GOLD

[pmaupoil]

5 investing bubbles

http://money.cnn.com/galleries/2010/fortun....fortune/6.html

 

Why it's hot

Gold was rising even before the recession. But panic over world markets and the health of European and U.S. economies propelled it into the stratosphere. Prices have risen 150% in the past five years, repeatedly setting new records. Meanwhile, small investors have stormed in. Some fear that stimulus spending could lead to massive inflation; they believe a tangible material like gold will hold its value better than other assets.

 

Why it's worrisome

Inflation isn't rising. It's falling and likely to be restrained for some time by a tepid economy.

 

Verdict: a major bubble

Gold has already started slipping. It declined 6% in July to a recent $1,160 an ounce. Some economists are warning that continued weakness could lead to deflation. If that happens, expect gold to crater.

 

[G0ldfinger]

5 investing bubbles

http://money.cnn.com/galleries/2010/fortun....fortune/6.html

 

 

 

See also http://www.greenenergyinvestors.com/index....showtopic=10843 .

[Fortune]

People rushed to gold in the Weimar hyperinflation and during the Great Depression. It was just for the USD being backed by gold that people would mostly want to hold gold receipts in USD form. So, people who expect the Dollar to do great things this time around might be very disappointed in the end.

I've just noticed this. And I agree (which is the gist of my point).

[romans holiday]

May I add something to this debate.

 

If I reading you correctly RH are you saying that it was the perception (or 'confidence' if you will) of the dollar which led many to associated it with real value, not just the backing of the dollar to gold? I thought that in the case of the US Great Depression, the pegging of gold to the dollar was one of the primary reasons for the onset of the depression. Reason being that, as gold cannot be printed out of thin air, the amount of dollars in existence reduced in the face of banking failures and money hoarding - a classic deflationary spiral. And so, in order to stop the spiral of falling wages and prices in the economy, the US government confiscated the people's gold to boost the money supply and create inflation. This was their way of 'printing money' on a gold-standard.

First of, thanks for continuing with a rational debate. Truly, a breath of fresh air given some of the recent inanities.

 

Well, most did associate the dollar with real value, and it continued to increase in value against asset prices as they crashed..... just like today. Yet, the more sophisticated [investors and nations] became concerned that Roosevelt would devalue the dollar [go off gold] just as other countries had done. This is also similiar to today, where the US is trying to devalue the dollar by other means.... though this time it is more difficult to do. My point is here that there is a similiar dynamic at work in debt deflations which makes money more valuable relative to assets... and which makes the "backing" of money irrelevant. The reality of debt is the driving factor.

 

The causes of the Depression are a lot more complex than the usual monetarist story we hear. The Depression was not simply uni-causal [lack of money supply] or US-centric. There was an international aspect to it, preceding the Wall Street crash. The financial world never really recovered from the WW1, Britain tried to but was unable to continue with in its leadership role in global finance, and the US was unwilling to pick it up. It was primarily a collapse of international finance, and the currency system, which lead to each country protecting its own national interest... nationalism. Kindleberger's main thesis is the lack of a "stabilizer" post WW1.

 

When Roosevelt came in, he completely ignored the problem of international trade/ order. To the horror of the poor Brits, who thought they'd bequethed the Americans leadership, Roosevelt completely broke with the idea of restoring an international system/ stabilizing currencies against a new gold standard. Instead, his approach was nationalist, and he devalued the dollar [against gold] in order to stabilize/ raise prices at home. This just lead to further chaos in the international order, and we know where that lead.

 

*[britain made a mess of it when it tried to put the pound back on par with the pre-WW1 level [after it had already depreciated quite a bit]... this was hugely deflationary and squeezed their economy. What they should have done is stabilized the pound at current price levels to a new gold level... why didn't they do it? something to do with a gold mythology; there could only be ONE standard... the pre War one.]

 

Thus (and some others have also argued) in those days it was the perception of dollar as being backed by gold which gave them the confidence to have faith in the dollar as money. In the present era, people still hold on to this belief even though all currencies are now fiat since 1971 - they believe dollars, pounds, yuan, yen, euros are backed by something (if not gold then something precious or valuable). This is why as you say the dollar's purchasing power could still increase measured against many assets yet at the same time decrease when measured against gold. The true awakening in the gold market will only occur when people realised that they have been had for generations.

