There's a theme on this, and other bearish websites that gold is the thing to buy when the markets head south.

I have to say, I just don't get it. The thought of putting our savings into gold coins and a good quality chest appeals to the pirate in me, but I need to understand it too.

My thoughts are as follows:

We are, doubtless, in the middle of an asset price bubble. Everything is up (equities, oil, and property, but also gold) because investment money from cheap credit, the carry trade, and hard working Chinamen has chased it upwards. If interest rates go up, and/or there's the mother of all crashes, presumably there would be less money sloshing around to buy gold, and so the price of gold would decline just as fast as everything else. I would imagine that there are almost as many leveraged positions in Gold, that would come unwound on the way down, as there are in equities. Surely, when the roller coaster passes the peak, everything goes down. What makes gold different?

As a hedge against inflation, I do understand how it's better than holding cash, but I would have thought no better than equities or for that matter, housing.

Anyone like to explain to an honest simpleton what I'm missing?

Thank you.

gold has been surpressed by central banks over the years - unlike housing, equities

an unsupressed gold price would highlight rising money supply/inflation - they don't want that

once the central banks run out of gold to sell - it's game over


...or is it?

iirc they haven't taken an audit of fort knox for quite some time and some vaults gold is reportedly being 'double counted'

hilarious stuff....

Hi, another newbie here!

Been lurking on this board for a while now, and it has to be said that a lot of gold ramping goes on here.

In all honesty, can anyone really say if the banks will ever stop manipulating the gold market, or if the price of it will tank with everything else in a major economic downturn? I don't think anyone really knows with any certainty.

I bought into a fairly small amount of gold via bullionvault earlier this year, largely influenced by the discussions here and on other sites. Having seen the initial investment decline >5% in less than 6months (with no sign of an upside with bond yeilds continually increasing), I may just admit my mistake and take the losses. If the trend becomes more positive I can always buy back in.

What is is about serious goldbugs which makes them so eternally bullish? I have to say, I'm beginning to wonder if I get it either.

Cheers!

To understand why people are so bullish for gold, you should read through the 'gold' thread in the main discussion part of the forum, make sure you read all the links and watch all the videos and then after all that maybe spend a quite a bit of time thinking about it all. Try to understand the other side of the argument against gold so that you can test the pro gold position, but theres probably nothing anyone can add in one single post that will give you somekind of secret knowledge or understanding of it all.


hopefully this video will help a little

http://video.google.com/videoplay?docid=-2...rassimir+petrov

gold is a long term investment

heres a graph that adds perspective...

Thanks for the link - very informative (if long!) video. I guess the nagging question which remains is : in the forthcoming bust, will gold be an asset/"high order capital goods" or a consumer item/"low order capital goods"

I'll keep reading, and whilst I understand that the gold market is volatile, and that any investment should be for the mid-long term, I remain a bit concerned!

Thanks, very interesting lecture there.

Don't know a great deal about PMs at all.
Internet forums seem a great way of expanding one's knowledge but I would never make any investment decisions based on forum chat alone.

Therefore spoke to a close friend last week whose father is a retired chairman of Citibank.
When asked a general question about the economy he (the father) merely commented that "now is not the time to be in the stock markets."
So where is his money at the moment?
Yep,.................. Gold

hmm, cgt free brittanias do seem to be in short supply atm...