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Gold strategy in the current economy


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Yes it is, but it's the best ponzi scheme ever produced, lasting in excess of 5,000 years! So if money flows out of gold, where does it go...? Bonds, currencies. In a sovereign debt crisis... are you serious?

Yes, of course. (I don't even think there is a crisis but there's clearly a media and Republican induced perception of one). The issue isn't even that the US is in any danger of default - they can and are borrowing quite happily at the lowest rates in the world - the main issue is that the Repubs are attempting to force their own country into a technical default. Shameful behaviour. If the Chinese were doing that they'd be talking about bombing them.

No-one's going to be around 5,000 years so that argument is irrelevant. You might make the same point about land but you'd still be a sucker to purchase BTL in 06/7.

In any event, perhaps we'll find out what happens in the next couple of weeks. Perhaps not.

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2018 could be the year for gold https://www.goldmoney.com/research/goldmoney-insights/popular/2141-2018-could-be-the-year-for-gold

Always my experience as well, so I second your recommendation.

It's entirely  dependant on what you are comfortable with. And obviously how much you would need on hand in the effect of something seriously drastic happening.

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Calling gold a ponzi scheme - how hubristic and ahistorical can you be?

If you believe gold is following a conventional bubble cycle, then presumably at the top, euphoric investors will declare a 'new paradigm' and proclaim gold to be the only true money. The obvious flaw in this interpretation is that gold advocates aren't calling for a new paradigm at all. On the contrary, Gold bugs are drawing on a paradigm that is older than the Old Testament. No 'new era', tortured logic or pyramiding of credit required.

Conversely, it is the born-again Keynsians and vehemently anti-gold crowd that need to justify their new paradigm. They seem to possess an infallible belief in violent Western monopolies and their ability to dictate monetary affairs through digital alchemy. On the contrary, history suggests that monetary regimes have a remarkable tendency to self-destruct. If you believe this time it's different, then good luck to you.

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Gold is the currency of last resort and has been for 5,000 years, if you choose to mark that as irrelevant, more fool you.

Yes, of course. (I don't even think there is a crisis but there's clearly a media and Republican induced perception of one). The issue isn't even that the US is in any danger of default - they can and are borrowing quite happily at the lowest rates in the world - the main issue is that the Repubs are attempting to force their own country into a technical default. Shameful behaviour. If the Chinese were doing that they'd be talking about bombing them.

No-one's going to be around 5,000 years so that argument is irrelevant. You might make the same point about land but you'd still be a sucker to purchase BTL in 06/7.

In any event, perhaps we'll find out what happens in the next couple of weeks. Perhaps not.

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Yes, of course. (I don't even think there is a crisis but there's clearly a media and Republican induced perception of one). The issue isn't even that the US is in any danger of default - they can and are borrowing quite happily at the lowest rates in the world - the main issue is that the Repubs are attempting to force their own country into a technical default. Shameful behaviour. If the Chinese were doing that they'd be talking about bombing them.

No-one's going to be around 5,000 years so that argument is irrelevant. You might make the same point about land but you'd still be a sucker to purchase BTL in 06/7.

In any event, perhaps we'll find out what happens in the next couple of weeks. Perhaps not.

Quick note to RK. Thanks for your gold advice for the past 4 years, buying whenever you posted negative things about it has made me rich.

You are my hero.

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How much did gold fall by in 08 and what the reasons for it?

Wasn't part of the reason for the sell off margin calls?

Also the paper price for gold in late 2008 and the amount you had to pay to take delivery were quite different.

Here are the charts for the October 2008 fall.

ausep08.gif

auoct08.gif

aunov08.gif

Seems like November saw a pretty solid recovery.

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Yes, of course. (I don't even think there is a crisis but there's clearly a media and Republican induced perception of one). The issue isn't even that the US is in any danger of default - they can and are borrowing quite happily at the lowest rates in the world - the main issue is that the Repubs are attempting to force their own country into a technical default.

I think you're seeing things filtered through a somewhat myopic (and antiquated) left/right view of the world.

