G0ldfinger Posted December 5, 2009 Author Report Share Posted December 5, 2009 Another good point. What was the volume of PHYSICAL traded I wonder? Bubb always stares at GLD like a deer in the headlights. GLD is irrelevant when Sovereigns move markets, and when even hedgies 'take delivery' from the ETFs (as we have seen recently). Forget GLD. Link to comment Share on other sites More sharing options...
carbon junkie Posted December 5, 2009 Report Share Posted December 5, 2009 Ummm... what's going on in the real world? Hyperinflation is nice in theory but does not cut it in the real world [which is there by the way to substantiate or repudiate theory]. This is because money primarily has a practical basis and not a theoretical one. We were all told when growing up that money makes the world go round, that money moves the world. But this hard-headed abstract maxim is being falsified before our eyes… money is not moving. Why? Because the exact opposite is nearer the truth, that the world makes money go round, that the basis of money is practical. It can never be analyzed in isolation in a set of theorems, but rather has to be observed within concrete circumstances. This is what muddle-headed monetarists have got so wrong. It is the same mistake the quants made. They were so obsessed with the elegance, beauty and certainty of their a priori principles and rational models, that they allowed those theories and models to become reality. Of course, this is the very definition of madness, when the figment of your imagination supplants reality. The reality was that the madness of the quants led to an economic ruin still playing out today. When you consider and observe the way in which money behaves in the real world, it is absurd to think hyper-inflation could happen to the central reserve currency. What I am more interested in is why hyper-inflationists cling to this belief. Perhaps the basis of hyper-inflation lies in the enthusiastic imagination of its adherents. Clear and distinct ideas are provided by authoritative figures. The ideas are easily understood along the lines of mathematical theorems. The ideas are essentially simple and not complex proceeding along axiomatic lines and generally agreeable to the more rationalist and mathematically minded. They provide certainty and a guaranteed eventual outcome in an uncertain world. The real world may fly in the face of hyper-inflation, but this is of no consequence as an eventual hyper-inflation is as certain as the second coming. This makes hyper-inflation more of a world-view or a faith than a provisionally held theory which would be open to being falsified. Beyond the hype of hyper-inflationary theory, gold can be bought as a sound currency and a hedge against uncertainty. No offence but that's a load of patronising waffle. Especially as history says you are just plain wrong. Link to comment Share on other sites More sharing options...
carbon junkie Posted December 5, 2009 Report Share Posted December 5, 2009 Wow! What a clear statement of complacency! (Nothing personal in this, but I think this is very dangerous thinking.) There may be a huge, huge volume of hedgie selling in the days to come. The ocean may be pushing through the straw in the opposite direction. Wishfull thinking. Do you have any stats to back up what % of total hedge fund investments are in gold? or what % of gold is held by hedge funds? I presume you would know this info. Do hedge funds not hedge their positions anymore? It is to the benefit of the Fed to have a higher gold price. Anyway nice to see you back. LOL Link to comment Share on other sites More sharing options...
romans holiday Posted December 5, 2009 Report Share Posted December 5, 2009 No offence but that's a load of patronising waffle. Especially as history says you are just plain wrong. It's different this time. My predictions might be wrong, but it will be the future not the past that would falsify them. http://www.greenenergyinvestors.com/index....st&p=115476 Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted December 5, 2009 Report Share Posted December 5, 2009 Ummm... what's going on in the real world? [sophistry] well in the real world the US has been balance sheet insolvent for a long time and has this year become cash-flow insolvent. you could start by addressing this point instead of arsing about comparing hyper-inflation to Jesus. No offence but that's a load of patronising waffle. isn't it just. Link to comment Share on other sites More sharing options...
