where are the gold threads?

[Gone4Good]

A blind allegiance to govt intervention in "fixing" every economic problem, along with a blatant disbelief of basic economic principles has not helped your cause.........

I guess an understanding that "Supply Side" remedies in the midst of a liquidity trap where the fed is already constrained by the zero bound is not only deflationary but is actually pro-cyclical counts as "blatant disbelief of basic economic principles."

But I guess the only "economic principle" I need to believe if I want to fit in around here is that government is always bad.

I like the "ignore" idea. I haven't used it yet, but maybe I should give it a whirl.

 

[Westernskies]

I like the "ignore" idea. I haven't used it yet, but maybe I should give it a whirl.

The economics make sense- it's free!

 

[CuppaJoe]

...or 87 more years of detente.

Or until one of them points out that the other now has "silver threads among the gold."

 

[Bestwifeever]

And they exchange gold rings?

Or shares in a precious metals fund

 

[CuppaJoe]

Or shares in a precious metals fund

I love it when a thread gets back to the basics, on topic.

 

[Purron]

I recently attended a fund raiser where people could sell unwanted gold jewelery with a % going to the cause. Many folks just made an outright donation if it was a small item like a single earring. The gold dealer was carefully checked out and gave a decent payment. The charity raised lots of money, the gold dealer made a reasonable profit and it was a win-win all round. This type of fund raiser has become very popular these days. Guess this is one upside to this whole gold thing.

 

[clifp]

So back on topic.
Physical Gold, Gold ETFs, Gold stocks, or should I steal gold jewelry to give G Gordon Liddy

 

[Gumby]

But I guess the only "economic principle" I need to believe if I want to fit in around here is that government is always bad.

Only in certain neighborhoods, not the entirety of "around here". On my block, we like the government.

 

[samclem]

On my block, we like the government.

We like the government on my block, too. All of us here in People's Apartment #37 tell our oblast leaders constantly how much we love the government.

I don't own any gold. DW wants to invest in the wearable kind.

 

[Westernskies]

I love it when a thread gets back to the basics, on topic.

Basically, I am still wondering whether to invest in gold or pay off the mortgage.

 

[Gumby]

We like the government on my block, too. All of us here in People's Apartment #37 tell our oblast leaders constantly how much we love the government.

Your day will come, Kulak.

 

[HFWR]

I love it when a thread gets back to the basics, on topic.

You mean gold threads?

 

[Purron]

Gaga

 

[endthefed]

hello to everyone that participated in this thread. i'm back after a loooong ban. i'll try to not get banned again. i had a lot that i was trying to share - but it ran afoul of the "rules".

what's ecouraging me about gold now - generally it's been an inverse dollar trade. the dollar has jumped in value (against other paper) lately - yet gold has held it's ground.

this will provide dry powder for dollar down/gold up action when the dollar falls against the other paper. it's in the high side of it's range right now - as people are running away from the euro drama.

 

[Texas Proud]

hello to everyone that participated in this thread. i'm back after a loooong ban. i'll try to not get banned again. i had a lot that i was trying to share - but it ran afoul of the "rules".

what's ecouraging me about gold now - generally it's been an inverse dollar trade. the dollar has jumped in value (against other paper) lately - yet gold has held it's ground.

this will provide dry powder for dollar down/gold up action when the dollar falls against the other paper. it's in the high side of it's range right now - as people are running away from the euro drama.

AHHHHH.... so that's why you were not posting... some thought you had left because of not liking what other posted...

Glad to see that you will be trying to not get banned again... also, read what people have written... it is your delivery that seem to be the main problem... but hey, I could be wrong...

 

[RonBoyd]

hello to everyone that participated in this thread. i'm back after a loooong ban. i'll try to not get banned again. i had a lot that i was trying to share - but it ran afoul of the "rules".

There are those that believe that if you are not, at least, "warned" by the Moderators every now and again, you are not using the Forum properly. In any event, you should be more concerned with the feedback from the civilians -- you will learn more.

