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G0ldfinger's GOLD Thread: Longer Term Aspects

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A little teaser. This here is (as far as I can see) Jim Sinclair's gold price model:

 

http://gold.approximity.com/since1970/Exte...Gold_Price.html

External_Debt_Equilibrium_Gold_Price.png

 

And this here puts the situation into perspective. No wonder Jim is so bullish:

 

http://gold.approximity.com/since1970/Gold...rium_Price.html

Gold_Price_to_External_Debt_Equilibrium_Price.png

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Check out the comments at the end of this Telegraph article rubbishing gold.

 

http://www.telegraph.co.uk/finance/persona...nts-to-buy.html

 

This was a good one.

 

"This is an unrealistic article which is trying to undermine gold as Central Banks hate its rise. The rise shows that people no longer believe in fiat currencies."

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And this here puts the situation into perspective. No wonder Jim is so bullish:

The situation that the barbarous relic gold is no longer money as central banks have been trying to show us for the last decade. :lol:

 

 

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A little teaser. This here is (as far as I can see) Jim Sinclair's gold price model:

 

I love these quality posts :D

I hope people take the time to really examine that.

 

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I think we need to get our facts straight here.

The thread was changed to have only the word trading with no explanation.

I was specifically chastised for making posts regarding investing rather than trading on that thread.

I think it is others who are intolerant and marginalising folk here!

Not by me. I am all for tolerance. I agreed with your original point that perhaps two threads were required [go back and read the posts]... but only if the bugs were intolerant towards trading/hedging.

 

There is no monopoly view on gold... gold does what it does. The problem is that some newbies who become a little curious about gold are often repulsed by all the gold bug baggage that comes with it. They are not interested in conspiracies, hyper-inflationary destructions, and the kind of hyper individualism that is often preached. They are just curious to know why it might be a good idea, for economic reasons, that they should buy a little gold. I am not saying these theories could not be true, and that they are interesting to discuss from time to time. What I am saying is that there tends to be such a strong political bias at play that many, who would otherwise consider the virtues of owning gold, are turned off by the what seems to them fanaticism. The discussion on gold should be as broad as possible in order to appeal to the broadest range of people.

 

Anyway, it's all a bit of a storm in a tea cup if you ask me.

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No, don't tell this story the wrong way around.

 

Someone turned the gold threads (which were originally intended to be more what we try to do in this thread here) into an ADD/short term only thread (called "gold trading"). That's what upset some people. But I know that there is a lot of people who couldn't care less. For those, I would suggest that we keep the short thinking thread.

 

Swampy would use the G-word, I think. :lol: (And maybe others too!)

ADD/ short thinking? To think hedging, for example, is such is comical. :lol: I really think you read way too much into a word, and the missing of a word. The reality is that rather than the discussion being narrowed, it was being more widely discussed... why you should feel so uncomfortable with this, I am not so sure.

 

 

I am surprised you are taking the "moral high ground" here.

 

Besides the G-word, emotion in general is detrimental to the investor:

 

http://www.greenenergyinvestors.com/index....st&p=127376

This is where Zen comes in. The practitioner seeks calm and fortitude in the face of turmoil and confusion. The idea is to rise above the noisy appearances, transcend the immanence of time, and focus on what is real. Appearances in the market of the moment are just that and represent nothing real; full of sound and fury, signifying nothing. How can the markets move against you if you are sufficiently hedged? If you do feel the markets moving against you, stop reading the plethora of articles available, stop watching the markets, and go for a walk in the mountains, meditate, clear your head and focus. Welcome the big moves, where others who are caught up with the stream of events panic, and take advantage of them by selling strength into weakness [theirs] as currencies wax and wane. Cultivate sobriety, avoiding both euphoria and fear.

 

Anyway, perhaps I should not be dirsupting this thread with thoughts which might disturb gold bug edification. :lol:

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ADD/ short thinking? To think hedging, for example, is such is comical. :lol:

 

 

I am surprised you are taking the "moral high ground" here.

