GOLD

[warpig]

I know what your thoughs are and you're entitled to them, but we will have to agree to disagree.

 

Interesting analogy given the natural resource limitations the world is facing.

 

I have explained elsewhere why I think that PMs as global money are as relevent today as horses are to transport. Of course I may be wrong, but I just see no evidence that a) they would make a good money, and b ) that the market takes this view or is likely to any time soon.

 

edit: I do not see an end to the credit crunch btw. The situation is a total mess. My main disagreement with many here is on how bullish this is for PMs, not the underlying situation

 

[Steve Netwriter]

It is ludicrous to say gold was in a bubble.

 

A bubble involves a manic phase where everyone is certain it is a sure bet. Anyone who could, and many did due to easy credit, bought houses without even bothering to ask what the real value of them were. People were "panicked" into buying and lost sight of fundamentals.

 

A bubble does not form when some see something as a sure bet, but when most do. This is what causes prices to become over-inflated.

 

The general public know next to nothing about gold, when they do maybe then you could talk of a bubble.

 

 

Anyone who did their homework on gold should not too concerned with the volatilty we have seen. Rather, it was to be expected. We will continue to have a deflationary period which will most probably be followed by an inflationary period after the election.

 

I quite agree.

 

[Gatesy]

here's a quite bizarre piece I picked up from the kitco forum - link to $ to gold at $500 per ounce? I wouldn't have thought there was anything like enough gold for that..

 

http://www.realclearmarkets.com/articles/2...ize_the_do.html

 

My bill will not put America on the gold standard, like we had in the early part of the 20th Century. Under the old gold standard, gold was money. Limiting the supply of money to the supply of gold was a huge mistake. It was the basic error that caused the Great Depression.

 

Under my bill, our money will be the same “legal tender” currency that we have now. There will be no limit on the number of dollars except market demand. The big difference will be that every dollar will always be worth the same as one five-hundredth of an ounce of gold.

 

When I became a Congressman, I took an oath to uphold the Constitution. The Constitution commands Congress to regulate the value of our money. My bill will do this. This is why it is essential that it become law.

Representative Poe, a former judge, is a member of Congress serving the 2nd district of Texas.

 

To me a "half gold standard" as proposed doesn't solve the problem of a fiat system and such a system would not be workable on a global scale either. TPTB would still be in charge of the money supply, even if there was a well intended objective at the outset to control the money supply in relation to the demand for money/goods and services in the (global?) economy. That's how fiat systems start but the temptation to manipulate for political means and greed is too much to resist and the system will start to fail. To me the reference to gold at $500 is a red herring and an irrelevance to the propsed system which is actually just suggesting managing money supply in relation to goods and services.

 

IMO in an ideal world the best system would indeed be a floating/flexible money supply which does alter in relation to the demand for money (via goods and services), and probably not a gold standard. The main reason I believe a gold standard is not ideal is because with only a 2% or so supply increase per annum it will not always be able to keep up with economic growth and demand for money, hence acting as a drag on growth, limiting capital when it is needed. However, as long as humans are involved in this world it will not be ideal, and as such a gold standard is far better than a fiat system or half way house which will likely always be manipulatted.

[romans holiday]

I'd argue that the rise to $1000+ wasn't really a bubble - a large part of the rise was an overdue correction, whether it overshot at the end or not is hard to say.

 

However I think what you say above is too restrictive as to what could be defined as a bubble. Bubbles don't have to involve the whole population to count. Property is obviously a market that a large part of the population are involved in. But you can have huge overpricing in a market based on speculative froth even if it is a fairly small proportion of the population who are interested in the first place.

 

Yes, I see your point. I believe the word "bubble" is being overused today. Where no one saw any bubbles a few years back, now they are suddenly everywhere! The new buzz word. In my opinion there has not been a lot of genuine bubbles in history. They are relatively few and far between and wreak economic havoc.

 

"Speculative froth" involves something far more common than a genuine bubble. For example, oil at $150 involved speculative froth but only the talking heads thought it was in a bubble.

 

 

Hmmm... once again we are getting down to the definition of words. Important nevertheless

[Steve Netwriter]

Dear Friends,

 

I wanted to express my appreciation to all those who took time to write in and thank Jim for the time and effort he has expended educating people about the gold market.

 

What we are seeing today in the broader market is unprecedented in my experience and I'm sure Jim's as well. I would encourage everyone to keep focused on the Big Picture which is set to play out over months and years rather than this period of market turmoil we are going through.

