aliveandkicking

Maybe we should introduce a new term "nominal austerity"... In any case, inflation/deflation is largely irrelevant when we're discussing the price of gold, gold will rise in real terms if for no other reason, than as a safe haven. The 2008 panic caused all leveraged assets to sell off, I am certain this will be less pronounced should such a shock hit the system again. The stage is set, we're just waiting for the final act.

Silver i think fell to just over 9USD in the '2008 panic'? The next stage of the game is rising interest rates. UK and Euro rates are going to be higher by the end of the year. Euribor has spiked up a bit lately. Super low interest rates are becoming rarer all around the world. China has 19% bank reserve requirements. Rates are up already in many other countries. US rate rises really cannot be far away either. In the USA for example rent rises are happening in a significant number of areas and it will not be long before people prefer to buy rather than rent and the recovery there will be firmer and need holding back rather than having the extreme support it still has.

http://www.calculatedriskblog.com/2011/01/...high-price.html

You could be waiting decades for the final act.

If it talks like a deflationista and walks like a deflationists then it probably is a deflationista.

 

Having read your replies I noticed the doom gloom fantasy hyper comments (very unhelpful unless you want to have an argument rather than a debate) and noticed you clearly have no idea of my standpoint as you always spend too much time arguing with so many here and too little time learning - twas ever thus.

 

Cheers Paul we will leave it there.

 

edited

What you mean is unless people agree with you then they are totally ignorant. You might as well bury your head in the sand for all you can learn with that kind of narrow minded attitude to learning.

There is evidently a widespread stupidity on this board that if you are not a hyperinflationista then you are a deflationista. Intelligent discussion is therefore rendered impossible due to the never ending toxic approach taken towards anybody who dares disagree with the required belief system.

When did you take the road to Damascus?

 

Should I call you Saul or Paul?

It was always my road. You guys just like to ridicule anybody who dares interfer with your fantasies of instant gratification and certain doom to your advantage.

The money supply (inflation therof) has increased deramatically. Prices though which I think is where you get confused will always and have always lagged a growth in the money supply - inflation.

 

Show me one instance where a dramatic increase in the money supply has created an instantaneous increase in prices - don't bother because it has never happened it never will as it takes time.

 

Deflationists still barking up the wrong tree and always wanting instant gratification with respect to prices.

I am in inflationist. You are the one wanting instant gratification and your Austrian definition of inflation is just part of that. Apparently doom is inevitable because boom must turn to bust.

You guys also muddle up the meaning of money supply. Bank deposits at the central bank are not part of the money supply that sloshes around to form money in ordinary peoples possession.

But in all cases where governments have printed up the notes in peoples possession i think we can be reasonably confidant that prices rose almost immediately.

Your supposed certain doom and your hyperinflation is not going to explode out of nowhere. You are just going to carry on being wrong until you realise that. If all gold buyers were counting on doom at any moment we can reason the gold price is not going to go anywhere fast for a while to come - particularly while interest rates are beginning to rise all around the world.

it already is.

So you keep saying. Apparently hyperinflation will arrive by June 2008

China can't afford to finance the US and the European states, one of which will fail and take the other with it. If you factor in all of the [off]-balance sheet items they don't want you to factor in, there is nothing that can save the system. Perhaps in 2008 with stark austerity measures, but now the problem's just too big. Even central banks and the IMF are running out of money, it's insane and the only [short|medium|long] term solution is to print $$$'s. We are going to see more poverty, more rioting, more extreme bank bonuses, more violence and higher gold prices. The MSM insist gold is in a bubble and we are on the road to recovery... you don't believe this do you?

In our money system prices are always in a bubble that is further inflated by adding extra money. Therefore you would expect prices of all things to rise as the bubble is made bigger. Is gold in a bubble? Yes but everything is in the same bubble.

We are in a recovery but we are on life support also.

The debt explosion you talk about is a deflationary collapse. Look at lehmans to see what happens when people lose confidance in our credit system and you see that gold and silver plunged as did the price of just about everything.

Central banks cannot run out of money, they are not audited and we only get to read what they tell us.

