GOLD

[modigliani1]

In posting Roubini's interview, my intention was not to suggest he was necessarily right. But I find it wise to gather as many views as possible, regardless of whether I agree with them or not. The more perspectives, the better no?

 

Roubini might be right or might be wrong. I personally remain fairly bullish on precious metals in the near future (although I do expect to see a correction in Dec or perhaps early Jan...but of course, I'd be happy to be wrong).

[bitbigt]

The indians obviously don't think the fundamentals aren't justified and they are not known for being a frivolous nation.

China's and India's recent gold purchases are being taken as a sign that gold is sure to go up in price. I.e., raising expectations that golds price in all currencies will rocket.

 

But this is wrong. These country's gold purchases are motivated by those country's thinking the USD may fall in price relative to other currencies. Gold may not rocket in other currencies.

 

So in short, recognising this key difference means that if you live in a USD based country and hold USD cash, then you can protect yourself by getting out of USD and into something else (not necessarily gold, but including gold). If you live in some other country and hold EURO, YEN, etc, then it may not pay off to buy gold.

 

Personally, I think USD and GBP will share the same fate of significant devaluation. But they are already down 30% over last two years compared to other currencies, and so how much fiurther will they fall and over what time frame. Perhaps their collapse from here will be long and drawn out, taking up to a decade?

[Pixel8r]

China's and India's recent gold purchases are being taken as a sign that gold is sure to go up in price. I.e., raising expectations that golds price in all currencies will rocket.

 

But this is wrong. These country's gold purchases are motivated by those country's thinking the USD may fall in price relative to other currencies. Gold may not rocket in other currencies.

 

So in short, recognising this key difference means that if you live in a USD based country and hold USD cash, then you can protect yourself by getting out of USD and into something else (not necessarily gold, but including gold). If you live in some other country and hold EURO, YEN, etc, then it may not pay off to buy gold.

 

Personally, I think USD and GBP will share the same fate of significant devaluation. But they are already down 30% over last two years compared to other currencies, and so how much fiurther will they fall and over what time frame. Perhaps their collapse from here will be long and drawn out, taking up to a decade?

All currencies are fiat and have undertaken different amounts of stimulus and QE, some will remove their extra liquidity quicker than others. I guess it comes down to wether you think that gold will end up being linked back into to currency in some way, I do. The fiat currency experiment of the last 38 years is obviously failing.

 

Sure there will be ways of maybe doing slightly better by swapping between currencies at different times, but that requires a lot of understanding and a fair amount of luck. PM's are a historical way of preserving your purchasing power in times of crisis, so it seems quiet a simple option to me. Each to there own really, I guess.

[romans holiday]

China's and India's recent gold purchases are being taken as a sign that gold is sure to go up in price. I.e., raising expectations that golds price in all currencies will rocket.

 

But this is wrong. These country's gold purchases are motivated by those country's thinking the USD may fall in price relative to other currencies. Gold may not rocket in other currencies.

 

So in short, recognising this key difference means that if you live in a USD based country and hold USD cash, then you can protect yourself by getting out of USD and into something else (not necessarily gold, but including gold). If you live in some other country and hold EURO, YEN, etc, then it may not pay off to buy gold.

 

Personally, I think USD and GBP will share the same fate of significant devaluation. But they are already down 30% over last two years compared to other currencies, and so how much fiurther will they fall and over what time frame. Perhaps their collapse from here will be long and drawn out, taking up to a decade?

So what you saying, if I am hearing you right, is that CB buying of gold essentially amounts to their diversifying their currencies [and hedging risk].... something a few of the investors here are also doing.

 

The point that gold prices may go both up and down similtaneously, depending on the currency, is an important one and has not been much discussed here.

[DoctorSolar]

The point that gold prices may go either up or down similtaneously, depending on the currency, is an important one and has not been much discussed here.

Yeah I thought about that one long and hard and from an investors point of view I came to the same conclusion Bill Bonner did, namely that anything other than gold just seems too risky. Sure there will be ups and downs and gold may not do terrifically well in certain currencies for the time being but ultimately in the longer run I believe gold will appreciate in all currencies. The reason being the visible rush to the bottom, and the feeling that if we do get another stock market crash the governments of the world will start employing even more crazy fiscal policy.

