romans holiday
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Posts posted by romans holiday
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I was more obsessed when I held currency.
Or possessed?
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haha... "gold"
You wouldn't want me to get the idea you were obsessed with one topic, would you?
Probably an uncomfortable truth that we're all a bit obsessed with money on this forum.
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It isn't the investment philosophy, it is the "cultish behaviour", which was described by another, not by me, and which unfortunately fits the reality of what is often posted on this thread.
Perhaps I should change the name of this thread to "the B&H-ers Room", and just stop visiting this thread. I think that might make some folks here very happy.
OK, the 2 cents worth of someone who counts himself a gold bull but not a gold bug. First of, it's your site so you can do what you want. If you want to continue building a vibrant forum though then you'll have to allow people some elbow room.
The idea of having distinct threads allows people to focus on distinct topics. There is nothing wrong with 'The Gold Thread' thread having a Buy and Hold bias seeing gold has performed so well these past ten years. I'd say most people frequenting the thread have the long term/ investment in mind.
The Trading of Gold [i prefer Silver here], which is also a suitable topic should also have its own focus and thread. Of course these two topics over-lap to a certain extent, and there is nothing wrong with making short term calls, whether bearish or bullish on long term gold. These may help people with entry points.
If you are bearish long term on gold, a separate thread should be opened for this as it is a distinct topic to the Bull and Trading threads. I'm sure a Gold Bear thread will get just as many readers.
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Sorry to hear that... but still 14 over par sounds like a good round of gold to me. I hope you were lucky with the weather.
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Romans Holiday has explained this quite elegantly: We are fundamentally in a deflationary environment; in a deflation assets fall relative to currencies; gold is the best currency so assets fall the most against it.
Yes, that Dr Bubb is still asking the same question is due perhaps to a habit of lumping gold in with assets and commodities rather than seeing it as a from of liquidity. The decoupling between commodities and gold is perfectly sensible when you consider gold appreciating against commodities.. or from the other angle, commodities depreciating against gold. It's this idea of appreciation/ depreciation that people have to .... appreciate. Because then you are getting beyond counting and dividing units of money [the essence of money illusion] and thinking instead about what happens to the unit itself. If the unit appreciates, it's best to exit investments and sit in units.
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Gold could fall below $1500 according to Marc Faber
""Marc Faber: The big rally into Sept. 6, 2011, took the Gold Price to $1,922/ounce (oz) and then it dropped until the end of the year, touching $1,522/oz on Dec. 29. It has rallied, and is now above $1,700 again, but I don't think the correction is entirely over. Corrections of 40% are nothing unusual in a bull market.
As an adviser, my duty is to always inform people of investment risk. I'm not saying I expect gold to collapse, but telling people the Gold Price will go up leads them to leverage up and speculate. If the Gold Price drops $50/oz, they're wiped out. All I'm saying is that, in my opinion, the Gold Price correction is not yet entirely completed. I see significant support around the $1,500/oz level, but it could drop lower. It depends on global liquidity and on money printing by central banks. We could have a big correction if global liquidity tightens or they stop printing money.TGR: Over what timeframe are you looking at the correction?
Marc Faber: This year the Gold Price may not exceed the $1,922/oz high that we reached on Sept. 6. Maybe it will. I'm not a prophet. I'm just telling people that I'm Buying Gold and holding it. I don't speculate in gold. If you Buy Gold, you better understand that the price could always move to the downside. If you don't understand that, don't invest in gold—or in anything.""
Regards
ML
Hyper-inflationists such as Faber are going to climb a wall of worry in the gold market. Along with Sinclair he sees gold sponging up liquidity, but he is not so sure as to whether there will be all this excess liquidity sloshing about for gold to be the beneficiary.
Much better to view gold itself as a form of liquidity... as an appreciating currency. And then look at the rate of appreciation. A solid 22 odd % year on year. Looking at the log chart, a slide to below 1500 looks unlikely. Looking more likely is a spike above 2000 sometime this year.
So why can't Faber see the obvious trend? Because theory determines what you see. And his theory does not perceive gold as a steadily strengthening currency.
