Tuesday, August 2, 2011

This will weaken our currency considerably, won’t it?

UK should cut taxes, expand QE if economy falters - IMF

"The government should cut taxes and the central bank take more steps to pump money into the economy if Britain looks to be heading into a long phase of weak growth, the International Monetary Fund said on Monday. In addition the Bank of England should expand its asset purchases. However, should growth turn out stronger than expected and inflation remain high, quicker interest rate rises may be necessary, the Fund said".

Posted by alan @ 07:30 AM (3378 views)
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80 thoughts on “This will weaken our currency considerably, won’t it?

  • Good for gold, but good for little else…..

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  • The big financial news this morning is that the UK’s 10yr borrowing costs have hit an all-time low of 2.78%

    Meanwhile Italy and Spain’s borrowing costs are rising into the danger zone..

    The IMF only suggests more QE for the UK if a scenario emerges that they don’t expect to happen..

    ..if the sea level rises by 200ft I’ll need to buy a boat – but I don’t expect that to happen either!

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  • “This will weaken our currency considerably, won’t it?”

    alan, it’s never as simple as that. If we like what’s being done, the Pound could rise, no matter how counter intuitive that may seem. Blog Meisters and generic journos tend to think one step at a time and in binary terms. The markets think several years ahead and factor in a far more sophisticated array of complex interactions. The equity markets are a good example of this. Back in 2009, Blog Meister Man looked at the world and solemnly pointed downwards. The market participants looked at the world with far more sophisticated eyes and loaded up on equities and a whole host of commodities. The equity markets and almost everything else then went rocketing upwards taking Blog Meister Man (from now on BMM) completely by surprise.

    Not addressed to alan: As an aside, the typical blog meisters’ capacity for delusion and denial has always fascinated me. He got it spectacularly wrong in 2009 but somehow now claims to have got it right because of a nefarious claim to have backed gold. Not one of these chaps seems to have the intellectual capacity or honesty to admit that they though gold would rise because everything else would collapse. The stark truth is that nothing collapsed and almost everything went up rendering their forecasts laughably wrong. This startling inability to comprehend or admit that gold went up for the complete opposite reason to the one they predicted (a growing world economy with rising demand from folks with more money than ever before), is one of the several reasons that I have little respect for BMM. Another reason for my near contempt for BMM is his donkey like refusal to acknowledge that almost all equities and commodities have gone up, with gold being at best, mid pack. Our own blog meisters surveyed the economy in 2009 (their typical declared gold entry point) and confidently made their decisions based on the universal collapse they saw as imminent. ‘Market man’ surveyed the economy at the same time and made his decision based on the almost certain realisation that things would gradually improve and also on the basis that world economic growth was likely to march onwards with hardly a blip. Clearly, Market Man got it spot on and BMM got it spectacularly wrong but BMM defends his considerable ego by sealing up his eyes and ears to the remarkable current world growth rate of 4.3%. However, despite getting it so wrong, BMM can surprisingly still be heard boasting from the rooftops. With no shame and a healthy dollop of delusion he shouts out the laughable claim that he is the only one to get it right. Not once does he permit the reality to sink in that his small gains are actually a result of his huge forecasting error. The self-evident truth is that since the claimed entry point in 2009, Market Man has done much better because his equities and commodities have on average risen further than the distinctly low to mid pack gold. Of course the superior performance of Market Man is even better than it first appears because Market Man also gets dividends and coupons on his stuff and he tends to trouser all his gains because people who get it right tend to have progressive careers that enable then to bank their winnings. Well done BMM, you really put one over by making less money and getting your forecasts wrong. Mug.

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  • As an aside, the typical blog meisters’ …………………….

    Not having a good day flashy? Get out of the bed the wrong side this morning? Resorting to insults, because things aren’t going your way?

    I am not going to waste time reading the above diatribe, because like most of what you post, you are basically wrong…..the people I feel sorry for are the ones who have listened to you and missed out on making the right defensive investments….as I myself did, but only once, on the basis of your wrong advice.

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  • Second thoughts, I would be grateful if you could ignore my above post and all future posts I make.

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  • Equities are a fairly easy choice for any sensible family man because if you pick any 100-year period in history, they’ve handily outperformed almost everything else and of course they have always trounced gold. Over the course of a human life, it’s always more sensible to go with well well proven methods because the odds are then in your favour. The Russell index is the one to look for because it includes dividends, which makes it easier to get a real comparison. Goldbugs often site the fact that equities are lower than they were in xxxx year but they usually omit to mention at the same time that gold is still lower than it was decades ago, in inflation adjusted terms. More recently, 2009 was a turning point. Some saw collapse and doom and some didn’t. The people who saw doom and collapse claim to have bought gold (and retrospectively silver) and the people who got it right tended to buy equities. Equities have done much better. The buyers of equities also have the comfort of knowing that their 2009 purchasing decision was based on a correct forecast. The 2009 buyers of gold should not be happy about making a lesser amount of money based on an incorrect forecast because it does not bode well for their future decisions

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  • It all depends on what one invests, how much one invests, and how long one is prepared to wait for a return. For me equities are both a risky and poor return, and I suspect also one for the vast majority of people. Most people I know have been pulling their money out of equities over the past few years…..but you believe what you want to.

    they usually omit to mention at the same time that gold is still lower than it was decades ago, in inflation adjusted terms.

