romans holiday

I think it is a good idea to keep a decent amount of powder dry at this stage. Of course you should also have a decent amount of bullion. For me it it a 50/50 split. Gold looks most likely to stay strong here for a while given post QE inflation concerns. However, I remain convinced these inflationary concerns are perceptions which Bernanke, the deflation fighter, is doing his most to promote with threats of continuous QE. The real economic forces still at work are deflationary and when they bite next we may only then see a move down in gold and silver. This will be the time to buy with your cash reserve [though it may still be a good idea to still be averaging in a little at these levels]. The big move up in gold will come when debt-laden currencies buckle to half of their former worth. Investment should be considered akin to warfare. You can have a strategy, but without certain tactics the strategy may remain unrealised. Tactics in investment is mostly about timing; positioning yourself then waiting to take advantage of certain developments.

"We" is a dangerous word when it comes to investing.

imo there are too many buyers lining up to buy gold now. As soon as it dips, buyers come in to support the price. What would it take for there to be a big sell off now in gold? I can't think of anything. Even if the stock markets sell off in a big way, and the dollar spikes again, investors are not likely to sell gold given that QE has "problematized" the dollar medium/long term. So looks like a range between 900 and 950 with gold going effectively sideways for some time and going higher only once the dollar depreciates, which may take a while.

Faber on gold. Thinks it will correct a little on the down side, June-August. http://howestreet.com/audiovideo/index.php...mediaplayer/300

Another option is to buy a house with only half your bullion and a 50% mortgage [keep a reserve, why commit all your capital]. That way, you cover yourself if we get high inflation. If it is deflation all the way, you then have the further option to pay off your mortgage if you need/want to.

I wonder if gold might just hover and move sideways now that investors and nations are concerned about the future impact of QE on currencies. I see gold as effectively "monetized" with investors increasingly perceiving it as a currency not a commodity. The volatility we saw in gold was due to being perceived by most as a commodity; with inflation it went up, with deflation it went down. Now gold, as a currency, might become a lot less volatile [the recent rise in gold only reflects a weak dollar]. Think of all the investors lining up to buy gold once it dips below 900, this will provide a floor for the price. There is no ceiling as yet, and as currencies weaken in a year or two, gold will double. As for the markets, the longer and higher the rally goes the larger the fall will be. The only way it will not fall is if inflation gets well and truly out of the bag, but I still see the forces of deflation trumping inflation in the short/medium term. You say inflation is low. Yet if it remains low this will work against the price of equities rather than support them. The main reason investors are buying equities is for inflationary concerns, and if these fail to eventuate we are likely to see a sell off. imo the cheapest ways to acquire gold now is to either wait for a dip, that may not come, or buy silver on dips and swap for gold on spikes when the ratio closes.

Maybe. If I was mostly in dollars, I would be concerned. For now, I think I will hold onto the dollars I have on the chance we will see another spike in the dollar. This rally in the markets represent nothing real and is driven by pure speculation. When economic realities hit we should see another sell off. That would be the time to get out of dollars when they are strong not weak. This payday, I will buy more because they are looking cheap at the moment. I agree, there will be an eventual currency crisis. But before we see it we may see another deflationary episode where everything [minus gold perhaps] sells off, equities and commodities included.

I like the look of silver too. Just waiting for it to dip a little before buying again. Gold looks solid above 900. I doubt whether deflationary fears will affect the price too much as in the wake of QE it is being bought in large part as a currency.

If you are already 50% in metal then you can afford to play this game. Actually, you should as you are then hedged either way with both cash and metal. There are no certainties, rather there is always the possibility of being wrong. Already with a large position in gold and silver, you cover yourself by buying metal with the other half of your funds at bargain basement levels in case deflation wins the day. This way, if ...gasp, shock, horror... gold does not go to the moon, you have still bought a monetary asset at a good price. Even so, I think in a hyper deflation, gold and silver will perform as currencies doubling from here as other currencies half. If you do not get the hoped for bargain prices - with gold and silver going one way upwards - this is no great disaster as you already have 50% of your worth in metal. Are you 100% in metal?