 

[RonBoyd]

what's ecouraging me about gold now - generally it's been an inverse dollar trade. the dollar has jumped in value (against other paper) lately - yet gold has held it's ground.

There are, of course, other opinions worth considering:

The Coming Bubble of 2010, and How to Avoid It

I particularly liked:

Warren Buffett once quipped:
It gets dug out of the ground. ... Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.

In any event:

Truth be told, the only way to get the price of gold to rise is to get other investors to buy into the idea -- like a giant Ponzi scheme. And as we know from watching the unraveling of Bernie Madoff's empire, that can't last forever

or

Perhaps the most damning fact is that, from 1833 through 2005, gold and inflation had nearly perfect correlation, according to Forbes. This means that, after taxes, you would have actually lost money in gold

 

[Gone4Good]

Fears Rise in Europe over Potential for Deflation

Maybe our esteemed OP can reconcile deflation with excessive money creation.

 

[Gone4Good]

There are, of course, other opinions worth considering:

Another opinion is that the recent run-up in gold is based on the fear of future inflation, not actual inflation; it is based on the fear of money creation, not actual money creation. If at some point that fear doesn't become reality, then the price of gold will look like Wile E. Coyote (Super Genius).

The gold story starts with a few facts and then jumps into speculation. It begins with the fact that global central banks took unprecedented action in cutting interest rates and expanding reserves. The facts kind of end there. The speculation is that eventually the monetary and fiscal stimulus works and those reserves get multiplied into money. Naturally, in this telling, global central banks sit on their hands as inflation rages out of control. In some versions central banks not only sit on their hands but abandon all independence and aggressively monetize sovereign debt turning high inflation into hyperinflation. According to many versions this worse case scenario is not only a base-case, it is "inevitable" . . . Zimbabwe here we come!

But actual events aren't playing out according to script. Inflation is still trending downward. Meanwhile pressure is building globally to reign in federal deficits and several governments are taking concrete action. These austerity steps will further reduce the demand for money, which will continue to retard money creation through normal channels. The E.C.B. refuses to compensate (the recent bond purchases were sterilized) even as several of its members plunge toward depression. In the U.S. all the talk at the Fed is over "normalizing" policy, raising rates and liquidating assets. Individual States are slashing budgets. And even the large amount of federal borrowing has been entirely offset by a decline in private borrowing.

In 2008 all the forces of government were used to stop the financial collapse, with good effect. Now those forces are starting to be thrown into reverse at a time when inflation trends are still heading downward . . . Japan here we come!

Oh, and a final message to Wile E. . . . look out below.

 

[Zathras]

what's ecouraging me about gold now - generally it's been an inverse dollar trade. the dollar has jumped in value (against other paper) lately - yet gold has held it's ground.

If it has generally been an inverse dollar trade, would that not indicate that there is downward pressure on gold?
In other words, that it will, sooner or later, revert to it's long term trend?

 

[Tigger]

If at some point that fear doesn't become reality, then the price of gold will look like Wile E. Coyote (Super Genius).

Sure, but if something would happen to the USD or the financial system, those who blindly trusted them who look like Wile E. Coyote.

The gold story starts with a few facts and then jumps into speculation. (...) The speculation is that eventually the monetary and fiscal stimulus works and those reserves get multiplied into money. Naturally, in this telling, global central banks sit on their hands as inflation rages out of control. In some versions central banks not only sit on their hands but abandon all independence and aggressively monetize sovereign debt turning high inflation into hyperinflation. According to many versions this worse case scenario is not only a base-case, it is "inevitable" . . . Zimbabwe here we come!

But actual events aren't playing out according to script.

Trusting your entire nest egg to the USD and the financial system is speculating on its unscathed survival. History is full of examples of failed currencies, central banks and private banks. Although bad things always seem to happen to others, the USA isn't immune to this kind of problems (nor the EU). It is of course impossible to tell if problems will arise during our lifetime (and when exactly), but I wouldn't call the current situation reassuring. Therefore I can understand people who have decided to hedge their bets.

Inflation is still trending downward.

Many "experts" predict inflation, many others predict deflation.

