The gold bubble

[uscitizen]

With gold at record prices, nearing $1200/ounce, one must be careful and realize that sometime, probably in the first quarter of next year, the Fed will raise interest rates and pop the gold bubble as gold will most likely fall to under $900/ounce. Remember, gold is a commodity. Like all other other commodities, whenever it hits a meteoric rise, it will always, ALWAYS have a meteoric drop within six months time. Just remember the oil bubble of 2008 as the perfect example of that.

I hope everyone here is careful with their gold purchases.

No problem, I bought gold eagles for a bit over $600 from an individual just a couple of years ago.

 

[uscitizen]

BTW gold production has been dropping since about 2000.

 

[Toro]

He's just another blowhard with an opinion as far as I am concerned. Buy gold if you want to, it's a free country.

He's just another billionaire with an opinion.

I have bought gold, thanks. I've done very well in it over the years, and over the past few months.

 

[Zander]

He's just another blowhard with an opinion as far as I am concerned. Buy gold if you want to, it's a free country.

He's just another billionaire with an opinion.

I have bought gold, thanks. I've done very well in it over the years, and over the past few months.

Billiionaire blow hard, my mistake.
Good for you. I bought a new aircraft instead of gold. I bet my aircraft will hold it's value as well as your gold over the years. Can you fly somewhere in your gold?

 

[Toro]

He's just another blowhard with an opinion as far as I am concerned. Buy gold if you want to, it's a free country.

He's just another billionaire with an opinion.

I have bought gold, thanks. I've done very well in it over the years, and over the past few months.

Good for you. I bought a new aircraft instead of gold. I bet my aircraft will hold it's value as well as your gold over the years. Can you fly somewhere in your gold?

Aircraft depreciate. Gold does not!

Besides, I don't think in years. Thinking in years is for lazy people.

 

[Zander]

He's just another billionaire with an opinion.

I have bought gold, thanks. I've done very well in it over the years, and over the past few months.

Good for you. I bought a new aircraft instead of gold. I bet my aircraft will hold it's value as well as your gold over the years. Can you fly somewhere in your gold?

Aircraft depreciate. Gold does not!

Besides, I don't think in years. Thinking in years is for lazy people.

Actually, small Aircraft do not depreciate, they increase in value over the years and have a utility value to boot.

Gold appreciates and depreciates all the time - just look at the chart over the past 25 years. Gold was in the toilet just a few years ago at $250 an oz. - it was at $700 an oz in 1980. What do you call that? Growth??

As for your short term outlook, good luck with that. Traders go broke. Investors get rich. I got rich slowly with low risk......

 

[Toro]

Actually, small Aircraft do not depreciate, they increase in value over the years and have a utility value to boot.

A 10 year old Gulfstream V is half the price of a new one.

Gold appreciates and depreciates all the time - just look at the chart over the past 25 years. Gold was in the toilet just a few years ago at $250 an oz. - it was at $700 an oz in 1980. What do you call that? Growth??

I call that 60% growth since 1980.

Everything has its time and place. Now, it's gold's time. One day, I'll short gold, but not now.

As for your short term outlook, good luck with that. Traders go broke. Investors get rich. I got rich slowly with low risk......

I'm not rich but I got "financially comfortable" fast with a fair amount of risk. I know a lot of rich Wall Street traders.

Of course, I'm being facetious about "years." Sort of. I've found that often, people use "long-term" as a crutch for investments that have done poorly.

 

[Toro]

BTW gold production has been dropping since about 2000.

Aaron Regent, president of the Canadian gold giant, said that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10pc as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run.

"There is a strong case to be made that we are already at 'peak gold'," he told The Daily Telegraph at the RBC's annual gold conference in London.

"Production peaked around 2000 and it has been in decline ever since, and we forecast that decline to continue. It is increasingly difficult to find ore," he said.

Ore grades have fallen from around 12 grams per tonne in 1950 to nearer 3 grams in the US, Canada, and Australia. South Africa's output has halved since peaking in 1970. ...

Ross Norman, director of theBullionDesk.com, said exploration budgets had tripled since the start of the decade with stubbornly disappointing results so far.

Output fell a further 14pc in South Africa last year as companies were forced to dig ever deeper - at greater cost - to replace depleted reserves, not helped by "social uplift" rules and power cuts. Harmony Gold said yesterday that it may close two more mines over coming months due to poor ore grades.

Mr Norman said the "false mine of central banks" had been the only new source of gold supply this decade as they auction off reserves, but they are switching sides to become net buyers.

