Friday, Dec 18, 2009

One for the gold bugs

Motley Fool: The Great Gold Bubble

No doubt some smart ar*es will say that Motley Fool is rubbish but then again they would , wouldn't they?!

Posted by mr g @ 09:48 PM (2399 views)
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50 Comments

1. This comment has been removed as it was found to be in breach of our Blog Policies.

 

2. hpwatcher said...

One for the gold bugs
Actually, this isn't one for the gold bugs at all. It's more for those who haven't bought gold and feel bitter for doing so.

Moreover, I don't know anybody - apart from me - who ownes any gold bullion...absolutely no-one.

Friday, December 18, 2009 10:14PM Report Comment
 

3. devo said...

Friday night quiz...

Age of mankind = years
Age of gold = years
Age of paper money = years
Age of oil = years

Friday, December 18, 2009 10:24PM Report Comment
 

4. hpwatcher said...

ZZZzzzzzzzzz

Friday, December 18, 2009 10:26PM Report Comment
 

5. devo said...

night night hpwatcher

Friday, December 18, 2009 10:30PM Report Comment
 

6. mr g said...

HPW @2 "Actually, this isn't one for the gold bugs at all. It's more for those who haven't bought gold and feel bitter for doing so" - I feel no bitterness whatsoever.

and, "Moreover, I don't know anybody - apart from me - who ownes any gold bullion...absolutely no-one" - Try General Congreve.

Remember the old saying:

When Main Street comes to Wall Street, it's time to get out, or words to that effect.

Friday, December 18, 2009 10:35PM Report Comment
 

7. devo said...

it's all coming to a head

Friday, December 18, 2009 10:41PM Report Comment
 

8. devo said...

god help us

http://www.youtube.com/watch?v=ZQcXeqZe1Zo

Friday, December 18, 2009 10:48PM Report Comment
 

9. mr g said...

Macbeth and Vivaldi!

Are you of Yorkshire origin devo like me? No one outside of God's Own County could have such eclectic good taste in culture.

Friday, December 18, 2009 11:01PM Report Comment
 

10. hpwatcher said...

Remember the old saying: When Main Street comes to Wall Street, it's time to get out, or words to that effect.

I remember the saying, it's just that I don't think we are there just yet. But we will have to wait and see, all else is pointless speculation.

Friday, December 18, 2009 11:03PM Report Comment
 

11. devo said...

devo is an agnostic who knows no boundaries

http://www.youtube.com/watch?v=HiGcaloF7pM

Friday, December 18, 2009 11:07PM Report Comment
 

12. mr g said...

HPW@10 "But we will have to wait and see, all else is pointless speculation."

I agree 100% with your comment.

Friday, December 18, 2009 11:14PM Report Comment
 

13. hpwatcher said...

Mr G, you should read the comments at the foot of the article you have posted?


Well, here are a few quotes, from different posters:-

the main reason I am invested is because it tends to increase in periods of inflation and as I believe we will have inflation then gold will increase until the period of inflation is over

No, gold doesn't have any intrinsic value. But neither does a piece of paper with "$1" or "1 Pound" printed on it (other than for starting fires, perhaps).

I buy gold because I have no faith that our government's will let the Depression burn itself out.



the US. Its currency is issued by its government. Its government is now in arrears to the tune of about $12 trillion. Therefore the currency, which has no backing, has no real value, just perceived value


How come only with gold do I have all these noble people telling me not to buy it?

No one ever warned me beforehand about tech stock or overpriced houses.



Gold is frequently and incorrectly thought of as a commodity, yet it is traded around the world as a currency. It is the universal form of money.


If currencies don't bubble I wonder what happened to the Zim Dollar.



Thanks for the quotes boys!

Friday, December 18, 2009 11:17PM Report Comment
 

14. devo said...

dollar, gold, sterling, euro, renminbi.

It makes one's head spin!

