Bernanke led economy proving critics clueless

[Truthmatters]

The price of homes ALWAYS goes up.

Land is the best investment since they are not making any more of it.

sound familiar

I guess you need it explained?


what did the "sound familiar" part mean ot you?

 

[TakeAStepBack]

Personally, I buy junk coin as my backstop.

Usually the lowest premiums, really easy to liquidate, and in the event of a catastrophic meltdown will be the easiest to use for day-to-day transactions.

Junk coin is a great way to secure an exchange for goods should hyperinflation occur. Right now I can buy a $1,000 face value assortment of pre-64 junk silver for $24,962.44. If that tells you anything about where we're going with the fiat money. Precious medals is an excellent backstop. Even the "junk" variety.

 

[Toro]

I think gold will be less than $500 one day, but it might hit $5000 first.

I'm going to assume you're not quite as wishy washy about these issues when you're actually managing people's money

To me, gold is now a trading instrument. I have a small short on it but might cover tomorrow.

Truth is, I have no idea what will happen. You can't value gold like you can value most other financial assets. It trades way above cost break-even value, so that tells me it is overvalued, but the fundamentals - central banks printing money and keeping interest rates extremely low - is bullish for gold. So I rely heavily on technical analysis. The technicals can be looked at either of two ways - gold is either topping or consolidating for a move higher. But there is nothing in the charts right now that says table-pounding buy. So I have to respect the market and wait. In the meantime, it looks like it is headed lower to support levels but I don't want to take a big bet on it.

 

[itfitzme]

we were on a gold standard in 1929. We did not follow the rules of the gold standard in place in 1929 according to Friedman and Bernanke. If we had there would have been no Great Depression.

Freidman and Bernanke both say that the problem was the gold standard. It restricted the Fed in every country from increasing the money supply and stopping the decline in the value of the dollar. The cause of the Great Depression had absolutely nothing to do with the gold standard. The gold standard was in place, didn't cause it and didn't stop it.

I think gold will be less than $500 one day, but it might hit $5000 first.

I'm going to assume you're not quite as wishy washy about these issues when you're actually managing people's money

To me, gold is now a trading instrument. I have a small short on it but might cover tomorrow.

Truth is, I have no idea what will happen. You can't value gold like you can value most other financial assets. It trades way above cost break-even value, so that tells me it is overvalued, but the fundamentals - central banks printing money and keeping interest rates extremely low - is bullish for gold. So I rely heavily on technical analysis. The technicals can be looked at either of two ways - gold is either topping or consolidating for a move higher. But there is nothing in the charts right now that says table-pounding buy. So I have to respect the market and wait. In the meantime, it looks like it is headed lower to support levels but I don't want to take a big bet on it.

So, gold sells at prices that are far above its cost to produce, either through mining and refining or recycling jewelry. It doesn't return a dividend or profit like company stock based on production. And it doesn't have a face value and interest rate to compare to the rate of inflation or return on other financial assets.

It is driven purely by supply and demand. Is the supply increasing at any appreciable rate? I should think not and as such, it is essentially demand driven only with a fixed supply. That means it is priced purely by demand speculation which is based on either it's past performance, especially its recent past performance, and secondary events that have meaning to the investors.

One such event are advertisements run on radio talk show programs. The demand, and price, of gold increases immediately during and after the advertisement is run. I have no idea by how much. Perhaps just for the company advertising.

Other events would be anything that makes certain people feel uncertain about the value of the dollar, such as a debt ceiling crisis. Specifically, when the US Government credit rating was downgraded, the stock market dropped and then remained increasingly volatile immediately after the decline, even as it recovered.

My guess is that gold saw an increase in trading volume and an increase in price at the same time.

Do news events of stability see people selling? Does it react to unemployment, CPI, and GDP reports?

It should be possible to research the news headlines and match events to the change in price and volume.

The fundamental measures in a technical analysis are the rate of change and the variance, growth and volatility. Volatility increases after the event and dampens over time. A sudden decline in price alone, simply because a large number of people simply decided to randomly sell, would increase volatility. A news event that triggers selling with also increase volatility.