    Yes of course, and the gold run has a good deal further to go.

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  • general congreve says:

    @3 – May I remind you why equities rebounded in March 2009, it was because of a huge dollop of financial stimulus that goosed the markets.

    At the time in the UK alone it was an injection of ONE TRILLION POUNDS and that figure has been rising ever since, see article below. That is what got the markets moving, one trillion of taxpayer money that has gone straight on the deficit.

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8262037/Bank-bail-out-adds-1.5-trillion-to-debt.html

    I’ll be honest, I didn’t see a move of such stupendous stupidity by our politicians coming, it certainly took me by surprise.

    However, rather than the outright economic collapse that was on the cards that would have crushed sterling, dollar, euro etc. and boosted
    the gold price, we just embarked on a more protracted economic collapse, which is signified by the continued appreciation of gold.

    I know of no one on here who suddenly panicked in 2009 and sold their gold, they stuck to their guns, knowing full well that you can’t fight reality. The stupendous size of the bail outs merely confirmed the magnitude of the problems faced and the obvious long term consequences. This has been born out in gold’s stubborn appreciation since then.

    Personally, my combination of gold and silver investments since 2009 has me looking at a 65% gain today, almost identical to the 66% gain since the March 2009 low the FTSE currently stands at today. From here on in one of these investment areas will be trending down in real terms, the other up. Place your bets please gentlemen.

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  • cynicalsoothsayer says:

    The difference is that you can pull out of some equities as they go high and into others that look better value or give better returns.

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  • general congreve says:

    @10 – What if you started out by picking losers rather than winners, or initially picked winners but put the money gained on losers?

    Indeed, that is how they keep the FTSE always going up over the very long term, the losers get relegated and the winners get promoted. So, you’re not comparing apples with apples. The mantra that ‘Stocks always go up in the long term’ is just plain wrong, it should be ‘Leading stock indexes always go up over the long run, at least nominally’.

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  • “At the time in the UK alone it was an injection of ONE TRILLION POUNDS and that figure has been rising ever since, see article below. That is what got the markets moving, one trillion of taxpayer money that has gone straight on the deficit.”

    No, GC, you’re talking rubbish again, because you’ve never understood how the markets work, and you jump to stupid conclusions.

    Even if took the trouble to read the Telegraph article today (which you clearly havn’t..) you’d see that this is just an accounting change. Yes, the government took on the banks’ liabilities, but it also took on their assets – the two more or less nett off to zero.

    Now, why not try listening to people who not only understand the markets, but have already made themselves enough money to retire?

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  • uncle tom: Your post @7 is ridiculous.

    I agree with UT. I didn’t bother reading any of your posts flashy because I though them garbled.

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  • sibley's b'stard child says:

    *Grabs popcorn*

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  • general congreve: You surveyed the economy and markets in 2009 (your declared entry point). At that time, you had the choice of investing in absolutely anything but you chose an item that finished mid-pack. You cannot loudly declare your 2009 entry point and simultaneously refuse to accept the same date as a starting point for comparative purposes. 2009 was a pivotal point which is why you made your decision and market participants made theirs, at the same time.

    Your public forecasts of collapse and doom did not pan out but you were fortunate to make some money precisely because you got it so wrong. The world economy grew at a healthy rate in the two years after your bet, which is not something you expected to happen. As a consequence of this growth, commodities and equities almost universally rose in price (including gold). If your forecast had not been so wrong, you would have made much more money.

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  • general congreve says:

    @14 – Apologies UT, in my rush to post I made it sound as thought a trillion was injected into the markets, it was not, I meant to say a trillion into the banks thereby propping up the economy and in turn the markets. If you see this earlier thread @34, you will see the same argument from me but not rushed off in hurry, in case there is any doubt I am trying to reconfigure my argument retrospectively:

    http://www.housepricecrash.co.uk/newsblog/2011/08/blog-go-long-on-shotguns-divining-rods-and-beans-34262.php?comment=added#comment

    Yes, the government took on the banks assets too, however, if those assets were so bloody great – they weren’t, they were a bunch of bubble-priced commercial and residential property no longer valued at those prices – then why did the banks need a bloody bail out? Seriously.

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  • “I meant to say a trillion into the banks thereby propping up the economy and in turn the markets”

    If you don’t understand why the above is complete nonsense, then you should stay well away from the markets

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  • general congreve says:

    @17 – Mid pack?

    Yellow line – gold, Black line – DJIA, Green line – WTI Crude, Blue line – Canadian Gold Junior Miners, Red line – Financials.

