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Maybe its not so much an 'either/or'....

 

It is undoubtedly true that many regular folk are cash poor and are attempting to pay back as much of their debt as much as possible. On the other hand the PTB are flooding the world with credit (cash) in order to counteract the deflationary beast. If they get the timing just right then they just might be able to pull a rabbit from a hat. Knowing human nature, the chances of this is perhaps less than 2%.

 

However what seems to make this situation really different this time is that this is a war of exponential losses (derivatives) versus exponential credit (money printing) growth. I don't think there are any historical parallels to the elemental forces currently in battle. So who knows how this is going to end - just prepare for the fact that both deflationists and inflationists could be right. Well that's the way I'm playing it.

 

Crazy times we live in.

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That's an interesting statement, as most, if not all members here consider gold to be the ultimate form of money. I don't want to debate the tos and fros of that statement, all that is important is that you know this is the belief of the many and why I consider your statement to be antagonising.

 

The majority here are trying to preserve their wealth, not profit from it.

 

Gold is not some special thing beyond economics

 

You buy it cheap in order to profit from it later when you need that profit. The time is now for many.

 

Many people need money more than they need gold

PS. Goldfinger earlier said he had too many prior committments for two months and was unable to buy Gold but added he might risk the anger of his wife and buy some even so.

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Maybe its not so much an 'either/or'....

 

It is undoubtedly true that many regular folk are cash poor and are attempting to pay back as much of their debt as much as possible. On the other hand the PTB are flooding the world with credit (cash) in order to counteract the deflationary beast. If they get the timing just right then they just might be able to pull a rabbit from a hat. Knowing human nature, the chances of this is perhaps less than 2%.

 

However what seems to make this situation really different this time is that this is a war of exponential losses (derivatives) versus exponential credit (money printing) growth. I don't think there are any historical parallels to the elemental forces currently in battle. So who knows how this is going to end - just prepare for the fact that both deflationists and inflationists could be right. Well that's the way I'm playing it.

 

Crazy times we live in.

 

But it seems true fear of deflation drives gold down and inflation drives it up.

 

Today we have this kind of news in Finland:

 

Finnish GDP contracts by 7.4 pct yr/yr in November -SF

 

Finland's gross domestic product (GDP) contracted by 7.4 per cent year-on-year in November last year, having shrank at a revised rate of 8.6 per cent in October, Statistics Finland said in a statement Friday.

 

Over in my other home we have this:

 

Yesterday’s HLFS revealed a spike in NZ’s unemployment rate to 7.3% in Q4, from 6.5% a quarter earlier. It was the highest reading since June 1999. The extent of the move caught everyone by surprise,

 

How long will it be before this kind of news is replaced by a steady flow of inflationary news and/or booming economic conditions?

 

 

 

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I think Prechter is right.

Prechter is a fool if he thinks the Dow at 1,000 or anywhere near is possible.

 

He is nuts the whole system would implode everyone would be bankrupt pension funds, insurance companies, banks govts etc.

 

Guess what would be the only thing worth holding in that scenario - it has no liabilities has been used as currency for 99.99% of the last five thousand years.

 

Its a paper bubble not a gold bubble, everyone is using paper promises, when everyone is using and talking about gold then I'll concede it is a bubble.

 

If Prechter thinks he can just swan in and buy physical gold at $300 an oz he is delusional.

 

He is one stopped clock who will never be right.

 

The physical and paper gold and silver markets are disconnecting big time right now physical gold is in strong hands that is how bull markets work.

 

 

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Prechter is a fool if he thinks the Dow at 1,000 or anywhere near is possible.

 

He is nuts the whole system would implode everyone would be bankrupt pension funds, insurance companies, banks govts etc.

 

Guess what would be the only thing worth holding in that scenario - it has no liabilities has been used as currency for 99.99% of the last five thousand years.

 

Its a paper bubble not a gold bubble, everyone is using paper promises, when everyone is using and talking about gold then I'll concede it is a bubble.

