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Interesting Article On The Front Page Of The Bbc!

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I'm sure the mods will let this stay on the main board a little while for people to discuss it before moving it to the gold forum ;)

Gold rush: All change for the world's favourite metal

Gold's position as the ultimate storer of value has remained largely unchallenged for centuries.

The metal's rarity not only meant it became a recognised and trusted form of payment, but also bestowed upon it an almost mystical allure.

This came about not through historical accident or coincidence, but for the simple reason that nothing else fitted the bill; almost every other element is either too common, reactive, corrosive or gaseous. And most of those that aren't are just too scarce.

Throughout history emperors, kings and queens, governments, central banks and investors have trusted gold to maintain its value.

This is simply because gold is a physical asset with a finite supply, unlike cash, equities and bonds, which can be printed or issued at will.

For investors, therefore, it has always been seen primarily as a good hedge against inflation - traditionally, few people bought gold to make money, simply to protect themselves against losing it.

Price surge

But all this is changing. Gold has risen in value every year for the past 10 years, during which its price has risen fivefold to more than $1,500 an ounce.

No longer, therefore, is gold seen simply as a way to store value, but as a genuine investment opportunity offering the potential to make a serious return.

But should it be? It is certainly true that all the factors currently driving the price up are likely to continue doing so for the foreseeable future.

Laying aside short-term factors such as unrest in the Middle East and North Africa, and low interests rates making cash unattractive, there are three central drivers behind gold's seemingly unstoppable rise.

First, higher inflation rates driven by monetary easing across the world are making gold - the classic hedge against rising prices - more attractive.

Second, major global currencies - rival safe havens for investors' money - are looking decidedly dodgy.

The US dollar is weakened, due to the country's massive debt problem which the government seems unwilling or unable to tackle.

And the euro is undermined by similar issues among the so-called peripheral members.

Finally, economic imbalances between East and West - between the world's savers and the world's spenders - are fuelling a general sense of unease about the future direction of the global economy.

And as one investment manager put it, gold is "the great barometer of uncertainty".

Add to this the increasing demand for gold jewellery from the growing middle classes in India and China, and for gold bars from the central banks of these two emerging powerhouses, as well as long-term production that is unlikely to rise, and you might think gold was not just an attractive investment but a pretty sure thing.

'Fear trade'

Not so, say a number of analysts.

"It is wrong to see gold as an investment," says Tom Stevenson, investment director at fund manager Fidelity Investments.

"It does not provide an income and is almost impossible to value. The fact that it is has risen in price is not a recommendation to buy; in fact it could be quite the opposite."

He does not expect the price to fall any time soon, largely due to the weak dollar outlook, but warns that, in the long term, the true price of gold must be linked to the cost of its production, which is much less than $1,500 an ounce.

Anything over and above this cost is just speculation, he argues.

In fact, stripping out inflation, the current price of gold is still below its 1980 peak. It would have to hit almost $2,000 to breach that inflation-adjusted record.

Yogi Dewan, chief executive of Hassium Asset Management, agrees.

The current surge in the gold price is based on "speculation and fear trades," he says.

"It's absolutely crazy [for the price] to be at $1,500 - we are clearly in bubble territory."

In fact, Mr Dewan argues that the price may drop sharply once interest rates begin to rise as the global economy continues to recover.

"If rates move significantly, there could be a massive move in price, possibly back towards the $1,100 level," he says.

This is simply because higher rates make cash and currencies more attractive, and signify a return of confidence in the global economy.

Too popular

Most importantly perhaps, Mr Dewan also argues that gold is now a "crowded trade". In other words, too many people own it - not a characteristic savvy investors look for.

Part of this is due to the remarkable success of gold exchange traded funds (ETF). These are vehicles that allow investors to gain exposure to the gold price without having to own any physical gold.

The largest gold ETF, the SPDR Gold Shares, holds more than $55bn and is one of the largest ETFs of any kind in the world.

In fact these investment vehicles' popularity, along with the recent surge in the gold price, is further evidence for those who argue the price is being driven more by sentiment and speculation than by fundamentals.

It may well be, therefore, that the fundamental change in perception of gold, from storer of value to investment opportunity, could be the very reason to avoid it.

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Gold isn't rising - fiat is sinking. MMT at work.

I find it amazing that houses can fall against a falling currency!

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Another cutting to be blue tacked to the crowded wall in our spare bedroom of the Idiot "Gold is in a Bubble" Hall of Fame..

Would you invest with someone called Yogi? (apart from Boo Boo of course!)

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Another cutting to be blue tacked to the crowded wall in our spare bedroom of the Idiot "Gold is in a Bubble" Hall of Fame..

Would you invest with someone called Yogi? (apart from Boo Boo of course!)

"smarter then the average bear Boo Boo."

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Big article on gold and nothing about gordon Brown selling off 400 tonnes at the bottom of the market.

The left wing bias continues.

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Big article on gold and nothing about gordon Brown selling off 400 tonnes at the bottom of the market.

The left wing bias continues.

I suggest that you read the article before commenting on its supposed "bias".

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Big article on gold and nothing about gordon Brown selling off 400 tonnes at the bottom of the market.

The left wing bias continues.

AFAIK it's not just that he sold at the bottom of the market, he actually created that bottom by telling everyone beforehand that he was going to sell! :blink:

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AFAIK it's not just that he sold at the bottom of the market, he actually created that bottom by telling everyone beforehand that he was going to sell! :blink:

It would be quite difficult to sell a large quantity of anything without telling buyers about it.