 

Besides the G-word, emotion in general is detrimental to the investor:

 

http://www.greenenergyinvestors.com/index....st&p=127376

This is where Zen comes in. The practitioner seeks calm and fortitude in the face of turmoil and confusion. The idea is to rise above the noisy appearances, transcend the immanence of time, and focus on what is real. Appearances in the market of the moment are just that and represent nothing real; full of sound and fury, signifying nothing. How can the markets move against you if you are sufficiently hedged? If you do feel the markets moving against you, stop reading the plethora of articles available, stop watching the markets, and go for a walk in the mountains, meditate, clear your head and focus. Welcome the big moves, where others who are caught up with the stream of events panic, and take advantage of them by selling strength into weakness [theirs] as currencies wax and wane. Cultivate sobriety, avoiding both euphoria and fear.

 

If you are completely hedged then I cannot understand how any gain can be made. Don't you have to 'speculate to accumulate'? :lol:

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If you are completely hedged then I cannot understand how any gain can be made. Don't you have to 'speculate to accumulate'? :lol:

 

http://www.greenenergyinvestors.com/index....st&p=135636

In a volatile, uncertain and unstable market as this, the trend is definitely not your friend. Better to hold on firmly to contrarian positions which should keep you high and dry on the whiplash moves likely to be seen. Only the die-hard gold bug should be 100% invested in gold and silver here, as they will have the zeal and faith to ride out stormy patches [they will also be right in the end though for the wrong reasons]. The "less seasoned veterans" would do well to hedge in various currencies including gold, silver, dollars, Yen and maybe some other currencies. The more adventurous could then, if they so decided, swap/trade strengthened currencies for weakened ones. That said, and with the investor's hat on, you would not want to be all lost at sea here without a compass. The investor's compass or aim, where eventual profits are to be taken at a future date, should be in the accumulation of the strongest currency, that of gold.

And I might add that though the hedger come trader come investor should have a core gold position besides hedging ones. By doing so, he will make a further gain than those that just sat on gold.

 

imo investment is like a dynamic game of chess. A currency such as Yen could be considered a rook. The King and Queen, gold and silver. US dollars could be considered a less valuable piece such as a bishop or knight [now waiting for the incessant mantra that fiat is toilet paper]. :lol:

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In a volatile, uncertain and unstable market as this, the trend is definitely not your friend. Better to hold on firmly to contrarian positions which should keep you high and dry on the whiplash moves likely to be seen. Only the die-hard gold bug should be 100% invested in gold and silver here, as they will have the zeal and faith to ride out stormy patches [they will also be right in the end though for the wrong reasons]. The "less seasoned veterans" would do well to hedge in various currencies including gold, silver, dollars, Yen and maybe some other currencies. The more adventurous could then, if they so decided, swap/trade strengthened currencies for weakened ones. That said, and with the investor's hat on, you would not want to be all lost at sea here without a compass. The investor's compass or aim, where eventual profits are to be taken at a future date, should be in the accumulation of the strongest currency, that of gold.

 

You seem to be hedging your forecast! I cannot see any logic in this reasoning - if you believe that 'they will be right in the end' why advise another course of action? To advise Newbies to trade currencies seems to me to be the height of foolishness - actually, you may as well advise them to just throw it away and cut-out the middleman.

 

 

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In a volatile, uncertain and unstable market as this, the trend is definitely not your friend. Better to hold on firmly to contrarian positions which should keep you high and dry on the whiplash moves likely to be seen. Only the die-hard gold bug should be 100% invested in gold and silver here, as they will have the zeal and faith to ride out stormy patches [they will also be right in the end though for the wrong reasons]. The "less seasoned veterans" would do well to hedge in various currencies including gold, silver, dollars, Yen and maybe some other currencies. The more adventurous could then, if they so decided, swap/trade strengthened currencies for weakened ones. That said, and with the investor's hat on, you would not want to be all lost at sea here without a compass. The investor's compass or aim, where eventual profits are to be taken at a future date, should be in the accumulation of the strongest currency, that of gold.

 

You seem to be hedging your forecast! I cannot see any logic in this reasoning - if you believe that 'they will be right in the end' why advise another course of action? To advise Newbies to trade currencies seems to me to be the height of foolishness - actually, you may as well advise them to just throw it away and cut-out the middleman.

I think you missed this bit; And I might add that though the hedger come trader come investor should have a core gold position besides hedging ones. By doing so, he will make a further gain than those that just sat on gold. This is in regard to veterans.