 

Recently I have begun to accept this notion of currencies bobbing up and down against each other, with gold (and perhaps silver) as the lord of them all. Well it's the only one that can explain all the paradoxes out there in the global economy. I think.

 

Yes, but in regards to the perception that dollar was backed by gold, keep in mind that both countries and investors were nervous about whether the US would actually stay on gold [which was wise given that so many countries had gone off]. The general population wouldn't have given much "fundamental" thought to the currency as they don't today. Most, if worried, ran to the bank for dollars which they stuffed under their mattress... evn though those dollars were soon to be devalued by decree/ fiat. The same forces are at work today, but consider how much more difficult it is to actually devalue a currency that floats in the market as opposed to one backed by gold. Roosevelt could simply by decree, confiscate the gold, and then devalue the dollar against gold, a huge windfall for the treasury. Today, market partipants may keep buying dollars [to pay down debt/ safe haven etc] even as the Fed wants to devalue it. This "short-covering" of the currency will only serve to strengthen it... just as has happened with the Yen. Those same market participants and others besides [the real big players], investors and central banks, will also be buying gold due to concern about rising debt, and mounting currency instability. So dollar up against weaker currencies... and higher gold prices in all currencies.

[Magpie]

*[britain made a mess of it when it tried to put the pound back on par with the pre-WW1 level [after it had already depreciated quite a bit]... this was hugely deflationary and squeezed their economy. What they should have done is stabilized the pound at current price levels to a new gold level... why didn't they do it? something to do with a gold mythology; there could only be ONE standard... the pre War one.]

 

I might be wrong but I think Churchill saw it as a matter of honour to restore the pre-war rate - because a lot of citizens had bought government bonds, thus funding the war deficit, he felt that to devalue would be to pay them back at a reduced rate.

 

He may have had a point, but his stubbornness on this probably did more harm than good in the long run (and yes there was a bit of mythology underlying it too).

 

[Magpie]

Not sure if we are really disagreeing here. In the western tradition, knowledge [a body of systemic thought] is considered justified true belief. It is the attempt to rationally demonstrate [justify] why we think our beliefs are true. What you term knowledge, I'd equate with [traditional] belief. I think the difference here is only semantic.

 

Yes, so knowledge and belief are a relation between the thinking subject and the objective world.

 

d2thedr's point would maybe be better expressed in terms of "facts". There are facts about gold that are not subjective, not in any way dependent on someone thinking about gold - facts about its durability, chemical make-up, mass etc.

 

However (IMO) value is always subjective - we ascribe value to an object based on our beliefs/knowledge of that object. We may ascribe value for good reason, for instance it is true that gold is durable, rare on this planet, and that it is generally valued by other people. But the value is not inherent to the object, only the facts that cause us to value the object.

[nathanjohnson]

 

 

The volatilty of gold looks to be settling down compared to previous years. Does this signal a steady strengthening along the trend line? I'd be happy with that... given that currencies might also be strengthening against assets.

 

 

Link to last month's thread:

http://www.greenenergyinvestors.com/index....st&p=177466

 

Yes i have used the automatic expert advisor of www.GoldExpertAdvisor.com.The automatic expert

advisor is customized to fit your balance. Your capacity to invest is what the ROBOT uses

to trade. Its really useful.

[fitkid]

May I add something to this debate.

 

If I reading you correctly RH are you saying that it was the perception (or 'confidence' if you will) of the dollar which led many to associated it with real value, not just the backing of the dollar to gold? I thought that in the case of the US Great Depression, the pegging of gold to the dollar was one of the primary reasons for the onset of the depression. Reason being that, as gold cannot be printed out of thin air, the amount of dollars in existence reduced in the face of banking failures and money hoarding - a classic deflationary spiral. And so, in order to stop the spiral of falling wages and prices in the economy, the US government confiscated the people's gold to boost the money supply and create inflation. This was their way of 'printing money' on a gold-standard.