Friday, December 18, 2009 11:23PM Report Comment
 

15. devo said...

computerworld

http://www.youtube.com/watch?v=Bg6NJhqLGWk

where we're at

more or less

Friday, December 18, 2009 11:27PM Report Comment
 

16. dill said...

The only thing a human needs is secure shelter, warmth, food and water.

The pursuit of anything else is a risk, which can compromise those needs.

Friday, December 18, 2009 11:40PM Report Comment
 

17. crunchy said...

14. devo Not knowing what to do makes one's head spin. lol

Le Crunch thinks gold is a thing of beauty. It is a reminder of what reality is in these unreal times and for that reason I shall hold untill I

see reason to spend it in favour of the next reality of greater beauty. That could be a very long time. : )

Friday, December 18, 2009 11:43PM Report Comment
 

18. devo said...

sex?

Friday, December 18, 2009 11:44PM Report Comment
 

19. dill said...

@18

Use a condom.

We don't need any more Homo Sadiens (sic) on the planet.

Friday, December 18, 2009 11:48PM Report Comment
 

20. devo said...

re: selling gold
what if there's no buyer?

There will always be a buyer for food, water and land.

Anything else, I'm not so sure.

Friday, December 18, 2009 11:51PM Report Comment
 

21. devo said...

and oil

Friday, December 18, 2009 11:57PM Report Comment
 

22. Cheekie Charlie said...

Why on earth did gold bugs attach themselves to this site? You could argue the BTL parasites have more social value than work shy horders of chav jewelry !!!

Saturday, December 19, 2009 12:14AM Report Comment
 

23. crunchy said...

20. devo said...what if there's no buyer? That's only a problem if you want to sell.

.......and oil, The liquid of politics is neither beautiful or easy to swallow.

Food is the best investment of all, as with gold and oil one needs to check it's authenticity.

dill...six? is (sic)

Saturday, December 19, 2009 12:49AM Report Comment
 

24. crunchy said...

mr 'g' says it all.

Mr Gold, Goff of Goof? Time will tell.

Saturday, December 19, 2009 01:05AM Report Comment
 

25. nubbers said...

Good find. I had gone off TMF, but reading the quality of the debate in the comments on this one makes me wonder why I am wasting my time anywhere else.

Saturday, December 19, 2009 05:48AM Report Comment
 

26. hpwatcher said...

I don't understand why Devo or mr g care about gold either way, if they don't hold any.

I mean, if I didn't hold gold, I would not care. Unless of course they are sore about not buying any.

Saturday, December 19, 2009 07:27AM Report Comment
 

27. devo said...

25. hpwatcher said... I don't understand

you are in good company, but try not to worry about it

Saturday, December 19, 2009 08:01AM Report Comment
 

28. krustyatemyhamster said...

@hpwatcher
So when's a good time to sell the gold?

Saturday, December 19, 2009 08:12AM Report Comment
 

29. hpwatcher said...

you are in good company, but try not to worry about it
You are really quite angry about this aren't you?

So when's a good time to sell the gold?
Not just yet. It all depends on several factors. In any event, we are past peak gold; the supply will now only decline. All the indications point to shortages in precious metals over the next few years, due to the large expenses in extracting them. I don't see a bubble developing just yet, as not that many people own bullion, very few in fact.

But don't listen to me, look at what the governments are doing, inflation/deflation etc and do your own research.

Saturday, December 19, 2009 08:29AM Report Comment
 

30. tenyearstogetmymoneyback said...

There was a TV program about gold earlier in the year.

Something interesting I remember was the manager of a gold mine saying it cost them about $500
(a large part being the price of the fuel for the excavators etc) to mine an once of gold. Comapre this with the
5 cents it takes to print a $500 dollar bill.

Yes there might be a bubble but I don't think the price will slip back like a paper investment.

:- Duncan

An interesting thing about the Gold bubble is that I haven't seem any advertising or similar.
During 1999 every other advert was for xxxxx.com. In the decade every other program between
the adverts was on property developing. Now even my local garden centre wants to buy your gold
but I haven't seen a single advert, even for Jewellery which sasy buy this. Its a good investment.