[warpig]

I think Roubini is talking the dollar book, I'm not sure who got to him and at what point, but it was commented on here maybe about 18 months ago that his tone suddenly changed, I noticed it and so did others. Perhaps he had too many people's ear... Personally I don't listed to a word he says on gold, I think he has an inverse agenda, if you know what I mean.

 

Roubini's view from seekingalpha. He believes gold (and other commodities) are due for a correction:

 

So we don't have Armageddon; we don't have inflation, so gold can maybe go slightly higher. But those people who delude themselves that gold can go to $1,500 or $2,000 are just talking nonsense. The fundamentals are not justified, and those people are just talking their books.

 

http://seekingalpha.com/article/171919-rou...or-a-correction

[G0ldfinger]

From Strawboss over at GIM (my comments in bold)

http://goldismoney.info/forums/showpost.ph...p;postcount=135

What happens when hyperinflation begins...

 

Hyperinflation: Weimar, Germany January 1919 to November 1923

[Expressed in German Marks needed to by an oz. of ag. or au.]

 

Jan. 1919 Silver 12 Gold 170

May. 1919 Silver 17 Gold 267

Sept. 1919 Silver 31 Gold 499 Trader: "Buy, buy!"

Jan. 1920 Silver 84 Gold 1,340

May 1920 Silver 60 Gold 966 Trader: "Sell, sell, SELL! DEFLATION is coming!!"

Sept. 1921 Silver 80 Gold 2,175 Trader: "Sh00t. But the price will soon correct."

Jan. 1922 Silver 249 Gold 3,976

May. 1922 Silver 375 Gold 6,012 Trader: "Sh00t. But there is going to be DEFLATION soon. People have no money on their hands."

Sept. 1922 Silver 1899 Gold 30,381

Jan. 1923 Silver 23,277 Gold 372,447 Trader: "Sh00t. But NADLER says the price won't stay over 1,000."

May. 1923 Silver 44,397 Gold 710,355

June 5, 1923 Silver 80,953 Gold 1,295,256 Trader: "Sh00t. But there is going to be DEFLATION soon. People have no money on their hands."

July 3, 1923 Silver 207,239 Gold 3,315,831

Aug. 7, 1923 Silver 4,273,874 Gold 68,382,000 Trader: "Sh00t. But ROUBINI said a price over 2,000 is nuts."

Sept. 4, 1923 Silver 16,839,937 Gold 269,429,000

Oct. 2, 1923 Silver 414,484,000 Gold 6,631,749,000 Trader: "Sh00t. But VAN EEDEN said that the fair price is 750."

Oct. 9, 1923 Silver 1,554,309,000 Gold 24,868,950,000

Oct. 16, 1923 Silver 5,319,567,000 Gold 84,969,072,000 Trader: "But, but, but, PRECHTER said the price will go back to 170!"

Oct. 23, 1923 Silver 7,253,460,000 Gold 1,160,552,662,000

Oct. 30, 1923 Silver 8,419,200,000 Gold 1,347,070,000,000

Nov. 5, 1923 Silver 54,375,000,000 Gold 8,700,000,000,000 Trader: "Sh00t. But the price will soon correct."

Nov. 13, 1923 Silver 108,750,000,000 Gold 17,400,000,000,000

Nov. 30, 1923 Silver 543,750,000,000 Gold 87,000,000,000,000 Trader: "Waaahahahahahaaaaa!"

[FWIW]

The indians obviously don't think the fundamentals aren't justified and they are not known for being a frivolous nation.

 

Is it only me that thinks Roubini has become irrelevant? I used to read a lot of his stuff but now a days I can't even be asred to get passed the headline!

 

I think he is nore interested in becoming a celebrity...expect him in the jungle soon!

 

 

[warpig]

Mostly yes. Incidentally, I still have a lot of time for Nicholas Taleb.

 

Is it only me that thinks Roubini has become irrelevant? I used to read a lot of his stuff but now a days I can't even be asred to get passed the headline!