 

Sincerely,

 

David Duval

 

 

I would like to express my thanks to Jim as well. But in order to avoid burdening him further, I decided not to email him my thanks.

 

Considering how much he does, and doesn't even get paid for it, I think he provides a terrific service.

 

[Steve Netwriter]

The main reason I believe a gold standard is not ideal is because with only a 2% or so supply increase per annum it will not always be able to keep up with economic growth and demand for money, hence acting as a drag on growth, limiting capital when it is needed.

 

Maybe we need to get away from the assumption that we should have growth.

 

Maybe it's more important to think about a system that would work well in a prolonged contraction, followed by stability.

 

The idea being that growth is not sustainable on a finite world.

 

[TinBrick]

I have explained elsewhere why I think that PMs as global money are as relevent today as horses are to transport. Of course I may be wrong, but I just see no evidence that a) they would make a good money, and b ) that the market takes this view or is likely to any time soon.

 

The "barbarous relic" argument has some merit and it is indeed hard to see how we would return to gold backed currencies anytime soon. However, if gold is not "good money" why do central banks continue to hold large stockpiles (notwithstanding sell offs in recent years) and why does the market place any value at all on it, especially given that its actual usefulness as an industrial metal/commodity is very limited?

[Magpie]

Maybe we need to get away from the assumption that we should have growth.

 

Maybe it's more important to think about a system that would work well in a prolonged contraction, followed by stability.

 

The idea being that growth is not sustainable on a finite world.

 

I agree with that. The amount of money can expand exponentially forever, but our use of resources and our population can't. So we need to start looking for a model that also works with stable or declining resource use and population, which means giving up on the idea of eternal economic growth.

 

[wrongmove]

The "barbarous relic" argument has some merit and it is indeed hard to see how we would return to gold backed currencies anytime soon. However, if gold is not "good money" why do central banks continue to hold large stockpiles (notwithstanding sell offs in recent years) and why does the market place any value at all on it, especially given that its actual usefulness as an industrial metal/commodity is very limited?

 

That is why it is called a barbarous relic, rather than just barbarous!

 

Banks hold many assets, of which gold is one. And as you say, they are selling off now. This has to be done slowly, just dumping the lot would trash the price. There is definitely a market for "bling", and probably always will be, although overly high valuations threaten even this. (e.g. Gold is Old)

 

I am not trying to say that gold doesn't have its place in a portfolio (including the banks). If I was as loaded as a bank, I would probably have 5-10%. What proportion of their "wealth" do CBs hold as gold? Are there any reliable figures for this?

 

 

 

[romans holiday]

Maybe we need to get away from the assumption that we should have growth.

 

Maybe it's more important to think about a system that would work well in a prolonged contraction, followed by stability.

 

The idea being that growth is not sustainable on a finite world.

 

I think you have hit on something significant here. Economic growth has become the rationale for social organisation. Perish the thought that we will have a recession!

 

I suspect it has something to do with the creation of debt money and keeping the general populace well disciplined, productive and devoid of leisure for thinking.

[Steve Netwriter]

From the Ian MacDonald interview, I thought this was funny:

http://www.netcastdaily.com/broadcast/fsn2008-0906-3a.mp3

 

Qu. Where's the price of gold headed ?

 

Ans. As the Govt. of Dubai we don't like to put out price forecasts, but, production is falling worldwide, central bank sales are falling, and demand is growing, so a kindergarten kid could tell you where the price is going. The trend is still up even though we've had a good healthy correction.

 

[romans holiday]

In an overly-civilized world, maybe a bit of barbarism is a good thing.

[Steve Netwriter]

I think you have hit on something significant here. Economic growth has become the rationale for social organisation. Perish the thought that we will have a recession!

 

I suspect it has something to do with the creation of debt money and keeping the general populace well disciplined, productive and devoid of leisure for thinking.

 

Like a room full of monkeys, I do sometimes say something interesting

 

I've been trying to get my head around this whole area, prompted by the Chris Martenson vids.

Hence this first attempt:

 

Climate Change, Carbon Credits & Peak Oil

Why Carbon Credits are the Wrong Solution

http://www.greenenergyinvestors.com/index.php?showtopic=4101

 

I've been distracted from this recently, but I hope to solve all the worlds future problems some time soon :lol:

 

[wrongmove]

In an overly-civilized world, maybe a bit of barbarism is a good thing.

 

 

Repeats of Gladiators fill that niche, IMHO (Not to mention the extremely uncivilised conditions endured by many of the world's population)

[tinecu]

http://www.marketoracle.co.uk/Article6215.html

 

worth read

 

Summary: Gold's good either way....

