Why is GOLD NOT rocketed in value?

[cakins]

Re: Why is GOLD NOT rocketed in value?

So................What we are saying is right now money is switched from flowing into CDO and other Wall St nonsence into stocks.......which are now also going to die.......thus flow moves into bonds/Bank rates.........at some near term point it will flow into Gold/Silver.

Mega

Considering the miniscule size of the Gold and Silver markets in relation to other asset classes, I would say a small fraction of it will go to precious metals, which is enough liquidity to boost prices mightily.

[rachits]

Re: Why is GOLD NOT rocketed in value?

I've found that in every significant market drop in the past couple years (late spring last year, feb this year, and right now), gold has followed the stock market down. It hasn't fully yet made sense to me why gold is no longer considered a safe harbor it was before. I guess its too closely tied to regular commodities now. Also it seems like more people are speculating in it, rather than using it as a safe haven. Whatever the market says, I'll have to live with it. Divergence of the market and the price of gold will be something to closely watch (could mean a lot of things).

I have been lurking around iTulip for some time now, and originally I didn't fully believe in the Ka-Poom theory, but after watching the market for some time and looking at historical data posted by other blogs, it makes a lot of sense. During Ka, everything drops in price. During Poom, everything increases in price, particularly gold and commodities.

The key is timing when is Ka / Poom going to happen. If you can nail that down, you are going to make a lot of money. I started shorting the market back in Jan, and was patting my back in Feb for timing it so close. I also dumped my gold during the feb "crash". Or so I thought. Lost a significant chunk of cash there. I started throwing more money in shorts (SRS, TWM, SDS, SKF) during the Bear Stearns "crisis", thinking that was going to signal the beginning of Ka, especially as it started looking like it was contagious. I'm guessing we'll find out in a couple of months (by the end of October pretty much). Good thing was by the end of Thursday, I made all my money that I lost over the first half of the year back.

If Ka is beginning, the next thing to time is Poom. Thats where I want to switch from shorts to PMs + exporting companies, perhaps alternative energy companies (depending on what the price of oil is after the Ka -- this IMO will really determine of Peak Oil is real or not). I have no idea how to time that and will probably rely on gradually moving money over time (like I did with the Ka timing), so I won't miss it or get hurt to badly if I'm slightly off. I have gut feel that Poom would take longer to happen and Ka can be more sudden, so hopefully it won't be as gut wrenching as Ka was.

[jk]

Re: Why is GOLD NOT rocketed in value?

rachits, i think we're just entering ka, and that it has a way to go. the fed will tell us when ka becomes poom - they'll start worrying about deflation and drop rates. i believe that's what fred told us in his post above.

[grapejelly]

Re: Why is GOLD NOT rocketed in value?

I've found that in every significant market drop in the past couple years (late spring last year, feb this year, and right now), gold has followed the stock market down. It hasn't fully yet made sense to me why gold is no longer considered a safe harbor it was before.

A few thoughts:

the US market has been rising in nominal terms since it bottomed out sometime around 2003.

Gold has been rallying for years.

Gold stocks respond with other stocks during a bull market. If the US market starts declining in a significant way over a long period, then gold stocks should rally.

There is still overwhelming confidence in paper. When paper starts falling in value, it will fall relative to gold.

Watch the bond market.

[FRED]

Re: Why is GOLD NOT rocketed in value?

Fred,
fficeffice" />
I am not a long time iTulip member, but have come to appreciate and respect your views. I don’t fully grock (understand) your post. Would U please expand on it as I still have much to learn?

Thanks Your Friend
Rick

Recall 2001 when "deflation" was the Fed catchword? Our interpretation at the time was that this meant the printing presses were running full tilt and asset inflation was about to rip. We issued our one and only write-up on gold, which we will update shortly. Remember also from our Hudson discussion that while the moderation of commodity and wage inflation is one objective of Fed policy, the creation of asset inflation is another, and as 100x more money is used in asset transactions as commodity/wage transactions, the latter is most certainly the tail and the former the dog in monetary policy making. Is gold managed as an asset to be inflated or as a commodity to be controlled? What is so particular about gold, from a monetary management perspective, is that it is both. It's the only commodity on the Fed's balance sheet.

