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Debating Gold over on House price crash now

http://www.housepricecrash.co.uk/forum/ind...50257&st=15

 

This made me chuckle

 

 

 

Kilham

 

Just wait for the TV programmes:

 

'Bullion Bullion Bullion'

'Gold under the hammer'

'A Krug in the sun'

 

I am waiting for that and when there is one on pretty much every night, with repeats on Dave, then I will probably swap for other assets.

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I am waiting for that and when there is one on pretty much every night, with repeats on Dave, then I will probably swap for other assets.

 

Double face-palm territory:

- It is illegal to hold bullion in the uk

- ETFs and BullionVault are basically the same.

 

I give up.

 

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Cluelessness on HPC reaches new records.

 

DYOR - Please!

Had a quick look at that thread. This sensible comment stood out by dpmiller:

 

I would say that even if there is a general awareness for the price of gold, the majority see it as a time to sell rather than a time to buy. Most people don't bother to understand why something has escalated/is escalating in price, least of all try to understand the likelyhood of this trend to continue.

 

This is a classic case of money illusion where people are so habituated to the local currency that they identify it with money per se. No consideration is given to the possibility that their own currency could be depreciating. Rather, this or that is just getting expensive, even worse, must be in a bubble.

 

Past histories have shown that populations have always waited for the currency to "bounce back" before swapping for stronger foreign currencies. Problem is it never does. And this from a ...non-hyper-inflationist. :lol:

 

The rational thing to do is to swap a weakening currency for a strengthening one... even if it seems "expensive".

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For those in the UK :

 

Nationwide house price average - today £166,507 (thats down 0.9% MoM, further falls likely)

Price of gold in sterling - £811.19 (and looking bullish)

 

House price to gold ratio = 205.26

 

Is this the 200 mark about to be broken through for good? :)

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Had a quick look at that thread. This sensible comment stood out by dpmiller:

 

 

As good a time as any to say hello, I guess! A bit of a lurker here... thoroughly enjoy the discussion, debate and insight. You've all been a great resource of information and opinion over the last year or so, and i'm happy to say that my interest in economics and worldwide affairs has increased no end. I'll take this opportunity to offer some words of gratitude. Long may it continue.

 

All the best.

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As good a time as any to say hello, I guess! A bit of a lurker here... thoroughly enjoy the discussion, debate and insight. You've all been a great resource of information and opinion over the last year or so, and i'm happy to say that my interest in economics and worldwide affairs has increased no end. I'll take this opportunity to offer some words of gratitude. Long may it continue.

 

All the best.

Cheers on behalf of the site. Welcome to the other madhouse. :lol:

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Here's Roubini's take on gold, which seems almost neutral:

 

 

Roubini Says Dollar, Franc to Beat Gold if Economy Slips Back to Recession

 

http://www.bloomberg.com/news/2010-09-03/r...-recession.html

The price of gold has risen 14 percent this year and traded at $1,252.25 an ounce as of 9:06 a.m. in London.

 

‘I believe that gold is going to trade around current levels,” Roubini said. “There are two extreme events that lead to a spike in gold. One is inflation, but we have no inflation in advanced economies. If anything, there is a risk of deflation.”

 

“The other event in which gold prices go up is the risk of a global financial meltdown, and that tail risk has been reduced because we backstopped the financial system,” he said.

 

He doesn't see a spike in gold, yet neither does he see a slump. He sees the stronger currencies holding firm against gold in a continuing recession; "I believe that gold is going to trade around current levels" [even with this rather muted Roubinian outlook on gold, it would still make sense to hold gold as a core currency alongside the other currencies he likes].

 

Of course there is another option; that gold will continue to slowly strengthen at the steady and incremental pace it has shown over the past few years.... 20-30% a year. Not a bad "return", especially when you consider dollars are also appreciating against assets. This means gold would be "doubly" appreciating against assets.

 

 

lllloon.gif

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Noticed the following in an email i received yesterday, sadly i am the wrong side of 30 and so cant attend.

