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Realistbear

Gold Closes In On The $550 Break Down Point

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The World Spot Price - Asia markets

MARKET IS OPEN

(Will close in 22 hrs. 28 mins.)

Metals Date Time (EST) Bid Ask Change from NY Close

GOLD 06/14/2006 15:01 553.40

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The recent gold spike suggests people would be itchy to move away from the USD, so I don't expect a pause soon.

Who's with me on this?

Another break down point ?!?!?!?

Billy Shears

I had my breakdown point in 2004 when I was doing some manual work while between proper jobs. The news came on the radio whilst sat in the van, and said that house prices were going up by £1,000 every 1x10e-6 seconds. *

* or words to that effect, whatever.

Edited by megaflop

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I'll use this as an opportunity to trot out that old question which I keep piping up with.

How do you value gold?

Is $540 an ounce overvalued? If you think so, why?

Is it undervalued, if so, why?

At least with property / stocks / cash / bonds you can quantify the value as an asset due to income.

How do you quantify the bright allure and cultural associations of this prized metal? In pounds and pence.

frugalista

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I'll use this as an opportunity to trot out that old question which I keep piping up with.

How do you value gold?

Is $540 an ounce overvalued? If you think so, why?

Is it undervalued, if so, why?

At least with property / stocks / cash / bonds you can quantify the value as an asset due to income.

How do you quantify the bright allure and cultural associations of this prized metal? In pounds and pence.

frugalista

That IS the question. Its the whole point about house prices also. As Mervyn said: its all opinion. The debt that can be created is what is real.

Its value is what can be bought with it at any given moment. Gold owes its volatility to the fickleness of the market.

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I'll use this as an opportunity to trot out that old question which I keep piping up with.

How do you value gold?

Is $540 an ounce overvalued? If you think so, why?

Is it undervalued, if so, why?

At least with property / stocks / cash / bonds you can quantify the value as an asset due to income.

How do you quantify the bright allure and cultural associations of this prized metal? In pounds and pence.

frugalista

Like everything else it is worth that the marginal person will pay for it. While other assets may earn rent, be they houses or JCBs they are still only worth what someone else will pay for them.

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MARKET IS OPEN

(Will close in 21 hrs. 33 mins.)

Metals Date Time (EST) Bid Ask Change from NY Close

GOLD 06/14/2006 15:57 557.20 557.90 -5.00

-0.89%

A lot of resistance at around 553.

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I think the ultimate demand for gold is as a display of wealth. Much like say a prestige car or designer clothes. They are no better than ordinary cars or apparel, but they indicate to those around you that you are rich.

Those wishing to display their wealth are the marginal buyers. Probably the largest volume of gold consumption is wedding rings and other small items of jewellery (this is a guess).

Gold used in this way generates an "income" in the form of its ability to convince people you are wealthy.

You do not have to be rich to engage in this kind of consumerism. For example, some years ago, on my travels in the western highlands of Guatemala, I met many peasants with gold teeth (purely cosmetic, not as fillings).

How much of their income will future inhabitants of the world be prepared to lavish on gold?

frugalista

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But that's circular, as it is only a "display of wealth" if it is valuable.

Rationally, yes, but it's only circular in the extreme long term. Gold is distinctive and easy to identify. Even at $100 an ounce that is a lot of money for a practically useless shiny piece of rock.

My point is, gold literally was money only 35 years ago. It was money for thousands of years before that, during which time its money status left strong cultural associations between it and wealth which are not going to go away.

Think of all the stories, idioms, sayings and proverbs involving gold from English culture. The same cultural associations exist in every significant culture on earth. They may go away eventually, but not any time soon.

frugalista

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Until the fed stops putting up rates Gold is heading south.

I disagree; people are starting to realise that we are in a stagflation environment. Hikes in IR have a detrimental effect on consumer spending power and increase costs for indebted businesses. Drop them, and the economy overheats with high inflation. There really is nothing they can do to keep all the plates spinning.

They either hike rates all the way a la Volker thus murdering the housing market and starting a recession, or they try to massage it into a 'soft landing' and risk hyperinflation. Mr Bernanke will probably attempt the latter.

Either way, $ will not be a nice place. Hence Gold will be strong.

Edited by tahoma

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But that's circular, as it is only a "display of wealth" if it is valuable.

Really, I do think it is a measure of the chance of a return to gold backed currency, not by government choice necessarily, but perhaps de facto through digital currencies selected in the free market.

To me, this makes it cheap, because the 13 experiments with fiat in history have all failed when the empire backing the main currency failed.

Gold for myself at least is an insurance policy - if all goes tits-up with our fiat currencies - I do not predict/anticipate that soon BTW! - I expect that Gold will take over and all your fiat currency (even wheelbarrows full of the stuff) will not buy you 1 oz of gold - but gold will give you the means to survive.

In this climate can one go without such an insurance policy? A modest 50 oz should do the trick.

As a means of speculation? Too volatile for me.

HAL

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I'll use this as an opportunity to trot out that old question which I keep piping up with.

How do you value gold?

Is $540 an ounce overvalued? If you think so, why?

Is it undervalued, if so, why?

At least with property / stocks / cash / bonds you can quantify the value as an asset due to income.

How do you quantify the bright allure and cultural associations of this prized metal? In pounds and pence.

frugalista

The question is how do you value the dollar?

Yesterday, it was worth one sixhundredth of an ounce of gold,

rising today to one fivehundredandfortieth, reflecting improved yield due to the

expectation of IR rises...?

ABB

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  • 331 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
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