romans holiday Posted December 5, 2009 Report Share Posted December 5, 2009 you could start by addressing this point instead of arsing about comparing hyper-inflation to Jesus. My point is that a theory about the world is something that should be open to criticism by the real facts of the world, and even perhaps falsified by real world events.... rather than be considered a priori true/ certain on abstract principles [hardly sophistry]. Some people have become so emotionally attached to hyper-inflation theory that it has become a dogma functioning almost like a religious belief.... nothing in the real world could falsify it... it is a matter for faith not uncertainty or doubt. Anyway, back to gold.... I do not think the performance of gold is tied to a hyper-inflationary outcome. There are other reasons why it will continue to be a good "investment". Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted December 5, 2009 Report Share Posted December 5, 2009 My point is that a theory about the world is something that should be open to criticism by the real facts of the world... agreed, so try including some facts in your posts rather than the usual ad homs, strawman, false dichotomies and strawmen. Some people have become so emotionally attached to hyper-inflation theory that it has become a dogma functioning almost like a religious belief.... nothing in the real world could falsify it... it is a matter for faith not uncertainty or doubt. you talk about 'real facts' and then in the very next sentence post another ad hom. you are attacking the people who predict hyper-inflation, rather than the arguments for hyper-inflation. the fact that Sinclair's a total dickwad doesn't make gold a bad investment though. Link to comment Share on other sites More sharing options...
romans holiday Posted December 5, 2009 Report Share Posted December 5, 2009 you are attacking the people who predict hyper-inflation, rather than the arguments for hyper-inflation. Not really attacking anyone... more stating an ideological fact. It would be futile to argue with hyper-inflationists as long as they insist that inflation/ deflation is by definition an increase/decrease of base money supply. And this is my point, that hyper-inflationism can not be argued with as long as it is based on this self-contained "platonic" truism. From that perspective, I may as well be arguing that 2 + 2 doesn't equal 4. Link to comment Share on other sites More sharing options...
drbubb Posted December 5, 2009 Report Share Posted December 5, 2009 Bubb always stares at GLD like a deer in the headlights. GLD is irrelevant when Sovereigns move markets, and when even hedgies 'take delivery' from the ETFs (as we have seen recently). Forget GLD. I would recommend you NOT forget GLD, since it may give you the clearest indication of buying or selling volumes, which can be a clear & useful metric Link to comment Share on other sites More sharing options...
Errol Posted December 5, 2009 Report Share Posted December 5, 2009 since it may give you the clearest indication of buying or selling volumes, Volumes of what though? Paper or real, hard, shiny metal? Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted December 5, 2009 Report Share Posted December 5, 2009 It would be futile to argue with hyper-inflationists as long as they insist that inflation/ deflation is by definition an increase/decrease of base money supply. And this is my point, that hyper-inflationism can not be argued with as long as it is based on this self-contained "platonic" truism. well it's true that the USD supply has entered hyper-inflation, so of course there is no point in you saying that it hasn't. prices haven't gone hyper yet though, so posters can still debate whether prices will go hyper or not. rather than making personal attacks on posters who say that prices will go hyper; why don't you put forward your arguments as to why you think prices will not go hyper. Link to comment Share on other sites More sharing options...
routemaster Posted December 5, 2009 Report Share Posted December 5, 2009 Wow! What a clear statement of complacency! (Nothing personal in this, but I think this is very dangerous thinking.) There may be a huge, huge volume of hedgie selling in the days to come. The ocean may be pushing through the straw in the opposite direction. With regards to the hedgie selling, the buyers were back in during the last hour of trading and pushed the price back up by $12 to $1161. There will be more skirmishes around the Chinese Wall, but the incursion will be repelled. Link to comment Share on other sites More sharing options...