 

Thus (and some others have also argued) in those days it was the perception of dollar as being backed by gold which gave them the confidence to have faith in the dollar as money. In the present era, people still hold on to this belief even though all currencies are now fiat since 1971 - they believe dollars, pounds, yuan, yen, euros are backed by something (if not gold then something precious or valuable). This is why as you say the dollar's purchasing power could still increase measured against many assets yet at the same time decrease when measured against gold. The true awakening in the gold market will only occur when people realised that they have been had for generations. Recently I have begun to accept this notion of currencies bobbing up and down against each other, with gold (and perhaps silver) as the lord of them all. Well it's the only one that can explain all the paradoxes out there in the global economy. I think.

 

ABSOLUTELY when the sheeple finally wake up ( and unfortunately some paper bulls without any physical) to the REALITY that they might as well use monopoly money as fiat as it has exactly the same intrinsic value 0.Why /How anyone with eyes that can see and ears that can hear are still unable to see whats coming down the pipe absolutely staggers me.

[fitkid]

ABSOLUTELY when the sheeple finally wake up ( and unfortunately some paper bulls without any physical) to the REALITY that they might as well use monopoly money as fiat as it has exactly the same intrinsic value 0.Why /How anyone with eyes that can see and ears that can hear are still unable to see whats coming down the pipe absolutely staggers me.

Just to add a further thought when people do WAKE UP if ever, before they are forced to because of currency crisis inflation etc will they be able to afford any physical gold at its fiat price at that time.?How many people can afford reasonable oz of physical even now.?Alot of people have no savings just massive debts and huge speculative leveraged positions in BUBBLE assets.!!

 

The PERFECT storm is ready to hit.

Its like being on the beach as the sea disapeard into the distance and all the people laughing and joking until they saw the returning wave.IT is a TSUNAMI.

ARE YOU PREPARED.???

[Ret45]

The PERFECT storm is ready to hit.

 

When, roughly, will this happen. This year, 2011, 2012?

[fitkid]

Not at all. Some people like to be "bound" by rules or conventions. Many find religion makes them feel better, makes their inevitable death less scary. I have no problem with that, nor do I deride them for it. It's understandable.

I simply contend that it's a man-made system, and limits thought to those concepts that fit within that system.

 

I do find it fun watching people tie themselves in knots over a self-invented/created system though.

 

It's almost like "what a tangled web we weave"...

 

 

PEOPLE CANT HANDLE RESPONSIBILITY AUTONOMY OR THE TRUTH.THEY LIKE TO BE PART OF THE FLOCK WETHER THAT MEANS DEATH OR FINANCIAL OBLIVION.

 

From:

 

[fitkid]

When, roughly, will this happen. This year, 2011, 2012?

I am prepared for tommorrow next week or any of the above.I am just waiting for the music to stop i aint playing musical chairs i prefer to sit and watch every body dance around wondering who is not going to get a chair when the music stops and THEY LOSE THEIR KNICKERS there are several contenders on GEI.

DONT BE ONE OF THEM!!!!!!

[lupercal]

I am prepared for tommorrow next week or any of the above.I am just waiting for the music to stop i aint playing musical chairs i prefer to sit and watch every body dance around wondering who is not going to get a chair when the music stops and THEY LOSE THEIR KNICKERS there are several contenders on GEI.

DONT BE ONE OF THEM!!!!!!

 

If something happens like that it doesnt matter who you are you or your family will be in trouble. I hope it is avoided.

[fitkid]

A VIDEO PERSPECTIVE ON THE DEVELOPMENT OF A MOVEMENT.!!!!! ARE YOU A LEADER OR A FOLLOWER???

WHERE WILL YOU JOIN THE RUSH FOR HARD PHYSICAL ASSETS.!!!!

ARE YOU THE SHIRTLESS DANCING GUY??

 

From:

 

 

 

 

[fitkid]

If something happens like that it doesnt matter who you are you or your family will be in trouble. I hope it is avoided.

HOPE IS FOR THE HOPELESS

HOPE IS FOR THE IGNORANT

HOPE IS FOR THE OBAMA FANS.!!!!!