    Image and video hosting by TinyPic

    Your second paragraph about growth is just nonsense. We may have experienced nominal growth in the west, but that’s all it is, nominal growth in return for throwing the kitchen sink of more debt at our economies. That has just resulted in inflation that has rendered that growth negative in real terms. Sure there may be some places in the world still growing in real terms, but their success will not subsume our failure.

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  • Over significant timeframes equities have outperformed all other asset classes. This will continue, because equities, unlike say commodities, mark not just the inevitable decrease in the value of fiat, (which horror of horrors is largely what fiat is about) but reflect also human innovation, ingenuity and endeavour.

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  • general congreve says:

    @21 – Indeed, the stock market recovery had nothing to do with governments standing behind insolvent financial institutions with a blank cheque book paid for by you and me and our children and their children.

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  • The Chart posted starts 2010 not 2009. I wonder why!

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  • “Are you suggesting that a family man should avoid an investment with the most successful multi hundred-year track record because he is unlikely to live several hundred years? Rubbish indeed”

    Timing is everything in investment! Something you clearly dont understand! Perhaps you ought to buy an “investments for dummies” book!! Actually.. maybe you should start with peppa the pig.. wouldnt want to stretch you!

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  • Over significant timeframes equities have outperformed all other asset classes.

    Dubious comment – depends on what equities and what time frame.

    Equities have traditionally been ”pumped” to make them look more attractive, the reverse has previously happened with PM’s – to get people to buy equities and other forms of paper…..

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  • Flashman, just because you’ve looked at a graph that shows that stocks outperform other asset classes in the very long term does not make you some sort of expert!

    It appears you’re a one trick pony that clearly missed the gold (and other commodity) superspike over the lasy 10 years and you’re feeling the pain! Well stop crying to mommy and get over it!

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  • There is nothing right about the notion that bailing out the banks will somehow encumber future generations, but its widely believed and it’s part of the fear that driving the PM trade for now . Ok it might be the Daily Mail does economic analysis, but it’s a catchy notion for those who can’t get their heads round more complex ideas – and if that’s the majority, the idea is here to stay.

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  • There is nothing right about the notion that bailing out the banks will somehow encumber future generations, but its widely believed and it’s part of the fear that driving the PM trade for now . Ok it might be the Daily Mail does economic analysis, but it’s a catchy notion for those who can’t get their heads round more complex ideas – and if that’s the majority, the idea is here to stay.

    no idea about what is actually happening at all……

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  • general congreve says:

    @23 – As I said before, stocks is a general term, where are the stocks of Pan Am, Commodore International, BCCI, Atari Inc., LTCM etc. now? The list is endless:

    http://en.wikipedia.org/wiki/List_of_business_failures

    A tracker may put you out ahead in real terms, lets see:

    1913 – DJIA = roughly 60
    1911 – DJIA = 1280

    Source:

    http://stockcharts.com/freecharts/historical/djia1900.html

    Devaluation of dollar since 1913 to present – Commonly held at 97%+, we’ll go with 97%.

    So, (12800/100) x 3 = 384

    So, if you bought a DJIA tracker in 1913 you would have increased you wealth in the last 98 years by 384/60 = 640%

    Not bad at all, a 6.53 average appreciation a year and consistent with a period of overall economic growth.

    Think I’ll still take my 65% gain on PM’s in 2.5 years and keep my money on the table to see what happens next with stocks and metals and we can check back later to compare notes, as we can’t settle the future with mere conjecture, we really need hard facts.

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  • general congreve says:

    @25 – Nice try, I just posted that one because it was closest fit for the dates, here’s the preceding graph for the full story…

    Image and video hosting by TinyPic

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  • general congreve says:

    @32 – Note it goes back further than 2009. I admit if I’d have gotten into the DJIA etc. in 2009, yes, I’d have made better returns thus far. However, I was coming into gold from a position of decent gains on property in the preceding years, so my personal investment story doesn’t start in 2009 and it certainly doesn’t end today 😉

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  • The argument was about performance of asset classes since 2009. Not since 2010 or 2006, or any other date.

    A graph from Jan 2009 to date?

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  • general congreve says:

    @29 – That’s right, we can spunk as much money as we like on the country’s credit card and it will have no impact whatsoever on the wealth of future generations.

    “Hey Cameron, got a vote winner for you, give everyone a Ferrari, you may as well, such largesse is apparently ‘negative financial impact free!'”

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  • @31 you’ve omitted dividends and reinvestment of same. Gaming the data.

    Agreed on the conjecture point tho, and to boot its all getting rather done to death.

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  • Digdug @28: “Timing is everything in investment!”