I dont think austerity is going to go away. There is a huge problem of excessive system leverage that can only be solved by people being poorer. And so we see the Baltic dry at 2002 prices not necessarily because of a collapse in world trade but because of a bubble in shipping that enabled a bubble in ship builders wages and their houses and their savings. All things were in a bubble and even if the bubble is kept inflated the underlying problem of excessive leverage will take years and years to be resolved so that current system is safe and self sustaining and off life support.

Given such a background it is hard to see how inflation is going to take off because if inflation were to dramatically rise then the wages of the shipbuilders would rise as would the farmers wages as would the builders wages and landlords etc and for many the crisis would be over, and that is just too easy. People are instead going to struggle.

You're painting a very sedate picture of the current situation. It's clear you can't fix a debt based problem with yet more debt. It's obvious the only reason the financial system isn't in free-fall, is because of recursive bailouts and forced liquidity through central bank schemes. Even if China's offer was accepted, how many times will they throw good money after bad..?

 

Negative real interest rates and current economic instability still favors a much higher gold/silver price IMO.

China is only reinvesting the 'good' european money it gets by having a trade surplus when it buys bonds in Europe. It can if it wants buy engineering or food from Spain instead and the other side of the debt problem is the savings problem.

Why does it have to be about the dollar? What about the Euro and all of the contributory factors that support a stable currency? Europe is in a mess and it's getting worse by the day. You could argue that a failing Euro currency would be good for the dollar, but that's largely ignoring contagion/unintended consequences/black swans. I suggest whatever is bad for the Euro is good for gold. I am expecting either EU states to fail this year or the ECB turns to the printing press as an interim solution, much like the US. Either way this is good for gold IMO.

It was about the dollar because you produced a list of 110 analysts predicting gold prices in USD.

On the european side Iceland is doing ok, the nordics generally are doing ok, Germany is booming, the Footsie is over 6000 and a stronger US is likely to pull europe along with it. Countries like spain have some problems but the difficulties appear over rated - particularly when China has said it will support the region.

Ja, glacial. So slow, plenty of time to get ........

 

All it would take at this point is the Chinese to wave a finger and it's all over for the USD.

You must realise that without the US economy the rest of the world would tank and so would china. China will do all it can to support Europe the USA and other countries because they all have a joint future for many years to come.

On a macro level, the world's financial system is on life support. The reality of a contagious thermonuclear financial debt explosion, is certainly not priced in, because people can't picture what the world will look like when this happens.

Most people must be beginning to realise that dollar doom is not likely to happen by the end of 2011, when at this point in time retail sales there are only 0.2% below the 2007 highs and even the trade deficit and firms like GM are looking better.

It would easier to raise a counter argument, if you suggested what was likely, rather than what is unlikely. I presume you're talking about much lower gold prices based on your second statement...

The point is that 3000 is the lowest price of all 6 of those people. And 3000 seems very unlikely. I cant tell you what the price of gold is going to be at the end of 2011. But why is it going to more than double from now?

What are you expecting to see happen that is not already in the price?

These 6 Analysts Believe Gold Will Reach Parabolic Peak Sometime in 2011

1. Bob Kirtley: $10,000;

2. Patrick Kerr: $5,000 – $10,000;

3. James Dines: $3,000 – $5,000;

4. Taran Marwah: $3,000;

5. Bob Chapman: $3,000;

6. Jim Sinclair: $1,650 – $5,000 ($1650 by January 14, 2011 OR $3,000-$5,000 by June 2011);

3000 seems very unlikely by end of 2011.

Probably by the end of 2011 the various Central banks will be beginning to remove some of the money sloshing around in preparation for higher rates.

* It will come back by popular demand for something which performs the function of money better than printed or electronic 0's.

** You don't want money to be too rare...Platinum does not work as money (least, not as well as gold) for many reasons you have not bothered to research or think about.

You seem fond of the line that people who do not agree with you are ignorant and cannot be bothered to learn what you have learnt that is so important to you. But at least you are not ignoring me any longer.

Electronic money performs the function of money much better than gold, as much as gold performs the function of money better than electronic money.

Commodity money is irrelevant in our modern world and therefore platinum money is irrelevant.

All monies can be abused and none are perfect. Gold would bring no magic answers to transform peoples lives.