 

The Next Generation: more on www.adamsmith.org/the-next-generation

 

Tim Harford (The Undercover Economist) @ the TNG

 

Preventing Financial Meltdowns

 

7th September 2010; 6.00pm to 8.00pm

 

Harvey Goodwin Suite, Church House, Dean's Yard, Westminster, London SW1P 3NZ

Demand for this event is high so make sure you RSVP to tng@adamsmith.org

 

Dominic Frisby of Money Morning @ the TNG

 

Gold and Governments

 

28th September 2010; 6.00pm to 8.00pm

 

(At a swish Westminster location, to be announced)

 

Leading US market analyst Mark Skousen @ the TNG

 

Hayek vs. Keynes: Who's Winning the Battle of Ideas?

 

2nd November 2010; 6.00pm to 8.00pm

 

(Location tba)

 

 

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Of course there is another option; that gold will continue to slowly strengthen at the steady and incremental pace it has shown over the past few years.... 20-30% a year. Not a bad "return", especially when you consider dollars are also appreciating against assets. This means gold would be "doubly" appreciating against assets.

Which assets do you think dollars are appreciating against? As far as I see dollars and other fiat currencies are all devaluing as they have done for decades. Currently we are in a massive credit crisis which means things bought with credit are getting cheaper, physical stuff not bought with credit is appreciating against the dollar.

 

The only thing that is appreciating with the dollar is the amount of them in existence, it is the last thing I would want to hold for any amount of time.

 

Here is a long term monthly chart of the USDX. Stop talking about how it is appreciating, it isn't.

 

20100903-duhu43wrmnedky177nrsnay2kd.jpg

 

 

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Which assets do you think dollars are appreciating against? As far as I see dollars and other fiat currencies are all devaluing as they have done for decades. Currently we are in a massive credit crisis which means things bought with credit are getting cheaper, physical stuff not bought with credit is appreciating against the dollar.

 

The only thing that is appreciating with the dollar is the amount of them in existence, it is the last thing I would want to hold for any amount of time.

 

Here is a long term monthly chart of the USDX. Stop talking about how it is appreciating, it isn't.

Dollars should appreciate against pounds, and most other marginal currencies. If currencies appreciate against local assets such as property, then dollars will appreciate against near all property. The dollar will also appreciate against equity markets. Given some time and demand destruction, the dollar should also appreciate against commodities and consumables. Watch oil crash again at some point, or just grind down.

 

The USDX is not the greatest measure of the dollar as is too heavily weighted to the Euro. Even so, we've seen the bottom in th USDX... give it a little time and USDX will be at 90 odd.... before going through 100.

 

One thing I doubt the dollar will appreciate against is gold.

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Which assets do you think dollars are appreciating against? As far as I see dollars and other fiat currencies are all devaluing as they have done for decades. Currently we are in a massive credit crisis which means things bought with credit are getting cheaper, physical stuff not bought with credit is appreciating against the dollar.

 

The only thing that is appreciating with the dollar is the amount of them in existence, it is the last thing I would want to hold for any amount of time.

 

Here is a long term monthly chart of the USDX. Stop talking about how it is appreciating, it isn't.

 

20100903-duhu43wrmnedky177nrsnay2kd.jpg

Looks like one of these.

 

bearish-pennants.gif

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Stunning performance from gold/silver so far today. After the opening plunge, gold came back strong - very bullish action.

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Too bloody true!

 

The only thing that is appreciating with the dollar is the amount of them in existence, it is the last thing I would want to hold for any amount of time.

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Dollars should appreciate against pounds, and most other marginal currencies. If currencies appreciate against local assets such as property, then dollars will appreciate against near all property. The dollar will also appreciate against equity markets. Given some time and demand destruction, the dollar should also appreciate against commodities and consumables. Watch oil crash again at some point, or just grind down.

 

The USDX is not the greatest measure of the dollar as is too heavily weighted to the Euro. Even so, we've seen the bottom in th USDX... give it a little time and USDX will be at 90 odd.... before going through 100.

 

One thing I doubt the dollar will appreciate against is gold.

That is a lame reason for holding dollars, that it will appreciate against property and other failing currencies. Things bought with debt don't have as many buyers anymore and it's a race to the bottom with fiat currencies.

 

Appreciate against commodities! You obviously haven't been looking at the current bull run in wheat.

 

How long do you mean by your "little time"? IMO the dollar will collapse to new lows at some point over the next year.

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That is a lame reason for holding dollars, that it will appreciate against property and other failing currencies. Things bought with debt don't have as many buyers anymore and it's a race to the bottom with fiat currencies.

