Pound 1.51

[Georgia O'Keeffe]

I am not into stochastic analysis but rely on trying to understand the fundamentals. All I know is that I hold 2/3rds of my assetts in US $ which places me in a better position than if I held Sterling. Since returning to the UK in 2005 I have not transferred more than 1/3rd into sterling believing that sterling would not last at 2.13 ish vs the dollar. Many on here were predicting the end of the US economy while I continued to hold $. There is universal bearishness vs the £ because fundamentals say there should be. We are the third worst economy in the world in relation to debt:GDP with no recovery in sight. Sterling has held up remarkably well over the last year but it seems clear that with houses about to resume the downward trajectory spending is going to collapse, jobs will be lost and we run a risk of depression. The US has always been the flight to safety bet and it will remain so for many years yet. The pendulum for the dollar is in the early stages of swinging in a positive direction as the real buying is not yet happening while the world waits to see if the Euro can hold itslef together. The pendulum for gold is close to the turning point as evidenced by universal bullishness and herd mentality which is Buffett's sell signal--I think Buffett is right in this.

I generally agree with your fundamental analysis and am very bullish on the dollar over every other currency including gold over the medium term, but price over the short term is driven by sentiment rather than fundamentals and if the Mainstream media are shouting out in unison that its time to offload sterling you can be 100% sure they are as usual on the wrong side over the short term. Like i say if there is universal bearishness as you say, that is simply another way of saying short term the selling pressure is reaching exhaustion. Who is left to sell if everyone is bearish?

Edited February 27, 2010 by Tamara De Lempicka

[Errol]

I'm sure most will concede its volatility.

Indeed. That's what you shouldn't trade it (especially not leveraged).

[wren]

I have a friend who bought 5 sofas over Christmas. If anyone's looking for a bright yellow leather DFS sofa, please contact me him.

In Finland it is illegal to buy more than 3 sofas in one month. By the third sofa shop assistants are giving them leery looks and if they ask for a fourth it's a case of "sorry, mate, you've had enough already".

The government is always talking about increasing sofa taxes for the public good and maybe decreasing the monthly quota to two (which they never actually do as the tax revenues are so good).

Edited February 27, 2010 by wren

[wren]

You need to base your gold value against a basket of currencies for a more accurate valuation.

No. You need to value gold against real things like houses, a month's average wage or a share of the DOW index of companies.

The nominal price in paper currencies is useless for valuation.

Gold/DOW is still over 9 and will drop below 2. An average UK house still costs over 230 ounces and will drop to 100 or less.

[SurgeonGeneral]

Gold is just another commodity that rides the market as Buffett decribe in his pendulum analogy. It has never recovered from the 1980 sell-off when it reached almost $2800 an ounce (inflation adjusted). There are better hedges against sterling than gold--how about Honeywell shares bought last year at $29 in US dollars and now at $40? Slightly outpaced gold? Factored against sterling it was a good bet. Don't hold too long though.

Gold will do what gold always does--rise and fall, and when it falls it goes quickly.

What might be the trigger? Frustration that it is not moon bound and still stuck well below $1500 (let along $2800)? Recession and depression looming which points to deflation? Everyone getting on the bandwagon believing its a one -way bet (the far end of the Buffett pendulum and a major sell signal)?

IMO, gold has had its run and now its time to sell.

http://www.kitco.com/market/

GOLD 26/02/10

02/26/2010

09:12

911.80

912.80

-115.20

-14.47%*

_______

*just kidding

you had me there chap!

Nick

[Errol]

you had me there chap!

Nick

I pray for a $100 gold drop every day (with equivalent sterling drop). The cheaper the better.

[tpbeta]

I think its time to bail out if sterling. Wish I had made the move last week at 1.62!

I got out at $1.65 but wish I had at $1.70. Pointless to regret might have beens.

[wren]

I pray for a $100 gold drop every day (with equivalent sterling drop). The cheaper the better.

It would give latecomers a better chance to take cover. I see this more as protection now than anything else.

[scottbeard]

If you bought a few months ago at or near the peak you are very nervous. If you bought when it was $900 you are wondering whether you will have time to get your money back if there is a sudden sell off because James "Jimbo" Rogers sneezes. If you bought at $500 you are thinking that doubling over 3 years is not bad. If you bought in 1980 you are still crying. Thus it all depends when, exactly, you bought and when you actually sold--the rest is what if-ism.