When the Fed worries aloud that inflation is a key concern even as the credit markets are seizing up and asset deflation, most obviously in residential and soon commercial real estate, is happening, you can bet that the desire is to allow asset prices deflate a bit to see if commodity and wage inflation can be brought back under control before these spin out of control. The Fed risks crashing the financial system in the process, as happened when Greenspan did as an ill-fated experiment in active asset bubble management in 1994.

So Fed language has been ambiguous, suggesting that they want asset prices to deflate a bit, but are worried about the outcome of the ongoing credit contraction and about commodity/wage inflation. But reading between the lines we see that the Fed may not be so confident it can "restore confidence in the system" so easily as in 1987 or 1995 or 1998 or 2001, so the language is vague and there is no apparent action.

They are hoping for an external crisis to respond to.

In a perfect world the Chinese stock market crashes and that spreads to the US and the Fed "responds" with rate cuts without crashing the US bond market. Greenspan tried to help with his seeming oddball Chinese stock bubble comments earlier this year. No luck. Instead, they are getting the US-centric crash they don't want, caused by a re-rating of US sovereign debt. What to do?

Nothing for the Fed to do but allow the crisis to continue to develop until the time is right to step in to "fix" it.

[Mega]

Re: Why is GOLD NOT rocketed in value?

Watch for What?

[Guest]

Re: Why is GOLD NOT rocketed in value?



Included below are a series of quotes from Mr. Janzen's thoughts about what would happen in Gold, from an I-Tulip article written (I think) in 2001. I've underlined and bolded those parts which address the present discussion most directly, as a reference point.

I don't believe the sense of these specific topics in the original article has been in any way altered by the abbreviation.

Two things that come prominently to the forefront comparing these notes to today's discussion are

A) People seem to assume now that any variety of the "debt deflation" phase has rendered the holding of Gold rather than cash to be an error. Nowhere in Mr. Janszen's original article below do I find a clear reference to that, and indeed this article includes a prognosis for the clear viability of holding gold in either a contemporary deflation OR inflation (Why? Because a US deflation would more resemble Thailand's comparative currency deflation, wherein Gold remained a very effective hedge), a topic I have not seen discussed further in any recent threads.

B) The caveat about the existence of a large short position in Gold. Mr. Janszen stipulated then it was probably NOT collusive. It seems entirely plausible and even likely that this short could have developed instead as a natural emergence of mutual interests by multiple players - However the take-away from that today is that fence-sitters looking for the most appropriate moment to enter into a "gold trade" may mis-time their entry as such a large institutionalized short can unwind at any time.

Previous posts in this thread allude to the size and significance of these short positions today, six years after Mr. Janszen was already referring to their significance.

Also, the fact gold prices recently nudged their old 1980 nominal highs suggests the risk of a short unwind occurring at any moment without notice have increased.

In reference to B) - One should recognize then the difference between positioning as an investor into this hedge which Mr. Janszen described six years ago, or choosing to approach it as a trader, with all the uncertainty of result which trading implies.

Seems to me most or all other components of Mr. Janszen's scenario for strongly rising gold are in place, very much in line with his description of six years ago.

I don't know if Mr. Janszen has reevaluated any part of this assessment since. I am only looking to understand the core of the thesis in it's widest scope and assurance, for some strength of convictions here - I personally feel that 90% of trading does not ever make more than small change returns with a lot of risk thrown in, nor provide any net increase in asset security due to then often mis-timing the eventual re-entry points, but perhaps that's just my bias.

What's changed in the Precious Metals investment game plan since?

It seems to me a lot of people on I-Tulip are jumping into and out of things, taking short positions, then long again six months later, trading futures or in and out of stocks for a month, and particularly with regard to bullion, selling it perhaps only a year after buying it - before the market Eric described even was remotely near to a conclusion.