    Yes and timing is the most elusive of all market abilities. Unless you have a crystal ball or a one in a million ability to time the markets, it is best to stick to the most time proven strategies. Over the last few hundred years, equities have trounced almost everything else, so if you do not have the use of a crystal ball, then there is only one sensible choice (if you want the best odds of success). Your waspish comments do nothing to hide your miscomprehension of the realities of the markets and their attending probabilities. You probably don’t have a bean or investment to your name but that never stops your sort lecturing those who’ve actually done the business for decades

    General Congreve: what is the point of your carefully selected charts? Since you made your purchase in 2009, equities have done better than gold and that is all there is to it. Why did you not put up a chart showing that? Why not put up a chart showing gold lower than it was decades ago? Over the course of the last few hundred years, equities plus dividends have trounced gold, which is all that anyone without a crystal ball should be concerned with. Your incorrect economic forecast of 2009 amply displays your lack of an economic/market crystal ball, so why are you so keen to pretend that you have one? You got it wrong and your 2009 investment did not perform as well as the ones you would have chosen, if you got it right.

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  • general congreve says:

    @34 – No, YOUR argument was about 2009 to date, because that is when I bought gold. Yes, other assets have made bigger percentage gains since 2009 (the two graphs together show that if you look), but that is only because of debt being piled on top of debt to produce that effect, the end result of which will propel gold much higher than those other assets as we move into the future.

    While the likes of Flashman may try to pin me down on a 2009 entry to gold and how I could have done better by being in stocks, what he fails to take account of is 2009 was not my starting point in investment, I was already sitting on a 55% gain from property as that point. If instead from the 2002 onwards period in which I held property I had instead held any of the other asset classes in the chart and held onto them until now, I would be out of pocket. So, despite efforts to say I messed up, the opposite is in fact true. I won’t deny that in hindsight I could have made more profitable trades, but I have made good trades nonetheless and gold is one such trade that will continue to perform well and out perform the other assets on that chart into the future. We can check back in a year to see if I am right on that score.

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  • general congreve says:

    @37 – The two charts show the full picture, which is that equities have outperformed gold since 2009, I concede that. However, I refer you @38 with regards to that and my own personal fortunes and that of gold in the future.

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  • “Flashman, just because you’ve looked at a graph that shows that stocks outperform other asset classes in the very long term does not make you some sort of expert! It appears you’re a one trick pony that clearly missed the gold (and other commodity) superspike over the lasy 10 years and you’re feeling the pain! Well stop crying to mommy and get over it!”

    No, but being fully qualified and participating in the markets for 25 years probably does make me an expert. In 2009 I was almost a lone voice on this site when I frequently posted about the impending recovery in the markets. I got it right and filled my boots while people like you quaked in their boots. You are out of your depth and you really should stop digging.

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  • sibley's b'stard child says:

    Bought gold in 2009? I am considerably richer than yow:

    Image and video hosting by TinyPic

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  • In 2009 I was almost a lone voice on this site when I frequently posted about the impending recovery in the markets.

    it wasn’t a recovery though – it was the effects of artificial stimulus. WAKE UP!

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  • got gold?

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  • “While the likes of Flashman may try to pin me down on a 2009 entry to gold and how I could have done better by being in stocks, what he fails to take account of is 2009 was not my starting point in investment, I was already sitting on a 55% gain from property as that point”

    You pinned yourself down to 2009 by telling us several times per day that it was when you got in. You further pinned yourself down to 2009 by constantly boasting about how much better you had done than anyone else as a consequence of your 2009 bet. It is only therefore fair for me to point out that your investment was at best mediocre and that your gains are a consequence of an incorrect forecast

    Your comments regarding your property gains are completely irrelevant and actually quite modest.

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  • Digdug?: You are not fooling anyone (on more than one level)

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  • You’ve got to love old Flash “One Swallow” Man..

    He’s several hundred years old and has made one good call (by luck) in 25 years of being an “expert” (chuckle)..

    Flashy, you must understand that being a “lone voice” about a stock market call on a property board doesnt really prove much now does it!?

    I made a great weather prediction on a sport website the other day.. can you believe I was the only one on the board that got it right… lol

    Well done, you predicted a stock market rally when it had been beaten down like a dog!!

    Any more predictions.. sun coming up tomorrow is it?

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  • Digdug/krustyatemyhamster: “He’s several hundred years old and has made one good call (by luck) in 25 years of being an “expert” (chuckle)”

    A 25-year career would make me about how old? People like you moan on about people like me getting more than we deserve but when it suits you, we suddenly only made one good call in our lives. You can’t have it both ways

    “Flashy, you must understand that being a “lone voice” about a stock market call on a property board doesn’t really prove much now does it!?”

    No but it makes me right and you wrong. Don’t be such a sore loser.

    “Well done, you predicted a stock market rally when it had been beaten down like a dog!!”

    That’s easy for you to say two years later. The fact is that, at the time, you and your sort laughed at the very notion of a stock market rally. Try to be more honest with yourself. The next time you moan about someone like me getting too much of the pie, try to remember how you curled your lips at someone who had the brains and balls to post an opinion that ran contrary to several hundred other posters. Also think about how you were still tying to laugh through gritted teeth two years later, when you were proved wrong.

