Gold Bulls - "Clawing the Sky" as prices fall

[carbon junkie]

It's fine to have paper currency but the rate of money supply increase has to be capped at 2% a year AND NO MORE.

 

Unfortunately the people in charge have shown themselves to be incapable of this self-regulation. They've been increasing the money supply at percentages in the teens for years. Decades even.

 

The closing of the gold window in the 1970's spelled the death knell for the dollar. It's only a matter of time.

Agreed, all of the above, but politicians generally only reflect the wishes of the electorate to some extent (they do also help to limit the choices available as well).

 

In essence when the medicine needs to be taken democracy doesn't work so well.

[Methinkshe]

RH,

 

I'm wondering.....

 

I think it's Hotairmail who has posted on several occasions about harmless bubbles - can't remember who he's quoting, though.

 

I wonder whether a gold bubble is just such a one.

 

Encourage a speculative bubble, especially in physical gold which will be hoarded and not spent into the economy, pop the bubble and, hey presto, an instant liquidity drain to counteract queasing and no harm done - except to the personal wealth of gold-bugs, but who ever cared about that?

 

 

 

 

[romans holiday]

RH,

 

I'm wondering.....

 

I think it's Hotairmail who has posted on several occasions about harmless bubbles - can't remember who he's quoting, though.

 

I wonder whether a gold bubble is just such a one.

 

Encourage a speculative bubble, especially in physical gold which will be hoarded and not spent into the economy, pop the bubble and, hey presto, an instant liquidity drain to counteract queasing and no harm done - except to the personal wealth of gold-bugs, but who ever cared about that?

I think a bubble is forming in near everything at the moment thanks to the reflationary efforts of CB's. Even if gold is being bought by "hot money" here as the new commodity of choice.... pushing up the price, I don't think that gold, in the larger scheme of things, is in a bubble. I think it would be fairer to say it could be getting "frothy" with the price being vulnerable to a correction on a market reversal [deleveraging]. But I think this kind of [potential] instability is the prime reason why gold is being bought by the more savvy investors and CBs, so the price should recover quickly. The thing is gold is being bought by different players for different reasons here, so though the price might dip, it will be supported on both the risk and safety trade. A while back I was wondering about all the talk of gold being in a bubble:

 

http://www.greenenergyinvestors.com/index....st&p=142389

................ investors [thinking of the CNBC crowd] are left scratching their collective heads and wondering if gold is in a bubble. Yet, how can gold be in a bubble when such an internationally desired commodity is well off its highs in the more “peripheral” currencies? The far better explanation, and one only a small fraction of investors have come to as of yet, is that gold is behaving like a [commodity] currency here, and is priced high with other commodity currencies relative to central reserve currencies. So, simply put, gold is in the process of monetization by investors and CBs, and its behavior reflects that of a commodity currency at the moment. That said, I wouldn’t be surprised to see gold also come to behave like a reserve currency and not plunge in tandem, or to the same extent, with the commodity currencies when/if capital flows reverse from the periphery to the centre. The main point is to think of it as a currency and perhaps even more than a currency in the end as governments in desperation may have to price/ stabilize currencies to gold, that is re-institute a gold standard.

 

......The way I see it, the problem the world faces now is one of uncertainty on how to value assets.... and then how to measure the value of those assets, that is, how to value currencies themselves [that which is supposed to be doing the valuing] relative to eachother. With currencies themselves traded as commodities, they are also caught up in the "problem of valuation" similiar to assets [the worth of that cash you have is completely contingent on increasingly volatile behaviour in the fx market]. I have referred to this as hyper-deflation where economic value gets on a slippery slope and erodes from all paper assets. If this process starts to feed on itself in a deflationary spiral then gold will be re-instituted as the bedrock of value... it will price/ stabilize currencies, which in turn will price assets.

 

This is also why I doubt gold could ever really go parabolic, and why the dollar could not go to zero. Before that happened, gold would fix or price the dollar. But then I do not think a gold exchange standard would be re-instituted because of a burgeoning hyper-inflation but because of increasing instability between currencies due to capital flows/ flight. Protectionist policies and capital controls would only lead to de-globalization and further deflation in economies. The only way out of this quagmire may be the ultimate capital control of an international gold exchange standard. It would restore stability, fix the value of currencies and prices at appropriate levels and enable the renewal of global trade. Necessity is the mother of rediscovery.... the first era of globalization lasted a good century and was based on a gold exchange standard.

