Daily Mail Calls The Top In Gold

[200p]

STOP PRESS

GOLD IS A BUBBLE - OFFICIAL! in the Mail

GOLD: Biggest bubble in history

http://www.dailymail.co.uk/money/article-1374899/Beware-big-investment-bubbles.html?ito=feeds-newsxml

[Old Nis]

Good, lets hope it causes a nice big pullback while the sheeple sell. Be nice to get some more affordable gold before the next climb. I still say this rise (it's still not a bubble, just a steady climb) is only partly due to investment; the main driver is still the outrageous money-printing and debasement of the currency.

http://www.cooksongold.com/mp/history_chart.jsp?metal=AU&period=3&chart=3&x=15&y=7

That's what we are seeing here, not a bubble. There's also the issue that the average person struggling with food and energy inflation can't afford gold any more, so the only bubble-buyers will have to come from the diminishing pool of very well-off middle-classes who still have something left after that bast@rd Brown finished destroying the economy. Governments won't be selling any more gold, they're not only not stupid, they know what they are doing.

Compare and contrast with silver...

http://www.cooksongold.com/mp/history_chart.jsp?metal=AG&period=3&chart=3&x=16&y=10

[200p]

I think I might show a copy of the Mail to the local Cash4gold oufit - might make him panic and sell his sovs for £100 each!

Edited April 9, 2011 by Money Spinner

[Errol]

They'll be saying the same thing as gold goes through $2000, $4000 etc etc.

Gold is not a bubble. Simple.

Only the other day I received a leaflet through the mail about a 'Gold Fair' - where some company was asking people to sell them any gold they had (at silly prices). Note - SELL their gold, not BUY.

There is no public take-up in the gold market. Ask around where you work or in your town. How many people do you know who own the real metal, or could tell you the spot price?

If/When we reach bubble territory people will be sending leaflets through the door offering to SELL you gold and everyone in offices and households around the country will be talking about gold and showing each other their Maples/Eeagles etc.

I personally don't know a single person who knows anything about gold (or silver).

Edited April 9, 2011 by Errol

[Errol]

Keith Wade, chief economist at fund manager Schroders, says the prospect of rising interest rates poses a threat to gold: 'If interest rates begin to rise, people want to put their money in something that gives them a return.' He expects the European Central Bank to hike rates in April with the UK following suit in August.

Lol. When interest rates start to rise gold will take off big-time (unless they are planning on raising them to in excess of 10%+). Mr. Wade needs to check his history books.

[Ruffneck]

STOP PRESS

GOLD IS A BUBBLE - OFFICIAL! in the Mail

GOLD: Biggest bubble in history

http://www.dailymail.co.uk/money/article-1374899/Beware-big-investment-bubbles.html?ito=feeds-newsxml

DM has obviously never heard of the derivatives bubble - 1.5 quadrillion and counting.Undoubtably the biggest bubble in history.

Paper gold is a bubble , real gold is a gauge on inflation.

[Guest_ringledman_*]

Classic contrarian call.

Bubbles peak when the asset class in question hits the front page as a 'buy' or as a story of grannies and school leavers having invested into the next big thing.

Once adverts in the daily press show companies selling you gold and not trying to buy it off you for a fraction of its worth will the bubble peak.

Remember Dow 36,000?

Bubbles peak on irrational exuberance. Negativity amongst the daily press who know nothing about economic history does not correspond with bubble tops.

Gold is in a bull market. Once it goes parabolic, then it will be in a bubble and then you want to get nervous of its ownership.

Amongst institutional investors it still represents a tiny fraction of the percentage of assets owned. Far lower than the percentage of ownership at the 1980s peak.

Likewise who of the general population that you know is buying gold? I know very few indeed.

Edited April 9, 2011 by ringledman

[Guest_ringledman_*]

Keith Wade, chief economist at fund manager Schroders, says the prospect of rising interest rates poses a threat to gold: 'If interest rates begin to rise, people want to put their money in something that gives them a return.' He expects the European Central Bank to hike rates in April with the UK following suit in August.