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  • krusty, you should know by now that you won’t goad me into getting banned. Have a great day.

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  • general congreve says:

    @46 – Your twisting things there. 2009 as a reference point is merely to do with when I started posting here, coincidentally around the same time I was buying my metals portfolio.

    Since then I have encountered people on here that have told me on here that gold has been a bad investment, someone even had the temerity to say I should be ashamed of myself for advocating gold as an investment and they pitied anyone who had followed my advice. Rather than boasting I simply counter with the fact that anyone who had followed my advice since I started posting here in 2009 would be looking at positive gains, which is true. I also point out my own personal percentage gains in that time period as evidence of that fact.

    Like I say, I do not deny stocks have made bigger gains since 2009, but as I stated above that is attributable to certain market interventions, interventions that will come back to haunt us all and will sent gold much higher than most investments in the immediate future as a result. Hence the reason I advocate holding gold.

    My property gains are not irrelevant in the context of looking further back than 2009. If you do so, you will find I made gains on property in that time frame, while other made big losses on stocks. Those holding stocks throughout have still not recovered all the lost ground in nominal terms and will never manage it in real terms IMO. So timing is everything and while my timing is not perfect in hindsight, sometimes for reasons beyond my control, it has been pretty damn good. As for my property gains being mediocre, yes they are, however I am younger than you and was not in a position to start investing until 2002, you have to play with the hand your dealt after all, and I’m more than happy with the progress of the game so far.

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  • GC: I am just trying to give you some perspective. If you take on board a little bit of what I’ve written here, your gold posts might attract less opprobrium. Disassociating yourself with the wrong sort will also encourage a better dialogue on the subject. The person who said you should be ashamed has been banned (over and over) and is quite probably certifiable so don’t worry about it.

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  • general congreve says:

    @53 – But on the contrary, I am open minded and I do take on board your posts Flashman. In fact I enjoy the opportunity they give for fleshing out the debate and looking at things from other angles. I am all about broadening my horizons. For example, I hadn’t taken a close look at the 100-year return on the DJIA until this thread, I learnt something today. However, if other arguments fail to make headway with me, then I will maintain my original position and stick to my guns. The same can certainly be said of yourself, can it not?

    To summarise, my argument for gold is based on the current situation we face and the future prospects for various investments, not a blind assumption that the the retrospective situation of the last 100 years in relation to stocks will play out indefinitely into the future. On balance stocks might continue the trend when viewed in a decade or two, but I, like many others, are trying to safeguard wealth now and make a return in the immediate term while we still draw breath and may have the opportunity to enjoy that wealth.

    I would also like to say that just because other users may be generally pro-gold as well, it doesn’t automatically follow that I agree with everything they say or the line of argument they deploy. That is up to them and it is not my business to chastise them or fight others battles for them. In fact to get involved in such things can often risk ones own banning from the forum.

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  • gc: regarding your post @52: You often seem to offer ‘proof’ that is based on your interpretation of what happened/will happen next. With respect, you have no idea what will happen next and your interpretation of the past is often a little off-centre. Your main error, as I see it, is this utter refusal to accept the above truism (that you don’t know what will happen next). Once you accept that all investment choices are a gamble, the only ‘sensible’ choices are the ones with the best possible odds. No matter how much you cherry pick the data or persuade yourself that you know what will happen next, dividend paying equities have by far the best multi-hundred year track record. For hundreds of years, people have thought they were on to something better, only to be crushed because the long run odds caught up with them. Gamblers do of course sometimes get lucky with longer-odds punts but the good ones never fool themselves into thinking that it was down to much more than luck. I’ve gone off piste many times over the years (mostly because of some scientific hobby-horse) but the success rate of these punts is pretty poor when compared to the good old plodding method, I described to you a few months ago. My apparent digs on the gold subject are purely aimed at pointing out that, no matter what anyone says, the gold bet has significantly longer odds. The more excitable amongst us treat this subject like they were on the terraces of their football club but I genuinely wish you success with your punts. I don’t care what happens because I’m hedged and out of the game after a good few years of boring short-odds plodding. It might not work for the next 25 years but the odds are that it will, no matter what you or I think we know

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  • general congreve says:

    @55 – At the end of the day, everyone has to weigh up the information at hand (something these sort of discussions on here certainly help with), calculate the odds of the likely outcome and place their investments accordingly, whilst hoping for a little luck to help grease the wheels and then patiently wait for the outcome.

    The information as you see it points to stocks being a better bet in the long run. The information I see points to gold/silver being a better bet for the foreseeable future, until something happens to make me change my mind. We will both defend those points of view on here because we both firmly believe in them.

    I understand that it is equally true that I can’t know the future any more than you, but I am not simply extrapolating 100 years of past investment performance directly into the future without any consideration to the underlying fundamentals of debt, economic growth and accelerating currency debasement. Instead I am considering these fundamentals and what effect they will have from the historical record on various investments and that shows a positive correlation for the appreciation in the value of gold.