[hotairmail]

I think a bubble is forming in near everything at the moment thanks to the reflationary efforts of CB's. Even if gold is being bought by "hot money" here as the new commodity of choice.... pushing up the price, I don't think that gold, in the larger scheme of things, is in a bubble. I think it would be fairer to say it could be getting "frothy" with the price being vulnerable to a correction on a market reversal [deleveraging]. But I think this kind of instability is the prime reason why gold is being bought by the more savvy investors and CBs, so the price should recover quickly. The thing is gold is being bought by different players for different reasons here, so though the price might dip, it will be supported on both the risk and safety trade. A while back I was wondering about all the talk of gold being in a bubble:

 

http://www.greenenergyinvestors.com/index....st&p=142389

 

I'm starting to worry about a world where yields tend to zero - and unlike in Japan, there is no yield chasing possible via a carry trade. What do you do with your money then?

 

 

EDIT: Methinkshe:I was quoting an economic adviser at the Fed - Mishkin. Read in the ft.

 

http://www.ft.com/cms/s/0/98e7c192-cd5f-11...144feabdc0.html

 

You might need a registration. It is also here and elsewhere....

 

http://www.businessinsider.com/henry-blodg...armless-2009-11

[aliveandkicking]

I get the clear impression many here have lost reason about gold.

 

It is a metal like copper is a metal. Without humans wanting to use it then it is just a useless yellow metal.

 

People are holding gold to use it later. Even if they never use it they are using it to sleep more soundly. Others buy it to sleep more soundly because they know others want to use it

 

Without use it is nothing.

 

Gold has always been valueable to humans because it has such fantastic qualities in art and metal work and so forth. It was great for example to make a cup that never tarnished or could be spread in tiny amounts via gold leaf over large works of art of importance. Gold leaf so thin it could be seen thru could be created because of the fantastic properties of Gold

 

Without this future use gold is just a useless thing of no value and thus no different to a rock of no value.

[Schaublin]

I get the clear impression many here have lost reason about gold.

 

It is a metal like copper is a metal. Without humans wanting to use it then it is just a useless yellow metal.

 

People are holding gold to use it later. Even if they never use it they are using it to sleep more soundly. Others buy it to sleep more soundly because they know others want to use it

 

Without use it is nothing.

 

Gold has always been valueable to humans because it has such fantastic qualities in art and metal work and so forth. It was great for example to make a cup that never tarnished or could be spread in tiny amounts via gold leaf over large works of art of importance. Gold leaf so thin it could be seen thru could be created because of the fantastic properties of Gold

 

Without this future use gold is just a useless thing of no value and thus no different to a rock of no value.

 

 

I agree with you - if there were no human beings, gold would have no value

 

Fulminating against people's desire to own gold is about as effective as preachers warning against the perils of fornication.

 

Next

[Errol]

I'll go with the 4000+ years of history, thanks.

[aliveandkicking]

I agree with you - if there were no human beings, gold would have no value

 

Fulminating against people's desire to own gold is about as effective as preachers warning against the perils of fornication.

 

Next

 

Aliens will still value golds ability to reflect light and ability to be fashioned into very thin sheets of metal as well as its electrical conductivity.

 

Gold does not require preachers to give it value

 

But without use it is useless and needs black magic to elevate it

 

[Schaublin]

Aliens will still value golds ability to reflect light and ability to be fashioned into very thin sheets of metal as well as its electrical conductivity.

 

Gold does not require preachers to give it value

 

But without use it is useless and needs black magic to elevate it

 

I did not say that preachers give value to gold - FFS read the posts before replying - also, be advised that precisely because gold has no real uses it is the ideal metal to use as money. That and the fact that is in very short supply and takes a lot of energy to find and mine it. That was figured out many thousands of years ago - haven't you caught on yet?