romans holiday Posted December 5, 2009 Report Share Posted December 5, 2009 rather than making personal attacks on posters who say that prices will go hyper; why don't you put forward your arguments as to why you think prices will not go hyper. Have I made personal attacks on posters? I don't think so... more of an objective discussion on ideas and beliefs. I like the pragmatic way you have framed it here.... whether prices will go hyper... because at the end of the day, besides being night time, we all know that hyper-inflation would have to involve this as the currency went towards zero. A few observations as to why the prices will not go hyper: - there are now laws in place that prevent central banks in developed countries from printing willy nilly... they are now mostly borrowing and expanding the debt bubble even further. - this debt bubble is contracting and is causing a debt/credit/asset deflation [monetary "hyper-inflation" was seen at an earlier period where bank credit inflated asset prices- I know you do not see credit as money... but I'd argue, on pragmatic grounds, it is definitely a monetary phenomenon]. -the behaviour of banks and consumers is influenced by the deflation in assets and collateral leading to a reduction in borrowing and lending levels. This deleveraging will continue to exert deflationary forces as both banks and consumers seek to restore there balance sheets. - the CBs are resorting to such desperate monetary policies because they see themselves fighting deflation and not chasing after windmills. -the amount of money printing is insignificant to the amount of debt that is contracting. If the economy was not debt-based then an argument could be made for hyper-inflation... but as it stands any new money creation is swallowed up in one very large hole of debt. - Political developments could just as well enforce fiscal prudence as they could bring about money printing to the nth degree. - Bond markets would be punished if buyers think government debt might be unpayable. Though the increased savings of Americans might help here as it did in Japan. - Commodities and equities are only going up in price because Bernanke is threatening inflation and printing. There is an ideological bias here [monetarist theory] for investors to spend/buy investments. Consumers on the other hand are guided more by the real world and not by theory and will be saving not spending. This means the real economy will continue to contract. At some point the real economy will no longer be able to support/ sustain the financial economy, with prices collapsing. -Current asset inflation in emerging economies is based on the US cheap dollar carry trade. All it is achieving is over-valuation in economies which already have over-capacity in production. GDP in developed countries is contracting not expanding. This malinvestment will come to a screeching halt as the China bubble burst leading to further rounds of foorced liquidation and dollar strength. -If worst came to worst, governments would default rather than destroy their currency. - Before it came to that, international government [iMF etc] would institute a gold-backed currency to which other currencies would be fixed and stabilized. Just a few brief reasons [all of which have been gone over ad infinitum on other threads] on why hyper-inflation of prices is far from a foregone conclusion. Link to comment Share on other sites More sharing options...
tanniemola Posted December 5, 2009 Report Share Posted December 5, 2009 Have I made personal attacks on posters? I don't think so... more of an objective discussion on ideas and beliefs. I like the pragmatic way you have framed it here.... whether prices will go hyper... because at the end of the day, besides being night time, we all know that hyper-inflation would have to involve this as the currency went towards zero. - there are now laws in place that prevent central banks in developed countries from printing willy nilly... they are now mostly borrowing and expanding the debt bubble even further. - this debt bubble is contracting and is causing a debt/credit/asset deflation [monetary "hyper-inflation" was seen at an earlier period where bank credit inflated asset prices- I know you do not see credit as money... but I'd argue, on pragmatic grounds, it is definitely a monetary phenomenon]. -the behaviour of banks and consumers is influenced by the deflation in assets and collateral leading to a reduction in borrowing and lending levels. This deleveraging will continue to exert deflationary forces as both banks and consumers seek to restore there balance sheets. - the CBs are resorting to such desperate monetary policies because they see themselves fighting deflation and not chasing after windmills. -the amount of money printing is insignificant to the amount of debt that is contracting. If the economy was not debt-based then an argument could be made for hyper-inflation... but as it stands any new money creation is swallowed up in one very large hole of debt. - Political developments could just as well enforce fiscal prudence as they could bring about money printing to the nth degree. - Bond markets would be punished if buyers think government debt might be unpayable. Though the increased savings of Americans might help here as it did in Japan. - Commodities and equities are only going up in price because Bernanke is threatening inflation and printing. There is an ideological bias here [monetarist theory] for investors to spend/buy investments. Consumers on the other hand are guided more by the real world and not by theory and will be saving not spending. This means the real economy will continue to contract. At some point the real economy will no longer be able to support the financial economy, with prices collapsing. -Current asset inflation in emerging economies is based on the US cheap dollar carry trade. All it is achieving is over-valuation in economies which already have over-capacity in production. GDP in developed countries is contracting not expanding. This malinvestment will come to a screeching halt as the China bubble burst leading to further rounds of foorced liquidation and dollar strength. -If worst came to worst, governments would default rather than destroy there currency. - Before it came to that, international government [iMF etc] would institute a gold-backed currency to which other currencies would be fixed and stabilized. Just a few brief reasons [all of which have been gone over ad infinitum on other threads] on why hyper-inflation of prices is far from a foregone conclusion. I'm a novice looking to increase my physical gold (currently about 10 % of my savings - aiming for 20%) in the next minidrop. I bought earlier this year and was thinking of increasing my holdings before this latest bull run started which made me think it was better to wait for a correction. So I'd like to know how low the experts think it's going to go? Link to comment Share on other sites More sharing options...