Saturday, December 19, 2009 09:44AM Report Comment
 

31. tenyearstogetmymoneyback said...

p.s Should have put quotes around "Gold Bubble" My largest shareholding is JP Morgan Natural Resources.

Saturday, December 19, 2009 09:46AM Report Comment
 

32. hpwatcher said...

Few good points there tenyearstogetmymoneyback. When tech stocks were going up, I don't recall anybody telling me not to buy...same with houses, everybody was buying and telling me I needed to buy. Like I said, I don't know anybody who buys bullion or has even thought of buying bullion (By the way Devo, I don't know General Congreve at all, and he isn't an acquaintance or friend in any shape or form).

Perhaps mr g and Devo are really doing everybody a favour by telling everybody that it's a bubble, because that will put a lot of people off and prevent a real bubble from happening.

Saturday, December 19, 2009 09:55AM Report Comment
 

33. techieman said...

tenyearstogetmymoneyback you havent seen a single advert??? Say what?? During the daytime there are loads of cash4 gold adverts.

http://uk.cash4gold.com/

http://www.cashmygold.co.uk

Saturday, December 19, 2009 09:57AM Report Comment
 

34. techieman said...

HPw i have held Gold - and added to it averaging out at around $360 over the years. I sold a large chunk in March 08. I havent added to that and to be fair if it wasnt for this site and tales of doom by S2R1 then i probably would have sold the rest around that March 08 level. I actually called the market then and its on this site where i said it - although i cant be botherd to try to find it.

At that time everyone was saying the same thing - you need to buy it. But the point was when it was around $300 no-one suggested you should buy it.

Personally i do agree that it goes higher but i do think its a bubble and once we have had a possibly parabolic move then it will crash. How high will that move get is anyones guess. That analysis is based on chart patterns and funnily enough EWI thinks the top is in. I posted a chart a while back


Sorry Tenyears - i got the wrong end of yr argument there, not enough coffee

Saturday, December 19, 2009 10:08AM Report Comment
 

35. techieman said...

http://1.bp.blogspot.com/_TwUS3GyHKsQ/SxqEsgF2N-I/AAAAAAAAC7o/oQreaYjTWeQ/s1600-h/golddaily.png

here is a weekly:

http://4.bp.blogspot.com/_TwUS3GyHKsQ/SxqEqMrb67I/AAAAAAAAC7g/SA1HNxn-Rfk/s1600-h/goldlongterm+daily.png - the point about this is the 5th wave should overthrow the top of the upward channel.

and here is a monthly to show you how parabolic we are getting:

http://2.bp.blogspot.com/_TwUS3GyHKsQ/SxqEnfuQzzI/AAAAAAAAC7Y/7bd0P7xv3TU/s1600-h/goldmonthly.png


Infact it might be worth reading his position on Gold over all:

http://danericselliottwaves.blogspot.com/2009/12/gold-update.html

ALl of that is an update of a prior posting:

http://danericselliottwaves.blogspot.com/2009/11/parabolic-gold.html

Essentially there was due a big fall from wherever the high was (of the 5th of 5th of 3rd) which is basically where we are now. The way Gold has reacted to falls in the $ and coped with them pretty well is, i would argue, bullish. However its all a bit watch this space to be honest. The down move probably shook out the weak buyers.

By the way there are alot of gaps in the chart because this is the streetracks Gold ETF being charted rather than spot.

Saturday, December 19, 2009 10:21AM Report Comment
 

36. devo said...

there seem to be bubbles everywhere, not just in gold

the spectacle of seeing investors desperately searching for a safe haven is fascinating

like wildebeest trying to escape a lion

Saturday, December 19, 2009 10:51AM Report Comment
 

37. hpwatcher said...

tenyearstogetmymoneyback you havent seen a single advert??? Say what?? During the daytime there are loads of cash4 gold adverts.
http://uk.cash4gold.com/
http://www.cashmygold.co.uk


The point being made was to do with buying, rather than selling.

once we have had a possibly parabolic move then it will crash.

