Gold in a bubble and/or going to $3,000

[touchring]

Re: Gold in a bubble and/or going to $3,000

Gold might crash. Or it might double.

Great, thanks for the valuable insight.

do i correctly sense sarcasm? lol

[touchring]

Re: Gold in a bubble and/or going to $3,000

I think the market is discounting the Chinese tightening, however when oil spiked, the paper longs had gone down by a lot a few months before the crash. What's hard to predict is a spike in actual physical demand coming out of China related to their inflation.

One thing which you have to consider about the Chinese is that when they dump, they will dump even faster than they have bought.

[nero3]

Re: Gold in a bubble and/or going to $3,000

When I lived in HK I felt like I was going nuts. In HK people don't seem to be thinking in the same critical manner as I do (disconnected from the object). Rather it's as they have a ton of visual categories, think of it as 1000 button panel, and the millisecond before choosing what button to press, and just make the link between outer object and inner symbol (and think Aha with very little reflection, in fact it seems they don't engage so much in verbal processes, it goes more in the visual, outer object to inner symbol).

That's why I think you are perfectly right, once they get that aha, they can all dump it.

[touchring]

Re: Gold in a bubble and/or going to $3,000

When I lived in HK I felt like I was going nuts. In HK people don't seem to be thinking in the same critical manner as I do (disconnected from the object). Rather it's as they have a ton of visual categories, think of it as 1000 button panel, and the millisecond before choosing what button to press, and just make the link between outer object and inner symbol (and think Aha with very little reflection, in fact it seems they don't engage so much in verbal processes, it goes more in the visual, outer object to inner symbol).

That's why I think you are perfectly right, once they get that aha, they can all dump it.

Are you referring to the herd instinct?

[nero3]

Re: Gold in a bubble and/or going to $3,000

Are you referring to the herd instinct?

I'm really out on deep water here (think of how they like to buy some stocks that have lucky numbers as an example). I think the question we need to ask is how big they are relative to the other parts of the market. After the peak in 80, demand picked up in some countries in Latin-America (they suffered inflation and lack of trust in their own paper currencies as the dollar got strong and commodity prices weaker), but it was clearly not enough to drive the market. It was clearly dollar they should have bought, but it's possible the Chinese will go for gold, the question is if it can drive the market.

[nero3]

Re: Gold in a bubble and/or going to $3,000

Cotton. On bloomberg. Certainly a hoarding commodity. Last runner?

[touchring]

Re: Gold in a bubble and/or going to $3,000

I think the question we need to ask is how big they are relative to the other parts of the market. After the peak in 80, demand picked up in some countries in Latin-America (they suffered inflation and lack of trust in their own paper currencies as the dollar got strong and commodity prices weaker)

Speculative demand aside, the Chinese aren't really that great fans of gold. Gold is somewhat yellow in color, it doesn't look that great on pale yellow complexion. Platinum and silver are more popular, especially for the younger generation.

India is the world largest consumer of gold - http://www.suite101.com/content/top-...untries-a40840

I think the well being of the Indian economy will affect gold prices more than other factors.

[nero3]

Re: Gold in a bubble and/or going to $3,000

One thing that's quite visible is how the currency of countries such as Egypt have tumbled since 2008, it did not recover as some other nations currencies did, (with the rally in the stock markets), that's why you have some riots in Egypt. When the devalued currency (against the dollar) and increased commodity prices (in dollar), add up, it's of course quite a lot to bear. China have a stronger currency relative, since they don't have the huge devaluation since 2008 that Egypt have. If there is a pattern I see. it's that these countries have currencies that over time weaken vs the dollar. However during the weak dollar phase, since 2000 they held it together, however a stronger dollar expose that things are really not well managed. When all these emerging market countries with subsidized fuel (like Egypt), get's weaker currencies it's will lower all sorts of demand for oil and other commodities.

One of these countries was India. They have had a weaker currency against the dollar as a long term trend, just as Greece did before they joined the Euro. However the weak dollar masked a lot of things. I suspect that it's this long term weakness in the currency in India that's just one of the things that creates a demand for gold. What it means is that gold might be a good thing to have in India even if it falls in dollar terms. I think that they are used to thinking of gold in their local currency. So, when their currency starts to fall back to it's long term trend against the dollar, it's likely that gold will fall.

[touchring]

Re: Gold in a bubble and/or going to $3,000

What i'm hinting at is that utility type stocks, that can be blue-chip as well, might perform well, even there is a treasury bond bear market, as long as there is not a bull-market in commodities as in the period up to 1965. That kind of stocks was very popular in that period. If there is instead going to be like a doubling of nominal GDP, as during WW2 with a heavy use of the printing press, then those stocks might decent anyway, only to have the good boom later, such a secular change is obviously coming, and it's hard to time the entry point, if it's not already happened. It might be dead money for a while (to buy those blue chips), but I doubt there will be a nominal loss.

do you mean something along the lines of http://www.google.com/finance?q=IDU ?