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Denninger On Gold


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#1 CokeSnortingTory

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Posted 31 May 2010 - 11:27 AM

He thinks the goldbugs are being taken for a ride: http://market-ticker...e-Your-Ass.html

(You'll need to copy and paste the above url, rather than just click it)

Salient points:

i) Gold is not an effective inflation hedge, but is an effective geopolitical instability hedge
ii) It functions as credit, but not as money
iii) It offers less utility, and thus price stability, than silver
iv) The last time there was an inflation scare in the early '80's, gold holders were wiped out when the price crashed
v) The only free lunch is the sun

Obviously, I can't be arsed to debate the article, because I think goldbugs are loons who are not able to be debated with, but it's worth a read for its contrarian standpoint, if nothing else.
"Man is a machine." -- G.I. Gurdjieff

"Gurdjieff's starting point is the completely deluded state of man; man, he claims, is so completely embalmed and enmeshed in delusions that he cannot even be considered as a living being; he can only be regarded as a machine. He has, in other words, absolutely no free will." -- Colin Wilson

"What negative emotions are you likely to glorify? Some people are proud of their irritability or irritation. They like to be thought very hard. There is practically no negative emotion which you cannot enjoy, and that is the most difficult thing to realise. Really some people get all their pleasures from negative emotions." -- P.D. Ouspensky

#2 Timak

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Posted 31 May 2010 - 11:41 AM

As I always say it is just something of value, an asset that can be traded internationally, and benefits from a high value to weight ratio meaning it is transportable.

It is no better or wose than other things such as rare paintings or star wars figurines.....
___________________________________________________________________________________________________The correct answer to every statement is "It's a little bit more complicated than that"

#3 Errol

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Posted 31 May 2010 - 11:46 AM

An alternative view ...

Mr. Denninger and Gold or Why the Dollar-Deflationists Are Wrong

http://www.zerohedge...nists-are-wrong

Gold is the currency beyond Governments. It is the most liquid form of money accepted throughout the world – the true reserve currency of the world - whereas Dollars, Yuans and Euros etc. are only guaranteed to be accepted within their own respective countries, and as long as their respective governments last. Why would you want to tie yourself down to the paper currency of a particular nation, especially in times of such turbulence? It points to a very limited sphere of thinking when you advocate that holding only dollars is the best strategy. It is a fallacy to believe that there is no refuge outside the system; that you have to be trading paper tickets all the time to “keep up” with the dilution of your purchasing power or just stand by idly holding dollars while the government rapes you. Gold is your refuge outside the system.

Got Gold, Mr. Denninger?




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#4 Bloo Loo

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Posted 31 May 2010 - 11:50 AM

An alternative view ...

Mr. Denninger and Gold or Why the Dollar-Deflationists Are Wrong

http://www.zerohedge...nists-are-wrong

Gold is the currency beyond Governments. It is the most liquid form of money accepted throughout the world – the true reserve currency of the world - whereas Dollars, Yuans and Euros etc. are only guaranteed to be accepted within their own respective countries, and as long as their respective governments last. Why would you want to tie yourself down to the paper currency of a particular nation, especially in times of such turbulence? It points to a very limited sphere of thinking when you advocate that holding only dollars is the best strategy. It is a fallacy to believe that there is no refuge outside the system; that you have to be trading paper tickets all the time to "keep up" with the dilution of your purchasing power or just stand by idly holding dollars while the government rapes you. Gold is your refuge outside the system.

Got Gold, Mr. Denninger?




Keep the image below at the forefront of your mind:

Posted Image


change the word GOLD for HOUSE and I think we are there.
WARNING

Your
country is at risk
if you
do not keep up repayments
on a gilt or other loan secured on it





#5 R K

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Posted 31 May 2010 - 11:51 AM

I like Denninger,he says what he thinks and isn't afraid of being as contrarian as Prechter-who in Feb 2010,made a Gold $200 call.


True. He's also been wrong alot of the time. (Denninger and Prechter - His double shorts on the SPX got stopped out months ago - before the April correction). I don't know if he recommended new double shorts subsequently but I guess his followers would still be smarting from being wrong from last August.

I agree with all the points in the OP link though. Most gold buyers will get creamed, eventually and for the very reasons they think they won't.

tins of beans and gallon of fuel trump gold.that chart is wrong


Nukes trump beans and fuel.

Edited by Red Kharma, 31 May 2010 - 11:55 AM.


"The problem with capitalism is that eventually you end up with everyone else's money" RK
"We have now entered The Great Rebalancing 2007-20xx" - RK
"Gold will go to $1000, Silver to $18" - RK August 2011
QE £100bn and build 1m council homes - RK
Carney announces the launch of Empire 2.0 - Rise of the Banksters Oct '13


#6 CokeSnortingTory

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Posted 31 May 2010 - 11:55 AM

True. He's also been wrong alot of the time. (Denninger and Prechter - His double shorts on the SPX got stopped out months ago - before the April correction). I don't know if he recommended new double shorts subsequently but I guess his followers would still be smarting from being wrong from last August.