Rule 1: Buy low, sell high.
Rule 2: Read rule 1 again.
Rule 3: Never buy high and sell low.

It is so obvious but failing to follow that simple rule is how people lose money. It's not as easy as it sounds. Even the most rational investor can get caught up in a moment of panic, deciding to get out before they lose too much. When it is above the price they purchase, they keep hoping it will turn around. Then, when it falls below what they purchased at, they remain hopeful for a while, watching it drop, then they dump it before they lose too much.

It is all valued on perception of growth based demand. That is what you said, and I believe your are correct.

Does it vary sufficiently and slowly enough that you can repeatedly catch it on a local low and sell it on a local peak?

Then, whether in it for the short term or the long term, what rate of change for how long and what level is sufficient to trigger you to sell?

Just some thoughts.

 

[TakeAStepBack]

Gold is only going to increase in demand and hence, the price in FRN will go higher.

 

[TakeAStepBack]

Which, as an owner of gold and silver, just makes me smirk and watch.

 

[samjones]

So, gold sells at prices that are far above its cost to produce, either through mining and refining or recycling jewelry. It doesn't return a dividend or profit like company stock based on production. And it doesn't have a face value and interest rate to compare to the rate of inflation or return on other financial assets.

It is driven purely by supply and demand. Is the supply increasing at any appreciable rate? I should think not and as such, it is essentially demand driven only with a fixed supply.

"Demand" for what? Surely not for gold. It isn't good for much. Gold is only good for 2 things:

1. Very limited uses in semi-conductivity. Even when gold's cheap they don't use much of it and when gold's expensive they use even less. Gold isn't good like copper. It's too soft and too heavy to make good cable. If gold went to a million dollars an ounce tomorrow I don't think any technological problems would come of it.

2. Specific types of fine jewelry - but it better be alloyed at 24kt or else it's usefullness is diminished. What's great about gold for jewelry is that it's so sculptable - great for making intricate little figurines. You go down and buy the Missus a pair of $495.00 24kt gold earrings for her birthday then take it down to the pawn shop and ask them how much the gold in it's worth and you'll see what I mean. The gold is just the medium of the valuable craftsmanship. Otherwise it's easily replaced with other metals.

The "demand" for gold is more of a "demand" for value-stability and alot of major economic players have deluded themselves into thinking that gold's value won't drop.... It's safe as houses. If you want my advice on gold, here it is.

Sell.

 

[Brutus]

Better advice , as Greece and Obama go, so goes gold.

 

[itfitzme]

So, gold sells at prices that are far above its cost to produce, either through mining and refining or recycling jewelry. It doesn't return a dividend or profit like company stock based on production. And it doesn't have a face value and interest rate to compare to the rate of inflation or return on other financial assets.

It is driven purely by supply and demand. Is the supply increasing at any appreciable rate? I should think not and as such, it is essentially demand driven only with a fixed supply.

"Demand" for what? Surely not for gold. It isn't good for much. Gold is only good for 2 things:

1. Very limited uses in semi-conductivity. Even when gold's cheap they don't use much of it and when gold's expensive they use even less. Gold isn't good like copper. It's too soft and too heavy to make good cable. If gold went to a million dollars an ounce tomorrow I don't think any technological problems would come of it.

2. Specific types of fine jewelry - but it better be alloyed at 24kt or else it's usefullness is diminished. What's great about gold for jewelry is that it's so sculptable - great for making intricate little figurines. You go down and buy the Missus a pair of $495.00 24kt gold earrings for her birthday then take it down to the pawn shop and ask them how much the gold in it's worth and you'll see what I mean. The gold is just the medium of the valuable craftsmanship. Otherwise it's easily replaced with other metals.

The "demand" for gold is more of a "demand" for value-stability and alot of major economic players have deluded themselves into thinking that gold's value won't drop.... It's safe as houses. If you want my advice on gold, here it is.

Sell.

You are very nicely refining what I mean by "demand driven".