    So, while we are both guessing at the future, we are both making educated guesses, of which I am confident mine are more correct or else I would switch promptly allegiance as my personal wealth is riding on my decision (and I am a mercenary [email protected] at heart!). I am sure you believe the same.

    I do not think it immediately follows that you are wrong, over the longer term you may be proved right about stocks, but it does not automatically follow that gold is a bad bet now. As I alluded to before, what matters to me is making a positive return now and in the next few years, not when I’m 60 or 70.

    Anyway, we can go on like this for hours and we frequently have 😉 Let’s check back and check scores in a few months or a year and see the lay of the land now.

    To clarify, like I said, a little luck is needed to grease the wheels, e.g. Fukushima and the recent floods in the US have contributed to the economic woes of the world and added to the upwards momentum of gold. Personally I would unwish those awful events if I could, but in terms of investment return that is the sort of unknown quantities out there (that can be positive and negative on a investment) that I talk about when I refer to luck. However, I do not want it said if I am out ahead in the future that it is down to nothing but luck, as that will be patently untrue, the luck element is marginal in my opinion and I have stated my reasons for why I think gold is a good investment, just as you have stated your reasons for backing stocks. Which reasons bear out to be correct is what we must ultimately examine.

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  • general congreve says:

    @56 – Correction – check back and see the lay of the land THEN, not now.

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  • gc: I think you may have missed my point a little. It is not a matter of who will be proved right or wrong. My point is that you wrongly think you know what will happen next, whereas I just blindly follow the shortest odds. I am quite happy to state that I don’t really know what will happen next. It is your ‘certainty’ that raises the eyebrows of more experienced hands

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  • general congreve says:

    @58 – I think you missed my point a little. I base my assumption of what will happen next, and it is an assumption, on my own reasoning on current events, which is based on past events. A reasoning that I explore and share on here. The general methodology is little different to yours, you may claim you are following the shortest odds, but those odds are based on historical data too, so it the same methodology as mine, it’s just we choose to attribute a more likely outcome to different data sets.

    Of course, I don’t know what happens next, maybe some rogue asteroid will hit us and all bets will be off. But all things being roughly equal, I believe precious metals to be a consistently good bet, if not the best bet, in the immediate term. What happens in the next months and years will bear out whether I have called that correctly.

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  • 2009 is an interesting time.
    I was looking at funds this weekend just gone and how they performed over the past so many years.
    Many of them dip leading up to it and then zoom off just after it.

    The FTSE reweighted itself over a year ago, didn’t it to reflect commodities more than it had done.

    I wonder if comparing PM performance significantly overlaps currently with an equities comparison.

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  • @59 and perhaps we can leave it at that! No more gold posts or comments for a year or so would be something of a blessing. It’s not that I hate gold or anything silly like that, it’s just that the topic is done now. Agreed?

    I appreciate that you feel you’re helping people (no doubt while reassuring yourself) but it gets tiring after a while, and if you are much more sparing it will look more like a valid argument than a personal obsession.

    I could for example post everyday my belief that the best investment anyone could make is to spend their free time being creative and entrepreneurial, but it would quickly become boring and then, some posts later, just plain ridiculous.

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  • Flashman,

    Regardless of right/wrong – you’re starting to sound like you’ve lost it. The instant anti-gold ranting at any opportunity is bordering on the type of behaviour you rant about.

    Whenever I get like that I tend to STFU for a bit and go and do something else.

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  • general congreve says:

    @61 – I didn’t post the article or start this thread Bellwether, all I did was step in response to @3 to set the record straight.

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  • general congreve says:

    @63 – and continued to post in reply to further points raised by you and Flashman. That’s what I find most tiring frankly.

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  • gc: “The general methodology is little different to yours”

    I don’t think you could reasonably claim to have anything that resembles a valid methodology because you have too many chasms in your understanding of the markets and the economy. Getting it completely wrong in 2009, should have been a wake up call for you but I guess nothing wakes up a zealot.

    jackas: I have been incorrectly and adversely quoted in several recent gold threads where I have not been involved, so I am quite entitled to get stuck in. I did not mention gold first on this thread so perhaps you could take your own advice. I haven’t seen a decent contribution from you in months, so you should perhaps put silly comments lower down your list of priorities

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  • Flashman,

    It’s been years not months. Better things to do & taking my own advice 🙂

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  • general congreve says:

    @65 – Not sure quite how you can call a 65% return since 2009 ‘getting it completely wrong’. There were no chasms in my understanding of the market or economy, not the free market anyway, but I will admit there was a gaping chasm in my belief back in 2009 that the authorities would resort to the insane bailout measures that they did. And for the result of that oversight I agree, I could have made higher returns since 2009 by putting my money in a FTSE tracker, only made higher returns thus far that is, because this race is far from over.

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  • general congreve says:

    @31 – Sorry made a mistake, DJIA is actually 11949 as of today, not 12800, so the average yearly return of the DJIA, not factoring in dividend reinvestment, over the last 98 years is not 6.53%, but 5.97%.