The time-scale of Mr. Janszen's remarks are long - he takes a panoramic sweep to discern the largest trends. That for me has been a big part of my interest to read his comments, and they seem to be very accurate. I very much enjoy the macro-sweep of his outlook, because it puts the "largest set of parentheses" around the trends. The super long investable trends is also the Warren Buffett way - we admire it, but do we emulate it?

My question is, why should we weave in and out of the markets in an asset class as fundamentally conservative as bullion, when in an acknowledged inflationary era, while also heading smack into currency storms? I feel the focus here gets too short term, and will risk getting spun around by swiftly changing events.

I don't know if Mr. Janszen has reevaluated any part of this assessment since, for instance how literally one is supposed to expect the inevitability of KA. One thing I note however is that it seems to me that strictly within the remarks written in 2001, Grapejelly's interpretation of the correct stance (and I think there must be many others of us here who take the same view) is the most "classic" and adheres most clearly to the original Janszen outline for the true defensive posture.

This is specifically with regard to the degeneration of bonds as a quality asset, and the events which their weakening may trigger. That is a very big deal, and the flight to bonds envisioned now in 2007 is by no means a flight to quality!

I may be missing a lot of revised input from Mr. Janszen since that original article - trading in and out was however not a part of the original prescription for placing into gold - which involved placing your position and waiting for the clear blow-off.

______________

Eric Janszen comments on gold from 2001, quoted for reference and orientation in 2007

... but the more significant source of runaway inflation was unexpected and external -- the oil crises of 1973 and 1979 -- that caused sudden price inflation and wrecked havoc in the newly minted monetary system based on floating exchange rates. Not only didn't gold fall to $7.50 as predicted by the BIS but it peaked at $870 ($1937) on January 21, 1980. ...

... Gold purchased and held for almost any twenty year period in history offered worse returns than any other investment. ...

... Is gold now solely a commodity, like copper, that will fall in value in a deflationary (debt) collapse? No. Gold is not only a commodity. Unlike any other metal, gold has commodity applications but monetary applications as well. ... Gold's performance relative to stocks since 1984 explains why gold is now popularly viewed as dead as an investment. An entire generation of investors and financial advisors have seen the DOW increase 750% while gold has fallen 55%. ...

... The ratio of the DOW to the price of gold approaches one to one toward the end of periods of financial insecurity brought on by excessive and prolonged inflation or deflation during which owners of capital have sold equities and bonds and purchase gold as a means of capital preservation. During the previous two peaks in the equities markets in the 1920s and 1960s, the ratio was 19 to one and 27 to one respectively. The current top in the equities markets marks a new peak in the gold/DOW ratio, now 37 to one. ...

... Is there causation between equities and the yellow metal? The answer is yes. During extended periods of disinflation that are conducive to rising stocks prices, investors are focused on asset appreciation. The good times for equities are periods of falling, not just low, inflation and interest rates. On the other side of the disinflation/inflation cycle is a period when stocks fall as inflation or deflation and rising real interest rates reduce corporate profitability and innovation. Then investor focus shifts from capital appreciation to capital preservation, especially the purchasing power of accumulated wealth.

Why does demand for gold as a means of capital preservation work in both the inflationary and deflationary case? Because in both circumstances investors are faced with a loss of principle, the first instance via a loss of purchasing power of the currency in which assets are priced and in the second case via default by security issuers. By "extended period" I mean the kind of bear market in stocks that characterizes a market that is repricing assets to account for previously non-discounted structural deficiencies in the underlying economy. ...

... At the same time, the effects of debt deflation, as described in the Economist article, will reduce overall economic activity. (Falling prices are commonly associated with deflation, but that's a misconception created by the U.S. experience of the 1930s when the U.S. operated under a gold standard and the buying power of the dollar was not determined by floating exchange rates as it is today. The modern U.S. future case is more likely to approximate the experience of Thailand during the currency crisis of 1997 when the baht fell more than 40% against the dollar, import prices skyrocketed and economic activity slowed to a crawl.) ...