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It would be quite difficult to sell a large quantity of anything without telling buyers about it.

true but there was no need advertise it a week in advance and cause the price to nosedive.

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Guest spp

it's time to cash out if the bbc are pumping it.

Pumping it? :lol:

Maybe you should read it first.

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it's time to cash out if the bbc are pumping it.

That was my first thought! :lol:

I noticed this story when following a link to another story proved by a HPcer (I don't normally visit the BBC new site).

I'm rather worried now. I need RB to post another "gold is doomed" thread to reassure me.

Or, alternatively, the article is just more people who don't understand why gold is rising, yet feel qualified to predict its demise.

In fact, Mr Dewan argues that the price may drop sharply once interest rates begin to rise as the global economy continues to recover.

Well IRs would have to rise considerably before that happens. IRs were rising throughout the 70s during the last gold bull run.

If inflation is 5% ( :lol: ) and you're an investor after a return of 5%, than IRs would surely need to be around 10% AFTER TAX before savings accounts become attractive to investors.

(Does the above make sense to anyone?)

Interest rates were double that before the 1970s gold bull run finally ended.

Give me interest rates of 10% after tax and I might just consider selling my gold.

Maybe.

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Continues to recover?

Yeah, whatever....

You cannot take an article seriously (all other inconsistencies aside) which purports the all time inflation adjusted high to have been in 2001 (the actual brown bottom) check thier chart.

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Big article on gold and nothing about gordon Brown selling off 400 tonnes at the bottom of the market.

The left wing bias continues.

Err..from the article:

Gordon Brown sold half the UK's gold reserves at the turn of the century at about $260 an ounce. The gold price is now more than $1,500

Yeah, well biased innit :rolleyes:

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You cannot take an article seriously (all other inconsistencies aside) which purports the all time inflation adjusted high to have been in 2001 (the actual brown bottom) check thier chart.

I'm checking the charts and 2001 doesn't seem to be a high for anything - where are you looking?! The highs for gold are clearly around 1980 and now.

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No bubble. There's no accounting for the money now in ciculation and currency devaluation.

If you could buy London property at 1980 prices - you'd jump to it.

Gold is below its 1980 price adjusted for inflation.

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Exchange gold when:

The BBC recommends it

Regular features in mainstream media "Gold under the hammer", "Grand gold designs" "Escape to the gold country"

People are making fortunes and becoming millionaires overight from gold penny shares

The Gold Dow ratio is 2 or below

When people you know are recommending gold stocks to you

When a major chain retailer starts selling bullion coins/bars on the highstreet. Tesco/Argos/etc

Interest rates are real; 9%+

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No bubble. There's no accounting for the money now in ciculation and currency devaluation.

If you could buy London property at 1980 prices - you'd jump to it.

Gold is below its 1980 price adjusted for inflation.

Yes i'd buy London property at 1980s prices because i could immediately re-sell for a profit (because housing is in a bubble).

Whereas real terms gold prices are just below the crazy spike of 1980 and that makes it good value? I don't agree.

Adjusting for inflation *IS* the method by which the money now in ciculation and currency devaluation is accounted for, since that is what inflation is!

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I'm checking the charts and 2001 doesn't seem to be a high for anything - where are you looking?! The highs for gold are clearly around 1980 and now.

Ah you're right they've corrected it since I first read it a couple of days ago, they had the chart there but the date line had the high at 2001. My bad, should have checked.

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It would be quite difficult to sell a large quantity of anything without telling buyers about it.

Well the Americans managed it! Fort Knox and the Fed are filled with 8000tons of gold painted tungsten! That was over 20 times as much gold as Brown got rid of.

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Speaking of Tesco...they're already in on the Cash for Gold business...

And no, this is no joke!

https://www.tescogoldexchange.com

Exchange gold when:

The BBC recommends it

Regular features in mainstream media "Gold under the hammer", "Grand gold designs" "Escape to the gold country"

People are making fortunes and becoming millionaires overight from gold penny shares

The Gold Dow ratio is 2 or below

When people you know are recommending gold stocks to you

When a major chain retailer starts selling bullion coins/bars on the highstreet. Tesco/Argos/etc

Interest rates are real; 9%+

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I find it very odd that people think this article is promoting gold! It's the usual BBC approach of keeping people in the dark, combined with smear tactics, while attempting to sound as if they've presented both sides of the argument. It's only right at the end of the article that they even mention the concept of physical gold, and even then it's in a largely negative context:

Most importantly perhaps, Mr Dewan also argues that gold is now a "crowded trade". In other words, too many people own it - not a characteristic savvy investors look for.

Part of this is due to the remarkable success of gold exchange traded funds (ETF). These are vehicles that allow investors to gain exposure to the gold price without having to own any physical gold.

The largest gold ETF, the SPDR Gold Shares, holds more than $55bn and is one of the largest ETFs of any kind in the world.

In fact these investment vehicles' popularity, along with the recent surge in the gold price, is further evidence for those who argue the price is being driven more by sentiment and speculation than by fundamentals.

And then their conclusion is:

It may well be, therefore, that the fundamental change in perception of gold, from storer of value to investment opportunity, could be the very reason to avoid it.

Meanwhile, right next to their conclusion, there is a banner that states:

Central banks in India and China are looking to increase their holdings of gold.

I suppose those Indian and Chinese central banks just like jettisoning wealth.

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  • 285 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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