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Gold's New Records - James Turk 18/10/08

 

Gold closed this past week with new record highs against the Australian dollar, Canadian dollar, Indian rupee, South African rand and British pound. Here are gold's long-term charts against these currencies.

 

Gold did not close this week with a new record high against the euro or the US dollar. But gold remains in a clear uptrend against both of these currencies, as we can see from the following long-term charts (the price of gold in Deutschemarks is used until it was subsumed into the euro).

 

Importantly, the debasement of the dollar is becoming so profound as central banks create "unlimited" amounts, the gold cartel will no longer be able to stop the watchdog from barking by capping the gold price. I expect new record highs in gold against the dollar and the euro by the end of this year.

 

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Gold's New Records - James Turk 18/10/08

 

Gold closed this past week with new record highs against the Australian dollar, Canadian dollar, Indian rupee, South African rand and British pound. Here are gold's long-term charts against these currencies.

 

Gold did not close this week with a new record high against the euro or the US dollar. But gold remains in a clear uptrend against both of these currencies, as we can see from the following long-term charts (the price of gold in Deutschemarks is used until it was subsumed into the euro).

 

Importantly, the debasement of the dollar is becoming so profound as central banks create "unlimited" amounts, the gold cartel will no longer be able to stop the watchdog from barking by capping the gold price. I expect new record highs in gold against the dollar and the euro by the end of this year.

 

How on earth does that data work?

I see a weekly change of about -10% in gold against AUD CAD and GBP.

I can make it work if you run the chart to the 10/10/2008 instead of 17/10/2008.

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That' why some people closely follow certain measures for the value of gold, e.g. here:

http://goldismoney.info/forums/showthread.php?t=195370

 

For instance, it could be a good idea to get out of gold once the price of an average UK home has dropped below 100oz (which doesn't mean it couldn't drop to below 50oz, BTW).

 

EDIT: Not sure why this whole discussion takes place on the gold thread, since these considerations apply to any asset. I have to suspect another motivation behind this discussion.

 

The thing about that goldismoney thread is that it focuses on ways to spot when your successful strategy has reached its ultimate success.

 

Do you have any thoughts on what indicators would suggest that holding gold now is a mistake and that you should get out before losing more? I'm not suggesting that this is true, but are there any indicators imaginable that would persuade you to reconsider the idea that gold is going back to higher real prices long term? It seems to me that one should have two exit strategies, one for success and one for failure.

 

Or is the only exit strategy for failure to assume that success has merely been postponed?

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... Or is the only exit strategy for failure to assume that success has merely been postponed?

You want me to say something like "I will sell it all at $599.99". Sorry, but that's not how it works for me. I am a medium to long term investor. I am interested in the fundamental drivers of gold, which is why I am not taking part in the technical discussions very often. The return to a sound monetary policy would make me change my mind. Information on this is on the mentioned GIM thread as well. As long as I can't see any return to such a policy, my orientation posts stay the one outlined in that thread.

 

I think it would be a grave mistake to take this process of deleveraging and outright market manipulation that we're seeing either as a sign that we're back to normal, or as a sign that we're entering a time of money supply or even retail price deflation (while we might see the latter in some cases short term).

 

The US treasuries market is the biggest financial bubble on earth THAT IS STILL INFLATING. Current events are in fact accelerating this inflation. Only when this bubble finally pops, which in my opinion can't be off too long anymore (max 5-10 years), we will see the true face of the fiat system. And it won't be pretty.

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You could probably get all the way to Z. :rolleyes:

Do I detect a touch of cognitive dissonance when you ignore the important 'D' type of goldbug? :P

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You want me to say something like "I will sell it all at $599.99". Sorry, but that's not how it works for me. I am a medium to long term investor. I am interested in the fundamental drivers of gold, which is why I am not taking part in the technical discussions very often. The return to a sound monetary policy would make me change my mind. Information on this is on the mentioned GIM thread as well. As long as I can't see any return to such a policy, my orientation posts stay the one outlined in that thread.

 

I think it would be a grave mistake to take this process of deleveraging and outright market manipulation that we're seeing either as a sign that we're back to normal, or as a sign that we're entering a time of money supply or even retail price deflation (while we might see the latter in some cases short term).