... At the early crisis stage of this structural re-adjustment of the U.S. economy and markets, the immediate reaction of most U.S. and foreign investors alike will be to buy short-term U.S. treasury securities. This will help support the dollar through the initial crisis, to some degree countering the fall in demand for other dollar denominated assets, especially equities. As the U.S. economy contracts, however, a weakening dollar trend will begin as foreign investment in U.S. debt subsides, and this decline will tend to be self-sustaining. ...

... In this scenario, at the same time that stocks are falling and interest rates, unemployment and inflation are rising, the dollar price of gold is skyrocketing. How much? No one knows, of course, but several tools are available for adventuresome guestimates. My personal favorite returns us to the ratio of the DOW to the price of gold. Over long periods of time, regardless of whether gold is officially part of the monetary system or not, the dollar price of gold and the DOW meet at a more or less one-to-one ratio at the apex of each structural re-adjustment to the economy. ...

... Put these two primary factors together, rising prices due to a falling dollar and perceived financial risk due to rising inflation and falling stock prices, and you have a bull market in gold. A few years into this bull market the financial services industry will get involved to make money on the rise in gold prices. You will begin to see financial products marketed by the financial services industry and a proliferation of positive articles in the financial press about gold. But once you begin to see the "Equities are Dead" articles again, that will signal the time to sell gold and switch those assets back into stocks. ...

Janszen on Gold Derivatives

... Bottom line is that gold market players on the both the demand and supply side (including bullion banks, gold mining companies, central banks and hedge funds) as well as intermediaries have, each by independently acting on self interest, engaged in market activities that have created a large short position in the gold market. ... As for central banks, without these activities the asset isn't performing at all.

The net effect of this enormous short position is not known, but safe to say that any price movements that would have happened in the gold price without derivatives will eventually come to bear on the shorts, and this will some day create a sudden spike in the gold price. ... My sense is that the volatility that derivatives will create for the gold price will be short lived. Subsequent to the eventual collapse of over-extended short positions, gold will in the long run behave like a traditional store of value. ...

[rabot10]

Re: Why is GOLD NOT rocketed in value?

Recall 2001 when "deflation" was the Fed catchword? Our interpretation at the time was that this meant the printing presses were running full tilt and asset inflation was about to rip. We issued our one and only write-up on gold, which we will update shortly. Remember also from our Hudson discussion that while the moderation of commodity and wage inflation is one objective of Fed policy, the creation of asset inflation is another, and as 100x more money is used in asset transactions as commodity/wage transactions, the latter is most certainly the tail and the former the dog in monetary policy making. Is gold managed as an asset to be inflated or as a commodity to be controlled? What is so particular about gold, from a monetary management perspective, is that it is both. It's the only commodity on the Fed's balance sheet.

When the Fed worries aloud that inflation is a key concern even as the credit markets are seizing up and asset deflation, most obviously in residential and soon commercial real estate, is happening, you can bet that the desire is to allow asset prices deflate a bit to see if commodity and wage inflation can be brought back under control before these spin out of control. The Fed risks crashing the financial system in the process, as happened when Greenspan did as an ill-fated experiment in active asset bubble management in 1994.

So Fed language has been ambiguous, suggesting that they want asset prices to deflate a bit, but are worried about the outcome of the ongoing credit contraction and about commodity/wage inflation. But reading between the lines we see that the Fed may not be so confident it can "restore confidence in the system" so easily as in 1987 or 1995 or 1998 or 2001, so the language is vague and there is no apparent action.

They are hoping for an external crisis to respond to.

In a perfect world the Chinese stock market crashes and that spreads to the US and the Fed "responds" with rate cuts without crashing the US bond market. Greenspan tried to help with his seeming oddball Chinese stock bubble comments earlier this year. No luck. Instead, they are getting the US-centric crash they don't want, caused by a re-rating of US sovereign debt. What to do?

Nothing for the Fed to do but allow the crisis to continue to develop until the time is right to step in to "fix" it.

Thank you Sen Sei (sp) I mean that sincerely

Your Friend Rick

[Guest]

Re: Why is GOLD NOT rocketed in value?