 

I am not advising newbies anything of the sort [i said trading/swapping currencies should be for the more "adventurous"; those that are more knowledgeable/ comfortable with risk is the implication here. I would advise newbies to buy a solid poisition in gold if they do not have one... one they are comfortable and not anxious about / according to the knowledge they have. I would advise newbies NOT to go 100% into gold, as it could prove psychologically truamatic for them if/ when the gold price dips, where they might panic and be shaken out.

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You seem to be hedging your forecast! I cannot see any logic in this reasoning - if you believe that 'they will be right in the end' why advise another course of action? To advise Newbies to trade currencies seems to me to be the height of foolishness - actually, you may as well advise them to just throw it away and cut-out the middleman.

The logic is based on uncertainty as opposed to the certainty of gold bugism. I noticed I replied to a similiar question on the other thread:

 

http://www.greenenergyinvestors.com/index....st&p=134731

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I think you missed this bit; And I might add that though the hedger come trader come investor should have a core gold position besides hedging ones. By doing so, he will make a further gain than those that just sat on gold. This is in regard to veterans.

 

I am not advising newbies anything of the sort [i said trading/swapping currencies should be for the more "adventurous"; those that are more knowledgeable/ comfortable with risk is the implication here. I would advise newbies to buy a solid poisition in gold if they do not have one... one they are comfortable and not anxious about / according to the knowledge they have. I would advise newbies NOT to go 100% into gold, as it could prove psychologically truamatic for them if/ when the gold price dips, where they might panic and be shaken out.

 

I cannot see how: hedging a gold position + holding gold = better than just holding gold when you believe that gold will increase its purchasing power.

 

For someone who is reasonably abreast of the fact that we are entering the end-game in the West (not too difficult to work out) buy and hold gold is simple and almost guarantees the preservation of purchasing power with the probable bonus of a significant increase (for all the reasons that have been discussed). Any deviation from the course of buy-and-hold, would probably lead to a loss of wealth. Why risk it? As for 100 percent - well , I agree that may be a bit too much for many recent converts but they will in time probably add incrementally as they become more confident in their research.

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I cannot see how: hedging a gold position + holding gold = better than just holding gold when you believe that gold will increase its purchasing power.

The market is becoming increasingly uncertain, therefore it will become more volatile.

 

A hedge against volatility to the downside is risk averse currencies.

 

Buy silver on the downside when the risk averse currencies strengthen.

 

Silver is then the trading vehicle to the upside where cheap gold is bought with strengthened silver.

 

The fundamentals will eventually win out.

 

 

Say someone buys dollars/ pounds and sits on them; assets, lets take houses, devalues against dollars and they can buy a house for half its current price.

Say someone sits on gold; houses devalue against dollars, dollars also devalue against gold, and they can buy a house for quarter of its current price [in gold].

Say someone has a core position in gold and hedges; they manage to double there bullion position by moving from cash to silver to gold at opportune moments. They manage to buy a house for an eighth of the price compared to their current capital position [a just price I might add for a vastly over-valued asset]. There-in lies the gain.

 

I don't expect you to agree with me, but I do hope you can see the logic. :)

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Say someone has a core position in gold and hedges; they manage to double there bullion position by moving from cash to silver to gold at opportune moments. They manage to buy a house for an eighth of the price compared to their current capital position [a just price I might add for a vastly over-valued asset]. There-in lies the gain.

Let's actually put some numbers and dates on your plan over mine.

 

Your plan is to hold a core of gold and buy dollars and yen and wait for silver to become cheaper in those currencies, then buy silver with them. When did you actually buy yen and dollars? You have been saying you have been buying yen and dollars for ages, since then silver has got more expensive in both. So it would actually have been better to buy silver then rather than yen or dollars.

 

My plan was to average in to gold and silver. Originally I went 65% gold and 35% silver, I did this between 2007 and 2008. I swapped some gold to silver after I had finished averaging in twice, once at 62 and once at 72. I know that I missed the high in the GS ratio but I already had changed my position as much as felt comfortable doing and was still learning.

 

My strategy is working, as far as I can see currently yours isn't. This is a fiat currency crisis I believe the last thing anyone should be stuck holding is a fiat currency. My strategy hedges the swings like yours is attempting to, but mine is working and yours isn't.

