We need some well thought out arguements to challenge the idea that gold wont continue to rise but has hit its peak.. so we can make informed choices whether or not to invest our cash.

We are not sheep are we???

See my reply to your same question on the other thread:

If government (US especially) bites the bullet and has a credit crunch, high interest rates, "Great Depression", deflation, then gold will go down with everything else (but not as far - maybe 90% for most assets, maybe 30% for gold), and fiat money will be restored in value, the economy will be cleansed of debt, everything can be ready to restart from a sound base. Fiat paper will have been proved to be a worthwhile bet and will survive another cycle.

Does the government have the balls/political power? IMHO - no.

So the alternative (which we are in) is a high liquidity, over-stimulus ending in hyperinflationary financial meltdown and a switch to gold backed currencies by the big multinationals for their deals, and governments eventually shrinking and going bust. (The gold bearish part in this second scenario is that gold would be so valuable (estimates of 1oz = $60,000 to $80,000 plus in current 2005 dollar value), that most countries would eventually confiscate in their death throes.)

http://www.housepricecrash.co.uk/forum/ind...20&#entry193313

You won't find many bearish arguments other than central bank sales.

And even that is changing....

Central Bank of Argentina – a changed view on gold
http://www.mineweb.net/sections/gold_silver/489001.htm

Where's the best place to find info on proposed central bank sales ?

Thanks

The 'essays' button at www.gata.org will give you a lot of info.

Pent

If you havn't read this...its pertinent and the view in the minority and not well represented in the mass media. My reasoning had led me to favour this view and my experience of the latter two aspects is instructional (being in the minority and not in the mass media).

http://www.housepricecrash.co.uk/forum/ind...showtopic=15056

sp1

I found this posting on the USA-Gold site and I wonder if he has not sketched out our future?

"We have seen that the public needs an asset class that is rising to feel comfortable about the economic prospects of the economy as a whole. The psychology of Americans has become the psychology of the gambler. We see that poker has become a "sport." We see boom/bust cycles that are appearantly encouraged by both monetary and fiscal policy. I have come to believe that Americans need a booming asset class. The American government, banking cartel, and wall street (an incestous group if there ever was) need booms more than the public. Without the cycle (first in stocks, now ending in real estate) the speculative nature of the American public could not be harnessed for profit or for control.

"The fundamental imbalances of the economy may have finally gotten so out of hand that currency will continue to flow to precious metals for protection. Many long time Gold investors feel that corrections will be engineered. However, the incestous government/banking/wall street complex is very intelligent. They are in need of another boom. Too many people are afraid of stock market speculation after the 2000 crash. Real estate will become a drain on the American public. The easiest boom to engineer is in commodities, led by the precious metals complex. Why? The investing (speculating) public does not care what the fundamental reasons are for moves in asset classes. This has been proven both in the stock market and the real estate market. They will put whatever money they have into ANY asset class to chase profits. I see the run in precious metals ending in a slaughter, just like the stock market did and real estate is about to do. Gold may be the new medium for the game of our time called the transfer of wealth. Be in early, get out prudently. Being greedy will lead to slaughter."

If this guy is right - and I find his reasoning extremely plausible, then we few who got into gold when it was still fairly cheap are going to be lifted to a higher plane of wealth. If the public rushed to gold and silver AND the "cartel" encouraged it to keep the feelgood factor alive..... well PM really could go really, really crazy. Maybe we will see $10,000 gold and $500 silver.

Darn it, why am I not richer? You know, for the first time in my life I became a saver about three years ago, out of instinct I suppose that I really ought to stop living like a herd beast just drifting along from month to month and wasting my money on cars, weekends etc etc. So I've built up a useful little sum and I can put several K into PM without feeling too overstretched. Amazing how this opportunity in PM came along just as I had at least some savings that I could put into it. For the first time in my life ever I feel I might have got into something early enough to be one of the lucky, envied few one day.