Sorry,

Evidently I don't have a very good handle on formatting test for posts to the I-Tulip servers.

As the prior post is borderline un-readable, I've stripped out all formatting and resubmitted it - without bolding etc, for emphasis.

_________________


Included below are a series of quotes from Mr. Janzen's thoughts about what would happen in Gold, from an I-Tulip article written (I think) in 2001. I've underlined and bolded those parts which address the present discussion most directly, as a reference point.

I don't believe the sense of these specific topics in the original article has been in any way altered by the abbreviation.

Two things that come prominently to the forefront comparing these notes to today's discussion are

A) People seem to assume now that any variety of the "debt deflation" phase has rendered the holding of Gold rather than cash to be an error. Nowhere in Mr. Janszen's original article below do I find a clear reference to that, and indeed this article includes a prognosis for the clear viability of holding gold in either a contemporary deflation OR inflation (Why? Because a US deflation would more resemble Thailand's comparative currency deflation, wherein Gold remained a very effective hedge), a topic I have not seen discussed further in any recent threads.

B) The caveat about the existence of a large short position in Gold. Mr. Janszen stipulated then it was probably NOT collusive. It seems entirely plausible and even likely that this short could have developed instead as a natural emergence of mutual interests by multiple players - However the take-away from that today is that fence-sitters looking for the most appropriate moment to enter into a "gold trade" may mis-time their entry as such a large institutionalized short can unwind at any time.

Previous posts in this thread allude to the size and significance of these short positions today, six years after Mr. Janszen was already referring to their significance.

Also, the fact gold prices recently nudged their old 1980 nominal highs suggests the risk of a short unwind occurring at any moment without notice have increased.

In reference to B) - One should recognize then the difference between positioning as an investor into this hedge which Mr. Janszen described six years ago, or choosing to approach it as a trader, with all the uncertainty of result which trading implies.

Seems to me most or all other components of Mr. Janszen's scenario for strongly rising gold are in place, very much in line with his description of six years ago.

I don't know if Mr. Janszen has reevaluated any part of this assessment since. I am only looking to understand the core of the thesis in it's widest scope and assurance, for some strength of convictions here - I personally feel that 90% of trading does not ever make more than small change returns with a lot of risk thrown in, nor provide any net increase in asset security due to then often mis-timing the eventual re-entry points, but perhaps that's just my bias.

What's changed in the Precious Metals investment game plan since?

It seems to me a lot of people on I-Tulip are jumping into and out of things, taking short positions, then long again six months later, trading futures or in and out of stocks for a month, and particularly with regard to bullion, selling it perhaps only a year after buying it - before the market Eric described even was remotely near to a conclusion.

The time-scale of Mr. Janszen's remarks are long - he takes a panoramic sweep to discern the largest trends. That for me has been a big part of my interest to read his comments, and they seem to be very accurate. I very much enjoy the macro-sweep of his outlook, because it puts the "largest set of parentheses" around the trends. The super long investable trends is also the Warren Buffett way - we admire it, but do we emulate it?

My question is, why should we weave in and out of the markets in an asset class as fundamentally conservative as bullion, when in an acknowledged inflationary era, while also heading smack into currency storms? I feel the focus here gets too short term, and will risk getting spun around by swiftly changing events.

I don't know if Mr. Janszen has reevaluated any part of this assessment since, for instance how literally one is supposed to expect the inevitability of KA. One thing I note however is that it seems to me that strictly within the remarks written in 2001, Grapejelly's interpretation of the correct stance (and I think there must be many others of us here who take the same view) is the most "classic" and adheres most clearly to the original Janszen outline for the true defensive posture.

This is specifically with regard to the degeneration of bonds as a quality asset, and the events which their weakening may trigger. That is a very big deal, and the flight to bonds envisioned now in 2007 is by no means a flight to quality!

I may be missing a lot of revised input from Mr. Janszen since that original article - trading in and out was however not a part of the original prescription for placing into gold - which involved placing your position and waiting for the clear blow-off.