[romans holiday]

Yeah I thought about that one long and hard and from an investors point of view I came to the same conclusion Bill Bonner did, namely that anything other than gold just seems too risky. Sure there will be ups and downs and gold may not do terrifically well in certain currencies for the time being but ultimately in the longer run I believe gold will appreciate in all currencies. The reason being the visible rush to the bottom, and the feeling that if we do get another stock market crash the governments of the world will start employing even more crazy fiscal policy.

 

I agree on the long run. As you are aware, in the medium term though gold is likely to get caught up in the "currency wars" as first the risk trade dominates, where the peripheral currencies will do well, and then the risk aversion trade dominates where the central reserve currencies will do well on the deflationary swing back.

 

Roubini provides the macro scenario for why this is likely to happen at some point, and our own Bubb provides a "phenomenlogical" approach to the market and how to both protect yourself and benefit from these swings.

 

Anyway, this might be besides the point for the die-hard gold bug [no offence intended] as they will keep the faith and weather the storm, though this might not be so easy to newbies to the game.

 

I think Roubini is talking the dollar book, I'm not sure who got to him and at what point, but it was commented on here maybe about 18 months ago that his tone suddenly changed, I noticed it and so did others. Perhaps he had too many people's ear... Personally I don't listed to a word he says on gold, I think he has an inverse agenda, if you know what I mean.

Roubini's is doing what he is best at and once again beating the doom and gloom drum. I think his macro outlook is pretty good and a very real risk to this market. As a conventional deflationist, I think he might be surprised at how well gold holds up on a reversal.

 

I am not keeping cash reserves in reserve currencies in order to buy gold on a reversal, but in order to buy silver, which should dip much lower. I think it is futile to delay gold purchases [if you want/need to buy], but as I already have a decent gold position, I will only increase it by buying silver cheaply, then swapping to gold once the ratio is once again favorable. Call me a very fussy buyer.

[warpig]

Here's one for you G0ldfinger. Ker's best prediction to date and possibly the best chart I've ever seen.

 

[romans holiday]

Here's one for you g0ldfinger. Ker's best prediction todate.

Kerr [he never reads this thread right?] the anti-goldbug.

[Pixel8r]

Here's one for you G0ldfinger. Ker's best prediction to date and possibly the best chart I've ever seen.

 

I like the way he describes his channels as fractal, maybe been taking a bit too much LSD lately

 

 

[G0ldfinger]

Here's one for you G0ldfinger. Ker's best prediction to date and possibly the best chart I've ever seen.

That's what TA does in extremis, when fundamentals get ignored in the most outrageous way. It becomes utterly worthless.

 

EDIT: He'd better use this chart. But even then it's not really relevant IMO (because no money/credit supply is taken into account).

 

http://gold.approximity.com/since1968/Gold_USD_LOG.html

[warpig]

This chart reeks of ecstasy induced DOW euphoria. He clearly lacks a healthy amount of doom in his predictions IMO, give that man some barbiturates.

 

I like the way he describes his channels as fractal, maybe been taking a bit too much LSD lately

 

 

 

 

 

[DoctorSolar]

Anyway, this might be besides the point for the die-hard gold bug [no offence intended] as they will keep the faith and weather the storm, though this might not be so easy to newbies to the game.

Just to be absolutely clear on this I do not consider myself a "die-hard gold bug". I hold gold through the ups and downs for the same reason many of us small retail investors do namely we don't have enough time on our hands to monitor the markets and are perhaps therefore not nimble enough to benefit from trading swings. We want something that on the balance of probabilities looks like a low risk way of preserving what we have. Can anyone suggest anything else other than gold that on the balance of probabilities will perform this role for the time strapped investor?

 

Swings back and forth will always shake out the weak hands many of whom may be "newbies" but thats always been the case.

[FWIW]

I like the way he describes his channels as fractal, maybe been taking a bit too much LSD lately

 

Maybe he doesn't know how to spell equaldistance equidistant equally spaced apart channels?

 

Calling them Fractal in nature sounds so important!

 

Anyway, that gold one is much better than his recent Silver one where he predicts with great gusto that Silver will be going to $2.50 an oz!!!!!

