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Just checking to see if I am going to be allowed to post this chart in this thread, as I have tried in the gold thread but appear to have been disallowed.

This is a graph that I have been creating since 2007, which is still fitting. It shows a hyperbolic curve fitting a log chart of gold in GBP.

20110720-me7tttu4r5p5fpesrads13m6hn.jpg

Edited by PiXeL8r
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Just checking to see if I am going to be allowed to post this chart in this thread, as I have tried in the gold thread but appear to have been disallowed.

This is a graph that I have been creating since 2007, which is still fitting. It shows a hyperbolic curve fitting a log chart of gold in GBP.

20110720-me7tttu4r5p5fpesrads13m6hn.jpg

Don't be shy, lets have a look before 1999

au968-999.gif

Looks like the 1972-1980 crash is coming again.

Edited by Peter Hun
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Don't be shy, lets have a look before 1999

au968-999.gif

Looks like the 1972-1980 crash is coming again.

I am not shy and perfectly happy to debate the reason for gold's rise with you. 1972-1980 was not a crash the price of gold went up by around 24 times.

If you remember that in 1980 Paul Volcker started getting inflation under control by raising interest rates from 11% in 1979 to a high on 21.5% in 1982. This action bought interest rates back to be positive rather than them being in the negative state they had been for most of the 70's. Negative rates means interest rate being below the inflation rate, which is particularly good for gold prices. It was decided at the time that to control inflation that interest rates had to be set at 2% above the inflation rate.

These days we have heavily negative interest rates, you get paid virtually nothing on your fiat currency even though it is losing heavily once you factor in the government's heavily manipulated CPI rate. If you actually go off the CPI rate as it actually was created in the 1970's things look even worse. There is no way that interest rates will go positive for many years yet, as the governments around the world have far to much debt and also a load of toxic MBS debt on their books, which is highly IR sensitive.

Here's a good chart for you to contemplate, it shows gold's performance on a YoY basis under different levels of real interest rates. Bear in mind that I think this chart is produced off the government reported CPI figures which have been heavily changed over the time and now read a lot lower.

20110704-nhnep1ix3kw9pmcjf2mr37t1in.jpg

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  • 3 weeks later...

I am not shy and perfectly happy to debate the reason for gold's rise with you. 1972-1980 was not a crash the price of gold went up by around 24 times.

If you remember that in 1980 Paul Volcker started getting inflation under control by raising interest rates from 11% in 1979 to a high on 21.5% in 1982. This action bought interest rates back to be positive rather than them being in the negative state they had been for most of the 70's. Negative rates means interest rate being below the inflation rate, which is particularly good for gold prices. It was decided at the time that to control inflation that interest rates had to be set at 2% above the inflation rate.

These days we have heavily negative interest rates, you get paid virtually nothing on your fiat currency even though it is losing heavily once you factor in the government's heavily manipulated CPI rate. If you actually go off the CPI rate as it actually was created in the 1970's things look even worse. There is no way that interest rates will go positive for many years yet, as the governments around the world have far to much debt and also a load of toxic MBS debt on their books, which is highly IR sensitive.

Here's a good chart for you to contemplate, it shows gold's performance on a YoY basis under different levels of real interest rates. Bear in mind that I think this chart is produced off the government reported CPI figures which have been heavily changed over the time and now read a lot lower.

20110704-nhnep1ix3kw9pmcjf2mr37t1in.jpg

That data set then is the 77-80 bubble and the current bubble?

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From the 1970's till now and BTW I don't think that gold is in a bubble, I think there is a fiat debt bubble.

I know. Clearly 77-80 gold was a bubble. So that just leaves the current data which you contend isn't. But I don't want to detract from this thread as a 'chart' thread. Was an observation.

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I'm intrigued. What does this chart represent? It's contrary to anything I'd expect.

My guess would be it represents hidden inflation. If you underestimate the real inflation rate it makes lots of figures look better than they would otherwise. GDP, retail sales etc.

The one thing you can not hide is peoples opinion on their current purchasing power.

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