______________

Eric Janszen comments on gold from 2001, quoted for reference and orientation in 2007

... but the more significant source of runaway inflation was unexpected and external -- the oil crises of 1973 and 1979 -- that caused sudden price inflation and wrecked havoc in the newly minted monetary system based on floating exchange rates. Not only didn't gold fall to $7.50 as predicted by the BIS but it peaked at $870 ($1937) on January 21, 1980. ...

... Gold purchased and held for almost any twenty year period in history offered worse returns than any other investment. ...

... Is gold now solely a commodity, like copper, that will fall in value in a deflationary (debt) collapse? No. Gold is not only a commodity. Unlike any other metal, gold has commodity applications but monetary applications as well. ... Gold's performance relative to stocks since 1984 explains why gold is now popularly viewed as dead as an investment. An entire generation of investors and financial advisors have seen the DOW increase 750% while gold has fallen 55%. ...

... The ratio of the DOW to the price of gold approaches one to one toward the end of periods of financial insecurity brought on by excessive and prolonged inflation or deflation during which owners of capital have sold equities and bonds and purchase gold as a means of capital preservation. During the previous two peaks in the equities markets in the 1920s and 1960s, the ratio was 19 to one and 27 to one respectively. The current top in the equities markets marks a new peak in the gold/DOW ratio, now 37 to one. ...

... Is there causation between equities and the yellow metal? The answer is yes. During extended periods of disinflation that are conducive to rising stocks prices, investors are focused on asset appreciation. The good times for equities are periods of falling, not just low, inflation and interest rates. On the other side of the disinflation/inflation cycle is a period when stocks fall as inflation or deflation and rising real interest rates reduce corporate profitability and innovation. Then investor focus shifts from capital appreciation to capital preservation, especially the purchasing power of accumulated wealth.

Why does demand for gold as a means of capital preservation work in both the inflationary and deflationary case? Because in both circumstances investors are faced with a loss of principle, the first instance via a loss of purchasing power of the currency in which assets are priced and in the second case via default by security issuers. By "extended period" I mean the kind of bear market in stocks that characterizes a market that is repricing assets to account for previously non-discounted structural deficiencies in the underlying economy. ...

... At the same time, the effects of debt deflation, as described in the Economist article, will reduce overall economic activity. (Falling prices are commonly associated with deflation, but that's a misconception created by the U.S. experience of the 1930s when the U.S. operated under a gold standard and the buying power of the dollar was not determined by floating exchange rates as it is today. The modern U.S. future case is more likely to approximate the experience of Thailand during the currency crisis of 1997 when the baht fell more than 40% against the dollar, import prices skyrocketed and economic activity slowed to a crawl.) ...

... At the early crisis stage of this structural re-adjustment of the U.S. economy and markets, the immediate reaction of most U.S. and foreign investors alike will be to buy short-term U.S. treasury securities. This will help support the dollar through the initial crisis, to some degree countering the fall in demand for other dollar denominated assets, especially equities. As the U.S. economy contracts, however, a weakening dollar trend will begin as foreign investment in U.S. debt subsides, and this decline will tend to be self-sustaining. ...

... In this scenario, at the same time that stocks are falling and interest rates, unemployment and inflation are rising, the dollar price of gold is skyrocketing. How much? No one knows, of course, but several tools are available for adventuresome guestimates. My personal favorite returns us to the ratio of the DOW to the price of gold. Over long periods of time, regardless of whether gold is officially part of the monetary system or not, the dollar price of gold and the DOW meet at a more or less one-to-one ratio at the apex of each structural re-adjustment to the economy. ...

... Put these two primary factors together, rising prices due to a falling dollar and perceived financial risk due to rising inflation and falling stock prices, and you have a bull market in gold. A few years into this bull market the financial services industry will get involved to make money on the rise in gold prices. You will begin to see financial products marketed by the financial services industry and a proliferation of positive articles in the financial press about gold. But once you begin to see the "Equities are Dead" articles again, that will signal the time to sell gold and switch those assets back into stocks. ...