[aliveandkicking]

I did not say that preachers give value to gold - FFS read the posts before replying - also, be advised that precisely because gold has no real uses it is the ideal money

 

I read your post

 

I can see you are being irrational about gold if you think it is valueable because it is not used

 

At the time of building of the pyramids iron was more highly prized than gold. Iron was only made by the Hittites who guarded the secret of iron. Gold could not cut stone. Gold could not be used to defend against iron.

 

As money gold is inflexible. Gold as the only money has not been the only money for hundreds of years.

 

What do you know of money?

 

Not so much i think from what i can see so far.

[Schaublin]

I read your post

 

I can see you are being irrational about gold if you think it is valueable because it is not used

 

At the time of building of the pyramids iron was more highly prized than gold. Iron was only made by the Hittites who guarded the secret of iron. Gold could not cut stone. Gold could not be used to defend against iron.

 

As money gold is inflexible. Gold as the only money has not been the only money for hundreds of years.

 

1.What do you know of money?

 

Not so much i think from what i can see so far.

 

I suggest that you go to a bank and try to convince them that it is sheer foolishness to hold gold bars - tell them that some nice pig iron would be better. If I were the only person in the world that valued gold, then that would be irrational - but there are hundreds of millions who, annoyingly, insist that gold is valuable too! If you can convince the rest of the world that your reasoning is sound, then I will change my mind.

 

I reiterate: gold is used as money precisely because it has no other uses.

 

1. I know the difference between the grubby, practical world of reality and theoretical ideas about how the world should be - unlike you, it appears.

[aliveandkicking]

I suggest that you go to a bank and try to convince them that it is sheer foolishness to hold gold bars - tell them that some nice pig iron would be better. If I were the only person in the world that valued gold, then that would be irrational - but there are hundreds of millions who, annoyingly, insist that gold is valuable too! If you can convince the rest of the world that your reasoning is sound, then I will change my mind.

 

I reiterate: gold is used as money precisely because it has no other uses.

 

1. I know the difference between the grubby, practical world of reality and theoretical ideas about how the world should be - unlike you, it appears.

 

Do you actually believe gold has no use?

 

I cant believe you are that stupid

 

So why do you say it?

 

Edit: It seems you have misread what i said and you believe i am saying that gold is not valueable. Several times i said Gold is valueable - even to Aliens. Gold is intrinsicly valueable. But so is copper or iron and so forth. Gold is valued because of it properties and its useage. I said without use it has no value.

[Schaublin]

Do you actually believe gold has no use?

 

I cant believe you are that stupid

 

So why do you say it?

 

I wish I had not started this ridiculous conversation with you now. Despite the best efforts of many knowledgeable posters here on GEI, you keep on recycling the same tired, discredited ideas and instead of thanking your interlocutors, you abuse them. Please swallow your pride, admit you know nothing, and start to learn - it is never too late.

[aliveandkicking]

I wish I had not started this ridiculous conversation with you now. Despite the best efforts of many knowledgeable posters here on GEI, you keep on recycling the same tired, discredited ideas and instead of thanking your interlocutors, you abuse them. Please swallow your pride, admit you know nothing, and start to learn - it is never too late.

 

As i pointed above it appears you have misunderstood what i said

 

Gold is valueable.

 

But without use it is of no value.

 

Of course gold is used!!!! I have had a gold tooth crown for 33 years with no repairs. It is the best material for rear jaw crowns in the world.

 

The gold price cycles thru the seasons because of the jewelry trade and so forth

 

Gold is used in the electronics industry

 

Etc etc etc

 

[romans holiday]

At the time of building of the pyramids iron was more highly prized than gold. Iron was only made by the Hittites who guarded the secret of iron. Gold could not cut stone. Gold could not be used to defend against iron.

Ah, yes but the great Ramses secured the Egyptian empire with gifts of gold to foreign kings as they in turn offered tribute. This was the begining of diplomacy. It could be argued that gold played quite a part in the development of civilization.... perhaps even more than "reason".

[romans holiday]

I'm starting to worry about a world where yields tend to zero - and unlike in Japan, there is no yield chasing possible via a carry trade. What do you do with your money then?

Ummm... save it?

 

In the best currencies of course.

[drbubb]

 

Gold-$1140

 

 

I wonder how the Piper's coffee tastes today?