I always think it is a good idea to mentally picture market commentators wearing John McCririck-style deer-stalker hats.
"Man is a machine." -- G.I. Gurdjieff

"Gurdjieff's starting point is the completely deluded state of man; man, he claims, is so completely embalmed and enmeshed in delusions that he cannot even be considered as a living being; he can only be regarded as a machine. He has, in other words, absolutely no free will." -- Colin Wilson

"What negative emotions are you likely to glorify? Some people are proud of their irritability or irritation. They like to be thought very hard. There is practically no negative emotion which you cannot enjoy, and that is the most difficult thing to realise. Really some people get all their pleasures from negative emotions." -- P.D. Ouspensky

#7 Errol

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Posted 31 May 2010 - 12:04 PM

Might want to bear this in mind ...

pie chart below, which depicts the fate of 786 paper currencies that have been issued in the course of history (excluding Chinese paper currencies prior to 1935):

Posted Image

Edited by Errol, 31 May 2010 - 12:05 PM.

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#8 Cogs

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Posted 31 May 2010 - 12:08 PM

Might want to bear this in mind ...

pie chart below, which depicts the fate of 786 paper currencies that have been issued in the course of history (excluding Chinese paper currencies prior to 1935):

Posted Image



What conclusion do you think that implies?
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#9 Errol

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Posted 31 May 2010 - 12:10 PM

Average lifespan of a fiat currency is around 40 years, btw.

Edited by Errol, 31 May 2010 - 12:10 PM.

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#10 'Bart'

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Posted 31 May 2010 - 12:17 PM

or 1970's Wonder Woman dolls.

Oh aye? ;)

#11 LuckyOne

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Posted 31 May 2010 - 12:25 PM

What conclusion do you think that implies?


The answer is to pick the correct one.

The problem arises when there are no "correct ones" left.

When there are no correct ones left, it seems that the best way to hold on to real value includes :

- Company shares for well managed businesses that make things rather than provide services.
- Things (gold, silver, coal, oil, agricultural land etc)
- Education
- Etc etc
- And at the very bottom of the pile : houses. I think it was Dr Bubb who showed how badly housing costs were damaged relative to the value of just about everything else during the hyperinflation in the Weimar Republic.

#12 sharpe

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Posted 31 May 2010 - 12:31 PM

He thinks the goldbugs are being taken for a ride: http://market-ticker...e-Your-Ass.html

(You'll need to copy and paste the above url, rather than just click it)

Salient points:

i) Gold is not an effective inflation hedge, but is an effective geopolitical instability hedge
ii) It functions as credit, but not as money
iii) It offers less utility, and thus price stability, than silver
iv) The last time there was an inflation scare in the early '80's, gold holders were wiped out when the price crashed
v) The only free lunch is the sun

Obviously, I can't be arsed to debate the article, because I think goldbugs are loons who are not able to be debated with, but it's worth a read for its contrarian standpoint, if nothing else.



In 1980 interest rates went to 20 percent - then gold fell.

Anyone using the term "goldbug" is a VI or a loon.

#13 Fishfinger

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Posted 31 May 2010 - 12:36 PM

As I always say it is just something of value, an asset that can be traded internationally, and benefits from a high value to weight ratio meaning it is transportable.

It is no better or wose than other things such as rare paintings or star wars figurines.....


So the Spanish weren't seeking gold at the fabled El Doraldo in South America but Cabbage Patch dolls? The Aztecs and Incas were wiped out for a Dinky Toy Collection?



#14 Injin

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Posted 31 May 2010 - 12:40 PM

He's right about gold, but oh so wrong on the dollar.

Still, he'a a patriot and that's to be expected.
My Blog

Find the right answer, realise you'll never see it in your lifetime, and then advocate it anyway because it's the right answer.

You've got to settle for second, third of fourth best in day to day life more often than not. There is no reason to accept anything but the best in your thinking, however. The only real personal issue is it requires you to completely give up on the idea that you will ever be all that free yourself. Accepting you can do nothing to sway tens of millions of people with muddleheaded notions any time soon is the first step to actually fixing stuff properly.

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#15 Injin

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Posted 31 May 2010 - 12:42 PM

An alternative view ...

Mr. Denninger and Gold or Why the Dollar-Deflationists Are Wrong

http://www.zerohedge...nists-are-wrong

Gold is the currency beyond Governments. It is the most liquid form of money accepted throughout the world – the true reserve currency of the world - whereas Dollars, Yuans and Euros etc. are only guaranteed to be accepted within their own respective countries, and as long as their respective governments last. Why would you want to tie yourself down to the paper currency of a particular nation, especially in times of such turbulence? It points to a very limited sphere of thinking when you advocate that holding only dollars is the best strategy. It is a fallacy to believe that there is no refuge outside the system; that you have to be trading paper tickets all the time to “keep up” with the dilution of your purchasing power or just stand by idly holding dollars while the government rapes you. Gold is your refuge outside the system.

Got Gold, Mr. Denninger?




Keep the image below at the forefront of your mind:

Posted Image

Bilge.

Sorry but gold is just another commodity, albeit one that trades like religious icons due to the poorly thought through quais mysticism that surrounds it.
My Blog

Find the right answer, realise you'll never see it in your lifetime, and then advocate it anyway because it's the right answer.

You've got to settle for second, third of fourth best in day to day life more often than not. There is no reason to accept anything but the best in your thinking, however. The only real personal issue is it requires you to completely give up on the idea that you will ever be all that free yourself. Accepting you can do nothing to sway tens of millions of people with muddleheaded notions any time soon is the first step to actually fixing stuff properly.

Ty, Shipbuilder.




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