Five Reasons for the Recent Surge in Gold

[Camtender]

http://jessescrossroadscafe.blogspot...arket-and.html

1. Seasonality



2. Continuing Risks in the Financial System



3. Moral Hazard: Tipping Point In Confidence From Over a Decade of Monetary and Regulatory Policy Errors






4. Blowback from Banking Frauds on the Rest of World



5. A Failure in Political Leadership to Deliver Essential Reforms

[metalman]

Re: Five Reasons for the Recent Surge in Gold




good one, fred!

[sishya]

Re: Five Reasons for the Recent Surge in Gold

good one, fred!

I don't know if any deflationist forecasted $400/oz Gold. But it did hit $680 at the crisis peak right ? even if it was a short time. I anyway got out of Short Gold GDX a few weeks ago with some profit. But man, I would have been butchered if I had stayed with that. I bought some more Physical Gold 2 days ago.

[Raz]

Re: Five Reasons for the Recent Surge in Gold

I don't know if any deflationist forecasted $400/oz Gold. But it did hit $680 at the crisis peak right ? even if it was a short time. I anyway got out of Short Gold GDX a few weeks ago with some profit. But man, I would have been butchered if I had stayed with that. I bought some more Physical Gold 2 days ago.

"Gold still represents the ultimate form of payment in the world."
Alan Greenspan

"The desire for gold is one of the most universal and deeply rooted commercial instincts of the human race."
Gerald M. Loeb

"No other commodity enjoys as much universal acceptability and marketability as gold."
Hans Sennholz

"Although gold and silver are not by nature money, money is by nature gold and silver."
Karl Marx

"There can be no other criterion, no other standard than gold. Yes, gold which never changes, which can be shaped into ingots, bars, coins, which has no nationality and which is eternally and universally accepted as the unalterable fiduciary value par excellence."
Charles De Gaulle

"Gold is money."
J. P. Morgan


http://itulip.com/forums/showthread....652#post116652

[sunskyfan]

Re: Five Reasons for the Recent Surge in Gold

Quoting Marx, Greenspan, and De Gaulle? Not exactly a great record there.

Let's not forget what has happened to the housing market. That was the second oldest conventional wisdom. Perhaps, associated with the oldest profession in a way but that's another web site.

Just because you do not agree with conventional wisdom does not mean that you agree with the contrary.

[Raz]

Re: Five Reasons for the Recent Surge in Gold

Quoting Marx, Greenspan, and De Gaulle? Not exactly a great record there.

Let's not forget what has happened to the housing market. That was the second oldest conventional wisdom. Perhaps, associated with the oldest profession in a way but that's another web site.

Just because you do not agree with conventional wisdom does not mean that you agree with the contrary.

Housing does not meet the necessary criteria of fungibility, portability and intrinsic immutability. Crude oil is probably closer to money than anything else in our present time, but it doesn't meet the portability requirement - unless people will accept a paper certificate in leu of the real magee.

The rest of your points are cryptic to me. :confused: (I can be dense at times.)

Would you elaborate?

[audrey_girl]

Re: Five Reasons for the Recent Surge in Gold

"Gold still represents the ultimate form of payment in the world."
Alan Greenspan

"The desire for gold is one of the most universal and deeply rooted commercial instincts of the human race."
Gerald M. Loeb

"No other commodity enjoys as much universal acceptability and marketability as gold."
Hans Sennholz

"Although gold and silver are not by nature money, money is by nature gold and silver."
Karl Marx

"There can be no other criterion, no other standard than gold. Yes, gold which never changes, which can be shaped into ingots, bars, coins, which has no nationality and which is eternally and universally accepted as the unalterable fiduciary value par excellence."
Charles De Gaulle

"Gold is money."
J. P. Morgan


http://itulip.com/forums/showthread....652#post116652

You missed one:

Gold is not neccesary. I have no interest in gold. We will build a solid state, without an ounce of gold behind it. Anyone who sells above the set prices, let him be marched off to a concentration camp. That's the bastion of money.