By "demand", I mean in contrast to the production costs and other similar factors that put a lower limit of the price that a supplier can sell at. As well, I mean in contrast to supply in terms of there being confounding factors like the supply decreasing or increasing. It isn't like diamonds where DeBarr has had control of the supply and could create shortages or dump them on the market. My general impression is that gold supply isn't increasing or decreasing to any great extent.

We are in agreement that the use of gold is limited. In electronics, it's primary purpose is as a coating for contacts. Gold has two ideal properties. It is highly conductive and inert. Electrical contacts are a point of resistance and with that comes heat. Heat increases the rate of corrosion which increases resistance which, in turn, causes more heat. It only needs to be thick enough to be a coating.

There is that alcoholic product with gold flakes in it.

Even when we detail and count all the uses, it just doesn't seem to add up to much.

So the demand side is purely demand as an investment. It is driven by, as you put it, "value-stability". More precisely, the perception of value-stability.

It seems that gold is a nearly perfect natural experiment of the psychology of demand. If a person just has to invest in gold, it seems like a nice opportunity to examine the psychological aspects of demand without all the other factors.

Someone make the point quite well with, "My advice, as Greece and Obama go, so goes gold." My point is that as the perception of the economy goes, based on news reports including reports of Greece and Obama, so go the price of gold.

We can predict the headlines already. "[Bad/Good] news of [Obama/Greece] sends the price of gold [up/dopwn] as investors [buy/sell]".

 

[samjones]

You are very nicely refining what I mean by "demand driven".

By "demand", I mean in contrast to the production costs and other similar factors that put a lower limit of the price that a supplier can sell at. As well, I mean in contrast to supply in terms of there being confounding factors like the supply decreasing or increasing. It isn't like diamonds where DeBarr has had control of the supply and could create shortages or dump them on the market. My general impression is that gold supply isn't increasing or decreasing to any great extent.

There is a robust extraction of gold every year. And we know how to get alot more of it, if the price-point goes to a level that becomes economical. There's no shortage of gold.

I don't know what to say about gold's supply/demand dynamic. It doesn't appear to be a conventional one. From an investment perspective, one might choose between investing in gold or buying stock in the gold minining industry. It would be considered essentially the same gamble. That means the supply and the demand are the same market.

Major banks and governments control almost all the gold in the world and they can control the price if they want to.

 

[Toro]

You are very nicely refining what I mean by "demand driven".

By "demand", I mean in contrast to the production costs and other similar factors that put a lower limit of the price that a supplier can sell at. As well, I mean in contrast to supply in terms of there being confounding factors like the supply decreasing or increasing. It isn't like diamonds where DeBarr has had control of the supply and could create shortages or dump them on the market. My general impression is that gold supply isn't increasing or decreasing to any great extent.

There is a robust extraction of gold every year. And we know how to get alot more of it, if the price-point goes to a level that becomes economical. There's no shortage of gold.

I don't know what to say about gold's supply/demand dynamic. It doesn't appear to be a conventional one. From an investment perspective, one might choose between investing in gold or buying stock in the gold minining industry. It would be considered essentially the same gamble. That means the supply and the demand are the same market.

Major banks and governments control almost all the gold in the world and they can control the price if they want to.

In 10, gold production rose 4%. From 00 through 09 however, gold production declined by 1% per year, even though the price rose by 500%.

 

[KissMy]

In 10, gold production rose 4%. From 00 through 09 however, gold production declined by 1% per year, even though the price rose by 500%.

Gold Swaps between Reserve Banks & Gold Miners could easily manipulate mine production numbers.

 

[samjones]

In 10, gold production rose 4%. From 00 through 09 however, gold production declined by 1% per year, even though the price rose by 500%.

This is normal for gold bugs and non-gold bugs alike. They choose the date parameters to support their assertion that prices are doing one thing or another.

From '79 to '05 - 26 years, the price of gold was essentially unchanged.

In '06 it made pronounced moves upward.... Bad times. If prices maintain at over $1000 per ounce then production will catch up. It's out there waiting to be mined.