I think one can say that about almost anything.


The fact remains that when there is little or no risk appetite, people will always run to gold; and of course especially when we are living in extremely uncertain times. I also think it very unwise to made predictions based exclusively on the basis of what something looks like on a chart or a graph. For a number of years I worked on stock price software, which was intended to give those who deal in share prices a clear picture of what shares were doing. The problem is that - as much fun as charts can be - they simply don't tell the whole story, not even half the story. Events, happenings, news etc are all filtered out and although I think ''chart gazing'' has it's uses, it must be remembered the charts follow reality; reality does not follow the charts.

However its all a bit watch this space to be honest.

Again, I think one can say that about almost anything. But I am far more worried about Sterling going the same way as the Icelandic Krona, or rampant UK inflation - which are both possibilities - than I am about Gold correcting.

Saturday, December 19, 2009 10:52AM Report Comment
 

38. hpwatcher said...

there seem to be bubbles everywhere, not just in gold

the spectacle of seeing investors desperately searching for a safe haven is fascinating


Do you not think that it could be to do with currency and inflation rather than the commodities themselves?

Saturday, December 19, 2009 10:54AM Report Comment
 

39. devo said...

depending on the severity of the crash, it may be that only the physical possession of a commodity matters

gold isn't particularly useful as a commodity

it may or may not keep its status as a currency. no one knows for sure.

Saturday, December 19, 2009 11:24AM Report Comment
 

40. hpwatcher said...

depending on the severity of the crash, it may be that only the physical possession of a commodity matters

gold isn't particularly useful as a commodity

it may or may not keep its status as a currency. no one knows for sure.


Yes, however the central banks are now buying gold, rather than selling - that can't be a bad sign. But I agree that no one knows for sure, but I buy on the basis of what is likely. A bubble may well develop in gold, but not just yet, as not that many people are buying; when EVERYBODY is buying and talking about it...we will know for sure!

Saturday, December 19, 2009 11:54AM Report Comment
 

41. crunchy said...

LOL, Gold is still half price relative to past inflation. Bubble? my ar8e. Sit on the sidelines and watch why China and India are so keen.

Saturday, December 19, 2009 12:33PM Report Comment
 

42. hpwatcher said...

LOL, Gold is still half price relative to past inflation. Bubble? my ar8e. Sit on the sidelines and watch why China and India are so keen.

Silver is 75% below it's high. Sounds like a BUY to me.

Saturday, December 19, 2009 12:49PM Report Comment
 

43. crunchy said...

41. hpwatcher

Shiver me timbers!!!!!!!!!!!!!!

May the Black Flag fly long.

Saturday, December 19, 2009 01:04PM Report Comment
 

44. rumble said...

"when EVERYBODY is buying"

I don't see that happening, it's seems too unfamiliar, too exotic for the average person. Mention it in an office and people look at you funny. Buying into a tech business made sense, not buying to defend wealth, too complicated, getting carried away. The day those people are panicked enough into buying gold, I suspect gold will either be getting confiscated, or we'll be more interested in buying guns.

Saturday, December 19, 2009 01:11PM Report Comment
 

45. drewster said...

I don't personally know anybody who has bought gold (or gold ETFs etc.), but then most people I know don't have money to invest anyway. So I can't use that as an indicator.

Saturday, December 19, 2009 02:24PM Report Comment
 

46. Urbanbear said...

More nonsense from bitter share investors, we are not even close to a Gold bubble.

1. The Gold buyer adverts and signs are fishing expeditions to get cheaper Gold outside of the investment Bullion market, given retail Gold can have a significant mark-up above spot, so they are maybe ripping off the people who sell to them!

2. The blanket media coverage and retail mania are still not here, just the odd mention about Gold prices, and to highlight the devaluation of currencies.

