Wednesday, May 10, 2006

A Think-Piece on Gold, Inflation and a new Bear market in Property

Financial Sense University: UK property is already in a severe bear market

Article examines how gold prices may be an indicator of future inflation trends. It seems to have some intellectual rigour but the style does 'rant' in places.

Posted by Talking_Rot @ 09:19 AM (1174 views)
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1. Uncle Tom said...

A rather silly piece.

It misses the fact that speculators are having a whale of a time playing the gold market.

True story is :

Oil prices soared on supply/demand concerns, and at the same time a lot of new rich people started emerging from India & China.

USA starts running up huge budget and trade deficits, so confidence in the dollar started to wane. Demand for gold began to increase as a precautionary investment, and prices rose steadily.

Speculators saw rising prices, gambled on further rises and piled in.

Prices soared.

This article is typical of someone who has buried his nose in economics textbooks and then believes he knows it all, while failing to assess recent events in the world.

The value of money and the price of gold were separated three generations ago, and have gone their own ways ever since.

Wednesday, May 10, 2006 10:06AM Report Comment

2. Surfgatinho said...

I have my 10% in gold and have done since it was below $500. However, I do see the current prices as speculative so I wouldn't draw any conclusions from it. You can't compare one bubble with another and get any sense out of it

Wednesday, May 10, 2006 10:50AM Report Comment

3. European-bear said...

In fact I think this article is pretty crappy. Central banks need to increase money supply as the economy grows. In the UK it would on average need to increase by 2.5% (the long term trend in GDP) to achieve price stability. Any less (including the 0% in the article) will leed to deflation as there is the same amount of money chasing more goods and services (as these increase at 2.5%). Likewise more than 2.5% money supply growth will lead to inflation as money growth outstrips the supply of goods and servies that are produced. Gold is little better than paper money. On the face of it it is fairly useless stuff (soft metal, only useful in jewlery!) and the supply can be increased by digging more out of the ground.resnt increases are just speculation caused by lack of security in other asset growth. Will eventually overshoot and tehn crash just like all spculations....(as it did in the past)

Wednesday, May 10, 2006 09:13PM Report Comment

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