[mSparks]

I did not say that preachers give value to gold - FFS read the posts before replying - also, be advised that precisely because gold has no real uses it is the ideal metal to use as money. That and the fact that is in very short supply and takes a lot of energy to find and mine it. That was figured out many thousands of years ago - haven't you caught on yet?

real use = real value.

gold has one historic use that is still going strong.

keeping the great unwashed in their place at the bottom of the cesspit of subordination.

[grumpy-old-man]

 

Gold-$1140

 

 

 

I wonder how the Piper's coffee tastes today?

 

Bubb, you really don't understand what's going on or coming do you?

I am very surprised because you do this as a living, professionally......

 

Everyone was expecting a pullback iirc.......

[aliveandkicking]

Bubb, you really don't understand what's going on or coming do you?

I am very surprised because you do this as a living, professionally......

 

Everyone was expecting a pullback iirc.......

 

There were a whole group of people here making discussion impossible by endlessly repeating that either:

 

1. gold was going to the moon as a certain 100% fact

 

2. Economies like the UK and USA were about to implode by next week or by June 2009 or some definate period that was so close you had to buy gold to protect yourself.

 

Plenty of rampers and shills but few cool heads.

 

Cool heads were constantly abused and pissed upon as if they were idiotic degenerates

 

And now we are led to believe that everyone thought gold would fall in price

 

 

[grumpy-old-man]

There were a whole group of people here making discussion impossible by endlessly repeating that either:

 

1. gold was going to the moon as a certain 100% fact

 

2. Economies like the UK and USA were about to implode by next week or by June 2009 or some definate period that was so close you had to buy gold to protect yourself.

 

Plenty of rampers and shills but few cool heads.

 

Cool heads were constantly abused and pissed upon as if they were idiotic degenerates

 

And now we are led to believe that everyone thought gold would fall in price

 

yep, it's not going up in a straight line now is it.....

 

I'm not worried as I hold only physical.

 

for thiose who are trading paper gold.

 

 

[drbubb]

Bubb, you really don't understand what's going on or coming do you?

I am very surprised because you do this as a living, professionally......

 

Everyone was expecting a pullback iirc.......

 

?? yeah.

Where. Not on this website.

Just go back and read all the predictions of $1300 and even $2000 and higher here.

 

I think you know that I have been slowly selling down my mining shares since the summer, and am sitting

on a record amount of cash. About half of my "profits" since the beginning in puts. If they go to zero by

the Dec and Jan expires I will be sourly disappointed, but still up on the year.

 

I rather think this present move down in gold and stocks will suit me, and I am in a powerful position

to take advantage of it.

 

If you think I "really don't understand what's going on or coming", I suggest you listen to my podcast

on FBB and then compare it with those on FS and Howe Street, and then maybe you will see who the

professionals are

 

 

How are you doing, GOM?

Sitting on US dollars and watching them rise? Or are you hoping that Gold will hold above $1100?

[grumpy-old-man]

?? yeah.

Where. Not on this website.

Just go back and read all the predictions of $1300 and even $2000 and higher here.

 

I think you know that I have been slowly selling down my mining shares since the summer, and am sitting

on a record amount of cash. About half of my "profits" since the beginning in puts. If they go to zero by

the Dec and Jan expires I will be sourly disappointed, but still up on the year.

 

I rather think this present move down in gold and stocks will suit me, and I am in a powerful position

to take advantage of it.

 

If you think I "really don't understand what's going on or coming", I suggest you listen to my podcast

on FBB and then compare it with those on FS and Howe Street, and then maybe you will see who the

professionals are

 

I had a post from last week where I said gold may finish @ $1150 on the day & that I wasn't worried. I can't find it now.

I have just spent the last 15 minutes looking.

I haven't posted much lately so I didn't have much to search through.

 

 

[grumpy-old-man]

How are you doing, GOM?

Sitting on US dollars and watching them rise? Or are you hoping that Gold will hold above $1100?

 

hee hee, you make me laugh Bubb. You're actually being serious aren't you ? :lol:

[drbubb]

hee hee, you make me laugh Bubb. You're actually being serious aren't you ? :lol:

 

My own dollar purchases are now in profit.

What are you laughing about? Do you think this dollar rally is done already?