CokeSnortingTory

Really, it goes deeper than this. All human reality is essentially constructed from narratives. As Gregory Bateson pointed out in "Mind And Nature", mankind is "the story telling animal". The only thing that makes the goldbug narrative compelling is that, like the Marxist narrative and the Progress narrative, it is patterned after the central narrative of our culture - the Judeo-Christian story of history-as-revelation. But it's unfair (to an extent) to pick on goldbugs, as all investment advice, whether in favour of stocks, ISAs, cash, property etc. are also based on narratives, and I'm coming to the conclusion that it is the persuasiveness of any particular narrative at any one time that drives valuations. It's interesting for example that gold fell in (fiat) value until narrative explantions started to be put forward to explain the fall. Until narratives could be supplied there was panic. Indeed, I think market panics could probably be described as "events made severe by the lack of explanatory narratives".

interesting reading here: http://www.psmag.com/magazines/pacific-standard-cover-story/joe-henrich-weird-ultimatum-game-shaking-up-psychology-economics-53135/

Yes, I actually hold some gold - as a hedge. The other interesting aspect of contemporary views of the market is that it should necessarily be The Route To Personal Wealth, rather than the arena of exchange. But that would take me into the territory of the divergence of the Western mind from the global cultural norm, and I'm not doing that here.....

@scepticus Well, my position would be that much market activity, although not intended as gambling ("investment") the complexity of the system in practice makes it such i.e. hedges aren't guaranteed to be paid out if the institution hedged with collapses itself. As regards goldbuggery (as opposed to ordinary gold investment), I see at as yet another bastardisation of the Jewish pattern of history. i.e. the eschatological formula of Second Coming > Judgement Day > The Millenium is replaced with Hyperinflation > Collapse of the State > Paradise of the Gold Owners. But excellent post, nonetheless.

Well, firstly, you initiated this conversation, not me. Secondly, you have adopted an uncivil tone, and not me. So I don't know why you are pretending to be the one who is being pestered somehow. The best investment strategy is a diverse one obviously - not to put all one's eggs in one basket, whatever that basket may be. And expect to come out with perhaps a small loss at the end of it, if the global economy does get increasingly worse.

You appear to be undergoing some personal strain. My own view is that when there is a steadily growing economy based on real capital growth, then yes there is some point in a rational investment strategy. But in a growing economy, most gambles will pay off anyway - like a casino that pays out 5% more than it takes in, say. In a declining global economy, like the one we have now, which blows multiple bubbles due to the actions of insiders, investing is really akin to pure gambling, and it's near impossible to predict what a winning strategy might be.

My narrative is that all investment is ultimately gambling. People justify their punts using whatever narrative is attractive to them. I've not said anything anti-gold. I've even said it may rise in value again. What I have said is that the reasons people often give to justify for investing in gold are ideological or religious - a wish for the end of The State.

I went through this 5 pages ago. But, the real secret of investment, the one they never tell you, is this: Always use other peoples' money.

You see, this is what I mean about people needing a narrative. You can't conclude anything about gold's price drop, any more than you can conclude why we've had and east wind for the last month.

Naughty. You know I meant Tamara DL

The Swiss man speaks the truth. Next week Gold may go up, or it may go down. Whatever the reason, it won't be due to the "inevitable" arrival of hyperinflation, as per the prophecy of the pseudo-religion of Austrian economics. (It's more likely to be the bear market in Fijian dong-rats). Also, are people still taking Zero Hedge seriously? It's so long since I've been here......

What you have to understand is that Austrian economics/Libertarianism is an eschatological belief system. Hyperinflation performs the same function in their religious worldview that Revolution does for Marxists and that The Second Coming does for Christians. It is were a corrupt system is slain, and a new paradise on Earth can be created.

The price of gold has started to rise again, just as I predicted, with my usual market brilliance, 20 minutes ago. It's no doubt due to the disappointing dong-rat harvest in Fiji, and the central bank of Uruguay not making any announcement on interest rates.

I think the panic has been feeding on itself, and will eventually self-correct. I once brought some Euros back from holiday, and left them in a drawer for a year. When I went to cash them in they had risen against GBP by 30% ! I told myself that I was an FX genius, and was always bound to make a profit on them.

Don't worry, it might go back up next week, and people will be equally flummoxed as to the reason why.