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Charlie Don't Surf

Can Gold Be In A Bubble Yet Not Overvalued?

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Can gold be in a bubble yet not overvalued, if that makes sense?

Yes, the dollar is going down the pan, yes the price of oils is way up, yes there is rampant inflation around the corner and yes there are a few sticky situations like Iran.

BUT, the rate at which gold is going up does seem to indicate a certain amount of speculation.

Having said this I think in the longer term gold is presently undervalued, on the other hand it just seems to be moving too fast and I feel a correction may be due in the near future. (when I will load up big time!)

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For what it's worth, I'm staying out for now. I'm only 15% loaded and I'm protected down to 610 spot - not that much of a margin to be honest. I can't / won't errode that any further by buying at today's price.

Even so, it could be the biggest mistake I make...

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Here is the very best analysis I've read of the many measures by which gold is undervalued (even if people are starting to pile in bubble style):

Gold and the historical norm (click)

EDIT: It's a little out of date now (it's from when I bought). We've moved a part way along each of these cyclical graphs some back to the middle, but nowhere near the ususal cyclical tops.

SECOND EDIT: Also, there is no provision in these cycles for a total fiat money breakdown (something that has occured with every other fiat system the 13 times it has been tried throughout history). Fiat breakdown would value gold at between $60,000 and $250,000 per ounce equivalent purchasing power, although there would be no dollars to convert gold into. The wide range is dependent on whether just the US government printing press collapses, or the whole world's governments', as the entities with economic power revert to gold-backed digital money.

FINAL EDIT: None of this means there won't be a pullback. It is a fundamental value analysis, not a market technical one.

How do you extrapolate those figures assuming that a FIAT collapse would cause gold to rise to those kind of amounts? (I'll get my calculator). That's a heck of a statement to make. :o Surely the central banks would be able to head off such a doomsday scenario, by simply switching back to the gold standard thereby fixing the gold price at an appropriate level for the amount of money in circulation, but surely there'll have to be a period of deflation to make paper money a viable alternative again :rolleyes: - who knows? Also, what would silver do in such circumstances - I assume it would follow gold up and also narrow the ratio between the two as it's seen more again as a store of wealth. Sorry if I'm asking basic questions here, but have lurked for a while and done some analysis of my own, so know more than most but less than the regulars here obviously. Would welcome explanations.

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How do you extrapolate those figures assuming that a FIAT collapse would cause gold to rise to those kind of amounts? (I'll get my calculator). That's a heck of a statement to make. :o Surely the central banks would be able to head off such a doomsday scenario, by simply switching back to the gold standard thereby fixing the gold price at an appropriate level for the amount of money in circulation, but surely there'll have to be a period of deflation to make paper money a viable alternative again :rolleyes: - who knows? Also, what would silver do in such circumstances - I assume it would follow gold up and also narrow the ratio between the two as it's seen more again as a store of wealth. Sorry if I'm asking basic questions here, but have lurked for a while and done some analysis of my own, so know more than most but less than the regulars here obviously. Would welcome explanations.

there is simply not enough gold in the world for what you are suggesting. That's the whole point of the gold bugs' arguement. Going to a gold or gold backed currency would drive the price to the stratosphere.

I assume that DURCH is doing some kind of calculation such as divide the amount of cash in the system by the number of ounces of phsical gold held in the world central banks.

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Actually, it's just lifted from a radio interview where they did that very same calculation, but I don't have the source - it's just from memory. If the central banks had to back their currencies with gold, they have X amount of dollars and Y ounces of gold. They can't choose to fix at anything other than there being X/Y dollars in circulation per ounce, or they are not 100% gold-backed, and they are still on a partial fiat regime. The idea is that during and after a fiat collapse the market will accept nothing less than 100% backing, as the government shortcuts of partial and total fiat systems led to the catastrophe (and the market can get 100% backing from privately held digital currencies which are in competition with tarnished government paper).

As you suggest, there are alternative backings, like silver, and just like any market, these substitutes would compete with gold (for backing the world's currencies) and reduce its price. I doubt these were factored into the calculation (but I can't say for sure, and the guy was pretty academic) so it's a valid point. There are already traded private digital currencies in gold, silver, palladium, and platinum that I am aware of and they are all used as money already. Probably the best calculation would be to take the world's cash supply, and set it against the amounts of those metals taken in their usual historical value ratios, to find the best guess of each one's "fiat collapse" value.

Thanks. Really interesting. I got into Gold and Silver at the beginning of the year and have already made significant gains on what I put into those accounts :) (I haven't got a large amount to play with, :angry: but at the same time, it beats shoving it in a high interest account watching it being eaten away by hidden inflation and I will keep adding steadily). The only thing that does cause concern me is, if there really is a big financial crisis, I should cyphon off some profits and get some physical just in case of massive defaults by govts and banks - but again, I just can't see how this would happen - yes, things might get nasty - but the idea of us going back to the days of the Great Depression is, well, i can't imagine it. I'm not a doom-monger by any stretch, but I do believe that both metals will, at some point go through the ceiling on a mix of speculation, demand, war, debt etc and that's where the real profits will be made. B) To my mind, it's been decided by people far higher up that it's going to be a steady inexcorable devaluation of the Dollar, Pound and maybe the Euro as well, effectively transferring both wealth and influence back to the East - but this will take maybe 15-20yrs to complete.