 

If Prechter thinks he can just swan in and buy physical gold at $300 an oz he is delusional.

 

He is one stopped clock who will never be right.

 

The physical and paper gold and silver markets are disconnecting big time right now physical gold is in strong hands that is how bull markets work.

 

 

I don't get the impression that Prechter is trying to buy gold at $300/oz. I think he's just telling what he sees - a bit like I am attempting to do.

 

Prechter does it from a financial background and I do it from a background of 5 decades of keen observation of people, the natural world, psychology etc.

 

My observations and experience lead me to believe that Prechter is correct in his forecast - simply because I "feel in my bones" (shorthand for some kind of sub-conscious distillation of knowledge and experience) the constant tug toward balance.

 

Gold is NOT going to go parabolic - the equal and opposite reaction that attends all systems will click in before that.

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That's an interesting statement, as most, if not all members here consider gold to be the ultimate form of money. I don't want to debate the tos and fros of that statement, all that is important is that you know this is the belief of the many and why I consider your statement to be antagonising.

 

The majority here are trying to preserve their wealth, not profit from it.

 

I was going to edit it later to 'local currency' from 'money' - but left it as it was.

 

If the ultimate money cannot easily be used to buy some veggies and a pint of beer it appears to have some limitations that most people can recognise when they pop out to get the groceries and dont have time to weigh their Gold with Mr Patel and risk they dont get gold in change due to the difficulties easily telling the difference between coated gold and other stuff which are the same difficulties Mr Patel faces when you ask him to take your gold.

 

I dont see gold as a very useful practical money. And we dont have to agree.

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Well said. That's what I like about gold bulls, they won't be pursuaded by weak arguments. It's so clear to me what is happening and it appears it is to you too.

 

Prechter is a fool if he thinks the Dow at 1,000 or anywhere near is possible.

 

He is nuts the whole system would implode everyone would be bankrupt pension funds, insurance companies, banks govts etc.

 

Guess what would be the only thing worth holding in that scenario - it has no liabilities has been used as currency for 99.99% of the last five thousand years.

 

Its a paper bubble not a gold bubble, everyone is using paper promises, when everyone is using and talking about gold then I'll concede it is a bubble.

 

If Prechter thinks he can just swan in and buy physical gold at $300 an oz he is delusional.

 

He is one stopped clock who will never be right.

 

The physical and paper gold and silver markets are disconnecting big time right now physical gold is in strong hands that is how bull markets work.

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Well said. That's what I like about gold bulls, they won't be pursuaded by weak arguments. It's so clear to me what is happening and it appears it is to you too.

 

Its got nothing to do with persuading people with an argument.

 

It is just saying what seems to be true.

 

Gold bulls often refuse to even attempt to understand the case for a deflationary recession. Apparently such talk only comes from the gubberment agents illuminati and the mentally ill.

 

Anybody who disagrees is just being troublesome and talking nonesense or is one of the usual suspects etc etc.

 

a pretty weak argument

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He is nuts the whole system would implode everyone would be bankrupt pension funds, insurance companies, banks govts etc.

 

Guess what would be the only thing worth holding in that scenario - it has no liabilities has been used as currency for 99.99% of the last five thousand years.

 

Machine guns, tinned food and a log cabin in the hills ?

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Machine guns, tinned food and a log cabin in the hills ?

 

 

Lol!

 

Sorry, perhaps I shouldn't laugh, but this one-liner drew an instant chuckle for its brevity and perceptiveness.

 

 

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The point I am trying to make is, it's not an ordinary commodity, it's more than that, otherwise central banks would stock rice and copper in their vaults and they don't. If you try and consider gold to be the ultimate currency rather than a run of the mill commodity, you will have a better appreciation for chart movements, the rules of natural market supply and demand do not always apply.

 

I was going to edit it later to 'local currency' from 'money' - but left it as it was.