 

P.S. sorry GF don't want to bring trading discussion into this thread, but couldn't really let RH carry on polluting it with his dollar/yen talk.

 

 

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P.S. sorry GF don't want to bring trading discussion into this thread, but couldn't really let RH carry on polluting it with his dollar/yen talk.

Oh right, silly me, I forgot this was the "pure" thread. :)

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Oh right, silly me, I forgot this was the "pure" thread. :)

Another get out post, why don't you answer the detail put above, or is this like the Occam's razor post yesterday?

 

 

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Let's actually put some numbers and dates on your plan over mine.

 

Your plan is to hold a core of gold and buy dollars and yen and wait for silver to become cheaper in those currencies, then buy silver with them. When did you actually buy yen and dollars? You have been saying you have been buying yen and dollars for ages, since then silver has got more expensive in both. So it would actually have been better to buy silver then rather than yen or dollars.

First of, I have had both a solid gold and silver position for quite some time. Most of the silver was bought on the dips at near bottom prices, which I am happy with and has shown a good nominal profit.

 

I also acquired a good position in Yen a few months back before it strengthened, so it is also showing a nominal profit. The idea here is to maintain a hedge against a very large bullion position. Needless to say I am happy with my Yen purchase, which i see as a similiar play to dollars [a risk averse currency]. I have been looking to buy dollars to add to my hedge, and hedge my hedge, but believe there is no rush as dollars are currently weakening.

 

My plan was to average in to gold and silver. Originally I went 65% gold and 35% silver, I did this between 2007 and 2008. I swapped some gold to silver after I had finished averaging in twice, once at 62 and once at 72. I know that I missed the high in the GS ratio but I already had changed my position as much as felt comfortable doing and was still learning.

 

My strategy is working, as far as I can see currently yours isn't. This is a fiat currency crisis I believe the last thing anyone should be stuck holding is a fiat currency. My strategy hedges the swings like yours is attempting to, but mine is working and yours isn't.

Once a solid position in bullion was established, I decided to take a more discerning approach to the other 50% of funds at my disposal. I will only buy further silver at bargain basement prices should they come along, and then swap that silver to gold when the market recovers. The idea here is that if one is to eventually be 100% in bullion, it will be so only if the second half of that involves lower prices.... as a hedge against prices staying relatively low [as opposed to stratospheric ones].

 

My strategy is working fine for me and I am very comfortable with it. I am not concerned which way the idiot market will move and am positioned to take advantage of either swing. Being free of anxiety is crucial for the investor as so often swings in the market cause the investor to make silly decisions. The goal is to accumulate gold.

 

As another has said, many ways to skin a cat, actually I do not think our strategies are that dissimiliar, but for some reason you do.

 

Edit.

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As another has said, many ways to skin a cat, actually I do not think our strategies are that similiar, but for some reason you do.

That is completely wrong, I do not think our strategies are at all similar. I feel it important to get out of fiat, you don't!

 

 

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My strategy is working fine for me and I am very comfortable with it. I am not concerned which way the idiot market will move and am positioned to take advantage of either swing. Being free of anxiety is crucial for the investor as so often swings in the market cause the investor to make silly decisions. The goal is to accumulate gold.

Well at least we agree on something ;) I feel anxiety free with my holding of precious metals, I wouldn't if I was holding large amounts of fiat.

 

 

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Oh right, silly me, I forgot this was the "pure" thread. :)

<SWAMPY mode on>

Off to the Gulag you go!

<SWAMPY mode off>

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<SWAMPY mode on>

Off to the Gulag you go!

<SWAMPY mode off>

I think swampy should be let back in, I miss his sense of humour.

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Gulag or ghetto .....Gulag or ghetto..... Not much of a choice really. :P

The original Ghetto - that would make you a Venetian Holiday, if you know what I mean. :unsure:

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I love these quality posts :D

I hope people take the time to really examine that.

I will post more later. Sinclair's $17,000/oz that he announced during the Toronto CIGA meeting is AFAICS an extrapolation of that chart to 2012 or so. The interesting thing is that the old high was almost double the external debt equilibrium price back then!

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