People are showing me information that gold and gold mining as a share of global financial assets [excl. gold] are still at an all time low of below 15% or so, while at previous peaks this ratio was over 100% (i.e. gold-related investments making up more than half of all financial assets at a gold market top).

 

No bubble in sight.

 

WE ARE STILL AT AN ALL TIME LOW FOR GOLD INVESTMENTS, FFS!!!!

 

(Sorry, but sometimes it has to be said loud and clear.)

At previous peaks there was a good chance or at least the belief governments would be forced back on to the gold standard. I really cannot see it happening. A government on a gold standard can always abandon that policy whenever it wants so gold standards and inflation targeting are essentially similar.

And 40 years ago there were not the same possibilities for investing that are available today for sophisticated investors and mums and dads and amateurs etc. People concerned about the price of gold today can move to something likely to give them what they think is a better return with less anxiety as they see the situation. Governments can hold uranium or just about anything else they think is a good store of value if they want to hold commodities.

Gold money is not coming back unless our current culture is replaced by something a bit more primitive.

So looking at historic levels of investing in gold is not likely to give you much of an idea about what is relevant now.

The fact that a top value credit card is a platinum card and just about anybody has a gold card reflects this simple reality.

Anyway for the time being gold looks like it is going lower again.

Look, they UK's current "austerity" still means a huge deficit while the economy is just in pain and retail price inflation is well and alive. Now you expect me the pound to strengthen against gold? I'd rather believe in Santa.

Gold is always going to strengthen against a currency that is constantly being devalued by design. The issue here is whether gold is overbought and due for a significant correction as better news comes thru and higher interest rates or at least monetary tightening is easily possible within 6 months time.

If a currency does not correct it creates irrational belief amongst buyers who committ more and more resources to speculate for higher and higher profits with greater and greater risk that a painful correction will eventually come.

They're all going to have a surplus suddenly! There will be real austerity!

 

Come on, you can't be serious.

You talk like nobody ever had to suffer thru a difficult recession.

It looks a little like some capping efforts are being made in gold, which looks a little as if ready to correct upwards.

Which is probably why the price will go lower. It is irrational to think the correct price is higher when against all expectations of the gold bugs economies are better than they were and monetary tightening is already happening in many parts of the world and might be only 6 months away from happening in the UK and USA.

Perfect timing! I am just now getting to move my pension cash into the gold SIPP!

 

$950, pretty pleaseeeeee!!

I promise to buy a few onzes at those levels

Still got a buy order out for 9 dollar silver as promised a while back.

The way I see it nothing has been resolved between surplus/ deficit economies... creditor/ debtor countries. All we see at present is a stimulus backed restoration of the old status quo. The imbalances will only build until we get an even worse crisis.

 

There needs to be a structural solution to the problem.... a rebalancing of trade by rebalancing currencies imo.

 

Thanks to the current currency system, the global economy can remain irrational longer than countries can remain solvent.

Adjustments are already happening and there needs to be flexibility while that happens.

The world is not created by law. It just exists and happens and an allowance has to be made for that reality rather than imaginining it can be engineered via some rigid mechanical process.

Modern currencies are whatever they need to be whenever they need to be, in the context of whatever they can be tolerated to be.

I think it has to do with both. Germany's exports are helped by a depreciated Euro. Chinese exports are helped by a credit boom. Do you think these exporting booms are sustainable given that they are only furthering the current imbalances in the global economy?

They are not booms. All they show is a recovery to conditions that are weaker than before the crisis as firms and people all around the world replace stuff they need to replace and get on with their lives in the expectation the world did not actually end in september 2008 while meanwhile exceptionally low interest rates are in place and only slightly higher rates will have a huge moderating impact.

The US also has had a reasonable recovery of imports and exports with a stronger currency.

To some degree it is just a recession and an inflationary one at present and it could go on for 10 years or longer.

Hyper-deflation now..... and what is going on is expected and predictable because the currencies of some countries depreciate against other more central/ reserve currencies. Currency depreciation gives a boost to exports. You need to look at it from an international/ currency relative perspective.

 

Because we live in a global economy, some currencies will strengthen and others weaken relative to each other... and all depreciate against gold [this is the essence of of hyper-deflation]. The export boom should be relatively short-lived due to wider problems and imbalances in the global economy; when demand falls off in developed countries where will developing countries export to? And there may be first a bust in booming economies before they manage to "decouple" and develop their own internal [alternative] markets.