 

[Catflap]

I see the gold thread is being trashed again by the same nutter person most GEI users would like to see the back of

 

 

[Crashman begins]

just to add a further thought when people do WAKE UP if ever, before they are forced to because of currency crisis inflation etc will they be able to afford any physical gold at its fiat price at that time.?How many people can afford reasonable oz of physical even now.?Alot of people have no savings just massive debts and huge speculative leveraged positions in BUBBLE assets.!!

 

Hedge funds, central banks, millionaires, billionaires

 

[fitkid]

I see the gold thread is being trashed again by the same nutter person most GEI users would like to see the back of

 

 

I am prepared for tommorrow next week or any of the above.I am just waiting for the music to stop i aint playing musical chairs i prefer to sit and watch every body dance around wondering who is not going to get a chair when the music stops and THEY LOSE THEIR KNICKERS there are several contenders on GEI.DONT BE ONE OF THEM!!!!!!

 

SPEAK AND THEY WILL APPEAR.DIVINE INTERVENTION IN ACTION.

[fitkid]

Hedge funds, central banks, millionaires, billionaires

And CATFLAP

[warpig]

I like your analysis, but not the way you just treated fitkid, maybe you should stick to what you're good at. If anyone's set a bad tone, it was you.

 

I see the gold thread is being trashed again by the same nutter person most GEI users would like to see the back of

[Catflap]

I like your analysis, but not the way you just treated fitkid, maybe you should stick to what you're good at. If anyone's set a bad tone, it was you.

 

Anyone that trolls the forum and posts ranting garbage along with a load of irrelevant pictures or videos deserves what they get. We've been here before if you remember - not just once but three times involving GOM and fitkid trashing the forum and winding people up. Don't understand why you feel the need to back him up and accuse me of setting a bad tone - from my posts you'll probably see that I'm a reasonably mature and well balanced individual with a lot of interests and unique insights. I predicted the gold peak in June to the day/to within a day weeks before it happened and said that gold was likely to bottom in July not August - what is it exactly that you find so useful about fitkids posts that makes you so protective of him?

 

To be quite honest, I'm getting tired of all this - I did a long and detailed post to yourself a while back that you appreciated after you made some prickly comment. Now I think I won't bother anymore..... I just don't have time for this childish b***ocks anymore or for dealing with othe peoples (not directed at you btw) over-inflated egos. I stopped posting on the main board of HPC a few years ago to get away from these muppets.......

 

Have a good day.

[warpig]

If someone was bashing you, I would have stuck up for you as well. TBH you sound like you need a pint, I might join you...

 

Anyone that trolls the forum and posts ranting garbage along with a load of irrelevant pictures or videos deserves what they get. We've been here before if you remember - not just once but three times involving GOM and fitkid trashing the forum and winding people up. Don't understand why you feel the need to back him up and accuse me of setting a bad tone - from my posts you'll probably see that I'm a reasonably mature and well balanced individual with a lot of interests and unique insights. I predicted the gold peak in June to the day/to within a day weeks before it happened and said that gold was likely to bottom in July not August - what is it exactly that you find so useful about fitkids posts that makes you so protective of him?

 

 

 

To be quite honest, I'm getting tired of all this - I did a long and detailed post to yourself a while back that you appreciated after you made some prickly comment. Now I think I won't bother anymore..... I just don't have time for this childish b***ocks anymore or for dealing with othe peoples (not directed at you btw) over-inflated egos. I stopped posting on the main board of HPC a few years ago to get away from these muppets.......

 

Have a good day.

[warpig]

I have 640ml of Tiger beer sat in front of me...

 

[EDIT] 520ml...

[Perishabull]

And CATFLAP

 

Did you get lost on the way to www.housepricecrash.co.uk again?

 

Do you see that bar near the top of the screen, yes, that's it, it has www.greenenergyinvestors.com in it at the moment. What to do is click on that, and type in www.housepricecrash.co.uk, then press return. And voila, you will then be transported to a utopian world, full of like minded individuals.

[Catflap]

If someone was bashing you, I would have stuck up for you as well. TBH you sound like you need a pint, I might join you...

 

OK, thanks - I've just opened a bottle of Badger......

 

Edit - that's better ..... could do with a fag though!