I doubt whether anyone doubts some kind of eventual price inflation is coming. It is the timing of it and what happens in the meantime which is of interest. Agree that it was an interesting interview.

opps

Not sure you could put silver in the "insurance" category. It is more speculative in nature than gold, though a great speculation nevertheless. Silver looks set to outperform, then in turn underperform gold as the manic market trades it in a highly charged setting. I want to be on the opposite side of that trade. We could see silver go to near $20 again in the summer, then plunge to where we are now as it is caught up in a general deflation scare where everything sells off... except gold maybe. I see gold as being effectively monetized [thanks to QE and then also the Chinese reaction] by investors/nations at the moment and accordingly now a lot less volatile. Silver lags gold and should remain extremely volatile for another year or so being still considered in part a commodity.

I have been accumulating a good stash of cash also. I am thinking they both may still drop, but silver is more likely to than gold. I reckon the explanation for gold remaining high now has nothing to do with inflation or deflation [which affects gold when considered a commodity] but because the big boys are buying it primarily for its monetary properties.. buying it as a currency. If gold remains steady around 900 thne perhaps it has already become "monetized". I am inclining towards just accumulating gold and trading silver [on the pull backs] over the next few months. That said, we might still see gold go down a little in the near future, but if it only dips 50 odd bucks, why bother waiting. Dualistic silver on the other is quite a different story.

I reckon it is best to trade something you know a little bit about and also know will be volatile. The odds are silver will ultimately perform as a monetary asset. Why not make use of market volatility [trade] to both accumulate and hedge against the possibility you could be wrong. Buy when it is low, sell half when it spikes, top up again when it is low again. It is just a money game, I want to play against the market. Soros outlined this in his theory of reflexivity where the investor has both an idea of real value and is also cognizant of the markets momentary perception of value. As for insurance, can't find it in this world.

Ummmm... perhaps 1300 [but I am hoping it goes down first]. Gold looks solid here with the dollar weak, a continuing stock market rally, confidence in financials restored by Bernanke's stress test, and investor money going into just about everything. Wonder if the illusion can last all summer. I am starting to think inflation and deflation concerns will have less an impact on gold compared to previously. Inflation and deflation affects the price of gold in so far as it is considered a commodity. By buying gold not as a commodity but as an alternative currency, due to debt concerns, investors are effectively "monetizing" gold. This should see gold remain strong and only rise slowly as other currencies decline. In this scenario, silver might be the best one to trade.

So..at what price are people thinking of lightening up a little?

Lessened volatility in gold is being made up for in silver on steroids.

Yep, I wouldn't be surprised to see the volatility in gold calm down a bit. Whatever way the market scares, whether inflation or deflation [apart from whether the wheels fall off the economy] I reckon gold is now effectively thought of by the big investors as a monetary asset. The QE event has pretty much put the breaks on gold going on another mega dip and continued concerns about economies and currencies has put a floor of sorts under it. Maybe best to just accumulate with wages. As for silver, now there is a different story..... I think this might be the one to remain wickedly volatile and fruitfully traded..... or platinum.

Awesome action in silver this week. The ratio is coming back down into the 60s. Have to say, I am a little surprised at the strength in metals.... coinciding with the continued rally in the markets.

Itchy fingers anyone?

I think a few no longer have the expectation that gold will explode any moment to hitherto unheard of heights. It may be a good few months, or a year or two before we see pog go high and stay high. That said, bit of excitement in metals today. I wouldn't be surprised to see gold spike up a little given that so many are short term "bearish" [though remaining long term bullish] at the moment.

No hurry. This down trend is not as steep as previous ones due to investor concerns about inflation. We might have to wait some time for 650.

pog at 887 now with the latest spike turning back down. With lower highs and lows, the down trend looks to be confirmed. Of interest is whether it will bottom at 850 like the first bowl, bottom at 750 like the second or whether it will go on to a lower bottom around 650. Whatever the bottom, I think it will be a bowl nevertheless and trend back up. Good buying opps coming up. I hope to start averaging in only once the 200mda is crossed.

I wonder if the end game will also be a looooong game. As long as it takes for the US dollar to roll over which may be a couple of years. All the better for buying.

Like astute investors, the Chinese are diversifying their reserves. http://www.bloomberg.com/apps/news?pid=new...id=a6cmtYYnaYiE