Well I hope so, anyway. Anything beats working for a living.

what's PM?

I feel similar. But can I recommend you have a read of Rich Dad Poor Dad. It discusses the very subject and could well change your entire perspective. I found it enlightening.

PM = Precious Metals

It seems to me that buying gold is for people expecting the very worst case scenario, like depression, massive devaluation or collapse of paper currency, hyper inflation.

But its also been mentioned that in a worst case scenario, that governments may confiscate gold.

So what is the point in buying it unless you have physically got it buried in the garden ? Which to me seems a little extreme/paranoid.

This is a serious question, if you bought gold from somebody like "Goldmoney" how safe would it be in this situation ?

ARGENTINA
(EXCERPT from the link above):

"the decision to take gold into the portfolio rests on the fact that the bank holds 30% of its reserves in non-dollar assets and it therefore wants to use gold to reduce volatility. It will not go above that of non-dollar assets percentage because of its need for dollars for international trade.

The latest figures from the IMF show that during 2004 Argentina acquired 54.9 tonnes of gold (equivalent to five days’ global fabrication and bar hoarding demand).

Country........ Holding %.Top15
Japan..........: $820Bn :27.2 %
China..........: $525Bn :17.4 %
Eurozone.......: $360Bn :12.0 %
Taiwan.........: $230Bn : 7.6 %
US.............: $180Bn : 6.0 % : Top.5= 70.3%
South Korea....: $175Bn : 5.8 %
India..........: $120Bn : 4.0 %
Hong Kong......: $115Bn : 3.8 %
Singapore......: $100Bn : 3.5 %
Russia.........: $ 95Bn : 3.2 % : Top10= 90.4%
Switzerland....: $ 70Bn : 2.3 %
Mexico.........: $ 65Bn : 2.2 %
Malaysia.......: $ 60Bn : 2.0 %
Brazil.........: $ 50Bn : 1.7 %
UK.............: $ 45Bn : 1.5 %

TOP 15........ $3,010Bn : 100 %

During the mid- to late-1960s, the United States experienced a period of rising inflation. Because currencies could not fluctuate to reflect the shift in relative macroeconomic conditions between the United States and other nations, the system of fixed exchange rates came under pressure.

In 1973, the United States officially ended its adherence to the gold standard. Many other industrialized nations also switched from a system of fixed exchange rates to a system of floating rates. Since 1973, exchange rates for most industrialized countries have floated, or fluctuated, according to the supply of and demand for different currencies in international markets. An increase in the value of a currency is known as appreciation, and a decrease as depreciation. Some countries and some groups of countries, however, continue to use fixed exchange rates to help to achieve economic goals, such as price stability.



= = = = =
LINKS:
Charts: http://www.kitcocasey.com/displayArticle.php?id=116
Google: http://www.google.co.uk/search?hl=en&ned=u...lr=&sa=N&tab=nw

I know that Pecunix (another gold backed currency) keeps its gold in Switzerland for that very reason. I don't know about Goldmoney, but I am certain they would move their gold there (or equivalent) if confiscation looked even remotely plausible.

I'd say if you keep any physical gold in a country like Switzerland and are prepared to leave the UK yourself when confiscation is first mooted, they'll find it very hard to confiscate your gold.

Also any confiscation scenario is usually the crazy anti-capitalist act of a government desparate to escape its own death throes. It won't last very long, which means you don't have to evade any clutches for too long.

I would further imagine that worse comes to worse, there will be new, smaller, more rational replacement governments later that would possibly be willing to own up and compensate you (after a 20 year court battle, and during very prosperous times, of course).

The main reason to buy gold is because it is in a bull run that is most likely to last for years and will see major rises if the public gets a sniff on it and throws money at it to bubble. It is also insurance against inflation.

The only reason to own physical bullion at the moment is to enjoy the satisfaction of having it tangibly to gloat over. The gold and silver coins are beautiful in themselves and security is not a major issue at the moment provided you don't get the bullion delivered to your home address.