3. I get bored looks when I mentioned Gold at work, or to my friends and family, so I try not to talk about it less now!

4. Short term volatility or pull-backs, possibly for profit taking, should be expected, especially in smaller markets like the Gold Bullion market.

We are not in a Gold mania, Gold is still relatively boring, as many on this forum protest, however you would be foolish [grin] to ignore it, given it gives much better returns than the best boring bank savings account, and most shares.

BTW, I avoid Bullion ETFs now, their stock audited leaves a lot to be desired, so you don't know where the Bullion is or how much they actually have, also concerns have been raised about links to the dubious Comex Gold market!

Saturday, December 19, 2009 02:36PM Report Comment
 

47. tenyearstogetmymoneyback said...

techieman @ 32

The point I was making is that I haven't seen a single advert telling people to BUY gold as an investment.
As in the original post even my local garden centre wants people to SELL them their old gold.

You could argue that you don't get many adverts promoting any kind of saving or investment.
As for adverts encouraging you to go into debt you get hundreds, although I have just realised
that it is months since I got any junk mail encouraging me to take out yet another credit card.
In 2006 I reckon I got one of those at least once a week.

To follow up on Drewsters comment @ 44 a few years ago I bought £100 worth of GBS in Halifax
Sharebuilder. Very annoyingly when I wanted to buy some more I couldn't because Halifax decided
it was a $ demoninated stock. As of today that £100 has turned into £192

Saturday, December 19, 2009 10:28PM Report Comment
 

48. techieman said...

tenyears- just got back in.

yes! i apologised in 33. "Sorry Tenyears - i got the wrong end of yr argument there, not enough coffee"

As for HPWs comments about mine (he also had some selective reading)- since he seems determined not to look at anything with a chart in it - for reasons that escape me, i think the actual comments on that blog are quite interesting whether or not you agree with them.

I will post them below.

HPW also seems determined to take my comments out of context - the posting of the charts was really just for peole that might be interested, if you have no faith in charts then thats up to you. some people have no faith in god some do - each to their own, but you can only make an informed choice if you can see the different approaches.

I didnt just say "once we have had a possibly parabolic move then it will crash." I qualified that with basically, if you read between the lines i do think it goes higher first, but that then if it does go higher (i cant say for sure) it will probably go parabolic, and will probably be a good idea not to be too greedy. I havent replaced the % i sold in March 2008.

so the phrase "I think one can say that about almost anything" is rubbish - you could say that it will go parabolic and then stay there - isnt that what pundits were saying about HPI? i.e. it would just go up fast but then the rate of ascent would slow or the level would be static.

I dont mind anyone disagreeing with me but be certain with what you are disagreeing with!!

As for 41 and Silver you could argue that the divergence between Silver and Gold is technical negative divergence for gold.

As for 36 its just plain wrong that prices follow events. As i have said before prices can pre-empt events "buy on the rumour sell on the news" or just ignore events. Again i will give you another example below - but look at the markets response to Dubai and Greece - there was no movement on the announcements, a case of pinning the market moves on the news.

As i said before i have years of seeing this stuff happen. Look at the markets reaction BEFORE lehman. If thats what you want to believe then so be it - i will try not to bring it up again. As for being worried about the pound and inflation - well im surprised you sleep at night. If i was worried which i am not, then i would be more highly geared in other currencies. At some point in time this may become a worry - in which case some trades can be made around it.

Saturday, December 19, 2009 11:55PM Report Comment
 

49. techieman said...

the Gold comments on the blog - i dont necc agree with them all but they are kind of interesting:

this is from: http://danericselliottwaves.blogspot.com/2009/12/gold-update.html
------------------------------------------------------------
Gold is at a make or break moment I think. A $65 intraday decline was kind of how I expected the beginning of the end to start. There are a lot of people, smart people, who are convinced that Gold will go to the moon. Or at least $2000 for starters.