romans holiday Posted December 5, 2009 Report Share Posted December 5, 2009 I'm a novice looking to increase my physical gold (currently about 10 % of my savings - aiming for 20%) in the next minidrop. I bought earlier this year and was thinking of increasing my holdings before this latest bull run started which made me think it was better to wait for a correction. So I'd like to know how low the experts think it's going to go? Hi dtm, not sure if there is any such thing as an expert when it comes to gold. But there certainly are a lot of opinions. It is quite hard to say which way gold will go here... there are good arguments for both directions.. and then trumping the arguments altogether is one very unpredictable market. One thing I think most here agree on is that in the long term gold looks to be a great buy. If you are the buy and hold investor type, I think you will not regret buying gold here... even at what seem to be highish prices. If the price does fall, the bull market in gold will "rescue" you as it goes on to new heights. Personally, I will not be buying here as I already have quite a large percentage of my worth in gold, and feel I can "afford" to wait for a dip. If I didn't have a good position and had say "only" 10% in gold, I would feel a little "exposed" and would buy... peace of mind and all that. So I guess, in my opinion, it comes down to how much [percentage wise] you already own, and what you feel comfortable with. Link to comment Share on other sites More sharing options...
fitkid Posted December 5, 2009 Report Share Posted December 5, 2009 Perceiving or perception is an act of interpretation using the mind. If we can change our mind then we can change our perceptions. If we dont change our mind then we can only perceive what we saw before The USA is the worlds largest economy. Other economies like Germany or Japan say are not full of consumers or people who want to take on more debt. These other economies want a strong USA economy so that firms like BMW or Sony remain strong. If BMW sells cars to the USA it gets dollars. If Germany wants to support the economy of Germany it can buy dollars Meanwhile these same nations support the USA militarily and diplomatically as it gets easier and protected access to oil in the middle east. Then there is the dollar as worlds reserve currency. The basis for the numbers in the banks is contracts between people who do not want to be double crossed. Most of the money in the world is dollars that are lent to other people. If i borrow 100 from you and lend 100 to Dr Bubb i am massively levered and exposed to losses if Dr Bubb does not repay me. So that loss if it happens creates a profit loss for me of the full 100 unless i have security i can sell. The banks are damaged and dont want to lend. Most of the money in the world is created by lending. The feds are mainly lending new money into existance that they expect to get repaid. The feds are private banks so you can imagine they want to be repaid or end up with no losses . But you probably think banks are criminal organisations that invent the money out of thin air and no matter how long we were to sit down and talk about banking you could not possibly conceive they did not So I imagine if Dr Bubb were to sit down with you and talk about banking you would also really struggle to understand how he could possibly not agree with you also. Perception is a funny thing. None of us can really see anything. All we can do is attempt to sense what is there and allow it to come to us and then compare what we think we sense with what we imagine we have already seen while allowing what is there to come to us unchanged by what we imagine we saw earlier. ALK i have done the maths and added up all the money in your posts that you have lent poor Dr Bubb your worthless FIAT and i now Declare you BANKRUPT. Do you think it would be possible for you to post the ALK manual to econmics so i can at least have a chance of follwing your posts.PLEASE HUMUoR GURANTEED EVIL FREE ZoNE Link to comment Share on other sites More sharing options...