 

The US treasuries market is the biggest financial bubble on earth THAT IS STILL INFLATING. Current events are in fact accelerating this inflation. Only when this bubble finally pops, which in my opinion can't be off too long anymore (max 5-10 years), we will see the true face of the fiat system. And it won't be pretty.

 

This position probably applies to me as well. Though I would describe myself as a long term gold holder. This could mean anything from 15 years (I started buying in 2000) to the whole of my life.

 

Gold is not an investment but a store of value. It represents a way of protecting wealth from the existing, dishonest, financial system.

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You want me to say something like "I will sell it all at $599.99". Sorry, but that's not how it works for me. I am a medium to long term investor. I am interested in the fundamental drivers of gold, which is why I am not taking part in the technical discussions very often. The return to a sound monetary policy would make me change my mind. Information on this is on the mentioned GIM thread as well. As long as I can't see any return to such a policy, my orientation posts stay the one outlined in that thread.

 

That's fair enough. I don't want a price that would trigger a sell as I don't think that would make sense - it's more about what conditions would indicate that the situation is no longer one in which you need the protection/insurance of gold. Sound monetary policy seems a reasonable enough demand on that front, though I don't see it happening any time soon. :rolleyes:

 

I think it would be a grave mistake to take this process of deleveraging and outright market manipulation that we're seeing either as a sign that we're back to normal, or as a sign that we're entering a time of money supply or even retail price deflation (while we might see the latter in some cases short term).

 

My feeling is that events last week marked a new phase of the banking crisis. Governments are out of denial about how severe the deleveraging and deflation threats are, and have basically promised to do whatever it takes to avoid a banking collapse. That makes it less likely that we have an immedaite meltdown of the banking sector, and more likely that the next phase will be inflationary. Might take a while to feed through though as a lot of the newly created money is in the first instance going into black holes in banks.

 

The US treasuries market is the biggest financial bubble on earth THAT IS STILL INFLATING. Current events are in fact accelerating this inflation. Only when this bubble finally pops, which in my opinion can't be off too long anymore (max 5-10 years), we will see the true face of the fiat system. And it won't be pretty.

 

Yes. In ten years time, perhaps we will look back and see this as only a preliminary crisis - "saving the system" this time might lead on to something even nastier later on.

 

 

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Do I detect a touch of cognitive dissonance when you ignore the important 'D' type of goldbug? :P

 

Maybe. :rolleyes:

 

I'm not sure what I think about the 'gold is good in deflations' theory. It seems intuitively wrong, but on the other hand people do look to gold in times of crisis. Maybe in the event of deflation the price will fall, but not by as much other assets, so gold will prove its worth. But I would suggest that in a deflation the difference between holding gold and other assets is less likely to be a big difference, so for those who expect deflation I don't think gold is such a no-brainer.

 

Anyway, I tend to think deflation is going to slip into inflation sooner or later as governments' only realistic option is to try to reflate the financial system, whatever the cost.

 

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When this financial mess is clearly fixed and IMO you won't need indicators it will be as obvious as the nose on your face. I would actually like to turn this in on you and ask you the same question with respect to Sterling. What indicators are you looking for?

 

The thing about that goldismoney thread is that it focuses on ways to spot when your successful strategy has reached its ultimate success.

 

Do you have any thoughts on what indicators would suggest that holding gold now is a mistake and that you should get out before losing more? I'm not suggesting that this is true, but are there any indicators imaginable that would persuade you to reconsider the idea that gold is going back to higher real prices long term? It seems to me that one should have two exit strategies, one for success and one for failure.

 

Or is the only exit strategy for failure to assume that success has merely been postponed?

 

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...

also, have you ever tried typing in your BV account name into google, it tells you how much your holding!

 

 

You can change your nickname at any time in the BV settings.

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When this financial mess is clearly fixed and IMO you won't need indicators it will be as obvious as the nose on your face. I would actually like to turn this in on you and ask you the same question with respect to Sterling. What indicators are you looking for?

 

I've never suggested holding cash, so I can't think of anything especially useful to say in response to that question. Right now I think the immediate danger of total currency collapse has probably receded, only to be replaced by other dangers, such as high inflation, bond and currency crises etc. Gold may well be a good store of wealth in that situation.