 

This is all predictable with hyper-deflation glasses on. The difference between deflation and hyper-deflation theory is the first tends to be overly abstract and US-centric, whereas the second is more country specific, empirical, and international.

 

Weimar also enjoyed a boom in exports [at the expense of other countries] as the mark depreciated. It was noted by many commentators at the time that during the boom period unemployment was not a problem, whereas it was plaguing other countries.

 

 

Sure, "here" is relative... though I don't think Weimar-like cash hyper-inflation will happen anywhere.

 

 

If a hyper-inflationary comparison must be made it should be made with China not the US.... and once again the hyper-inflation is in credit:

 

http://www.latimes.com/business/la-fi-0907...8818,full.story

The economic bounce has generally almost nothing to do with exchange rates and generally everything to do with the absense of a collapse in credit.

Some economies are enjoying a boom in exports. How can this be sustainable when many economies are ina continued slump.

You talk about 'here'. I am in Finland and you are in Korea.

In Finland Korean products are selling well. Samsung cell phone adverts are everywhere and they look much better than Nokia, then there are those flat screen TV's which seem very cheap for what used to be a very large screen of 40". My previous TV back in NZ cost 1500 NZD for a 36? inch. An equivalent flat screen would be maybe a third of the price - everybody is converting now. Old CRT sets are more or less junk.

And Finnish exports and imports are up 40% since last year - but probably still down from before the crisis.

Then there very low interest rates. People must have loads of money if they are working.

Evidently you have your deflationary glasses on. But meanwhile deflationary fears are behind the stimulus and super low interest rates - how can there not be a boom for some economies??

And deflation in the USA will mean just more QE and stimulus. In the USA Retails sales and imports and exports have recovered almost to pre crisis levels - plenty of the profits from overseas manufacturing are American.

What actually do you expect to be happening when this is going on????????

It always seems to me that the purpose of your posts is to, in some way, violently replace our own thoughts with your own ones which you have decreed are the correct ones.

InternationalRockstar

You have said the above is an ad hominem

but:

In reality, ad hominem is unrelated to sarcasm or personal abuse. Argumentum ad hominem is the logical fallacy of attempting to undermine a speaker's argument by attacking the speaker instead of addressing the argument. The mere presence of a personal attack does not indicate ad hominem: the attack must be used for the purpose of undermining the argument, or otherwise the logical fallacy isn't there. It is not a logical fallacy to attack someone; the fallacy comes from assuming that a personal attack is also necessarily an attack on that person's arguments."

So now you wish to impose the reality upon me that you are correct about your use of adhominem and i am wrong as if nothing i have said has any merit and it is simply illogical and abusive.

And as i said it always seems to me that you are not interested in discussion but you just want to tell us you are right.

Your use of the word adhominem to attack me rather than my argument is just an ad hominem by you.

nonsense.

 

the markets exist first.

 

then the statists come along to try to take a cut of each transaction, by force.

 

 

 

FFS stop repeatedly posting this false dichotomy of 'gov't imposed currencies' or 'barter'

 

 

 

the purpose of gov't is for those in gov't to pillage those who are not.

It always seems to me that the purpose of your posts is to, in some way, violently replace our own thoughts with your own ones which you have decreed are the correct ones.

Dr Bubb is the government here on this board. He violently removes offending posts and posters.

Your posts never seem to invite discussion. You just seem to decree the truth and then object to all reasons why you can be wrong.

A market for example is made of people. People have natural leaders. Some are born leaders and others can grow into the role. But it appears you have some while back decreeded that only individuals matter and that only slaves have leaders.

Which then brings me back to the way you come over as a tyrant who wishes to impose his reality upon others.

I have tried to talk to you about this before but it appears i cannot get thru your latin based pre programmed filter that produces the text 'ad homiem'.

Essentially you appear to follow a philosophy of anarchism but you dont seem much interested in philosophy or love or learning which suggests that rather than being philosophical you are close minded and prefer to create your own knowledge.

That doesn't look like popcorn.

I seem to be in two minds about all of this stuff