Barrick is moving fast to wind down the remaining 3m ounces of its infamous hedge book over the next twelve months, an implicit bet on rising gold prices over time.

Barrick shuts hedge book as world gold supply runs out - Telegraph

 

[Paulie]

I kind of like how Zander thinks $250 and ounce is "in the toilet", considering it was originally fixed at $35.

 

[Toro]

Gold was $12 100 years ago.

Over very long periods of time, gold rises because of the proclivity of politicians to create inflation.

At times gold is a bad investment, at times it is a great investment. But that's true of stocks, bonds, real estate and every other investment as well.

 

[Neubarth]

Gold was $12 100 years ago.

Over very long periods of time, gold rises because of the proclivity of politicians to create inflation.

At times gold is a bad investment, at times it is a great investment. But that's true of stocks, bonds, real estate and every other investment as well.

You can always live off of the land (unless it has become a dust bowl like the southern Central Valley of California).

Two depressions and two dust bowls. Hummmmmmm?

 

[Zander]

I kind of like how Zander thinks $250 and ounce is "in the toilet", considering it was originally fixed at $35.

Your facts are incorrect. Gold had a "fixed value" of $20.67 per troy ounce for 96 years from 1837 to 1933. In 1934 FDR Devalued the dollar by 67% by raising the fixed price of gold to $35.00 per oz. It remained that way until Nixon took the US off of the gold standard. The dollar has devalued 96% since 1913. That means Gold should be approximately 25x higher than it's $20.67 fixed price. It is 55x higher. Do the math Paulie, it's not too hard to figure out.

At any rate, If you bought gold in 1980 at $700 per ounce. You would have watched it fall to $250.00 per oz in 2001 and you'd have waited more than 28 years just to recoup your original investment. If you think that is a smart investment, buy gold today. Buy as much as you can!! GOLD!!!!!

 

[Zander]

Actually, small Aircraft do not depreciate, they increase in value over the years and have a utility value to boot.

A 10 year old Gulfstream V is half the price of a new one.

Gold appreciates and depreciates all the time - just look at the chart over the past 25 years. Gold was in the toilet just a few years ago at $250 an oz. - it was at $700 an oz in 1980. What do you call that? Growth??

I call that 60% growth since 1980.

Everything has its time and place. Now, it's gold's time. One day, I'll short gold, but not now.

As for your short term outlook, good luck with that. Traders go broke. Investors get rich. I got rich slowly with low risk......

I'm not rich but I got "financially comfortable" fast with a fair amount of risk. I know a lot of rich Wall Street traders.

Of course, I'm being facetious about "years." Sort of. I've found that often, people use "long-term" as a crutch for investments that have done poorly.

60% over 29 years, wow, what a great investment. That works out ot a CAGR of less than 1% per year. T-bills paid a CAGR of 5.47% during the same time period with far less risk. BUY GOLD!!!!!

 

[Tony_S]

With gold at record prices, nearing $1200/ounce, one must be careful and realize that sometime, probably in the first quarter of next year, the Fed will raise interest rates and pop the gold bubble as gold will most likely fall to under $900/ounce. Remember, gold is a commodity. Like all other other commodities, whenever it hits a meteoric rise, it will always, ALWAYS have a meteoric drop within six months time. Just remember the oil bubble of 2008 as the perfect example of that.

I hope everyone here is careful with their gold purchases.

Ben Bernake is a delusional prick. They're not going to raise interest rates. Ultimately, over the course of the next 24 months, the dollar is going to go through the floor and hyperinflation is a real possibility. By the way, I was firmly in the deflationist camp until around 8 months ago. Don't be suprised if gold hits $3000/ounce over the next 18-24 months. The US may end up as a failed state.

 

[Toro]

60% over 29 years, wow, what a great investment. That works out ot a CAGR of less than 1% per year. T-bills paid a CAGR of 5.47% during the same time period with far less risk. BUY GOLD!!!!!

You said that gold went down. From the gold peak in 1980 to today, it is up 60%.

In 1970, gold was $37 an ounce. The S&P 500 was 93. Today, gold is $1120 while the S&P is at 1100. Gold has risen 2,927%. Stocks, excluding dividends, have risen 1,034%.

Since 2000, gold has tripled while stocks have fallen by a third. That's a whole decade wasted in stocks, especially considering one could have at least tripled their money in commodities.