Janszen on Gold Derivatives

... Bottom line is that gold market players on the both the demand and supply side (including bullion banks, gold mining companies, central banks and hedge funds) as well as intermediaries have, each by independently acting on self interest, engaged in market activities that have created a large short position in the gold market. ... As for central banks, without these activities the asset isn't performing at all.

The net effect of this enormous short position is not known, but safe to say that any price movements that would have happened in the gold price without derivatives will eventually come to bear on the shorts, and this will some day create a sudden spike in the gold price. ... My sense is that the volatility that derivatives will create for the gold price will be short lived. Subsequent to the eventual collapse of over-extended short positions, gold will in the long run behave like a traditional store of value. ...

[c1ue]

Re: Why is GOLD NOT rocketed in value?

I gotta go get C1ue and drag him over here, so we can sort these nutcases out - he's the biggest agnostic around here on PM's - mebbe we can straighten these looney-tunes out?

I thought I felt a karmic interaction during my 2 or 3 days off the grid ;)

I do have a small correction: I'm not super high on gold because I think there are too many people interested in keeping the price down. Besides the gold mining companies, there are also the central banks selling as well as economic policy maker-types (not necessarily just CBs) who look at gold as an indicator.

The key point here is to look at the derivative markets.

While I am not QUITE at the stage where I must put on the tin foil hat, I do agree that it is very possible, even likely that significant commodities manipulation is occuring in the Au and Ag areas.

I don't like playing in muddy pools with submerged sharks - to mix metaphors really badly.

However, you will note that Platinum is inherently different than Au or Ag; there is basically no derivatives market for Pt.

Look at the Pt vs. Au charts - the Au chart certainly does look like a result of an attempt to hold the price down against a secular market change. Coincidentally or not, the breakdown time is right when the gold miners started giving up their hedge books...

[zoog]

Re: Why is GOLD NOT rocketed in value?

Thanks Fred, it helps to be reminded how all these pieces fit together and what signals from the Fed should mean.

You're like a mini-EJ, explaining things to us when he's not around.

[Mega]

Re: Why is GOLD NOT rocketed in value?

So....noody wants to come to a conclusion?
Mike

[Jim Nickerson]

Re: Why is GOLD NOT rocketed in value?

So....noody wants to come to a conclusion?
Mike

Mega,

Isn't it amazing that so much can be written and you still do not have an answer? Perhaps there is one somewhere above--I did not re-read all that has been written to see if I could find it.

If Eric Janzen is correct, that there will be a period of disinflation--the Ka, followed by a period of serious inflation--the Poom, then during the period of disinflation (lessening inflation) the dollar/bonar should strengthen and gold being a hedge against inflation should decrease in value in dollars. I think most people here who give the Ka-Poom theory credence believe that the Ka is still to come, and perhaps it has begun with the dollar having had a mini-bounce off its recent long-term lows.

I have no idea as to what gold will do in Euros which I guess is your concern.

I guess I could figure it out, but I am not inclined to try to do so.

Edit: I should have written GBP rather than Euros. In fact, I do not know how one should interpret the Ka-Poom theory if one's currency is sterling.

Edit #2: Just in case it is still not clear to you, gold is not expected under the Ka-Poom theory to "rocket" in value in dollars/bonars until the period of disinflation is countered by the Fed fighting it with production of more bonars/dollars--thus producing extreme inflation. Gosh, I hope that is clear, if not make it known and perhaps someone else will do better in explaining how things might turn out.

[Mega]

Re: Why is GOLD NOT rocketed in value?

Ok, In ENGLISH!
PLease.
Mega

[Jim Nickerson]

Re: Why is GOLD NOT rocketed in value?

Ok, In ENGLISH!
PLease.
Mega

Mega, if you expect others to take time and thought to try to answer questions or elucidate issues, then you likewise should go to the trouble to specify what it is you are not understanding. Everything in this thread is in English, some of which is poor English, but nevertheless English.

Speak up, man, and do it plainly and specifically.