Side Discussion:
And Gold to $2000-$5000 that is largely based on what? The dollar "collapsing" of course.

I have some general thoughts, allow me to parse some of them:

1. Gold is a commodity like any other commodity. It cannot be used to buy groceries. You cannot go in to a store and buy $1200 of groceries with 1 ounce of Gold. You must of course first convert it to the fiat currency your dealing in.

2. Gold is going to behave like any other commodity. It goes parabolic and then when the steam runs out, it collapses like every other commodity. The charts are littered with moves like this over the past 100 years. Its a well-documented process.

Commodities work a bit different psychologically than other markets. They rise a bit on "fear". Usually this fear is based on a lack of the commodity or other such connections. Almost all turn out to be just as irrational as buying Worldcom at its peak. So parabolic moves in commodities usually occur in exponential moves to peak. Then when it reverses, momentum swings wildly to the other side and the downdraft cannot easily be stopped.

See Oil last year.
See Natural Gas this year.
See Gold in 2010?

3. It is true that Gold is a store of value somewhat, at least in the history of mankind it was used extensively. People are collecting it (physical) in thinking in case our fiat monetary systems collapse, they will be the "rich" ones and able to survive and even thrive. I happen to think that the opposite may actually happen. I have several reasons for saying so:

a.) If our system of fiat currencies truly collapsed, I think the result would be to convert to another fiat currency first and foremost before saying something like "ok anyone with Gold is good to go, the rest can fend for themselves". I think not.

b.) We have a tremendous sense of "fairness" (that usually results in misguided policies nonetheless) in modern society and do you think society would all of a sudden allow a fiat system that supports all to turn into a system that supports a select few that hold physical metal? I rather think that any fiat system change will in particular take into account of Gold holders and penalize them, or at the very least, minimize their holdings. Or convert at an equal rate at the time.

c.) FDR confiscated Gold in the 1930's. It can happen again. And if it doesn't happen quite the same way there will likely be an overwhelming public opposition to reward any who have been perceived to be "hoarding" gold. There may be even criminal laws passed on the exchange of gold for goods and services. Ridiculous? Think hard about it. Does the majority of Americans have or own enough physical gold to survive and thrive in any new system? I don't think so!

4.) And may I remind that the entire world uses fiat systems. The dollar rises and falls relative to every other junk currency out there. I don't think it'll be the one that fails first particularly since its the world's reserve currency. And its due for a big rally indeed....

5.) Gold is to banks in what Kryptonite is to Superman. And banks control the world. Gold threatens fiat systems. The people in power will not easily give it up.

6.) Personally I think the best store of value right now will be in dollars. It is the system. And any systemic collapse will result in a conversion from that very same system. The public will demand it as a sense of fairness.

Simply put, social mood will demand that Gold be marginalized. At the least, I think it will be converted at the going rate no matter what happens.

Sunday, December 20, 2009 12:08AM Report Comment
 

50. techieman said...

and from this as promised:

http://danericselliottwaves.blogspot.com/2009/12/e-minis_17.html

And i do agree with these comments:

----------------------------
Of course the "news" jumps from one small mini-crisis to another. Thats what happens when the psychological mood start to shift again back to the primary trend (down). The Greece thing is now all of a sudden a big deal. As if.


The down waves will be just as irrational as the up waves. There are of course bigger monsters out there than a floundering Greece but the media is showing its "herding" characteristics.


Don't concern yourself too much with the hype of the day, up or down, but do pay attention to the psychology of it all.


Oh yeah, whats the conventional wisdom? The Fed let Lehman fail and that caused all the turmoil last year! Ha! What a friggin joke. Thats b*llshit and that "paradigm" that has now been planted in everyone's head will give licence to the Fed freewheeling loosely from here on out (not that they haven't been already) with money they don't have.


We had any number of "reasons" to have a crash last year. We'll have plenty of reasons in 2010....

--------------------------------------

Goodnight!!

Sunday, December 20, 2009 12:22AM Report Comment
 

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