Hitler

[erw698]

Re: Five Reasons for the Recent Surge in Gold

You missed one:

Gold is not neccesary. I have no interest in gold. We will build a solid state, without an ounce of gold behind it. Anyone who sells above the set prices, let him be marched off to a concentration camp. That's the bastion of money.

Hitler

We will build a solid state without an ounce of Gold behind it. So how did that work out?

[MulaMan]

Re: Five Reasons for the Recent Surge in Gold

Gold has been used as the primary human medium of exchange throughout recorded history, this is around the 4th millennium BC or in otherwords when the bronze age and the age of writing began.

and then in 1971 many humans went 'officialy' off of gold.

5,121 years of gold as currency vs. 38 years of gold as not currency.


clever humans, place your bets. LOL

[sunskyfan]

Re: Five Reasons for the Recent Surge in Gold

"Housing does not meet the necessary criteria of fungibility, portability and intrinsic immutability."

No, it doesn't but people acted for a VERY long time that it did in a way.

I did not mean to make my points cryptic. Let me try again (I know that you are not dense).

When people look for certainty they look for correlations between people, ideas, and/or phenomena. That is why we form groups when under threat or stress with like minded people. It can be momentarily useful as it usually makes us feel better, and it helps us feel more comfortable about our present condition especially in a high-risk environment. It is one of the reasons we train soldiers to "think a-like" and why they were uniforms. It is the same phenomena that has almost all Wall Street guys wearing expensive suits. Unfortunately, it is not the way to solve problems. There is power for solving problems in establishing common protocols such as language, law and basic civility. Sometimes we confuse the two when trying to solve problems. How many times has a military force been sent in to solve a conflict that that stems from a lack of common language, law, and basic civility that creates nothing but disaster? Anyway, my thinking is that any surge to gold is just a desire to find a group of like minded people for the illusion of security and not because it solves any of our economic problems. I think people will recognize pretty quickly that going into gold gains them nothing. It doesn't solve any problems. It's value will be questionable. It will make you feel better for a while but you can't eat it. The modern chase for gold is no different than the chase for derivatives or credit-default-swaps and will be just as useful when it collapses.

Look for something functional to invest in.

Perhaps ... land.

[Raz]

Re: Five Reasons for the Recent Surge in Gold

"Housing does not meet the necessary criteria of fungibility, portability and intrinsic immutability."

No, it doesn't but people acted for a VERY long time that it did in a way.

I did not mean to make my points cryptic. Let me try again (I know that you are not dense).

When people look for certainty they look for correlations between people, ideas, and/or phenomena. That is why we form groups when under threat or stress with like minded people. It can be momentarily useful as it usually makes us feel better, and it helps us feel more comfortable about our present condition especially in a high-risk environment. It is one of the reasons we train soldiers to "think a-like" and why they were uniforms. It is the same phenomena that has almost all Wall Street guys wearing expensive suits. Unfortunately, it is not the way to solve problems. There is power for solving problems in establishing common protocols such as language, law and basic civility. Sometimes we confuse the two when trying to solve problems. How many times has a military force been sent in to solve a conflict that that stems from a lack of common language, law, and basic civility that creates nothing but disaster? Anyway, my thinking is that any surge to gold is just a desire to find a group of like minded people for the illusion of security and not because it solves any of our economic problems. I think people will recognize pretty quickly that going into gold gains them nothing. It doesn't solve any problems. It's value will be questionable. It will make you feel better for a while but you can't eat it. The modern chase for gold is no different than the chase for derivatives or credit-default-swaps and will be just as useful when it collapses.

Look for something functional to invest in.

Perhaps ... land.

I follow you. And I agreed with you until you said this:

...my thinking is that any surge to gold is just a desire to find a group of like minded people for the illusion of security and not because it solves any of our economic problems. I think people will recognize pretty quickly that going into gold gains them nothing. It doesn't solve any problems. It's value will be questionable. It will make you feel better for a while but you can't eat it.