Furthermore, even though it may sound sci-fi to play out the scenarios by which it could happen, it's not at all unrealistic to believe that a Black Swan could emerge that could greatly increase the supply of gold. I don't suppose anybody was really predicting in 1847 that the supply of gold in the world would double over the next few years. And PBS tells me that glaciers are recediing and permafrost is melting in areas of world that have had substantial gold discoveries before.

 

[Paulie]

Sell.

Short of swing trades, there's zero reason to sell until the Fed starts extinguishing bank reserves.

 

[Toro]

In 10, gold production rose 4%. From 00 through 09 however, gold production declined by 1% per year, even though the price rose by 500%.

Gold Swaps between Reserve Banks & Gold Miners could easily manipulate mine production numbers.

The data is from GFMS. They are reputable.

 

[Toro]

In 10, gold production rose 4%. From 00 through 09 however, gold production declined by 1% per year, even though the price rose by 500%.

This is normal for gold bugs and non-gold bugs alike. They choose the date parameters to support their assertion that prices are doing one thing or another.

From '79 to '05 - 26 years, the price of gold was essentially unchanged.

In '06 it made pronounced moves upward.... Bad times. If prices maintain at over $1000 per ounce then production will catch up. It's out there waiting to be mined.

Furthermore, even though it may sound sci-fi to play out the scenarios by which it could happen, it's not at all unrealistic to believe that a Black Swan could emerge that could greatly increase the supply of gold. I don't suppose anybody was really predicting in 1847 that the supply of gold in the world would double over the next few years. And PBS tells me that glaciers are recediing and permafrost is melting in areas of world that have had substantial gold discoveries before.

You said there is robust gold production. Gold production falling over a decade while prices quintuple is not "robust." Yes I'm sure that in 150 years, gold production will be higher than it is today. But in the meantime, we will all be dead.

 

[itfitzme]

http://minerals.usgs.gov/ds/2005/140/gold.pdf

 

[itfitzme]

In 10, gold production rose 4%. From 00 through 09 however, gold production declined by 1% per year, even though the price rose by 500%.

This is normal for gold bugs and non-gold bugs alike. They choose the date parameters to support their assertion that prices are doing one thing or another.

From '79 to '05 - 26 years, the price of gold was essentially unchanged.

In '06 it made pronounced moves upward.... Bad times. If prices maintain at over $1000 per ounce then production will catch up. It's out there waiting to be mined.

Furthermore, even though it may sound sci-fi to play out the scenarios by which it could happen, it's not at all unrealistic to believe that a Black Swan could emerge that could greatly increase the supply of gold. I don't suppose anybody was really predicting in 1847 that the supply of gold in the world would double over the next few years. And PBS tells me that glaciers are recediing and permafrost is melting in areas of world that have had substantial gold discoveries before.

You said there is robust gold production. Gold production falling over a decade while prices quintuple is not "robust." Yes I'm sure that in 150 years, gold production will be higher than it is today. But in the meantime, we will all be dead.

This is better. It is from the USGS data. The scale is metric tons gold content.

The first is world production. I believe the second to be US production. I have no idea what primary and secondary sources means. Haven't bothered to read the pdf and a bit tired. But, as it is the USGS and the first is world, it doesn't leave much else for the second except US. I just can't see the USGS detailing Canadian production.

It looks like world production picked back up with the onset of the recession but US production just got tapped out a decade ago. Though 200 metric tons isn't exactly a "little bit". The table reads, "metric tons of gold content". It's relative to something, though.

 

[Toro]

Eventually, gold production will increase to meet increased demand. But it takes on average 7-10 years to get a mine up and running, from the go-ahead to the first ounce coming out of the ground, up from 4-5 years 20 years ago.

 

[editec]

You people who are advocating a GOLD STANDARD don't really know what you're talking about.

The Gold standard has not historically prevented central banksters from printing up more money.

I know you think it ought to but it never happens in reality.

Mankind's civilizations have had economic depressions in every economic system we have ever created.

We had them when we were on a Gold standard and had no central bank, and we've had them when we were on the gold standard and had a central bank, and we've had them when we were not on the gold standard and ONLY had a central bank.

Your theories are interesting (they even have a kind of simpli9tic logic behind them, too), but they are not supported by reality.