Personally I don't have a great deal of wealth to protect in any case, and most of it is tied up in my property. With respect to property, I bought knowing that it could go up or down, but the calculations compared to renting and my need for a place to live take precedent - so I hopefully don't really need an exit strategy.

 

I'm not sure it will be that obvious when this mess is sorted to be honest, though. We know how desperate financial institutions, insurers and so on are to brush awkward facts under the carpet. I don't think there will suddenly be a day when we realise everything is sorted out. I think there could be a 5-10 year period when no-one is entirely confident and when there could be a new wave of new crises or not. Japan doesn't give us a very encouraging precedent in tht respect, though this crisis is a bit different in its scope.

 

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I agree with you Steve. It is quite tempting to jump out of e-gold today based on Ker's charts, but as you say some/most aren't here to use gold as an investment vehicle, myself included. I moved to gold as a safe haven and I am still convinced of this trait. I have no intention of selling today with the likely prospect of a large drop in the imminent future, because it leaves me exposed and that is precisely what I don't want at the moment, regardless of short term gains. Until this is visibly over I don't care if the POG goes to zero, I won't sell.

 

I find it amazing that some people appear to have the idea that at the moment "gold is down" and "I'm so worried it's not higher", or "going to fall more".

I get the same thing on another forum. People pop up and say "gold down again". Gold seems to attract the "gold knockers".

 

I point out that gold is near a peak for me, because I'm not interested in the GoldUS$ exchange rate, I'm interested in GoldNZ$ & GoldJPY.

Somehow they only ever quote the GoldUS$ rate :unsure:

 

This happened to me the other day where the NZ$ has fallen 53% over the year compared to Yen. When I pointed this out I got no response.

They will sit with their view that "gold is down" and they will sit with their devaluing NZ$ based assets !

 

They make a huge mistake if they think I am unhappy. Things are getting worse, not better, and as time goes by I feel happier and happier that I bought before now. I feel really sorry for those who want to buy now, but either have to pay way over spot, or have to wait months for delivery.

 

This is what I am looking for as signs to reduce my gold holding:

1. Real interest rates above 2% - remembering there is a lag.

2. A return to financial stability and faith in the money system.

3. There is a complicated (3), related to Chris Martenson.

 

I'm predicting somewhere around 2020 :D

 

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OK, I assumed that was your counter arrangement. I think to summarise my position, I have gold as an insurance policy and once I no longer need that insurance then I will look for a good time to sell, in the mean time the current POG is inconsequential and I do genuinely mean that, it doesn't matter. I also accept I may have made a mistake and lose money at the end of this and again it doesn't really matter to me, it served its purpose.

 

Conversely, I think we are now even closer to a currency crisis then we were before the intervention. So whilst the banking crisis has been very temporarily averted, the problem has been passed further up the chain and of course this is with respect to current loses, they are still mounting. There will be plenty more opportunities for gold to show it's worth.

 

I have faith in this area, I think we have been so ahead of the curve on this and that so much critical information is pooled here, that we will be the first to see the light at the end of the tunnel. Once I am sure the end is in sight, is when I will start to unwind my holdings. I take your point about obfuscated data, but it hasn't hindered us so far, I think everyone on here must be lateral thinkers and as such we aren't easily bullshitted.

 

I've never suggested holding cash, so I can't think of anything especially useful to say in response to that question. Right now I think the immediate danger of total currency collapse has probably receded, only to be replaced by other dangers, such as high inflation, bond and currency crises etc. Gold may well be a good store of wealth in that situation.

Personally I don't have a great deal of wealth to protect in any case, and most of it is tied up in my property. With respect to property, I bought knowing that it could go up or down, but the calculations compared to renting and my need for a place to live take precedent - so I hopefully don't really need an exit strategy.

 

I'm not sure it will be that obvious when this mess is sorted to be honest, though. We know how desperate financial institutions, insurers and so on are to brush awkward facts under the carpet. I don't think there will suddenly be a day when we realise everything is sorted out. I think there could be a 5-10 year period when no-one is entirely confident and when there could be a new wave of new crises or not. Japan doesn't give us a very encouraging precedent in tht respect, though this crisis is a bit different in its scope.