 

 

[FWIW]

Kerr [he never reads this thread right?] the anti-goldbug.

 

Ouch my lip!

 

I think you mean Perma Gold Bear!

[romans holiday]

Just to be absolutely clear on this I do not consider myself a "die-hard gold bug". I hold gold through the ups and downs for the same reason many of us small retail investors do namely we don't have enough time on our hands to monitor the markets and are perhaps therefore not nimble enough to benefit from trading swings. We want something that on the balance of probabilities looks like a low risk way of preserving what we have. Can anyone suggest anything else other than gold that on the balance of probabilities will perform this role for the time strapped investor?

 

Swings back and forth will always shake out the weak hands many of whom may be "newbies" but thats always been the case.

So I'd be right to assume you are not 100% "all in" and keeping some serious powder dry in the event of a dip? Also, would you agree that keeping dry powder is [in the right currency] is not trading?

 

I mean, wouldn't you agree it is fair to say that only gold bugs perma gold bulls would be 100% in bullion now ...most likely due to the belief that all fiat will soon be toasted?

[jinbal]

Just to be absolutely clear on this I do not consider myself a "die-hard gold bug". I hold gold through the ups and downs for the same reason many of us small retail investors do namely we don't have enough time on our hands to monitor the markets and are perhaps therefore not nimble enough to benefit from trading swings. We want something that on the balance of probabilities looks like a low risk way of preserving what we have. Can anyone suggest anything else other than gold that on the balance of probabilities will perform this role for the time strapped investor?

 

Swings back and forth will always shake out the weak hands many of whom may be "newbies" but thats always been the case.

 

Yeah I hear you

 

I'm 50% Gold and have a FX trading acc for the "trading the swings" part. After some practice and the right methodology (i.e. daily and weekly timframes) you can work it so that you only have to spend 30 mins a day checking the end of day status to see any signals.

 

TBH - I's much rather have cash somewhere where it was yielding (like equities) but don't see anything with low enough risk now so AU it is

[Pixel8r]

TBH - I's much rather have cash somewhere where it was yielding (like equities) but don't see anything with low enough risk now so AU it is

Why not do both and get some gold/silver mining equities?

 

 

[jinbal]

Why not do both and get some gold/silver mining equities?

 

was just thinking that - I should start researching and drip feeding very slowly (i.e. my monthly salary savings) to build a medium - ish position

[Pixel8r]

was just thinking that - I should start researching and drip feeding very slowly (i.e. my monthly salary savings) to build a medium - ish position

I have always tried to keep a 65% bullion and 35% equity balance. I have at times sold some bullion to take advantage of situations I have seen develop in equities.

 

 

[d2thdr]

Actually not, I do work for some very interesting people as I am a professional advertising photographer. The only problem was last year that there really wasn't much work around in the high end advertising world. Things do seem to be picking up again now though, just worked on a image for a 35m x 9m billboard in Russia!

 

 

Would like to see what that billboard looks like!!

 

Any of this yours ...http://www.toxel.com/inspiration/2009/01/05/clever-and-creative-billboard-advertising/

[DoctorSolar]

So I'd be right to assume you are not 100% "all in"

 

Correct

 

and keeping some serious powder dry in the event of a dip?

 

No mostly keeping some as the rest of my family don't feel comfortable with an all in position and I have to respect that

 

Also, would you agree that keeping dry powder is [in the right currency] is not trading?

 

Yes this would be diversifying.

 

I mean, wouldn't you agree it is fair to say that only gold bugs perma gold bulls would be 100% in bullion now ...most likely due to the belief that all fiat will soon be toasted?

 

No. I think it is quite possible for a calm rational person to come to the same conclusion as Bill Bonner and think anything other than gold seems risky including other currencies due to government policy risk. Fair play to them.

 

I know some who were "waiting for the dip" that was "just around the corner" when gold was at 565 GBP a few months back. At some point you have to acknowledge the dip and get in otherwise you are a "perma gold dip waiter"

 

A lot of people will be 100% in GBP right now. Does that make them perma GBP bulls?