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  • @68 or indeed factoring in dividends at all, which are essential to make the calculation meaningful.

    Also you’re not seriously going to deny making constant gold based posts !!!!!

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  • general congreve says:

    @69 – If I had the dividend data I’d factor it in, but I don’t, that’s why I stated the caveat that reinvestment of dividends wasn’t accounted for.

    It is unfair to say every post I make is about gold. If a specific article mentions it, someone else mentions it, or the consequences of the subject of the article are bullish for gold then it is likely I will bring it up. Is that so unreasonable? No one is making you engage me in multi-post tit-for-tat conversations on the topic if you find it boring. However, I get the impression you secretly enjoy haranguing me. Go on, admit it, your mission to chase me down gives your life added purpose. 😉

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  • general congreve says:

    @68 – Sorry, wrong again, as of market close DJIA is 11867, loss of 2.56% today apparently. Ouch.

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  • clockslinger says:

    FFS, GC & Flashman, stop it! You have both done very nicely from your respective positions in gold / dividend paying equities since 2009. You have certainly both demonstrated balls in putting money wghere mouth is and surpassed the herd. Enough!
    So, colours to mast you two…still buy more gold now even at 1,000 an ounce, GC?
    Top three dividend payers to go with, Flashman? Yes, it is rude to ask, but IMO you have both earnt your spurs and deserve to be taken seriously, so there is the acid test, with usual caveat emptor for anyone taking the advice.

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  • gc @67: I’ve told you at least ten times in this thread why and how you got it completely wrong in 2009. Re-read the thread if you need it explaining again.

    @70 Please don’t pretend that you are innocent of obsessively repetitive gold posts. When it comes to gold, you have something that closely resembles OCD. Give it a rest, if you don’t want to feel harassed. It’s not entirely your fault that you are aided by and therefore associated with this sites most mentally negligible poster but you should at least wonder why it is that only the dimmest of the dim support you in your obsession.

    The idea that fiat currency is doomed to extinction is strictly for the fairies. Anyone with an ounce of learning understands that it is technically impossible. Find out why that is the case and prove to me that you understand it and I will retool my attitude towards your posts. In the meantime everything you forecast is based on a farcical premise. You have to understand something of human nature before you understand why people like bellwether and myself pick you apart. When someone repeatedly boasts about a mediocre performance, they will always end up getting kicked. The situation here is no different to how it would play out in a rugby team’s locker room, or in the boardroom of a large PLC.

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  • Clockslinger: I wouldn’t dream of giving specific investment tips here or anywhere else. I have absolutely no particular skills or aptitude for investing. All I know is the habit of religiously putting a portion of my monthly salary into some decent blue chip stocks by way of a pension and savings plan. I have never indulged in the rougher side of the investing game

    My digs are not meant to be taken as an equities versus gold match. I have absolutely nothing against gold at all but frequent boasting about speculative gold derived gains is a rather crass habit on a site devoted to the injustices caused by speculation. I occasionally get stuck in because the odd melee like this tends to quieten it down for a while, which is all we can really hope for

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  • general congreve says:

    @73 – If I had the available funds I would be, however, I worked out what I could afford to realistically invest going forward, after taking account of other commitments and went all in over a 3 month period from Jan 2009 to March 2009. Fully committed in one hit, and am I glad I did. Having said that, going forward, gold is still cheap at this price, of course that is my opinion.

    @74 – You say I got it wrong. If it is on a straight forward what made the biggest returns between 2009-2011 basis, then I admit (as I did earlier if you re-read the thread), I didn’t pick the best winner with gold, although I still finished in the lead pack. My silver on the other hand has at least equalled the FTSE. However, I have never alluded to this being a straight race form 2009-2011. The story starts before that and will end long after 2011, so it is you who is cherry picking Flashman.

    I said we’d revisit this in a year, but having seen the way things are playing out in the last few days I would like to revise that time down to the end of the year.

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  • general congreve says:

    @75 – Speculation on houses, oil, grain, soya, sugar etc. affects peoples lives and their standard of living, I do not condone it. Purchasing gold on the other hand has no direct impact on peoples standard of living other than the fortunes of those who hold it (be that positive or negative), the effects are more or less personal. Therefore, I find the label of ‘speculator’ with respect to purchasing gold, in the sense that it is an unsavoury activity, abhorrent.

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  • crash bandicoot says:

    GC – I use gold at work to make an oxidisation barrier on a nickel bonding film. Over the past five years the cost of gold has pushed up the raw material cost for our products while we come under pressure from our customers to cut costs. While I don’t put you into the same category as a BTL investor please be aware that you investment of choice does have an impact on the real world.

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  • general congreve says:

    @78 – Fair point and of course wedding rings are another one I forgot to mention, although they can be seen as an investment, although one that any couple would have to be desperate to redeem – I believe such redemption in an emergency is part of the function of such an item though.