The answer to your question is simply based on the profit you actually made by comparing your buy sell price. Gold bugs tend not to sell which is why so few realise a gain. There is awlays the thought of "what if" the price went to the moon and I cashed in at the top of the market. Buffett says that most people lose by waiting for that extra 5% profit instead of getting out while the pendulum is still swinging in the right direction.

Surely it depends why you hold Gold? If you hold it as a "regular" investment the aim should be to buy low, sell high as with anything.

But I hold a little bit of Gold and it is "for emergencies". It is insurance, not investment.

Think of it like home contents insurance. My house will probably not burn down, and therefore I will probably have wasted £300 insuring my stuff. However, I am prepared to forego that to cover the unlikely (but disastrous) scenario in which i need to claim.

For me, selling Gold would be like cancelling my annual house insurance policy after 6 months because the house hasn't looked like burning down. So that's why I will keep it.

It doesn't matter to me whether Gold outperforms Honeywell shares or not. Perhaps Honeywell is the place to be, perhaps I could get home insurance for £285 not £300, but I have neither the time nor the inclination to research everything in minute detail and accept that as a result I will miss a few boats.

['Bart']

In Finland it is illegal to buy more than 3 sofas in one month. By the third sofa shop assistants are giving them leery looks and if they ask for a fourth it's a case of "sorry, mate, you've had enough already".

The government is always talking about increasing sofa taxes for the public good and maybe decreasing the monthly quota to two (which they never actually do as the tax revenues are so good).

As long as they don't bring in some sort of sofa confiscation laws.

[Tired of Waiting]

http://www.xe.com/

1 GBP =Inverse: US $1.51925

Euro: 1.11964

The housing market is the last domino to fall and the markets are reacting accordingly? Brown may think he is in control but the bond traders and currency markets call the shots now. IR rates will have to rise if we sink below 1.40 and that can happen in a matter of days.

Could the market be reacting to the SKY poll showing labour rising?

Something is spooking the market today.

I read somewhere (Telegraph?) that the cause was that Q4 was worse than previously thought.

Edit to add link: http://blogs.telegraph.co.uk/finance/edmundconway/100004040/dont-be-fooled-gdp-was-actually-revised-down/

I know, 0.3% is better than 0.1%.

But the cause of the "improvement" in growth was not that the GDP in Q4 was higher than estimated, it was lower. But Q3 was revised even lower, making the "growth" (Q3 to Q4) bigger. I kid you not.

Edited February 27, 2010 by Tired of waiting

[wren]

As long as they don't bring in some sort of sofa confiscation laws.

In the '20s they were completely prohibited: sofabition (sohvakielto in Finnish).

People started learning how to make them themselves and hid them from the authorities in barns and saunas. Sociologists estimate that sofa production and use actually increased threefold during the prohibition era. Some people still make their own as a hangover from the old sofabition days, learnt from grandparents.

It's still illegal to make them without a licence but it doesn't stop some people. I once knew a student of analytical chemistry who made his own at home in his very small student flat.

Edited February 27, 2010 by wren

[Georgia O'Keeffe]

In the '20s they were completely prohibited: sofabition (sohvakielto in Finnish).

People started learning how to make them themselves and hid them from the authorities in barns and saunas. Sociologists estimate that sofa production and use actually increased during the prohibition era. Some people still make their own as a hangover from the old sofabition days, learnt from grandparents.

It's still illegal to make them without a licence but it doesn't stop some people. I once knew a student of analytical chemistry who made his own at home in his very small student flat.

are they still classified as Class A in Finland or have they been downgraded to Class B yet, a former freind of mine iikka, OD'd a few years ago after a weekend of debauchery that included two settees, 3 armchairs and a leather suite, it was very distressing

[wren]

are they still classified as Class A in Finland or have they been downgraded to Class B yet, a former freind of mine iikka, OD'd a few years ago after a weekend of debauchery that included two settees, 3 armchairs and a leather suite, it was very distressing

Not totally illegal now - regarded as more of a soft piece of furniture these days.

It's said still to be one of the major social problems but I reckon it's mostly the tax revenues that they are really interested in.

Armchair sociologists for you.

Now hatstands are a different matter entirely.

Edited February 27, 2010 by wren

[indirectapproach]

Ah, 1:51, them was the days.

[gasket37]

Ah, 1:51, them was the days.

aye lad.

you could get t'bus into town, go to t'cinema & have a slap up meal and still have change out of £1,000,000,000,000,000,000,000 british pesos.

you try telling t'young people that today!

'appen.