 

BTW: The Yen is 'out-rallying' the Dollar....

 

http://newsvote.bbc.co.uk/1/shared/fds/hi/...welve_month.stm

 

Carry trade meltdown? Hence liquidation of PMs?

[romans holiday]

Well, this may be the first time that I have ever traded gold [aready heavily invested ]

 

The Indian festival Diwali arrives soon and gold always moves up in this period. I am thinking of a reverse fishing line.... buy a few ounces on this dip [perhaps around 700] then sell on the coming rise [i wonder if I will be able to bring myself to sell].

 

I have enough in gold at the moment but find it hard to resist at these prices.

[Steve Netwriter]

Extraordinary Measures Today, a Financial Funeral Tomorrow

by Kurt Kasun | PUBLISHED: September 09, 2008 AT 7:14 PM

http://www.greenfaucet.com/the-market/extr...-tomorrow/94888

 

I wish I was referring to Fannie and Freddie in the title of this piece, but because those institutions are being resurrected, the funeral I am waiting for is the one for our entire fiat-based system. We are now on the brink of a collapse in confidence that brings the whole world financial system to its knees. Each market intervening action is becoming more extraordinary. The rallies which pull the suckers in following the intervening actions are becoming more brief and less powerful. I expect this one to be no different. This sequence has now become a broken record. Markets threaten to take out technical support levels and the government comes to the rescue. Armageddon is avoided until another day and a relief rally ensues on the belief that the government has fixed the problem a new bull market can begin. After all, this is how investors have been conditioned over the last three decades.

[romans holiday]

Extraordinary Measures Today, a Financial Funeral Tomorrow

by Kurt Kasun | PUBLISHED: September 09, 2008 AT 7:14 PM

http://www.greenfaucet.com/the-market/extr...-tomorrow/94888

Lehman and WaMu are on the edge. Will the Fed step up to the plate? Or let them fail?

 

Double post.

[tinecu]

Extraordinary Measures Today, a Financial Funeral Tomorrow

by Kurt Kasun | PUBLISHED: September 09, 2008 AT 7:14 PM

http://www.greenfaucet.com/the-market/extr...-tomorrow/94888

 

Seems I beat you to it...

 

I bet you are pleased about the Yen.....where is your thread on it? I can't find it with the silly search on the board.

[plan9]

Economic growth has become the rationale for social organisation. Perish the thought that we will have a recession!

 

I suspect it has something to do with the creation of debt money and keeping the general populace well disciplined, productive and devoid of leisure for thinking.

(My understanding of it)

 

If money is created from debt, and lent at interest, then where does the interest come from?

 

If all the debt money is represented by 1.0, and lent out at 2% interest, then 1.02 money is required to service that debt. So (by my understanding of it) economic growth must be at least 2% (the 0.02) otherwise some people will default (1.0 money in existance, 1.02 needed to replay).

 

Keep spinning that wheel hamster boy!

[romans holiday]

Who said that man was not an animal to be farmed?

 

An economic collapse would also be a regeneration of ourselves.

[kernull]

hey guys, there is a possible take over LEH & WM by FED on this weekend, so , the $USD rally may be ending with a gold spike on sunday market open. (take your own risks for course)

[romans holiday]

hey guys, there is a possible take over LEH & WM by FED on this weekend, so , the $USD rally may be ending with a gold spike on sunday market open. (take your own risks for course)

 

This may lead to further dollar strength with panicked investors and hedge funds flying even faster to "quality" . Absurd isn't it!

 

For those with dry powder, it could be an excellent buying op.

 

The decline of the dollar may be left waiting in the wings for a few more months. Then the fun will really begin.

 

 

[Gatesy]

Maybe we need to get away from the assumption that we should have growth.

 

Maybe it's more important to think about a system that would work well in a prolonged contraction, followed by stability.

 

The idea being that growth is not sustainable on a finite world.

Yep, I don't disagree with that or the others comments on this. I think the consequences of an economy which does not seek growth need to be thought through very carefully however in terms of social consequences. I guess everything from population figures to matters of choice in goods and services various markets would need to be considered in an attempt to ensure everything stayed just finely balanced at the right levels of activity. Sounds a it like a command economy.... But maybe to get to that brave new world a small step would be going back to a gold standard whereby we could get used to the limitations on growth which may be ultimately necessary to achiev the new model you propose.

[gwizzie]

Can someone explain:

This.....

 

 

 

 

And This??????????