$1300 Gold, and $21.50 Silver....

What makes you think gold at $1300 isn't evidence of an efficient market?

Eventually, gold will get hammered but I doubt it will happen soon. There will be corrections - there have been a few 20%+ declines since this gold market began. But thus far, all the foundations are still for a bull market. I would start looking for an end to the gold bull market if and when a flood of new supply comes into the market and/or monetary conditions get very tight. The Fed raised interest rates from 1% to 5.25% from 2003 to 2007 and gold more than doubled.

I wouldn't short gold here, except for a near-term overbought trade with tight stops.

We still haven't reached the euphoric stage of this yet.

Youi're joking. When radio ads tout gold the same way they did real estate, and before that stocks then we've hit a top. When I see people standing on streetcorners advertising to buy gold, we're at a top. You don't think all the scrap is going to gun supply? When the stock market starts making new highs all that money is going to pile out of gold and into stocks. I don't know whether this is really the top, or whether it's at 1300 or 1400 or 1500 but we're very close. Gold is thinly traded so it is subject to very big moves.

The funniest part of the gold equation is that most of the gold people buy isn't gold at all. It is leased gold. You "buy" it, pay for it, but the guy you buy it from doesn't have it, or own it, he just has a lease on it. And those leases are sold in a manner similar to fractional reserve banking in which many people are leasing the same physical gold at the same time.

When the premium between real delivered gold and leased gold collapses you will know that the bubble is about to pop. Last I heard that premium was still rising.



My gold is Eagles and in hand.
And yes I agree with you, there has been more gold sold than exists.

However since I bought at a little over $500 I don't think I will be hurt.
 
If it's hidden then how do you know it's happening?

The phony, pumped-up stock market numbers, with no real appreciable increase of growth and/or output.

Also, those trillions of dollars "sitting on the sidelines" aren't just stuffed under the mattresses of corporate CEOs.

How are stock market numbers (and do you mean the DOw, the S&P, the Wiltshire??) phony and pumped up? Do you think people buy and sell and then get their confirms and say "no, I didnt pay that for this stock"?
Output and growth are not correlated to stock market returns.

I'm not hearing anything cogent here.
The Fed has been pumping cash into the markets to prop them up, dude.

GASG: Is the FED propping up the stock market?

http://www.marketwatch.com/story/tepper-tells-cnbc-fed-will-prop-up-market-2010-09-24
 
If the dollar falls relative to the value of real assets, then all currencies must fall with it. Otherwise, production capacity around the world would be gutted out and relocated to America.

Hard case to make, the dollar is still strong compared to most commodities since June 2008. Just not against gold, silver and other PM. But real estate is low against the dollar, as are wages. Oil is just holding steady.

But reduced demand is responsible for much of the weakness in commodities.

Silly Rabbi(t) would have a strong argument if he was arguing that general inflation was not yet in evidence instead of arguing that the gold rally can't continue.

But he isn't alone, lots of folks see the historic picture and choose to believe gold is already in a bubble, and it might be. Esp since gold doesn't have the extra value of being a world reserve anymore.
 
Toro, minor quibble on explanation, since gold production is generally a by-product of mining other ores such as copper a fall off in the real value of those ores means that gold production will go down no matter what happens to the price of gold. Being from Canada where mining is more important than in the US and hanging out here with people who also know the economics of mining you may have unintentionally have left a wrong impression of what to expect from production in case of a rising gold price.
 
Youi're joking. When radio ads tout gold the same way they did real estate, and before that stocks then we've hit a top. When I see people standing on streetcorners advertising to buy gold, we're at a top. You don't think all the scrap is going to gun supply? When the stock market starts making new highs all that money is going to pile out of gold and into stocks. I don't know whether this is really the top, or whether it's at 1300 or 1400 or 1500 but we're very close. Gold is thinly traded so it is subject to very big moves.

The funniest part of the gold equation is that most of the gold people buy isn't gold at all. It is leased gold. You "buy" it, pay for it, but the guy you buy it from doesn't have it, or own it, he just has a lease on it. And those leases are sold in a manner similar to fractional reserve banking in which many people are leasing the same physical gold at the same time.

When the premium between real delivered gold and leased gold collapses you will know that the bubble is about to pop. Last I heard that premium was still rising.



My gold is Eagles and in hand.
And yes I agree with you, there has been more gold sold than exists.

However since I bought at a little over $500 I don't think I will be hurt.

you will be fine. I doubt gold will ever fall below $800 (2010) again.
 
The phony, pumped-up stock market numbers, with no real appreciable increase of growth and/or output.

Also, those trillions of dollars "sitting on the sidelines" aren't just stuffed under the mattresses of corporate CEOs.

How are stock market numbers (and do you mean the DOw, the S&P, the Wiltshire??) phony and pumped up? Do you think people buy and sell and then get their confirms and say "no, I didnt pay that for this stock"?
Output and growth are not correlated to stock market returns.

I'm not hearing anything cogent here.
The Fed has been pumping cash into the markets to prop them up, dude.

GASG: Is the FED propping up the stock market?

Tepper tells CNBC Fed will prop up market Hedge Funds - MarketWatch

Unfortunately your links don't substantiate the idea that the stock market is rising because the Fed is pumping money into it.
Actually they don't substantiate much of anything at all.
 
Loss of confidence in fiat currencies. Most governments are systemically debasing the value of their own currencies. The US government has been doing so for much of the past decade. And since the dollar is the anchor of the global currencies, it is dragging all other fiat currencies down with it.

If that were so then all currencies would be falling in value.
But they aren't. Nor is that possible since currencies trade against each other.

They are all falling in value. That's the point.