This is rubbish. If you read economic history, gold only collapses once interest rates become real.

Raising interest rates is bullish for gold as it implies there is an inflation problem and in today's economic environment it implies that governments will raise rates at a slower pace than inflation rises at.

The nominal headline interest rate figure is irrelevant. Totally irrelevant. The important one is the real base rate, ie the headline minus inflation.

With UK inflation at 7% in real terms (i.e. governments bull**** the real rate of inflation) and the base rate at 0.5% we have a rate of around minus 6.5%.

So we raise rates to 1% by year end but inflation could be at 8% in real terms, leaves us with a real rate of -7%. In such circumstances gold will continue to rise.

Governments will always be behind the curve. Governments class savers as second rate citizens. They want to steal your wealth to pay for their overspend and their failures.

Gold is one of the few protections from stealth statist theft.

Edited April 9, 2011 by ringledman

[General Congreve]

DM has obviously never heard of the derivatives bubble - 1.5 quadrillion and counting.Undoubtably the biggest bubble in history.

Paper gold is a bubble , real gold is a gauge on inflation.

Yep, the real bubble is in paper and debt and growing.

[General Congreve]

This is rubbish. If you read economic history, gold only collapses once interest rates become real.

Raising interest rates is bullish for gold as it implies there is an inflation problem and in today's economic environment it implies that governments will raise rates at a slower pace than inflation rises at.

The nominal headline interest rate figure is irrelevant. Totally irrelevant. The important one is the real base rate, ie the headline minus inflation.

With UK inflation at 7% in real terms (i.e. governments bull**** the real rate of inflation) and the base rate at 0.5% we have a rate of around minus 6.5%.

So we raise rates to 1% by year end but inflation could be at 8% in real terms, leaves us with a real rate of -7%. In such circumstances gold will continue to rise.

Governments will always be behind the curve. Governments class savers as second rate citizens. They want to steal your wealth to pay for their overspend and their failures.

Gold is one of the few protections from stealth statist theft.

Well said that man. Here is a graph showing the historical correlation of real interest rates vs. the rolling annual % change in the price of gold (from Money Week), it solidly shows that real rates have to generally be 2% above inflation to have a negative affect on the gold price and quell inflation (Interest rates at 9% anyone? Didn't think so):

http://www.moneyweek.com/~/media/MoneyWeek/2010/101018/509_P30_COVER_2_A.ashx?w=450&h=234&as=1

[General Congreve]

Classic contrarian call.

Bubbles peak when the asset class in question hits the front page as a 'buy' or as a story of grannies and school leavers having invested into the next big thing.

Once adverts in the daily press show companies selling you gold and not trying to buy it off you for a fraction of its worth will the bubble peak.

Remember Dow 36,000?

Bubbles peak on irrational exuberance. Negativity amongst the daily press who know nothing about economic history does not correspond with bubble tops.

Gold is in a bull market. Once it goes parabolic, then it will be in a bubble and then you want to get nervous of its ownership.

Amongst institutional investors it still represents a tiny fraction of the percentage of assets owned. Far lower than the percentage of ownership at the 1980s peak.

Likewise who of the general population that you know is buying gold? I know very few indeed.

This is one of the most bullish aspects for gold. For most of the 20th century the average amount of global wealth held in gold (as opposed to bonds, equities etc.) hovered around 22%-26%. Now it is 0.8%. Yes that is right, 0.8%!!!

This means that even a tiny liquidation of global wealth from equities, bonds or other assets into gold, especially if asset allocation returns to historic norms, will be a HIGHLY geared event for gold, driving the price many-fold higher.

Alternatively, listen to the wisdom of the Daily Mail.

EDIT: Just seen on BBC News that the US government will not shut down! They've agreed a stopgap agreement on funding to raise the debt ceiling. The spending agreements made between the parties to push agreement through don't even put a 1% dent in the US National Debt. Can you believe this stuff? And it's just said as matter of fact on the news. Business as usual Good luck Paper Mugs!