For a non-partisan view of the US's financial woes, I recommend this (made in 2006):

http://www.youtube.com/watch?v=Mkg2bzSXfJs

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Wasn't part of the reason for the sell off margin calls?

Also the paper price for gold in late 2008 and the amount you had to pay to take delivery were quite different.

Here are the charts for the October 2008 fall.

ausep08.gif

auoct08.gif

aunov08.gif

Seems like November saw a pretty solid recovery.

Thanks.

So it was just a brief one month 20% decline before a recovery. In hindsight what a wonderful buying opportunity that was.

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Nicely crafted post BTW.

Calling gold a ponzi scheme - how hubristic and ahistorical can you be?

If you believe gold is following a conventional bubble cycle, then presumably at the top, euphoric investors will declare a 'new paradigm' and proclaim gold to be the only true money. The obvious flaw in this interpretation is that gold advocates aren't calling for a new paradigm at all. On the contrary, Gold bugs are drawing on a paradigm that is older than the Old Testament. No 'new era', tortured logic or pyramiding of credit required.

Conversely, it is the born-again Keynsians and vehemently anti-gold crowd that need to justify their new paradigm. They seem to possess an infallible belief in violent Western monopolies and their ability to dictate monetary affairs through digital alchemy. On the contrary, history suggests that monetary regimes have a remarkable tendency to self-destruct. If you believe this time it's different, then good luck to you.

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I have opened an account on bullionvault and plan to buy ~£50-100+ worth of gold a month from now on.

I'm planning to do something similar. (assuming the gold outlook, in my opinion, looks the same)

Started with some sovereigns and probably add a couple per month for the time being.

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Quick note to RK. Thanks for your gold advice for the past 4 years, buying whenever you posted negative things about it has made me rich.

You are my hero.

When it's an overbought asset I'll say so.

When it's an oversold asset I'll say so.

I said it was overbought in '07/8. It was. It crashed (a real crash) from $1033 to $695. I was correct with that call.

I said I'd be a buyer (paper only of course) at that point and trade it into the next overbought phase. In the event I chose silver and SLV instead. I exited when silver around $18.5 which I was very satisfied with.

I haven't either been short or suggested being short since then.

In fact I've been pretty clear that gold is now in the final stage of the bubble. I have two possible outcomes. This is the final stage or the penultimate stage. I think the former is more likely but it may be the latter. In either case it's little different to tech stocks in the late 20th century or BTL in the late phases of their bubbles.

Are you saying (as one of the charts on the thread is claiming) that we're going to see a permanently high plateau in the gold bubble? That really would be a new paradigm for bubbles would it not? Since no bubble in history hasn't burst and returned to trend I see no reason to argue gold is any different.

That's my position - I'm sorry it elicits such bad feeling and personal attacks, but I guess Tech stock and BTL holders didn't like to be told similar things during the end phase of their bubbles either. No pleasing some people I guess.

I'm happy with my choices, and clearly you're happy with yours and that's all that matters. You'll be infinitely wealthy, forever, lucky you.

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So the US defaults on it's obligations (possibly meaning stiff the bond and treasury creditors) and the result is a flight to safety. Let me guess, would that be a flight to US treasuries perhaps? Talk about Stockholm Syndrome. Bizzare.

I would agree though that gold would sell-off on confirmation of a US default - at first. Then once big money realises there's basically nowhere to go (apart from Apple and Swisses :rolleyes: ) then they will come flooding back in. Don't forget gold is bought because it has no counterparty risk (well physical, that is) whereas other assets depend on the reliability of others in some way. With gold you are not dependent on governments or central banks (except when they confiscate it from you, in which case it's best to go elsewhere) where you might be with currencies or equities for instance. There is also the historical perception that it hold some immutable properties for holding wealth and value. Yep, humans are insane but there you go.

Gold is an excellent crisis hedge. Nothing less. Nothing more. It's a turd most other times, however judging this crisis it really could be different this time...maybe. It's really that simple.

US bond market is $11trilion.