If you don't want to keep physical bullion then invest in egold or a gold currency, but bear in mind that even allocated gold accounts have a question make against them in my opinion, because I can't see how the companies can guarantee that you really do own a distinct share of gold in their vault, unless they buy a great quantity of gold up front. If they did that their working capital would be too great, so there has to be some kind of fluffiness in the system to match custom demand to physical gold stocks. Also, do they really own every gold bar or do they lease it? A final point is that nothing on the Internet is absolutely secure from hackers.

Maybe, but there is much controversy about that book. Take a look at this site:

http://www.johntreed.com/Kiyosaki.html

This analysis comes to the conclusion:

"Rich Dad, Poor Dad contains much wrong advice, much bad advice, some dangerous advice, and virtually no good advice."

I have no idea if that is justified but it might be an idea to take a look over John T. Reed's essay as a balance. It may be that John T. is being rather harsh. The comments on Amazon were also very mixed.

Durch, I don't understand your reasoning here. You say that a credit cruch prompted by high interest rates means "the economy will be cleansed of debt", but will that not be at the expense of banking failures due to mass bankruptcies? Any whiff of a banking crisis will send gold sky-high surely (along with the Swiss Franc). The current debt has to get paid off or else someone pays the price (we do, as savers).

Actually, whether they shove rates up or down I can't see a happy ending, unless I am to believe they'll actually spend the next 50 years trying to pay it all back, and I doubt that.

Prior to the 1930s gold was cash, so the history of all the old fashioned catastrophic banking collapses (the kind where everybody lost their shirt, and politicians looked on unmoved) would have seen cash become king, ie. gold rise.

Now, supposedly, gold is a commodity priced in cash. If the fiat backers are strict (ie. watch everybody lose their shirt and look on unmoved) then cash (dollar paper) will be king, and gold will move as a commodity, dropping in price, purely because there is no lending available, that is, the money (paper) supply has shrunk 500x and so few dollars are around that gold's nominal price has to drop. (In real terms, no doubt, it would be going through the roof, until the crisis was finished and it was apparent that the government had let the whole thing unfold without intervention so fiat had won.)

As you imply "it just ain't gonna to happen".

This thread was started to gather bear views on gold. They are thin on the ground but here is one from Business Week:

http://www.businessweek.com/investor/conte...015.htm?chan=db

I am not much impressed. What makes me think the long bull in gold is real is that those who have really looked hard at what is going on have come to support it, while contrary views are based on common attitudes just from the period since 1980.

Gold is all over the bl00dy shop at the moment, up and down in great sweeps. What's behind this?

You give them money, they take their percentage, then buy gold with the rest and store it in a vault. At most they need to buy one extra bar of gold out of their own pockets to cover any fractional bar in their deposits.

I would guess that you could only physically receive gold from them if you owned enough to justify taking an entire bar, but they can always sell a bar, give you the cash value and you could then buy gold coins with it.

Personally, if gold really does explode in value I suspect that confiscation is probably a greater risk than the company not giving you gold because they never had any.

I've heard all sorts of rumours - a hedge fund failure that is short gold and the Fed intervening to push gold down to let it unwind - secret central bank sales to support the dollar - a rogue computer trading programme - you name it. Go to Kitco's forum to read some.

Basically, IMHO, when markets are a one way ticket, they often make massive counter moves to shake off the uncommitted - called bear and bull traps.

So in 1929, the dollar was backed by gold. This didn't stop the biggest debt bubble, boom and bust we have ever see.

Why would it be "different this time" if we switched back to a gold based currency ?

Gold doesn't stop bank's lending it out in credit manias. But because you can't print any at the end, everyone suffers the consequences, when you can't get it back.