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Hi RH,
FWIW,
This is my slant on how things will pan out and why Gold is the thing to hold for the time being!!
Maybe just maybe when the Sh&t finally hits the fan a real asset revaluation will take place, as it is the first time to my knowledge the whole world has been on a Fiat currency credit binge so it is a bit of an unknown !
1. Solution one, high real inflation huge injections of cash/printed cash into banks all assets retain value/increase in fiat value the further from the bottom of Exeters inverted pyramid, the less inflation of value, of each of the asset class ! Private Debt is erradicated from the system, which is what is happenning now, debts ratios reduded, ministers make noises they want further lendng publicly to the people but then at the same time enforce stricter lending ratios on the banks, resulting in mortgage debt reduction as we are seeing now without a headline crash in values, hoping at the same time growth will appear from somewhere!
(Cash held cash could do well in this senario as people with high personal debt ratios are squeezed by rising interest rates and real falling incomes stagfltion occurs)
2. “Paper money eventually returns to its intrinsic value – ZERO” Voltaire 1729
The worlds nightmare happens the sheeple see Fiats true value!!!!!!!! A huge deflation of all assets takes place again using Exeters inverted pryamid the items furthest away from the bottom of the Pyramid deflate the most against gold!
(With the excepition of fiat cash whch will burn as in Weirmar Germany in this senario!)
Regards
ML
I think there may be some incoherency here. But I see you mention Exter's pyramid a couple of times. If you focus on the pyramid and understand what it means for fiat/ conventional currencies, and on a global stage, then you might find some coherency.
First, Exter's pyramid needs to be 'internationalized' and applied to the global economy. 'Fiat' currencies themselves need to occupy a tier somewhere on that pyramid. I've found it useful to divide currencies into peripheral, commodity, and central/ reserve currnecies. As forms of liquidity they will come lower down on the pyramid closer to gold and further from assets in the higher tiers. So you could have gold at the bottom, with the US dollar [and perhaps Yen] above that, then perhaps commodity currencies above that. Peripheral currencies would be further up near the tier of assets. Remember that due to deflationary pressure monetary value is filtering down from the upper tiers through the middle tiers to the tiers at the bottom. Though the market may move opposite to this at times [the risk on trade] the fundamental movement is down.
The crucial point to grasp now is the relativity of value. Assets will depreciate in terms of currency... even as currencies depreciate in terms of more central currencies, or gold. In this relative scheme, a currency could both appreciate and depreciate. It depends on what you are relating it to; if to assets then currency appreciates, if to gold then currency depreciates. Everything depreciates/ deflates relative to gold. What does not happen in this scenario, is the complete erosion of the value of 'fiat'. It does not hyper-inflate, but instead actually strengthens against assets. As for 'money printing', it may soften the effects of a debt deflation, but can not over-come and reverse the process.
Hope that helps.
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And how do you know different?
Because I don't think I 'know'. It has to do with the nature of knowledge, which most seem to be happily ignorant of these days. Nobody 'knows', all we have is theory/ hypothesis. This a point I often come back to, and where I have an argument with the 'dogmatists'. A hypothesis ['as if'] should be taken as only provisionally true, and never as 100% guaranteed. The strength of one's hypothesis should then be evaluated on the basis of predictive and explanatory power. Sinclair doesn't really offer a theory but a simplistic dogma or faith which is easy enough for people to buy into [based on another form of money illusion - monetarist illusion - where money is mathematically equated/ divided with the number of units]. The problem is its lack of sophistication as a falsifiable theory... not to mention its weakness in predictive power.
The money is getting deposited in the CB's accounts. It will not be extinguished. At some point it will be lent. The question is will the economic output of the world be equal to it. Wait and see, but if there is no major advance in technology or energy production then we will see inflation of horrendous proportions and gold will take on the mantel of the only honest money.In the last few days I have listened to people call into London radio stations giving opinions that I thought were outside the mainstream. 'Fractional reserve banking','money out of thin air', 'crony bankster capitalism', 'fiat money'. These phrases I have not heard in my day to day life outside these forums, but I hear them now. I don't think it will take too long for everyone to realise what QE really means. Everyone runs away from getting robbed.