Edited April 9, 2011 by General Congreve

[Guest_ringledman_*]

Well said that man. Here is a graph showing the historical correlation of real interest rates vs. the rolling annual % change in the price of gold (from Money Week), it solidly shows that real rates have to generally be 2% above inflation to have a negative affect on the gold price and quell inflation (Interest rates at 9% anyone? Didn't think so):

http://www.moneyweek.com/~/media/MoneyWeek/2010/101018/509_P30_COVER_2_A.ashx?w=450&h=234&as=1

The two most important concepts in investing, in my eyes are -

1) The difference between the nominal and real price movements of an asset class.

2) Regression to the mean & the Secular bull/bear market.

For the first, to prove the point:

The general population can't see property losing value currently as nominal prices stagnate and the real price falls. The general population can't grasp real prices. 'Bought in 2005 for £200,000 its now worth £210,000' so my property has risen in value'.

The same goes for gold who's price is in the main determined by the relationship between nominal and real interest rates. As joe public can only grasp nominal interest rates, he/she then implies gold will fall once interest rates rise as this is the conventional wisdom. 'I can get more interest in a bank now rates are up, so therefore gold is in a bubble'.

On the second point, everything moves in long cycles, from market top overvaluation to market low undervaluation. gold is no different. It peaked in the early 80s and collapsed by 1999/00. The secular cycle applies to all asset classes. Regression to the mean likewise.

Gold is somewhat harder to value than property (yield, price to earnings measures) or stocks (P/E, P/B, yield measures) but the best measure is the relationship between nominal and real interest rates. This is a measure which most people cannot grasp.

It is the relationship between independent variables that determines the under or overvaluation of an asset class. Every measure of an asset's value is a ratio. Joe public only ever looks at one of the variables, without considering its relationship to the other.

Edited April 9, 2011 by ringledman

[General Congreve]

Just read the article. On the one hand they are saying Gilts could be in a bubble on the other gold.

At least they are right about one thing, but the idiots are completely contradicting themselves with this article.

Also the interviewed investment analysts that berate gold then give their tips for investing at the end.

"Oh, I would recommend investing in this or that fund". Vested interests?

Edited April 9, 2011 by General Congreve

[General Congreve]

The two most important concepts in investing, in my eyes are -

1) The difference between the nominal and real price movements of an asset class.

2) Regression to the mean & the Secular bull/bear market.

For the first, to prove the point:

The general population can't see property losing value currently as nominal prices stagnate and the real price falls. The general population can't grasp real prices. 'Bought in 2005 for £200,000 its now worth £210,000' so my property has risen in value'.

The same goes for gold who's price is in the main determined by the relationship between nominal and real interest rates. As joe public can only grasp nominal interest rates, he/she then implies gold will fall once interest rates rise as this is the conventional wisdom. 'I can get more interest in a bank now rates are up, so therefore gold is in a bubble'.

On the second point, everything moves in long cycles, from market top overvaluation to market low undervaluation. gold is no different. It peaked in the early 80s and collapsed by 1999/00. The secular cycle applies to all asset classes. Regression to the mean likewise.

Gold is somewhat harder to value than property (yield, price to earnings measures) or stocks (P/E, P/B, yield measures) but the best measure is the relationship between nominal and real interest rates. This is a measure which most people cannot grasp.

It is the relationship between independent variables that determines the under or overvaluation of an asset class. Every measure of an asset's value is a ratio. Joe public only ever looks at one of the variables, without considering its relationship to the other.

Stupid peons

[200p]

Psst

It'll be like the hoover dam emptied through a hosepipe!

Edited April 9, 2011 by Money Spinner

[newbonic]

DM has obviously never heard of the derivatives bubble - 1.5 quadrillion and counting.Undoubtably the biggest bubble in history.

Paper gold is a bubble , real gold is a gauge on inflation.

That's what I was thinking - Quantitive Easing and printing of fiat is the bubble, rising PM and commodities prices are one of the results.

[Take Me Back To London!]

They'll be saying the same thing as gold goes through $2000, $4000 etc etc.

Gold is not a bubble. Simple.