There is a time and a place for everything. Do I think gold will outperform stocks over the next 4 decades? Probably not. But do I think they will outperform over the next 4 weeks, 4 months, 4 years? Probably.

 

[Zander]

60% over 29 years, wow, what a great investment. That works out ot a CAGR of less than 1% per year. T-bills paid a CAGR of 5.47% during the same time period with far less risk. BUY GOLD!!!!!

You said that gold went down. From the gold peak in 1980 to today, it is up 60%.

In 1970, gold was $37 an ounce. The S&P 500 was 93. Today, gold is $1120 while the S&P is at 1100. Gold has risen 2,927%. Stocks, excluding dividends, have risen 1,034%.

Since 2000, gold has tripled while stocks have fallen by a third. That's a whole decade wasted in stocks, especially considering one could have at least tripled their money in commodities.

There is a time and a place for everything. Do I think gold will outperform stocks over the next 4 decades? Probably not. But do I think they will outperform over the next 4 weeks, 4 months, 4 years? Probably.

Gold and other precious metals have their place in a portfolio - a very small percentage for prudent investors (I recommend 5% to 10% maximum).

Tell me Toro, how many dividends did gold pay over the last 40 years? ZIP, NADA, NIL, ZERO. You can't just exclude S&P 500 dividends from your analysis and expect to be taken seriously.

I agree that Gold has outperformed over the last few years. That alone is a compelling reason to sell and re-balance after this run-up. The axiom, "Buy low, sell high" comes to mind. Re-balancing a portfolio forces an investor to do just that. Best of luck with your gambling.

 

[Neubarth]

Ben Bernake is a delusional prick. They're not going to raise interest rates. Ultimately, over the course of the next 24 months, the dollar is going to go through the floor and hyperinflation is a real possibility. By the way, I was firmly in the deflationist camp until around 8 months ago. Don't be suprised if gold hits $3000/ounce over the next 18-24 months. The US may end up as a failed state.

Might I remind you as I have others on this forum that if the Dollar lost half of its value, American products would be so cheap that we would outsell the rest of the world and our economic malaise would be totally eliminated.

Unfortunately, China will not let us devalue by fifty percent, because they want to sell their product to the countries of the world in place of us.

 

[Tony_S]

Ben Bernake is a delusional prick. They're not going to raise interest rates. Ultimately, over the course of the next 24 months, the dollar is going to go through the floor and hyperinflation is a real possibility. By the way, I was firmly in the deflationist camp until around 8 months ago. Don't be suprised if gold hits $3000/ounce over the next 18-24 months. The US may end up as a failed state.

Might I remind you as I have others on this forum that if the Dollar lost half of its value, American products would be so cheap that we would outsell the rest of the world and our economic malaise would be totally eliminated.

Unfortunately, China will not let us devalue by fifty percent, because they want to sell their product to the countries of the world in place of us.

Actually, if we get down to brass tacks, China doesn't need the US. Once they decouple from the US, which is inevitable, given the insanity of the FEDs' policies, they have around 200 million people - domestically - to take the US place of the debt-infested US consumer.

Also, once they decouple, their currency will drastically appreciate and they'll have new found purchasing power.

Lastly, you don't want a severe currency devaluation - it's a form of legalized theft. Trust me, you don't want to pay $40 for a gallon of milk.

 

[driveby]

Correct me if i'm wrong, and i'm not saying gold is a bad investment, but the problem with gold comes when you decide to sell it. You only get about 70% of its actual value ?

 

[Paulie]

I kind of like how Zander thinks $250 and ounce is "in the toilet", considering it was originally fixed at $35.

Your facts are incorrect. Gold had a "fixed value" of $20.67 per troy ounce for 96 years from 1837 to 1933. In 1934 FDR Devalued the dollar by 67% by raising the fixed price of gold to $35.00 per oz. It remained that way until Nixon took the US off of the gold standard. The dollar has devalued 96% since 1913. That means Gold should be approximately 25x higher than it's $20.67 fixed price. It is 55x higher. Do the math Paulie, it's not too hard to figure out.

At any rate, If you bought gold in 1980 at $700 per ounce. You would have watched it fall to $250.00 per oz in 2001 and you'd have waited more than 28 years just to recoup your original investment. If you think that is a smart investment, buy gold today. Buy as much as you can!! GOLD!!!!!

I'm bullish on gold for one reason, Zander:

And most of that was done when gold was already priced around $900.

You explain to me how the Fed is going to exit from that without causing inflation the likes of which we may have never seen, and I might consider changing my mind.