I know both gold and silver have digital backed currencies, but haven't heard about platinum or palladium having them - any idea where I can find a way to get into this, or would it only be available in the US?

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because the reason Nature wants Winter is to have another Spring. To my mind the future is extremely bright - quite incredible in fact. We just need to shake off our mouldy bandages.

.

Well, let's hope so :) - That's very insightful. Ever thought about public speaking? I think you're right in a lot of ways - the problem is that peoples' fear gets in the way of what they want to do, or at least they feel constrained by it. The key is to keep pushing yourself to do a little bit more, think a bit more and not to be swept up in a tide of apathy and resignation about how life can be, or influenced by others. I've tried to live my adult life like that but by doing it you kind of alienate yourself from the flock, so at times I feel like I'm the only one who feels or sees what I do. (that made no sense at all) :unsure: But then maybe the love of a good woman can correct that. ;)

Anyway, if there is the mother and father of all crashes :o I'll feel sorry for those who blindly followed, but I will feel that my life has been for a purpose and I can pass that wisdom on to those who want to be educated. :) Anyway, only time will tell if we're all blessed with above average foresight or doomed to wish our lives away.

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Actually, it's just lifted from a radio interview where they did that very same calculation, but I don't have the source - it's just from memory. If the central banks had to back their currencies with gold, they have X amount of dollars and Y ounces of gold. They can't choose to fix at anything other than there being X/Y dollars in circulation per ounce, or they are not 100% gold-backed, and they are still on a partial fiat regime. The idea is that during and after a fiat collapse the market will accept nothing less than 100% backing, as the government shortcuts of partial and total fiat systems led to the catastrophe (and the market can get 100% backing from privately held digital currencies which are in competition with tarnished government paper).

As you suggest, there are alternative backings, like silver, and just like any market, these substitutes would compete with gold (for backing the world's currencies) and reduce its price. I doubt these were factored into the calculation (but I can't say for sure, and the guy was pretty academic) so it's a valid point. There are already traded private digital currencies in gold, silver, palladium, and platinum that I am aware of and they are all used as money already. Probably the best calculation would be to take the world's cash supply, and set it against the amounts of those metals taken in their usual historical value ratios, to find the best guess of each one's "fiat collapse" value.

After that, they would all rise in line with world economic growth (less new supply). Because the gold standard eliminates the source of a lot of malinvestment and socialist largesse, growth would probably be well above the current 4% pa. (For example, a lot of non-performing benefit basket cases in Africa would likely become functioning, growing economies.)

again it's basically a zero sum game.as commodities are based in dollars they are such influenced by 2 things.

1) what is global demand relative to supply?

2)how dominating is the influence of the US on the rest of the world?

answer in brief is 1)rising and 2)falling.

now where does sterling fit in????....well the answer I think lies in the M&A activity,because takeovers are about control.

...with BAE and NASDAQ I'd be inclined to take the view we are more allied to the strength of the US$ than we are to €...meaning our earnings per share on the likes of BHP/BP etc will rise as our own currency goes down the toilet with uncle sam.

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Here's a report by Jason Hommel as part of his regular newsletter which gives his own opinion and analysis of where gold and sliver are headed. Enjoy. :D

Aplogies if this has been posted before.

http://www.silverstockreport.com/email/Fut...ver_Prices.html

GT.

HeHe Quite entertaining :D Bit optomistic though. I dont even think cgnao believes it will go that high.

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Guest boredwaiting

HeHe Quite entertaining :D Bit optomistic though. I dont even think cgnao believes it will go that high.

I miss cgnao, he made me feel safe in gold :) I do hope someone finds his dummy and puts it back in the cot.... It was nice having him around.

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I miss cgnao, he made me feel safe in gold :) I do hope someone finds his dummy and puts it back in the cot.... It was nice having him around.

I miss him too, even though I was the one questioning gold's over-boughtness. Come back Cgnao and make our forum bright, colourful and controversial again!

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I miss cgnao, he made me feel safe in gold :) I do hope someone finds his dummy and puts it back in the cot.... It was nice having him around.

Especially on the traditional friday sell off, which just started in New York. How low will the 'cabal' manage to drive gold today in today's 'make goldbugs stew over the weekend' move? They seem to have broken from the 680 magnet. http://www.jsmineset.com is a good cgnao substitute - It's interesting what Jim is saying about the BoE.

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SECOND EDIT: Also, there is no provision in these cycles for a total fiat money breakdown (something that has occured with every other fiat system the 13 times it has been tried throughout history). Fiat breakdown would value gold at between $60,000 and $250,000 per ounce equivalent purchasing power, although there would be no dollars to convert gold into. The wide range is dependent on whether just the US government printing press collapses, or the whole world's governments', as the entities with economic power revert to gold-backed digital money.

I agree with the potential purchasing power.That is why for the "man in the street" no more than, say, 20 oz in coins and small investment bars will be required to "protect yourself".

IMO any holding over this sort of level should be considered as a "punt" - backing a gold bull - NOT a fiat collapse.

Although, of course, in the event of a collapse those backing a gold bull will profit more than they may have imagined!!!!!

I miss him too, even though I was the one questioning gold's over-boughtness. Come back Cgnao and make our forum bright, colourful and controversial again!

You did have company in your questioning. It would indeed be nice to see him back. A difference in views should not mean we can not discuss them.

Edited by vinny

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  • 335 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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