The linchpin of the global economy is the dollar. It is the global reserve currency. If the dollar falls relative to the value of real assets, then all currencies must fall with it. Otherwise, production capacity around the world would be gutted out and relocated to America.

None of that is borne out by real life. All currencies cannot fall at the same time, since they are traded against each other. No one buys assets with gold. No company in Canada goes to Germany to buy equipment and offers gold. They must pay in Euros.
The whole "entire world debasing its currency" is a myth.
 
How are stock market numbers (and do you mean the DOw, the S&P, the Wiltshire??) phony and pumped up? Do you think people buy and sell and then get their confirms and say "no, I didnt pay that for this stock"?
Output and growth are not correlated to stock market returns.

I'm not hearing anything cogent here.
The Fed has been pumping cash into the markets to prop them up, dude.

GASG: Is the FED propping up the stock market?

Tepper tells CNBC Fed will prop up market Hedge Funds - MarketWatch

Unfortunately your links don't substantiate the idea that the stock market is rising because the Fed is pumping money into it.
Actually they don't substantiate much of anything at all.

HUH? Are you daft?
 
duh, are you ever dumb!

All currencies can fall at the same time. It's that simple idiot.

Esp when every major currency is scrambling to debase their currencies at once.

There are three threads in the econ forum dedicated to this.

Do you need a link?
 
duh, are you ever dumb!

All currencies can fall at the same time. It's that simple idiot.

Esp when every major currency is scrambling to debase their currencies at once.

There are three threads in the econ forum dedicated to this.

Do you need a link?

So if I showed you a currency not falling then you'd agree this was bunk, right?
 
duh, are you ever dumb!

All currencies can fall at the same time. It's that simple idiot.

Esp when every major currency is scrambling to debase their currencies at once.

There are three threads in the econ forum dedicated to this.

Do you need a link?

So if I showed you a currency not falling then you'd agree this was bunk, right?

gawd are you over literalizing! Besides how could you show one that isn't falling, as in compared to WHAT?

You really don't get the idea of relative.
 
duh, are you ever dumb!

All currencies can fall at the same time. It's that simple idiot.

Esp when every major currency is scrambling to debase their currencies at once.

There are three threads in the econ forum dedicated to this.

Do you need a link?

So if I showed you a currency not falling then you'd agree this was bunk, right?

gawd are you over literalizing! Besides how could you show one that isn't falling, as in compared to WHAT?

You really don't get the idea of relative.

Gee, you might be getting the idea now! Yes, compared to what?
 
The Fed has just begun to monetize Federal & State debt. The housing foreclosures will not subside until late 2012.

creditsuisse.jpg


There is no way in hell they will raise interest rates until 2012. There is still plenty of time to pile into Gold & Silver.

[ame="http://www.youtube.com/watch?v=zr1zYUN6oj4"]U.S. May Face Bailout for States[/ame]
 
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Currencies are falling in comparison to gold and silver. Oil prices have been de facto denominated in gm/au for the past 40 years.
 
None of that is borne out by real life. All currencies cannot fall at the same time, since they are traded against each other. No one buys assets with gold. No company in Canada goes to Germany to buy equipment and offers gold. They must pay in Euros.
The whole "entire world debasing its currency" is a myth.

All currencies cannot fall against each other. But they can all fall against real assets.

For example, if the total money supply of the world comprised of various currencies is $1 billion, and all the countries double their money supply, everything else being equal, the price of real assets should double. Thus, the price of gold should double.

Yes, a Canadian company pays in euros, not in gold, but they could pay in gold if both parties wished.
 
No, inflation is a general rise in the level of prices.

I think this is a philosophical argument, and reasonable people can differ. Your view is definitely in the majority and mine is in the minority. But I believe that people who ask "Why is gold going up?" don't understand or accept the minority's argument. One can call the expansion of the money supply as "inflation" or not, but when there is too much money being created in the world, it has to go somewhere. And if it is not going into consumer prices, it is going to go into asset prices. That's a big reason, if not the main reason, why we have had a Tech Bubble, a Housing Bubble, and now a developing Gold Bubble all within a decade.

But also, gold may be signaling a future rise in inflation, as you define it. Simply because we haven't seen inflation doesn't mean it isn't coming. I have no opinion on that, but it may be.

If the Fed tightens, gold is going to swoon very quickly. It is a volatile market since there isn't much of it. The fact that no one sees the Fed tightening is a good reason why it will.

Gold rose from 2003 through 2007 when the Fed raised interest rates from 1% to 5.25%. But I do agree with the general gist of your argument. Bubbles pop when monetary conditions tighten. But they usually don't pop until the end of the tightening, not at the beginning. If you go back and look at the last gold bubble ramp from 1978 to 1980, the 10 year yield rose from something like 8% to 11% while gold rose from $300 to $850. This is why I don't think we are even close to the price of gold topping out. The Fed is looking at QE, not tightening. The Fed has been as loose as it has ever been. Generally, tops don't happen when the central bank is flooding the economy with liquidity. In fact, just the opposite usually happens.
 
Hard case to make, the dollar is still strong compared to most commodities since June 2008. Just not against gold, silver and other PM. But real estate is low against the dollar, as are wages. Oil is just holding steady.

But reduced demand is responsible for much of the weakness in commodities.

I agree. Other commodities are much more a function of the real economy. But it is interesting that oil is at $80 while most of the world's economies are weak. What's going to happen to the price of oil when the US economy starts to strengthen?

As for real estate, I think the cheapest asset in the world right now is US land. Given the massive supply of real estate still sitting on banks' books, I don't expect real estate prices to move upwards much anytime soon. But raw land prices here in parts of Florida have fallen by up to 90%-95%. And decent properties, too. Beachfront has fallen by 60%-70% in some areas. With all this money sloshing around the world, it will eventually flow back in.
 

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