Sure, but there are alternatives to simply shouting hyper-inflation. What's needed is a more nuanced view which can take into account all the phenomena in the current economy. Something like combining the insights of those who see depreciaitng currencies with those who see an on-going debt deflation. Synthesis added to analysis. As said before, I don't think Sinclair should either be revered or ridiculed. In so far as you value your independence as a critical thinker, you should take him with a heavy dose of salt.
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Errrh. He was right in 1980. He has been right in 2011 (except for being a few months off the time line). And I truly believe he will be right in that we will see a much higher gold price.
It's futile saying Sinclair is absolutely right or absolutely wrong. The thinkers are going to ask how right he is. Or in other words, has he got the rate of appreciation right? He was willing to bet a fortune on 1650 because being a hyper-inflationist, he thought the price would have blasted well through that point by that time. The fact is it crept through that price and has been hovering around that price for quite some time now.
If we're generous and give him the 'letter' [that gold got to 1650 at/ around that date], we can also be critical in 'spirit' and say that gold is moving quite in contrast to Sinclair's predictions. He was right to see gold going up, but wrong perhaps in his prediction of the rate and his explanation.
Some have been predicting instead that gold will move up steadily at 20 odd % a year, explicable due to the appreciation of an informal currency in a free market of currencies. This prediction has worked out more accurate than Sinclair's, which encouraged rockets [i notice no rockets are posted these days]. Sinclair's predictions are based on the dubious idea, since we are in a debt deflation, that gold is an investment/ commodity/ inflation hedge - a sponge to soak up that deluge of money that's supposed to be coming upon us.
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Could be a month of consolidation ahead for silver. Could go as low as 30 odd. 'The' low [26] looks to be in.
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i dont have your chart reading skills because cannot see how that is obvious at all. silver has run up 40% over last three months, someone must have made some money. if the price plummets from here then these trades will look very savvy.
I had made an 80% profit on silver in just over a month with a leveraged silver ETF [now still over 50%]. Mind you that is only a paper profit. I expected silver to come back a bit, and didn't take a profit because I want to let this one run. Why sell in a month for that kind of a profit [and lose your position] when there is a good chance of making a much better profit on quite a different order of magnitude over a longer time frame?
http://www.greenenergyinvestors.com/index.php?showtopic=9164&pid=241603&st=260entry241603
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http://www.reuters.com/article/2012/03/02/us-markets-precious-idUSTRE80T1QZ20120302
Gold falls 3.5 percent in the week, more weakness seen
(Reuters) - Gold fell on Friday as the dollar rallied, notching its biggest weekly decline this year, and the metal remained vulnerable to drop further after a tumble earlier in the week shook bullion investor confidence.Losses in crude oil, euro and U.S. equities weighed on bullion prices, which posted a 3.5 percent weekly decline.
Further profit-taking was possible, as one or more large funds possibly sold after U.S. Federal Reserve Chairman Ben Bernanke did not signal another round of monetary easing was imminent, sparking a 5 percent sell-off on Wednesday.
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Despite this week's pullback, the metal is still 9 percent higher year after the Fed said in January it would keep U.S. interest rates near zero until at least 2014.
Gold started the week with a rally to a 3-1/2 month high on economic uncertainty after the European Central Bank gave half a trillion euros of cheap loans to banks.
However, sentiment turned bearish when some investors interpreted the ECB move and Bernanke's remarks the possible end of further monetary easing.
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On charts, gold's present pattern resembled an initial break and acceleration in early 2006 before bullion resumed its long-term bull run, said Tom Fitzpatrick, chief technical strategist of CitiFX, Citigroup's technical research unit.
"In the near term, there is a real danger that we could see better buying levels in the region of $1,600," he said.
Highlighting the resilience of investors, holdings of gold in the world's largest exchange-traded products, a measure of shorter-term shifts in investor appetite for bullion, rose a record.
Bullion held by the world's top gold ETFs tracked by Reuters hit an all-time high of more than 70.76 million ounces, having their largest net inflows this week since early January.