Gold would have given 1929's participants pain equal to their previous excesses. To escape that pain, the government began to place restrictions (for individuals) on gold convertibility, then ownership, then confiscation, as depression dug in, and the government began the first moves towards overstimulation and pure fiat. They kept a gold window open for other countries until 1971, when France began taking the p1ss, emptying out Fort Knox, so it was closed. That's when dollar became pure fiat.

If the real Great Depression had occurred (far worse than what did pass, bad as it was) we would have seen the truly horrific outcome of a credit bubble (starvation), and might have learned not to do it again. Instead we've stored it up for today, when the contrast will be even more painful.

Thanks for your answer Durch - much appreciated.

Are you saying that the Great Depression did not actually happen ? Or just that it would have been worse in a non-gold backed banking system? If I remember my history lessons, it was pretty bad - some did starve, and I think we did learn a lesson. We have clearly forgotten again now, but it has taken 2 or more generations.

Do you know if 1920's USA used FRB? I know that this is seperate from the issue of gold.

Edit:tpyo

Thanks.

Yes, I think the Great Depression was headed off as it went towards its lows by the New Deal, and a switch away from gold to partial fiat currency (with limited gold convertibility for international trade).

If the government had stuck to gold and no intervention it would have been much worse at the bitterest end. Instead, they went for a one-shot deal of putting off the problem. Now of course they are eroding that faith. The same trick can't be used twice, and we will eventually have the hard end of the Great Depression.

Now because of technology (and everything) being different it won't be the same. Some people think it might be better. (But some think it will be worse - imagine a bankrupt state, too impoverished to act, but no one willing to lend any more resources to it, with cities in winter deprived of oil and food.)

We think we are separated from Nature. We are not. And I don't think we have escaped the hard lessons of life yet.

(Wall Street used FRB - it's been in vogue since John Law - although it was considered fraud in the Middle Ages.)

Hmmmm........


Thanks again Durch.

Since you mentioned not being able to follow my logic on another thread, I reread my post above.

You are right, it's pretty dense.

Here's a long drawn-out article explaining the same thing far better than me:

Central Heating

No critism intended ?

I can't find much to argue with in the link you posted. It doesn't even mention gold !!

So I then read this one : THE BABYSITTING SYNDICATE

Again, it uses useful metaphors to get its point across.


I am pretty pessimistic about the longterm future of our finances, but less so about our future in general. Perhaps if I had lots of cash, I would stock up on gold. A portion of any portfolio should contain some PMs, I am advised.

However, (lacking a portfolio of any kind), I am still not totally pessimistic. This big cycle (late 20th century capitalism) will surely run its course. But humanity will emerge wiser (I hope) and try again with something new. Energy and ingenuity will be at least as important as gold. We have certainly gained a lot from this latest cycle (and paid a few dues, too) and I don't think a dark age is inevitable. Dunkirk spirit and all that ! The current state of affairs is self-evidently unsustainable, I have always believed that. But just because a car will eventually run out of petrol, doesn't mean you can't have some fun zooming around in the meantime ! Just make sure you learn to cycle before it finally runs out.

Anyway, I am rambling Thanks for your interest Durch. Time for bed I think !

Cool. If you 're still there, just to let you know I agree. The future is bright. Nanotechnology, machine intelligence, space travel, human intelligence augmentation, all the wonders of the Universe, maybe a Singularity. Progress is real. This is just a little fallback.

I think we will soon see the Gabachinni effect with gold prices. We may even see a Fetuchini effect if the Tachini pressure is high ie 100/23.4 cf 100/22.4. I think you all know what I mean

I wasn't impressed by this article at all. It's mostly just opinion built around imagery. He repeats the view that house prices in UK are inflated by restrictive planning laws. That I doubt. Other countries like the Netherlands and Germany have far higher densities than UK but similar house prices. Isn't the willingness to go to extremes of lifelong debt that inflates the housing market? It's otherwise a bit hard to explain a 120+% bubble in a period when the government was if anything relaxing planning regulations by forcing building on South Eastern counties that didn't want it, but interest rates were low.