GOLD

[azazel]

Hi ML, I'm good at the mo enjoying a life of leisure.... though will start manual labouring myself on a long time acquaintance's orchard next week for a month or so. Funds earned will go into a pretty flash metal [gold] detector, which will be put to work in the Central Otago/ Queenstown area this summer. Bring it on.

 

All you say in regard to "printing" I see as part of the equation. Other aspects such as the deflation of asset prices, and then currencies against gold, bring me to a novel view of things which seeks to accomodate both inflationary and deflationary aspects. The crucial point is that "money printing" will not lead simply to more money chasing goods and assets, and hence conventional inflation. Rather, QE adds to the debt burden on currencies/ economies, this in turn weakens currencies against gold [now being effectively monetized]. This at the international level. At the national level, continued debt deflation leads to the possiblity of fiat currencies appreciating against local assets [even as both depreciate against gold... assets doubly so]. Within this context, commodity prices could remain volatile, where they first spike on speculation [inflation expectations], and come off again with moments of deleveraging/ short-covering [deflation expectations].

 

The solution could be a matter of gold slowly and steadily rising to a market price where it effectively "recapitalizes" economies... and where it also becomes more economical to mine.

 

It's all relative, and depends on your perpective. I could [and do] say everything deflates against gold. Or, you could say the price of gold must inflate. But I think it's problematic to say that the price of everything must inflate [hyper-inflation]. This would involve saying asset prices [property/ stocks] etc will "go to the moon" [along with gold] which I think is highly dubious.

 

I think the current trend of these past few years will continue into the future, which makes gold even a good buy here for those that haven't yet bought.

The only asset I see falling in price will be property. Otherwise, energy and all commodities will inflate driving up labour costs. Interestingly, some sectors are prospering (Farming,mining) where others are struggling (Retail and services) and I would expect that to be reflected in stock prices.

[aliveandkicking]

The only asset I see falling in price will be property. Otherwise, energy and all commodities will inflate driving up labour costs. Interestingly, some sectors are prospering (Farming,mining) where others are struggling (Retail and services) and I would expect that to be reflected in stock prices.

 

there is also massive demand for products coming out of emerging markets. That could easily be

unsustainable unless they can develope their own consumer economies and trade amongst each

other which is pretty unlikely given their current dependance upon western consumption.

 

At the moment we see conditions changing in China. It could easily ripple into other emerging

nations and developed economies who have been largely saved from recessionary forces by for

example massive chinese demand. And of course the chinese like to gamble and own gold.

Copper looks very likely to fall considerably in price as the western recession deepens

and the situation changes in China. Silver

will follow and gold with it. People will simply move to the best commodity opportunity.

[Manual labourer]

Hi ML, I'm good at the mo enjoying a life of leisure.... though will start manual labouring myself on a long time acquaintance's orchard next week for a month or so. Funds earned will go into a pretty flash metal [gold] detector, which will be put to work in the Central Otago/ Queenstown area this summer. Bring it on.

 

All you say in regard to "printing" I see as part of the equation. Other aspects such as the deflation of asset prices, and then currencies against gold, bring me to a novel view of things which seeks to accomodate both inflationary and deflationary aspects. The crucial point is that "money printing" will not lead simply to more money chasing goods and assets, and hence conventional inflation. Rather, QE adds to the debt burden on currencies/ economies, this in turn weakens currencies against gold [now being effectively monetized]. This at the international level. At the national level, continued debt deflation leads to the possiblity of fiat currencies appreciating against local assets [even as both depreciate against gold... assets doubly so]. Within this context, commodity prices could remain volatile, where they first spike on speculation [inflation expectations], and come off again with moments of deleveraging/ short-covering [deflation expectations].

 

The solution could be a matter of gold slowly and steadily rising to a market price where it effectively "recapitalizes" economies... and where it also becomes more economical to mine.

 

It's all relative, and depends on your perpective. I could [and do] say everything deflates against gold. Or, you could say the price of gold must inflate. But I think it's problematic to say that the price of everything must inflate [hyper-inflation]. This would involve saying asset prices [property/ stocks] etc will "go to the moon" [along with gold] which I think is highly dubious.

 

I think the current trend of these past few years will continue into the future, which makes gold even a good buy here for those that haven't yet bought.

 

 

 

 

 

 

Hi RH,

 

Hope the detector brings you many great finds!

 

I can buy all what you say above; I think that is definitely a scenario that could play out and is playing out as we sit here!

 

I did think until recently, we would see a stagflationary period which we are seeing right now in the UK, and probably more so in the USA.

 

However the powers that be are frightened by what is panning out, there isn't enough gold for everyone so gold will rocket, but not until 1650 is taken out then probably a strong pullback to 1000 dollar area, hard to believe but the same could of been said about silver on its way to 50 THEN BACK DOWN TO low thirty's.