Switzerland can't cope with a few billion euros. No other markets are deep enough.

At some point we'll see a resolution of the Asia surplus problem and the US can start to see a reduction in its capital account inflows and thus a reduction in govt. debt issuance. That's the key and will have to happen at some point. The only questions really are when and how. By agreement or following a catastrophic dislocation. But as things stand there really are no credible alternatives to the dollar. I'm afraid gold's a sideshow, entertaining though it may be.

Edit: Btw CarbonJunkie - I'm perfectly happy to debate anything. Debate isn't the same as personal abuse is it? I don't constantly change my name (Check on my name history); I have only one userid unlike quite a few goldbugs and have never asked the mods to delete anyone's posts with 1 exception which was a reference to bombing manchester (having had friends and colleagues who were bombed by the IRA I thought that was frankly in poor taste). I not even sure who the mods are apart from Doccyboy and I wouldn't dream of asking him such a thing. Perhaps you may wish to accept that other people hold different views to you and there's no such thing as a 'sure thing'? Guess not.

Edited by Red Knight
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US bond market is $11trilion.

Switzerland can't cope with a few billion euros. No other markets are deep enough.

At some point we'll see a resolution of the Asia surplus problem and the US can start to see a reduction in its capital account inflows and thus a reduction in govt. debt issuance. That's the key and will have to happen at some point. The only questions really are when and how. By agreement or following a catastrophic dislocation. But as things stand there really are no credible alternatives to the dollar. I'm afraid gold's a sideshow, entertaining though it may be.

US Junk Bond market is valued nominally at $11 trillion. The real value is closer to zero.

Switzerland or any other market cannot cope with few trillion euros, but gold market can. And I mean physical.

At some point we'll see revolution in Usa Euroland due to debt problem, and US would be bankrupt. so debt problem would be gone forever.

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I would like to know how you know gold is in a bubble, so please lay it out in bullet points, line by line accompanied by external 'credible' references. Personally I don't think you can and I'm also of the opinion you know this and won't acknowledge this post. One last request, please don't turn this around and say "you prove it isn't in a bubble", because you're the only one making this claim, so now's your chance to prove us wrong.

gold is now in the final stage of the bubble. I have two possible outcomes. This is the final stage or the penultimate stage. I think the former is more likely but it may be the latter. In either case it's little different to tech stocks in the late 20th century or BTL in the late phases of their bubbles.

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I would like to know how you know gold is in a bubble, so please lay it out in bullet points, line by line accompanied by external 'credible' references. Personally I don't think you can and I'm also of the opinion you know this and won't acknowledge this post. One last request, please don't turn this around and say "you prove it isn't in a bubble", because you're the only one making this claim, so now's your chance to prove us wrong.

Such intensity.

Does it really matter? If you think Gold is a good investment, buy it, don't worry about what anyone else says.

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I didn't intend for it to come across that way, but yes it does matter. If someone new to gold took that statement to heart, it could put them off buying precious metals until it's too late. I'd hate for that to happen, IMO suggesting gold is in a bubble, is an indefensible claim.

Such intensity.

Does it really matter? If you think Gold is a good investment, buy it, don't worry about what anyone else says.

Edited by warpig
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It wasn't intended to come across that way, but yes it does matter. If someone new to gold took that statement to heart, it could put them off buying precious metals until it's too late. I'd hate for that to happen, IMO suggesting gold is in a bubble, is an indefensible claim.

So you are trying to convince people to buy gold. Let's hope for their sake that they don't get their fingers burnt, one way or another.

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No! you're twisting my words. All I'm after is a fair discussion and for outlandish statements to be justified.

So you are trying to convince people to buy gold. Let's hope for their sake that they don't get their fingers burnt, one way or another.

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I would like to know how you know gold is in a bubble, so please lay it out in bullet points, line by line accompanied by external 'credible' references. Personally I don't think you can and I'm also of the opinion you know this and won't acknowledge this post. One last request, please don't turn this around and say "you prove it isn't in a bubble", because you're the only one making this claim, so now's your chance to prove us wrong.