 

If the ultimate money cannot easily be used to buy some veggies and a pint of beer it appears to have some limitations that most people can recognise when they pop out to get the groceries and dont have time to weigh their Gold with Mr Patel and risk they dont get gold in change due to the difficulties easily telling the difference between coated gold and other stuff which are the same difficulties Mr Patel faces when you ask him to take your gold.

 

I dont see gold as a very useful practical money. And we dont have to agree.

 

 

 

 

 

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I don't get the impression that Prechter is trying to buy gold at $300/oz. I think he's just telling what he sees - a bit like I am attempting to do.

 

Prechter does it from a financial background and I do it from a background of 5 decades of keen observation of people, the natural world, psychology etc.

 

My observations and experience lead me to believe that Prechter is correct in his forecast - simply because I "feel in my bones" (shorthand for some kind of sub-conscious distillation of knowledge and experience) the constant tug toward balance.

 

Gold is NOT going to go parabolic - the equal and opposite reaction that attends all systems will click in before that.

 

If you are assuming that the currency will have a stable purchasing power into the future, you would be right. The purchasing power of gold will probably go up somewhat - perhaps double what it is now. The exponential curve does not represent the purchasing power of gold only the amount of zeros in fiat needed to buy it. At some point, no amount of devalued currency will be accepted for gold (when the line is vertical) This does not mean that the purchasing power of gold is infinite, just that all faith has been lost in fiat. There are many historical examples of this. The collapse of the Soviet Union is recent and well worth reading up on.

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I don't follow your line of thinking, deflation is better for gold than inflation in real terms. We've been talking about it here for years... It's done, dusted and proven, we moved on. It's a win/win situation whatever happens, when the only alternative is a devalued currency.

 

Its got nothing to do with persuading people with an argument.

 

It is just saying what seems to be true.

 

Gold bulls often refuse to even attempt to understand the case for a deflationary recession. Apparently such talk only comes from the gubberment agents illuminati and the mentally ill.

 

Anybody who disagrees is just being troublesome and talking nonesense or is one of the usual suspects etc etc.

 

a pretty weak argument

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If you are assuming that the currency will have a stable purchasing power into the future, you would be right. The purchasing power of gold will probably go up somewhat - perhaps double what it is now. The exponential curve does not represent the purchasing power of gold only the amount of zeros in fiat needed to buy it. At some point, no amount of devalued currency will be accepted for gold (when the line is vertical) This does not mean that the purchasing power of gold is infinite, just that all faith has been lost in fiat. There are many historical examples of this. The collapse of the Soviet Union is recent and well worth reading up on.

 

 

I'm not convinced that the base-line measure against which a parabolic rise is measured is very important. It may have a short term importance (Weimar germany, for instance) but the correction toward balance will always be the over-riding driving force.

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I'm not convinced that the base-line measure against which a parabolic rise is measured is very important. It may have a short term importance (Weimar germany, for instance) but the correction toward balance will always be the over-riding driving force.

 

When hyperinflation occurs, the purchasing power of the currency ends up at zero. The exponential curve could be used for anything - not just gold. The actual increase in purchasing power of gold in the last few years is as a result of prescience of the few who are buying it while they are able.

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When hyperinflation occurs, the purchasing power of the currency ends up at zero. The exponential curve could be used for anything - not just gold. The actual increase in purchasing power of gold in the last few years is as a result of prescience of the few who are buying it while they are able.

Nice in theory. But the market isn't fazed in the least by the idea at the moment... quite the contrary. :)

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I don't follow your line of thinking, deflation is better for gold than inflation in real terms. We've been talking about it here for years... It's done, dusted and proven, we moved on. It's a win/win situation whatever happens, when the only alternative is a devalued currency.

 

You already have said that most if not all people here object to anti gold talk. :) What you prove here is only going to fit what you already believe

 

In deflation cash rises in value.

 

Devaluation will probably come in the final analysis

 

Meanwhile the dollar could strengthen until next year and beyond due to the nature of fractional reserve banking where everybody is chasing cash rather than debt money

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When hyperinflation occurs, the purchasing power of the currency ends up at zero. The exponential curve could be used for anything - not just gold. The actual increase in purchasing power of gold in the last few years is as a result of prescience of the few who are buying it while they are able.