 

Anyway I digress, why I see hyperinflation of the dollar is because it suits the western world, they have lowered their interest rates to as low as they can, they have QE a fair amount!

 

Now the IMF tells the UK to QE more? Lower Taxes? The next will be large public overpriced unnecessary public works going on new motorways etc to inject billions into corporate hands raising share prices creating wage inflation and currency devaluation leading to a vicious circle of wage inflation pumping more and more into the retail economy, currency devaluation ( with the same happening in the USA) creating more import cost led inflation vicious circle again.

 

The purpose as I see it is to destroy the worth of fiat cash and hyper inflate external debt away? Any private savers will be decimated they will rush out of savings some into gold others into hard fixed assets,property shares of blue chip companies anything tangible other than cash. Private debtors will be saved by massive wage inflation, if I owe you a million on 100k a year and five years later I owe you a million on 200k I feel much better off especially if my asset I borrowed against has inflated to two million! Pension funds etc will rush to hard assets commodities property shares etc as they are banned from holding over a certain percentage of one asset gold silver etc they wont want to hold cash or fixed interest earning bonds.

 

They are so determined to protect debtors in Ireland if you pay off 100k in mortgage they give you a 10% bonus, or is it they the creditor can see hyperinflation on its way and the last thing you want to be is a creditor in a hyperinflationary environment when the cental bank/ government wont raise interest rates, due to the race to the bottom for Western currencies?

 

We are going through the stagflation stage now granted but the end game will be hyperinflation of western economies, to solve the west’s debt problem and more importantly even out the Eastern advantage of low production costs in the world, world trade is in for a very rough time?

 

China isn't building four new aircraft carriers for fun, I suspect to protect oil via Iran, Iran has been on West’s the radar for many years and when it tried to tie the barrel of oil to the price of gold instead of the dollar it took a step to far! It is going to get very volatile soon! China will want to protect it’s current assets bought with the hard earned cash they are spending. They are spending that cash as fast as they can. Unfortunately for them they can't spend it as fast as the USA can printmore and more and more of it and compete with them for other world assets!

 

Either way I agree with you a few ounces in a safe allocated fund in Switzerland will win win in either scenario!

 

I really hope you are right, your scenario sounds a lot easier to live through!

 

Regards

 

 

ML.

[Manual labourer]

The only asset I see falling in price will be property. Otherwise, energy and all commodities will inflate driving up labour costs. Interestingly, some sectors are prospering (Farming,mining) where others are struggling (Retail and services) and I would expect that to be reflected in stock prices.

 

 

I agree with that other than re falling UK property, interest rates of 0.5 percent, and inflating rents via inflated wages will keep UK property strong in sterling terms.UK Property has already dropped 50% in Dollar terms, the world ticks on Dollars at the moment? It won’t fall much more in Sterling terms! It HAS already crashed in gold terms and will drop further over the next five years!

 

Regards

 

ML.

[Pixel8r]

.

[azazel]

.

 

Good point...

[G0ldfinger]

DOUBLE POST.

 

Momentarily, I am reading "Red Capitalism" by Walter & Howie. Based on this, but also based on what I have seen elsewhere, I would advise everyone to stay clear off China. It is not worth the risk. The Chinese property bubble is way worse than anything ever seen in the US (in relative terms at least), and the financing is an unprecedented credit binge that makes Charles Ponzi look like a saint.

 

What will the outcome be?

 

Based on previous bubbles (Hainan etc.), this one will end in tears too, and the bad debt will be hidden just as cleverly as we do in the West. Given the size of the bubble this time round, and given the old bad debt of previous bubbles is still in the system, I can't see how China won't be forced to monetize. This will lead to bad inflation, most likely simultaneously with an epic property bust.

 

What will the Chinese investor do?

 

The only safe haven, with strong/hyper-inflation in necessities, and an epic bust in property and IMHO the stock market too, will be gold and silver. There will possibly be a gold & silver scramble coming in China of a kind the world has not seen before.

 

I think China will export its (hyper-)inflation, partially as a measure to ease it off inside the country, by means of FX adjustments and state subsidized price fixing of commodities (using their USD-reserves).

 

EDIT: BTW, as some people have possibly wondered, for various reasons, I will spend less time posting on GEI from now on.

[50sQuiff]

Nice charts. If I am following the stair stepping pattern correctly then the forecasted August low should be approx £100 higher than the Feb low. The Feb low was £825 so the forthcoming August low would be projected as £925. Thats a tiny 2% drop from here.

 

Is this how you are interpreting it? If not why not?

 

Is it the rising wedge that is of concern?