Suki Cooper, precious metals analyst at Barclays Capital said investor appetite for gold remained healthy due to decent physical demand, negative real interest rates and longer-term inflationary concerns.
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I was thinking that. It all just depends where you draw the lines.
Yes, when you start drawing trend lines, the longer ones are the more reliable. When gold spikes well above the trend then you're pretty safe to predict a correction. But it looks now that most of the correction has played out, and the price is back in line with the long trend. Of course, it could easily come off another $50 to 1650 odd... the tail end of the correction within the long term trend. Then with gold back to its solid baseline it could well spike through 2000 this year.
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It will be interesting to see if GLD/Gold ... update
...will be still above $140 at the end of April. I expect that at least 90% of our regular posters would expect to see that. My own guess now would be that there is a more than 20-30% chance that GLD will at least touch $140 within Q2 2012.
What do others think the odds of that happening would be?
90% chance it won't touch $140. I think you're projecting your own view onto that chart. The trend is the other way, and the correction looks to have bottomed.
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I'm reminded of the observation of Dr Johnson in Edinburgh, hearing two women arguing across the street, from the upper storey of one house to another: "They'll never agree, because they're arguing from different premises".
Too true.It seems to me that "buy & hold" is only half a strategy. For what purpose, and for how long, should I hold it? (I expect to be dead in the next thirty or forty years.) I'd like to hear more about exit strategies and timing: neither traders like Dr B nor hoarders lke GF give me quite what I need. When they dissatisfy me good-naturedly it's one thing ... but when this thread is both unhelpful and bad-tempered, I can do without it.Yes B & H is only half a strategy. Making it a whole one runs the risk of turning into a miser. I've had a counter-balancing strategy to B & H for some time now. Trade the volatility of silver in order to gain dollars not ounces. Sell on the next large spike and there is your realized profits and exit plan. There is now a window of opportunity for anyone wanting to look into this hedging strategy. Silver looks to have bottomed and looks a good buy. All in gold? Sell some for silver, or if feeling adventurous a silver leveraged ETF. Further information on this trade here:
http://www.greenenergyinvestors.com/index.php?showtopic=9164&pid=241603&st=260entry241603
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People may be asked to make decisions on this. Especially if the Gold Bugs can get enough public support for a Gold backed currency.
Personally, I am against a Gold backed currency, for a number of reasons. But the well-financed Gold Bulls will keep pushing for it.
Well, I guess that I'm neutral or agnostic on it. The monetary system is quite an arbitrary thing... money itself for that matter. Dare I say your bias is getting the better of you here?
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DOUBLE POST
No problem: gold is forward looking and for now seems to react more to money supply (which is increasing to replace private debt) than to (more stagnant) nominal GDP. This is no contradiction as money velocity is low. The key for understanding the forward looking aspect is that velocity (and also private credit growth) lags money supply growth, and therefore retail price inflation follows with a delay. The delay at the moment is pretty long, however, the coming calamity can be seen already in stubbornly growing prices in necessities.
That's is one way of meeting it. Though it is hardly falsifiable which is generally considered a virtue of a theory. I mean it could always be just next year before 'velocity' [what an abstraction that is] picks up.
But the problem is more a problem with those who see a problem specifically in the rise of gold comparable to commodities. I don't think you've ever had a problem with the rise of gold... unless it hasn't risen fast enough.
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Can there be a Right price for linking the Dollar to Gold? How would it be determined?
The question is almost non-sensical given we live with free markets. We don't have a philosopher-king who can one day say this is the way our money will be [mind you, Friedman gave it a good try with an attempt at scientific currency]. The reality is the market will determine the worth of gold. However, should capital one day, in the free market, start absolutely pouring into gold and abandoning economies then government will most probably then have a say out of a perceived necessity... that would be the end of the free market with currencies then somehow fixed to gold. Notice, none of this is about what ought to happen, but what is, and what perhaps could happen.
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Yes.
That is what the Gold bulls are hoping for and praying for...
They want to see Gold's value be uplifted by its usage as a monetary marker. Like the US Dollar or the Euro, Gold can float at a level way beyond its intrinsic value, or its inflation-adjusted value. But for that to happen, Gold has to be a preferred "store of wealth" which is preferred ahead of Ag Commodities, Energy, or Houses.