Are you serious? Just google gold bubble.

Or look at the chart you posted.

Or look at any other bubble charts. I referenced Jeremy Grantham's work on 34 historical bubbles in a post above.

Or compare the 1980/1 bubble with the current parabola.

The only thing it's impossible to know is how far it will expand and when it will crash. I have no more idea on this that you do, but my opinion is set out above. This appears, based on the 80s bubble, my reading of Grantham's work i.e. bubbles avg duration is 3.5 yrs up and 3 years down, the duration of secular (as opposed to bubble) markets etc etc to indicate this is the final or penultimate phase of this bubble. In the absence of evidence to the contrary I'm going with final.

I've taken the '08 gold crash as the likely starting gun for the average 3.5 yrs upleg, which would take us to first half of 2012 for the top. Unlike the 'it's different this time' crowd I don't see any reason to expect that to be the case, and expect the parabola to steepen then blow off and crash with the immediate aftermath somewhere around 50-70% of the top. Meaning the risk of buying anywhere along that line is fairly high.

Since I don't see any difference between a gold bubble and any other bubble i.e. BTL/Houses I see no reason to urge people to buy gold like you do. The very fact of urging seems no different to the urging to buy houses during the house bubble or miss out forever.

Can you not see the problem?

Ultimately I see the trade imbalances being resolved, the capital and current accounts issue being resolved, the US debt issue being resolved and the reserve currency issue being resolved. Why wouldn't it be?

One last request, please don't turn this around and say "you prove it isn't in a bubble", because you're the only one making this claim, so now's your chance to prove us wrong.

Ahh.....the old 'Disprove there's a god' argument. It's your religion, not mine. I don't have to prove anything.

Edited by Red Knight
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I said I'd be a buyer (paper only of course) at that point and trade it into the next overbought phase. In the event I chose silver and SLV instead. I exited when silver around $18.5 which I was very satisfied with.

:lol:

Incredible! Just another bitter paper 'bug'.

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Since I don't see any difference between a gold bubble and any other bubble i.e. BTL/Houses I see no reason to urge people to buy gold like you do. The very fact of urging seems no different to the urging to buy houses during the house bubble or miss out forever.

There is a difference. A big one.

No one is suggesting anyone spend 200k on gold bullion or borrow that much to become indebted for life to buy the shiny relic. Most gold bugs only suggest buying a bit of gold depending on what one can afford. No leverage or negative equity.

But you knew this without me having to say.

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Good points well made and I'd agree it is hard to reach a valuation. I'd suggest as a starting point, it's proportional to the supply of money, although I concur there are numerous considerations to take in to account after that.

Gold is the underdog and it's reputation needs defending, so others appreciate what it is and what it can do for you. I can now afford to buy back my old house without a mortgage thanks to gold, the sometimes evangelical tone of goldbugs posts, is an extension of their good fortune and wanting to share it with others. I can see how it could be mistaken for ramping, but I've never picked up on that from anyone's posts anywhere on the internet and I honestly mean that. Having the courage to sell the gold might be a problem, because it is such an emotive subject. Will goldbugs hold on for that last $XXX.XX/t.oz or will they sell when the time's right... Not sure, but I hope at least I sell in to strength rather than weakness.

At the end of the day we all know there are no true valuation metrics.

There exist various ratios like the amount of fiat in issue to the amount of gold, silver to gold, bread to gold, or buyer sentiment surveys, amount invested into the GLD ETF by mug punters.

Some would suggest gold is under valued and some would suggest over valued.

I would say without a yield it is not easy. I would also say that there are more stretches of time of trend following than there exist turning points so to call a turning point is quite a brave one.

What I don't understand is why it elicits such fervour amongst its religious supporters. That is not a safe state of mind to be in when talking about where one should park one's dosh.

Certainly if I see gold turning on my own timeframe, I will not hang around, regardless of the "it's the only real money" arguments. B)

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  • 415 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% +
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      • Even
      • up 2.5%
      • up 5%



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