    However, would I be correct in saying gold is not the only raw material going up in cost at your business CB? If so, perhaps the reasons for gold’s appreciation lie more with monetary policy than speculators.

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  • crash bandicoot says:

    GC – We use a lot of germanium and the price of that has been relatively stable over the period. I have occasionally over the years used platinum for technical reasons too. In the 1990’s I seem to recall that platinum was nearly three times the price of gold. These days they are close to 1:1. I was quite shocked the first time that I noticed that.

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  • general congreve says:

    @80 – The effect of gold being a monetary metal I am afraid. Traditionally there were few uses out side wealth-based adornment and money that gold had, now there are a growing number of industrial uses and I concede that means any fluctuation in the value of gold as a currency also impacts the industrial user and his customers. I imagine there are legions of Swiss firms similarly cursing the stability of their currency as we speak, as it continues to strengthen at the more or less the same pace as gold against the dollar, euro, pound etc.

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  • crash bandicoot says:

    I’m laughing to myself now because we subcontract some gold coating to a swiss company… They do some work for us as a sideline to watch manufacturers and judging from our current relationship the high-end watch industry is holding up quite well.

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  • general congreve says:

    @82 – Selling gold watches in Swiss Francs?! Could be a tough line of business, good job for them there’s plenty of crooked bankers out there loaded with taxpayer-funded bonuses! 😉

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  • crash bandicoot says:

    Luckily there are plenty of bankers who are paid in Swiss Francs. I’d never seen a two-storey Lamborghini dealership until I visited their facility!

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  • gc: You really can be incredibly slow on the uptake. You got it wrong because in 2009 you loudly proclaimed your confident prediction that the economy and the markets were heading for an imminent collapse. For good measure you banged on about the imminent demise of fiat currency or some such drivel. You got it badly wrong because the world economy started growing almost immediately and almost all markets started rising. Your claims of silver and house selling heroics were added on to your story, somewhat after the event

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  • the yellow stuff still looks quite good today………

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  • general congreve says:

    @85 – So now you resort to casting doubt on my claims. I can assure you that while I most frequently refer to gold, I purchased an allocation of silver at the same time, equal to 10% of my gold purchase in £’s. Thanks to its faster appreciation silver has added in the region of an additional 7% or so of my total gains from both metals. Prior to gold investment I also bought a property in 2002 and sold it in 2007 for a 55% profit, in between this and purchasing gold I had the property money in Icesave for around a year at 6% before pulling it out two days before they collapsed (how’s that for timing? – or do you think I messed up there and I’m a loser for not pulling it out with only 24 hours to spare?) and reinvesting the majority in gold/silver. In fact I remember the first time you became aware of my other investment moves you actually retracted an earlier diatribe against me in the thread in question and congratulated me on the moves I had made.

    Do consider for one moment what I have to gain by making up I made 55% on property between 2002-2007, a gain that in your and my words is quite modest considering housing went up around 170% between 1997-2007. Why say I bought gold in 2009 for a 58% gain thus far (stripping out silver from the equation)? If I was an idle boaster surely I’d go the whole hog and say I was in property from 1997-2007 and gold from 2001-present, rather than try to dazzle you with my obviously pitiful returns from the dates I give.

    I’ll tell you why, because I am telling the truth, it should be plain as day.

    As for the markets, I firmly believe they would have collapsed had it not been for the rescue of the financial system, a rescue that punted the problem into the future, a future that may be arriving as we speak:

    http://money.cnn.com/data/world_markets/americas/

    Yes, I also believe the purchasing power of the pound, euro, dollar and Yen and many other currencies that hold these currencies as collateral will see their purchasing power drastically reduced going forward, some will almost definitely collapse. But I never called it all to happen next week, did I?

    I don’t know what it is with you, but you are a most unagreeable character. I’ve had quite enough of your bully boy debating-style and accusations that I am a liar. For crying out loud, I conceded the point that if I had invested in shares I’d be marginally better off (1% – mind you that was yesterday, I doubt it holds today) than if I hadn’t bought gold/silver instead and I conceded the point that the stock markets have outpaced gold thus far. I then reiterated that going forward I thought gold would diverge and outpace the stock markets. I even did the figures to show the DJIA had made good real positive returns in the last 98 years, although I stated my point of view that I didn’t think that run would continue, certainly not in the immediate term. Is that not clear? Can you not accept my point of view gracefully?

    There is no reason why you can’t agree to disagree and be gentlemanly about it. I don’t agree with Techieman, or UT, or Quiet Guy on things, but we agree to disagree and keep things pretty civil and we all know time will tell who has been more correct as the future happens. Where I am wrong I admit it too, as do they, it is not like I have stubbornly refused to accept reality like Sibley at any time.

    You stick with your shares, I’ll stick with my gold and we’ll review the situation as time goes on. And with reference to this thread, remember the story of the Tortoise and the Hare Flashman, the Tortoise and the Hare.

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  • general congreve says:

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