It has happened for brief periods, but can it be sustained?
Well, as I said it was an alternative rational explanation. No hoping and praying involved.
I think you're still missing some very rational macro-economic points here:
1] If gold is starting to behave as a currency then it really does not make sense to talk of its 'intrinsic value'. A currency provides the monetary value of other things.
2] The 'system' needs to be re-capitalized. One way this can effectively be done is for gold to slowly rise as a pricing mechanism. Somehow the amount of debt outstanding has to be re-balanced against capital. If for some reason [most probably political] 'printing' can't do it, or then again debt is not then written off in mass, then another alternative is for gold to continue rising. Fact is, central banks hold gold because they consider it capital.
I repeat, these are rational economic points worthy of consideration and not greedy 'self-interested' ones.
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You don't have to be a genius to spot the potential top here.
(Yet I wonder: Where are the comments from the Gold purist gurus?)
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Gold has an important role in preserving wealth IMHO. I own it now, and have owned it for years... and I buy on dips and sell some when I think it is overvalued. But we must not treat gold owning as a religion and/or build cults around gold hoarding.
It's an interesting chart that. The thing is there is another perfectly valid explanation to the "decoupling" seen between gold and commodities post 2008. That is that gold has been re-monetized by the market. It now acts more [potentially] as a pricing mechanism of commodities, a currency as opposed to a commodity. I don't think allowing for gold to behave as a currency [one amongst many] entails one to be a 'gold purist'. Don't 'gold purists' only allow gold as money?
Critical thought is important, but if it becomes reactionary one can be led into equal and opposite errors. You have to ask yourself why in that chart gold has risen so steadily in a long term trend against commodities. To just say it's 'over-valued' doesn't really offer an explanation.
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JS refers to Alf Fields' numbers; Fields is currently expecting $4500. I think that is quite possible. And I wouldn't call a 160% increase in a few years parabolic - it depends of course on how it gets there.
Thanks for that Carlton. I checked his website but couldn't find a prediction.
The time frame is important here. Easy to say gold is going higher, harder to say at what rate. OK, so let's assume they are predicting $4500 in 3 years. How does that compare to the current rate of appreciation of around 20 odd % a year against the reserve currency? If we put gold at say 1650 [baseline] here that would put gold at around 2000 next year, at around 2500 the following, and say 3100 on the 3rd year. That prediction still looks a bit on the high side given the current rate of appreciation.... which has stretched back over a decade so far.
I think they might be hesitant to call the current rate of appreciation, which looks on the face of it so obvious, because of the bias towards hyper-inflation.
I agree that these figures aren't parabolic. On a log chart gold price at 3000/ 4000 a few years traces a relatively even straight line of appreciation.
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I am not given to conspiracy theories, but given the statements of Andrew McGuire and others I am tempted to think that some of these pullbacks in silver are orchestrated by someone.
They may well be. But if your concerned with price, you have to take the behaviour of the market as you find it. Whether the market is 'pure' or 'manipulated' is besides the point and hence my agnosticism.
If one really thought that markets were manipulated then that manipulation would be factored into predictions/ expectations of price etc. But what tends to happen instead with those that adhere to manipulation is they use it as an ad hoc after-the-event explanation; silver should blast upwards due to the fundamentals... and when it corrects they then blame manipulation. It really is quite an ingenious air-tight system because it's unfalsifiable. But then those who think falsifiability is a virtue to a theory see this as a weakness.
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OK, so what are Jim Sinclair's latest predictions for gold? Does he still think it's going parabolic in the next few years? Or has he settled down to predicting 20 odd % appreciation year on year?
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Hmmm, it's about time for another CME hike methinks
Yes, would like to see silver retrace just a little further.
GOLD
in Gold, FX, Stocks / Diaries & Blogs
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Well, I hardly 'tow the line'. Here were my thoughts on the matter:
As for moderation, I don't do any these days and wouldn't mind just being signed up as a member.
Just noticed I am now a 'member'. Fine with me.