It is my impression that we can't predict future inflation, that we can only try to estimate it in retrospect. Reality is complex. There are many inflationary and deflationary factors at work and I think it's impossible to measure and compare their individual effect, so as to determine their cumulative net effect.

My conclusion: don't bet the farm on any scenario, try to be diversified against many types of risk. (I'm currently not diversified enough)

In 2008 all the forces of government were used to stop the financial collapse, with good effect.

I think it's a bit soon to draw conclusions.

We're going from bubble to bubble to bubble and the solution is more government debt, preventing insolvent companies from failing, pumping consumption back up to "normal" (=bubble) levels? I would feel safer in a world built on solvency, really.

Japan here we come!

Let's hope not.

Oh, and a final message to Wile E. . . . look out below.

We're all someone's Wile E. Coyote.

 

[growing_older]

Trusting your entire nest egg to the USD and the financial system is speculating on its unscathed survival. History is full of examples of failed currencies, central banks and private banks. ... the USA isn't immune to this kind of problems (nor the EU). ... Therefore I can understand people who have decided to hedge their bets.

I completely fail to understand this line of reasoning. IF you are guarding against complete systemic breakdown of the financial system, why are you doing it with an investment in gold, which requires a functioning financial system to redeem and access your "investment" Surely you don't believe that you will be bartering or paying your rent in gold bars. Maybe you would be better off investing in cigarettes, clean water and ammunition.

 

[Tigger]

I completely fail to understand this line of reasoning. IF you are guarding against complete systemic breakdown of the financial system, why are you doing it with an investment in gold, which requires a functioning financial system to redeem and access your "investment" Surely you don't believe that you will be bartering or paying your rent in gold bars. Maybe you would be better off investing in cigarettes, clean water and ammunition.

I'm not exclusively talking about Mad Max scenario's.

In Argentina people who had gold in a safe place were the lucky ones. Having it in a foreign country was even better, because they could try to leave and start a new life elsewhere.

 

[growing_older]

I am not opposed to "insuring" against calamities. I do want to be sure that I understand what scenario I am protecting against, so I can understand whether the protection I am buying will really be effective. I am not satisfied with the simple notion that if I am fearful I should buy gold. I want to know what I actually intend to accomplish with such an investment. If I understand your suggestion, you think gold is a good hedge against the collapse of financial institutions in the US and dollar values, as long as viable economies and financial institutions continue to function elsewhere. Possibly allowing emigration.

I would not rank this as a very likely scenario. If it were, I would be concerned that in order to be an effective hedge, my gold account would have to be large enough to support me in this possible future, as well as well placed enough to pick the "right" location to insulate from near-global economic disaster. Perhaps I would actually need multiple accounts in multiple places to increase my likelihood of having a safe haven. Unless I have ample funds to cover my own FI, as well as possible FI in possible multiple locations, I do not see how this helps me. If I did have that kind of financial resources, I doubt I'd want to devote that much of it to such unlikely scenario.

Alternatively, if I am protecting against "Mad Max" scenarios, I'd rather invest in rural land, skills and equipment to farm it, and means to protect it (if I assume that with the demise of means of exchange will also come demise of law and order). Or if you are thinking some milder form of breakdown (think Katrina or Haiti) then perhaps I want to invest in useful trade goods (plus again a means to protect myself) and distribute my investments so that losing no one position will devastate me. I don't see how gold helps me in either case, except possibly if I think I can buy low now (really?) and sell high(er) later to make some money with it. Again, at record highs, this seems unlikely.

 

[DblDoc]

Quote:
Originally Posted by Gone4Good
In 2008 all the forces of government were used to stop the financial collapse, with good effect.

I think it's a bit soon to draw conclusions.

I think we have enough hindsight now to understand it did prevent collapse. How much further it would have gone we could debate - personally I think it would have been much, much worse without the worldwide intervention that took place. What remains to be seen is how it unwinds. My crystal ball is cloudy but I get hints of prolonged slow growth interrupted with episodes of recession taking place in various regions around the world. My strategy remains in a diversified portfolio, save, save, save and LBYM.

DD