I don't like a lot of company when I make serious investment allocations. I began buying Eagles and Maple Leafs in 1998 because I knew (1) gold was undervalued and almost universally derided as the investment for losers, and (2) a long-term chart of the U.S. Dollar was very overextended and in an area that should provide resistance. I certainly can't claim that I foresaw the assinine economic idiocy of "W", Trent Lott and Denny Hastert (I had known the Democrats were economic idiots since Carter). Neither am I capable of the original thinking and macroeconomic analysis of EJ, so I had no special insight.

Thirty years of trading and investing has taught me that the greatest percentage gains in the shortest period of time will occur near the end of a move, the "surge" into gold, if you will. That will be the time to sell 75% to 95% of ones gold: when most people are screaming and clutching to get their hands on it. But it should have increasing value until that time.





You're correct in saying that no one can eat gold. But neither can they eat other things that have great value. As long as society doesn't totally collapse there will be plenty of people willing to exchange various goods for gold. Always have and always will.
Yet in a "Mad Max" world gold will have little value; I'm not betting on a MadMax world.

And I have only 15% of my liquid assets in PMs. I might well double or triple that amount using CEF, GTU and Comex futures if I see a breakout and a likely upmove of 20%+. But it will be a hot money trade - not a long-term investment.

I prefer crude oil reserves as the major hedge against a continuously declining US Dollar, appropriately hedged at various times.
But should food and feed grains have a major bear market coincident with a big drop in equities, your idea of land (I'm assuming farmland) will become very interesting indeed. ;)

[Jay]

Re: Five Reasons for the Recent Surge in Gold

Gold has been used as the primary human medium of exchange throughout recorded history, this is around the 4th millennium BC or in otherwords when the bronze age and the age of writing began.

and then in 1971 many humans went 'officialy' off of gold.

5,121 years of gold as currency vs. 38 years of gold as not currency.


clever humans, place your bets. LOL

There have been plenty of other fiat systems before 1971, they just all ended badly.

[GRG55]

Re: Five Reasons for the Recent Surge in Gold

...Look for something functional to invest in.

Perhaps ... land.

Land?

LAND :eek:

My hopes are crushed.

I thought we were all going to get filthy rich trading UNG...:rolleyes:

[Fiat Currency]

Re: Five Reasons for the Recent Surge in Gold

There have been plenty of other fiat systems before 1971, they just all ended badly.

Yes - over 3,600 fiat systems have collapsed on planet earth.

A lot of people might be surprised to note that the U.S. has moved into (and out of) gold & fiat/fixed currency systems many times.


Gold vs Fiat.png

You've actually spent more time on the gold standard. Perhaps you're going back ;)

[Mn_Mark]

Re: Five Reasons for the Recent Surge in Gold

I don't understand the people who keep saying "you can't eat gold". Can you point to a social collapse somewhere, some time where a person with gold couldn't find food to buy?

Weimar Germany was about as close to complete economic collapse as any Western nation's government has ever come, that I can think of...and people with gold did quite well. I read that at the height of it you could buy a block of downtown Berlin for a one-ounce gold coin.

Zimbabwe has been a complete disaster....and yet people with gold are doing great. In fact I saw a news story about how in Zimbabwe average people are ripping up the riverbanks, washing them away to try to find the 3 or so grams of gold they need per day to buy enough bread to survive.

The Mad Max scenario has emotional intensity but seriously, can you point to an example of that actual outcome somewhere in the actual world? Even the worst places, like Somalia, which have descended into warlords' fiefdoms, still have economies where people who have money - gold - can buy food and whatever else they need.

If you think we're going to collapse so severely, that economic activity will so completely cease, that there will be no food for sale at all, at any price - well, give me some examples where this happened in history. Anywhere. I think the more common result is a period of collapse where you can't buy food using the collapsed government's currency. You could still buy it with real money like gold.