Only the other day I received a leaflet through the mail about a 'Gold Fair' - where some company was asking people to sell them any gold they had (at silly prices). Note - SELL their gold, not BUY.

There is no public take-up in the gold market. Ask around where you work or in your town. How many people do you know who own the real metal, or could tell you the spot price?

If/When we reach bubble territory people will be sending leaflets through the door offering to SELL you gold and everyone in offices and households around the country will be talking about gold and showing each other their Maples/Eeagles etc.

I personally don't know a single person who knows anything about gold (or silver).

Marc Faber being interviewed on CNBC in the last few days (at 4.45mins to 5.50 mins in the video), commented about a previous CNBC interview of a friend and CNBC saying gold being in a bubble etc. Marc Faber highlighted that he had just come back from a conference in Singapore with over 200 people and he had asked the audiance of wealth managers, fund managers, how many personally had more than 5% in gold. Not one hand went up!

Edited April 10, 2011 by Take Me Back To London!

[Guest_ringledman_*]

Marc Faber being interviewed on CNBC in the last few days (at 4.45mins to 5.50 mins in the video), commented about a previous CNBC interview of a friend and CNBC saying gold being in a bubble etc. Marc Faber highlighted that he had just come back from a conference in Singapore with over 200 people and he had asked the audiance of wealth managers, fund managers, how many personally had more than 5% in gold. Not one hand went up!

He also says he think's gold may be cheaper now than in 1999!

Legend. One of the few independent minds in the investment world.

[Errol]

In a few years the current price will look very cheap.

[50sQuiff]

It's amazing to me that gold has risen consistently every year for over a decade, outperforming everything else, yet it's still barely more than a sideshow in the investment world. It's still spoken of like a speculative curiosity, a burgeoning bubble or a marginal 'insurance policy'. If this were real estate or tech stocks, then the public would be all in by now!

I also wonder how many people and institutions actually own physical gold. Anyone who has read the prophetic writings of ANOTHER, FOA and now FOFOA, will know what I mean. Paper gold to 0 and physical to infinity as gold stops trading altogether?

We are starting to build up a head of steam here. Just a quick anecdotal but I have never seen so many names on the visitor's log book at ATS Bullion, but I suspect they weren't all buyers. When I was in on Friday it was Arabs/Asians buying and Europeans selling, from what I could see.

[jonb]

They'll be saying the same thing as gold goes through $2000, $4000 etc etc.

Gold is not a bubble. Simple.

Only the other day I received a leaflet through the mail about a 'Gold Fair' - where some company was asking people to sell them any gold they had (at silly prices). Note - SELL their gold, not BUY.

There is no public take-up in the gold market. Ask around where you work or in your town. How many people do you know who own the real metal, or could tell you the spot price?

If/When we reach bubble territory people will be sending leaflets through the door offering to SELL you gold and everyone in offices and households around the country will be talking about gold and showing each other their Maples/Eeagles etc.

I personally don't know a single person who knows anything about gold (or silver).

What is your target price for gold then, and how did you value it at that level? What reasons will people have for buying it at that level apart from the hope of selling it to someone else later for a higher price?

[50sQuiff]

What is your target price for gold then, and how did you value it at that level? What reasons will people have for buying it at that level apart from the hope of selling it to someone else later for a higher price?

Those trillions in bonds, forex, derivatives, equities and real estate have to flow somewhere, and precious metals is a tiny market.

Edited April 17, 2011 by 50sQuiff

[Errol]

The top is in for paper. The paper bubble has been going for years now.

[jonb]

Those trillions in bonds, forex, derivatives, equities and real estate have to flow somewhere, and precious metals is a tiny market.

Why do they have to flow to gold? Apart from paper money, the other things listed are income generating assets. Gold is not. It costs money for insurance and storage, and for those reasons, most businesses who use it as a raw material would want to keep as little as possible of it in stock.

[Ruffneck]

The money flows into all valuable physical assets , not just gold.

To put diamonds/gemstones on that list with Mortgage backed securities is a joke.