warpig Posted December 5, 2009 Report Share Posted December 5, 2009 Why wouldn't they hyper-inflate? It's certainly a possible outcome. I don't know why you are so quick to dismiss it and frequently present your opinion on this as fact. IMO they will cling to their reserve currency status until it's `prised from their cold dead hands`, to default is acknowledging they can't service the debt, but they can... I just do not think that the dollar will be hyper-inflated away, or wilfully destroyed. The US woould default before they let that happen. Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted December 5, 2009 Report Share Posted December 5, 2009 A few observations as to why the prices will not go hyper: oh joy. labeling each of your points from [1] to [11]... [1]- there are now laws in place that prevent central banks in developed countries from printing willy nilly... clearly there are no such laws in place given the recent actions of developed countries. I'm not even sure what you're referring to. perhaps you are referring to the Federal debt limit which seems to get raised everytime it's about to be breached [linky] [1] ... they are now mostly borrowing and expanding the debt bubble even further. this is incorrect, given that the Fed was monetizing 47% of the debt back in June/July [linky] and given the continuing collapse in feredral tax receipts [linky] you can bet your arse that monetization rates are only going to increase. the UK gov't is up to similar sh1t [linky] [2] - this debt bubble is contracting... here you say that the debt bubble is contracting, yet in only the previous sentence (coloured in green) you say it is expanding! clearly you are contradicting yourself and it is not possible for me to formulate an appropriate response to this part of your post until I know which one of these two comments of yours is the real Slim Shady. [3]-the behaviour of banks and consumers is influenced by the deflation in assets and collateral leading to a reduction in borrowing and lending levels. This deleveraging will continue to exert deflationary forces as both banks and consumers seek to restore there balance sheets. and why would deleveraging be deflationary or even cause prices to fall? it is simply a transfer of money from the debtor to the creditor. [4]- the CBs are resorting to such desperate monetary policies because they see themselves fighting deflation and not chasing after windmills. no, the CBs are resorting to such desperate monetery policies because tax revenues have collapsed to less than half of what is needed to fund gov't expenditure. [5]-the amount of money printing is insignificant to the amount of debt that is contracting. If the economy was not debt-based then an argument could be made for hyper-inflation... but as it stands any new money creation is swallowed up in one very large hole of debt. again, debt repayments are simply a transfer of money from debtors to creditors. it is a change in ownership; not a change in supply. [6]- Political developments could just as well enforce fiscal prudence as they could bring about money printing to the nth degree. nope. we are simply too far down the laffer curve for any tax rate hikes to remove from circulation even a fraction of what has already been printed. if they'd begun enforcing fiscal prudence say 10 years ago then maybe. Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted December 5, 2009 Report Share Posted December 5, 2009 [7]- Bond markets would be punished if buyers think government debt might be unpayable. Though the increased savings of Americans might help here as it did in Japan. see my initial response to point [1] [8]- Commodities and equities are only going up in price because Bernanke is threatening inflation and printing. he is printing. [8]There is an ideological bias here [monetarist theory] for investors to spend/buy investments. please focus on arguments rather than people. [8] Consumers on the other hand are guided more by the real world and not by theory and will be saving not spending. they'll be doing neither, actually. J6P will be utterly destitute by the time this is all over. [8] This means the real economy will continue to contract. At some point the real economy will no longer be able to support/ sustain the financial economy, with prices collapsing. why would the end of the financial economy cause prices to collapse? [9] -Current asset inflation in emerging economies is based on the US cheap dollar carry trade. All it is achieving is over-valuation in economies which already have over-capacity in production. GDP in developed countries is contracting not expanding. This malinvestment will come to a screeching halt as the China bubble burst leading to further rounds of foorced liquidation and dollar strength. liquidation, like debt repayment, is simply a transfer of money from debtors to creditors. it is a change in ownership; not a change in supply. forced liquidation does not affect the supply of dollars. the dollar strength seen in 2008 had f*** all to do with your liquidation and everything to do with foreign central banks propping the dollar up with $1.4 TRILLION in currency swaps: $0.5 trillion at this point, but still a good watch: From: if liquidation caused dollar strength then there would have been no need for foreign gov'ts to save the dollar like this. [10]-If worst came to worst, governments would default rather than destroy their currency. er no, given the historical track record of gov'ts! [11]- Before it came to that, international government [iMF etc] would institute a gold-backed currency to which other currencies would be fixed and stabilized. they don't have enough gold to back all their promises - so what you're suggesting would first require sovereign default - see my respond to point [11] PS the IMF already introduced a gold-backed curremcy in 1967 - it had its gold-backing removed only four years later though! Link to comment Share on other sites More sharing options...