 

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I have faith in this area, I think we have been so ahead of the curve on this and that so much critical information is pooled here, that we will be the first to see the light at the end of the tunnel. Once I am sure the end is in sight, is when I will start to unwind my holdings. I take your point about obfuscated data, but it hasn't hindered us so far, I think everyone on here must be lateral thinkers and as such we aren't easily bullshitted.

 

All sounds sensible.

 

With respect to this forum and some of the other internet resources, I agree. I may disagree with "goldbugs" on some things, but I've learned a hell of a lot from the debate here, and I think most here are far better informed than average.

 

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Or is the only exit strategy for failure to assume that success has merely been postponed?

 

Thanks for starting this discussion Magpie, I think it is really important to think about these things and understand what drives you (me) in your (my) decisions. Gold is of no use to me directly. It doesn't provide heat, shelter nor tell me it loves me (but I do all that for gold...a very one way relationship!) But one day I hope to be able to exchange my gold for those things. Therefore we all need to have an exit strategy in our minds.

 

You question has caused me to really think about what mine is. I think I have two, one for success and one for desperation but as I said before, a failure strategy is much harder to imagine. That's why I am not an investment banker :-) (plus I have a soul)

As it stands at the moment, my exit strategy for failure IS to assume that success has been delayed. Maybe even to the extent that as long as I can work, pay a mortgage, survive etc. without selling my gold, then I might even pass it on as an inheritance. I suspect you have hit the nail on the head for a lot of people on here.

 

Very interesting to think about and this train of thought might lead me to new strategies in the future that will protect me more. Cheers!

 

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Very interesting to think about and this train of thought might lead me to new strategies in the future that will protect me more. Cheers!

 

Thanks. Some might find this hard to believe, but I genuinely hope it's the success exit strategy you end up needing to invoke.

 

To be honest, if I had more savings I would probably put some into gold at this stage as I don't think the deflation will be disastrous for gold, and the danger of inflation is high, while currency collapse is still at least possible, if slightly less likely than a couple of weeks ago.

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I point out that gold is near a peak for me, because I'm not interested in the GoldUS$ exchange rate, I'm interested in GoldNZ$ & GoldJPY.

Somehow they only ever quote the GoldUS$ rate :unsure:

 

Agreed. Buying in the dips means buying in the currency fluctuation dips as much as the spot price dips. When there was 2.1 USD to the GDP, gold was a steal in the UK.

 

 

 

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Despite falling gold prices in the short term I still think we will hit a new high by the end of the year the same as we did back in December 1974 - falling share prices are going to panic more investors into gold so this may be a good time to take some profit on the next high as a short deflationary period takes hold before giving way to inflation later on.

 

http://www.independent.co.uk/news/business...res-965959.html

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GoldMoney Alert - 18 October 2008

Gold's New Records

http://goldmoney.com/en/commentary/2008-10-18.html

 

Gold closed last week and made new record highs this week against the Australian dollar, Canadian dollar, Indian rupee, South African rand and British pound. Here are gold's long-term charts against these currencies.

....

Gold was not the only thing making new records this past week. US government debt is soaring as it borrows money to pay for the bank bailouts concocted by it in recent weeks.

 

From September 30, 2007 to the end of this past fiscal year on September 30, 2008, total federal debt grew by $1.0 trillion, from 9,007,653,372,262.48 to $10,024,724,896,912.49, which is an 11.3% annual rate of growth. The federal debt as of October 16, 2008 is now $10,331,139,000,845.92. So in just 16 days since the end of the last fiscal year, the federal debt has grown by an astounding $331.1 billion, which is a 75.5% annual rate of growth. It has taken just 16 days to borrow one-third of what the government borrowed in all of last year.

....

For several years the Gold Anti-Trust Action Committee (www.gata.org) has diligently explained why and how central bankers under the direction of the US government - the henchmen of the nefarious 'gold cartel' - have been capping the gold price. Their solitary aim is to silence the gold "watchdog", in the hope of making people unaware of the danger of holding dollars. But the watchdog is now barking in many countries as the gold price reaches new records against those currencies.

 

Importantly, the debasement of the dollar is becoming so profound as central banks create "unlimited" amounts, the gold cartel will no longer be able to stop the watchdog from barking by capping the gold price. I expect new record highs in gold against the dollar and the euro by the end of this year.

 

T-Bills, T-Bills, everywhere T-Bills :blink:

 

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