 

Appreciate against commodities! You obviously haven't been looking at the current bull run in wheat.

 

How long do you mean by your "little time"? IMO the dollar will collapse to new lows at some point over the next year.

I feel like we are going over old ground here. Nevertheless, here is a summary of my views:

 

1] Having put 50% of my liquid worth into bullion a couple of years ago, I consider myself "all in".

 

2] Because there are no certainties in life, I am hedging that rather large core bullion holding [also with 10% in core silver] by keeping the other 40/ 50% in US dollars. Yet, I don't think US dollars are necessarily just a hedge against gold, but also the next best currency to hold - besides gold [and perhaps silver] - in a deflationary drive to liquidity [see signature].

 

3] I am bullish on silver, but more bullish on gold so the bulk of my core is in gold. With silver and dollar remaining volatile, I may look to trade dollars against silver.... in order to accumulate dollars not silver because this dollar position remains my hedge, and my core bullion position remains in gold. But I'll only buy silver if it's price crashed... if the price doesn't crash, and it breaks to the upside, no harm done because those gains in bullion price will be picked up by my core holding in gold [not to mention silver may still crash at a later date].

 

4] The "little time" involved may be five years or so. Given the global/ market fundamental currency system, I think there is at least as much chance of the US dollar chronically strengthening as there is in it blowing up in some sudden hyper-inflation. If this happened, the dollar may need to go back on gold to devalue it relative to creditor country currencies.

 

 

No doubt you'll disagree with most of the above, but you should be able to see there are alternative logics/ systems and different ways of seeing things. If you can't see that predictions about the future are not certain, but only probable and possible, then you are not thinking logically at all but dogmatically. And there is no point in arguing with dogma.

 

 

duckrabbit.jpg

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I feel like we are going over old ground here. Nevertheless, here is a summary of my views:

Yes we are going over old ground, but you do keep insisting in repeating that the dollar is appreciating, I was merely correcting that statement. If the reason you have bought something is because you are then hedged, why do you insist on trying to say that all your positions are the right one and appreciating? If you are truly hedged some of your positions won't perform, which is fine as they are a backup.

 

I don't have a problem at all with the approach you have taken, in fact I think it is a very sensible one. All I am trying to do is debate your statements about the fact that the dollar is a better investment than silver.

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Yes we are going over old ground, but you do keep insisting in repeating that the dollar is appreciating, I was merely correcting that statement. If the reason you have bought something is because you are then hedged, why do you insist on trying to say that all your positions are the right one and appreciating? If you are truly hedged some of your positions won't perform, which is fine as they are a backup.

I think the dollar will appreciate as well as depreciate. If you look at Exter's pyramid, you'll see that the dollar will appreciate against assets [and I'd add major currencies such as the pound/ Euro, and minor currencies such as the Kiwi and Aussie] while depreciating against gold.

 

As I mentioned above the dollar could be considered a hedge against gold... if the two are negatively correlated as most conventional wisdom states. Yet [as mentioned in previous post], my view is that they are not necessarily so negatively correlated, and that rather the dollar will function in the short/ medium term alongside gold as a safe haven. That said, if there was the kind of cataclysmic deleveraging that Prechter is talking about then the dollar would be a straight out hedge.

 

 

Exetersinversepyramid.jpg

 

I don't have a problem at all with the approach you have taken, in fact I think it is a very sensible one. All I am trying to do is debate your statements about the fact that the dollar is a better investment than silver.

I don't think that long term the dollar is a better investment than silver. But I do think that gold is a better investment than silver. For me, gold is to hold, and dollars are for trading against massive volatility in silver should we see it [this is an easy trade for me as I see both silver and dollar as good currencies in the interim]. I don't feel the need to hold much core silver because I hold a lot of core gold.

 

Long term I think silver will outperform dollar, but underperform gold... and remain more volatile against the dollar. The reason I take a more ambiguous approach to silver is because of my deflationary outlook. I think too many are assuming that silver will be a "leverage" on gold.

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Roubini:

The price of gold has risen 14 percent this year and traded at $1,252.25 an ounce as of 9:06 a.m. in London.

 

This rules him out instantly for me as a credible source of opinion.

 

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