fitkid Posted December 5, 2009 Report Share Posted December 5, 2009 Good post IRS Dont you just love those for public consumption charades known as treasury select committe,pure theatre. Beter than watching the soaps though. Link to comment Share on other sites More sharing options...
wren Posted December 5, 2009 Report Share Posted December 5, 2009 Putting the recent increase in price in the context of the whole gold bull market so far. http://www.gold-eagle.com/gold_digest_08/hamilton120409.html Another article: http://www.gold-eagle.com/editorials_08/hamlin120409.html Link to comment Share on other sites More sharing options...
Errol Posted December 5, 2009 Report Share Posted December 5, 2009 Schiff on the gold pull-back: http://www.youtube.com/watch?v=HbqzjL0eKg4...feature=channel Link to comment Share on other sites More sharing options...
Compounded Posted December 5, 2009 Report Share Posted December 5, 2009 Maybe Bubb has a repeating pattern of getting out too early? He got out of UK property in 2001, 3 years before the property peak in gold and 6 years before the nominal peak. If he does the same with gold, he might lose out on another 500% gain or so. “I made a fortune getting out too soon” J P Morgan I found this one of his as well while looking for the above. Was JPM a bit confused, or hypocritical or thinking of someone else when he said this? "Of all forms of tyranny the least attractive and the most vulgar is the tyranny of mere wealth, the tyranny of plutocracy” JPMorgan Link to comment Share on other sites More sharing options...
notanewmember Posted December 5, 2009 Report Share Posted December 5, 2009 Stick with the long secular trend [up] unless otherwise Link to comment Share on other sites More sharing options...
tanniemola Posted December 5, 2009 Report Share Posted December 5, 2009 Hi dtm, not sure if there is any such thing as an expert when it comes to gold. But there certainly are a lot of opinions. It is quite hard to say which way gold will go here... there are good arguments for both directions.. and then trumping the arguments altogether is one very unpredictable market. One thing I think most here agree on is that in the long term gold looks to be a great buy. If you are the buy and hold investor type, I think you will not regret buying gold here... even at what seem to be highish prices. If the price does fall, the bull market in gold will "rescue" you as it goes on to new heights. Personally, I will not be buying here as I already have quite a large percentage of my worth in gold, and feel I can "afford" to wait for a dip. If I didn't have a good position and had say "only" 10% in gold, I would feel a little "exposed" and would buy... peace of mind and all that. So I guess, in my opinion, it comes down to how much [percentage wise] you already own, and what you feel comfortable with. Investing in gold for me is a way to protect my savings in uncertain times so I am definitely a buy and hold investor. I am happy make small loss for the case of security. However I must say I have been surprised by the rapidity of the rise in gold the last couple of months and wonder if it is sustainable. I expected a much more gradual rise. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now