 

Cheers

 

Hi Doc, it was just a chart I made for my own use really, so apologies for the confusing lines. The green and purple horizontal lines merely represent time rather than a particular measured move. Each segment is exactly the same length and called for a peak on June 10. This pattern seems to repeat with amazing consistency. As I see it, red lines are the major support levels that we need to see hold if any breakdown from the wedge is to be a false break.

 

It also amazed me just how well sterling gold obeys key moving averages and support levels. Maybe it shouldn't have. But perhaps sterling gold can tell us more about the gold market than dollar gold? We'll find out soon I guess, because the sterling chart looks more bearish than the dollar chart I think.

[harold bishop]

 

 

EDIT: BTW, as some people have possibly wondered, for various reasons, I will spend less time posting on GEI from now on.

 

Sorry to read that. Always enjoyed and frequently found your posts most interesting.

[Errol]

http://expectedreturnsblog.com/the-future-gold-price/ - The Future Gold Price.

 

I like this blog. A good read and not just about gold, despite the name.

[LauraB]

 

 

EDIT: BTW, as some people have possibly wondered, for various reasons, I will spend less time posting on GEI from now on.

 

Now come on GF! - This shows an appalling lack of responsibility to your fans

 

 

Tongue-(firmly)-in-cheek outrageous statement, designed to shock the great one into changing his mind over his posting rate

 

Best wishes GF

[PricedOutNative]

Sorry to read that. Always enjoyed and frequently found your posts most interesting.

 

+1 I’ve been an avid reader back from your days at HPC!

[aardvark]

 

EDIT: BTW, as some people have possibly wondered, for various reasons, I will spend less time posting on GEI from now on.

 

i'm sorry to hear that GF.

you were the reason i started looking at gold in the first place, way back in the hpc gold thread heady days.

[frizzers]

Likewise

[dpmiller83]

Same GF. Always enjoyed and appreciated your insight and I've learned a lot from you (even if you don't know it!). Don't stay away too much, eh!?

[Ret45]

I agree. Your posts have great conviction. I hope your plays on oil work out great for you.

[andrew]

 

EDIT: BTW, as some people have possibly wondered, for various reasons, I will spend less time posting on GEI from now on.

 

OMG GOldfinger............

 

Your posts have been insightful and concise, an education to all who frequent this site.

 

I will, with many others here miss your most valuable contributions.

 

You have been of invaluable help to myself and family in navigating these increasingly troubled times.

 

I truly thank you for your great generosity of spirit.

 

You carry with you my sincere best wishes and gratitude.

 

Thank you.

 

AB

[chazza]

i'm sorry to hear that GF.

you were the reason i started looking at gold in the first place, way back in the hpc gold thread heady days.

 

+1

[malvern hills]

GF, you and Cg are the reason I and my family looked into pm's and why we are in a much better position now than we could have been.

I thank you for your efforts, and hold your opinion in the highest of regard. Whatever the reason for your posting less, I hope you will remember the many that have been helped by you,and are very grateful.

[azazel]

GF, you and Cg are the reason I and my family looked into pm's and why we are in a much better position now than we could have been.

I thank you for your efforts, and hold your opinion in the highest of regard. Whatever the reason for your posting less, I hope you will remember the many that have been helped by you,and are very grateful.

 

Yer me too. Im also glad of Goldfingers buy and hold advice as I would have been lousy at trading. Cgnao stark warnings and dramatic posting style spurred me into buying gold and silver and goldfingers sensible ratios to houses etc made a great case for gold. Thanks guys and please keep posting!!!

[Schaublin]

Yer me too. Im also glad of Goldfingers buy and hold advice as I would have been lousy at trading. Cgnao stark warnings and dramatic posting style spurred me into buying gold and silver and goldfingers sensible ratios to houses etc made a great case for gold. Thanks guys and please keep posting!!!

 

Another thank you to Goldfinger from me - a great source of information and excellent at countering claims from paper bugs and other fools.

[shawth]

Goldfinger,

 

Will you be posting on any other boards in future? It would be good to continue to get your views, even if it is not aon GEI.

 

...............oh for gawd's sake, come on man, spill the beans. tell us why you won't be posting on here any more?

 

Did you and Bubb have a bust up?

 

Can't take any more of AAK posts?

 

Do spill the beans! everyone wants to know the gossip!!

 

sorry for the poor taste post but this is the best bit of soap drama we have ever had on this board!

[Ret45]

Just been looking at Bloomberg - DOW down 180 pips, oil down 4 USD. Gold was fluctuating but now firmly up. I think this is a pattern we are going to see into the summer. load up on gold now!

[BelfastBoy]

Took an interesting photo while on holiday in New York recently...

 

[warpig]

"The best currencies - Gold & Silver!" on the front of NYSE... Own up, this must be photoshop'd....!