Dispassion

John Authers on the current risk adversion. http://www.ft.com/cms/bfba2c48-5588-11dc-b...00779fd2ac.html US 3 month t-bill yield at lowest point since 1941

Exciting times huh? What's the biggest daily percentage move up in gold of all time? The movement in gold price does seem a day or two belated, but seems to coincide with the recaptialisation of the Fed.

I've been working on the pricinple that the only reason to borrow gold is to short it. Am I missing something?

http://www.federalreserve.gov/newsevents/p...y/20080916a.htm Interesting, I don't think the markets are going to like this!

You think the Fed and US treasury will set a precedent and let one of the big four fail? I've not been following this story but I think that there are emergency meetings expected to conclude before the Asian markets open today. I think they want to put pressure on the other banks to bail them out, I don't expect the banks to take this on completely but I'm expecting to see some news in the next few hours on it.

I just got back from a month long break. Has there been any great insights into the direction of the Euro/Dollar or into gold decoupling from it? I could read all thousand or so, posts, but I'm sure that someone won't mind summarising for me.

The world's a very interesting place at the moment, I just hope that it's still interesting when all these power struggles are over. It looks like we're going to need a global state soon, but I don't see it being lead by Russia or the US and Europe doesn't seem to be making much progress.

I believe that the Rand is the popular unofficial currency in Zimbabwe.

Freedom, for who though? If world currencies were to return to asset based currencies then how would governments prevent the increasing divide between wealthy families and poor families? Money supply does serve a purpose in free market economies, but is the problem with the money supply or the free markets themselves? Regardless of monetary system, freedom for people, in general, can only come from an equal distribution of productivity and the nature of using money to make money is the enemy of this. Proponents of free markets would argue that without personal investment, productivity cannot be planned to efficiently increase standards of living, but the fact that half of the world lives on 2 dollars a day indicates, to me, that analytical planning would struggle to do worse. Here's some stats on freedom: http://www.globalissues.org/article/26/pov...facts-and-stats http://www.guardian.co.uk/money/2006/dec/0...ternationalnews

I don't, over the timescales that we are interested in I don't believe that there is a good measure of the purchasing power of any currency apart from inflation figures. I posted a similar chart a week or two ago, here. I'm just observing that the gold price has acted as a magnifier on the relative value of the Euro to the Dollar for a number of years and that the current movement in the Euro/Dollar and dollar index has been lead by Euro weakness instead of Dollar strength.

I think that the key factor affecting the gold price, isn't how quickly the dollar devalues in absolute terms, but how it performs relative to the Euro.

Apologies, if this is old news, I've been away for the last week or so. 11 Aug, John Authers demonstrates that the long term correlation of commodities with the dollar has ended. http://www.ft.com/cms/bfba2c48-5588-11dc-b...00779fd2ac.html It looks to me that the threat of global recession is leading the markets, driving down commodites, which has lead to the strengthening of the dollar and that gold's response is still more closely matched to the dollar. If we are to see a global recession and continuing strengthening of the dollar, do people see an end to this trend too and over what timescale, or are still people looking to TA as a predictor of future gold price?

I agree, panic buying or selling isn't profitable, but the thing that I don't see on this forum is discussion about exit strategy. Most posters hold gold, want the price to go up and don't like to see negative posts about it, but to have a forum that only attracts people who believe that the gold market will outperform all others indefinitely is likely to mask the risks.

This volatility is exaclty why I, unpopularly, argue that gold is not a preserve of wealth but a speculative investment. Although the long term trend holds, you really wouldn't consider your wealth to have been preserved if you bought at any of the troughs in this chart and sold at the subsequent peak. http://en.wikipedia.org/wiki/Image:Longter...ldlogtr1800.png Relative to stocks, volatility of 300% is common and 4,000% in the extreme. Over lifetimes purchasing power may be relatively constant for a quantity of gold, over the time scale of years to a decade, the story is very different.

$850 region looks to have lots of support based on MAs, previous bottoms and retracements, but for it to hold are we predicting the end of the correlation with Euro/Dollar and Dollar Index, or are we prediciting a change of direction for the dollar too?

Pretty similar, but this is to be expected since the Euro is most of the basket in the dollar index. http://www.akmos.com/main/forex/usdx.html

This is a good point, perhaps Goldfinger can produce a plot to correlate the dollar index with the dollar price of gold, for comparison.

Good chart! Showing clearly that the correlation between Eur:Usd and gold began at the start of 2006 and as held very well since then.

You asked for raw data in a previous post, I don't have it, but I'm sure it can be found. The correlation goes back further than one year, but has become stronger since the credit crisis took effect, for the moment I'm of the opinion that gold is acting as a magnifier on EUR:USD. I think it could take time for this correlation to leave the markets as I expect that it's ingrained in trading strategies. As major currencies weaken together, I'd naturally expect gold to trade more like commodites and out perform them in a recession. The question, for me at the moment, is how long gold will take detach from the the Euro dollar ratio if the Euro is to weaken further against the dollar.

John Authers on currencies and commodities followed by a summary of the credit crunch to date. http://www.ft.com/cms/bfba2c48-5588-11dc-b...00779fd2ac.html

I think if we get this low we'll be at the 300 day MA, correct me if I'm wrong but, I'm pretty sure that gold hasn't retraced that far, with respect to MAs, for the entire bull. Considering the gold chart in isolation, the odds are very much in favour of the longs between here and $850. However, the correlation with the dollar is still very stong and from a technical perspective, this is what is holding gold back. The euro/dollar is right at the bottom of it's trading range at the moment, it'll be interesting to see where it goes from here.

I've read this in a number of places. Interestingly, they all also argued that gold doesn't, historically, perform very well at times of inflation. Which would seem contrary to the most commonly held view that I see on gold forums. I don't want to ignite the whole - what is gold debate, but it seems to me that gold's purchasing power, historically, has varied wildly, if I recall correctly, by two orders of magnitude, so I don't see it as a preserve of wealth, but as a speculative investment with good prospects in the current economic climate.

Looks like gold lease rates have gone negative again! I'm sure some of you can explain this, but I've not had much luck finding an explanation that I have much confidence in, so far.

We're well in the MA support range now. The region around 850 looks very strong. If we see $825 again, then I'd be thinking the bull is over.

Good plan. Although the discussion about what gold is seems trivial to me, it does seem to be a very popular discussion, so to prevent it polluting a more useful thread, my suggestion would be that it is pinned in the main discussion, and that the scope is opened to promote a discussion on how gold has performed historically against currencies and at times of economic stability, inflation and deflation, but this is just the suggestion of a newbie to the forum and meant to be taken as such.