 

 

Hyperinflation when it occurs is always very short lived - it is the final blow-out phase before the search for equilibrium results in an opposite move. And if the opposite move cannot be found then there is a self-destruct.

 

Within an oscillation there is an up and a down move.

 

Those that catch the up do well - unless they believe that the up will continue exponentially toward infinity.

 

The trick is to ride the up and bale out before the reverse swing.

 

The difficulty is to identify the tipping point.

 

The only certainty is that the tipping point and consequent reversal WILL occur.

 

I just think that gold has reached a tipping point and will reverse.

 

Psychologically, which is the more immediate/greater fear in the mind of an investor?

 

Immediate losses or losing out on potential gains?

 

My bet is that the immediate fear of losses due to a large correction will cause its own positive feedback loop downwards until equilibrium is reattained.

 

 

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You already have said that most if not all people here object to anti gold talk. :) What you prove here is only going to fit what you already believe

 

In deflation cash rises in value.

 

Devaluation will probably come in the final analysis

 

Meanwhile the dollar could strengthen until next year and beyond due to the nature of fractional reserve banking where everybody is chasing cash rather than debt money

In deflation, cash rises against value.

 

Consider the inverted triangle. Cash can rise in value against assets and goods. This does not mean that gold can not also rise in value against cash. You could think of gold as super-cash. As the strongest symbol of money it will continue to benefit, in the aggregate, from concerns weighing on national currencies.

 

 

Exetersinversepyramid.jpg

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In deflation, cash rises against value.

 

Consider the inverted triangle. Cash can rise in value against assets and goods. This does not mean that gold can not also rise in value against cash. You could think of gold as super-cash. As the strongest symbol of money it will continue to benefit, in the aggregate, from concerns weighing on national currencies.

 

 

Exetersinversepyramid.jpg

 

most of us are required to settle our debts in cash. If we have gold we sell gold to get cash

 

Most of us dont see gold as money. instead it is what a person has if they have money. A person can have debt and money and gold. Upon settlement they might have only debt.

 

In deflation more people are settling debt than getting new debt.

 

Therefor the buying power of cash rises. What the banks have is irrelevant unless that is being spent. Maybe it was to get gold to go up. But now?

 

 

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Also, please, anyone who survived the plunge of 2008 (remember, silver down from 21 to 9?) should be coping well here. :lol:

Down to 14.73 (now back up to 14.95ish). This and the last few days drops are coincidental with the opening of the NYMEx and GlobEx markets in New York. I wonder what's going on?

 

Granted this should be water off a duck's back for a seasoned PM holder (particularly silver). It still doesn't feel good though, particularly when I was reading around here:

http://www.investophoria.com/2010/02/peopl...at-heck-is.html

http://www.investophoria.com/2010/01/infla...-nightmare.html

 

Meh... Ignore it and it will go away...

 

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I didn't say that, please do not advertise I did.

 

Chicken or the egg, I believe it because of what has already been proven.

 

Apart from deleveraging which will hurt the price of gold in all currencies, I don't care if the dollar rallies, it isn't my local currency.

 

You already have said that most if not all people here object to anti gold talk. :) What you prove here is only going to fit what you already believe

 

In deflation cash rises in value.

 

Devaluation will probably come in the final analysis

 

Meanwhile the dollar could strengthen until next year and beyond due to the nature of fractional reserve banking where everybody is chasing cash rather than debt money

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Machine guns, tinned food and a log cabin in the hills ?

Which is precisely why they will print like crazy, this action now is the markets asking for more printy.

 

Anyone think we won't see another bailout?

 

Anyone think the politicos in Washington are going to watch their power dribble away?

 

Not a chance, I'll bet Ben and Timmy are arm twisting and scaring the numpties on capitol hill as we speak.

 

I await the politicians response with trepidation.

 

 

 

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