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

[nero3]

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

nero3 - you have earned zero credibility with anything you've said since you've joined iTulip.

I've already shown that you talk far more than you actually know.

If you want to continue to make pronouncements, put some numbers and dates up.

Otherwise, while you are welcome to write your opinion, said opinion carries zero value at least to me.

I have no problem with that, I'm not here to convince you. If you want to check any numbers, like on the Australian dollar, their housing bubble or things like that, I suggest you do your own research. To me it's much more an intuitive process. That's why I think it's hard to convince you of my argument.

[Blindweb]

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

When hits oil $200, $300, $400, $500 over the next decade or two the 2008 prices will only be slightly outside a linear advancement from 2000.

If one understands peak oil, I'm not sure how they could believe the current fiat system can survive.

Personally I think we might get a major correction in PMs in a couple years when people realize growth is impossible, but they'll be so high by that point that the worst case scenario they'll come back down to today's prices, and then continue going up. At that moment gold will probably outperform the others with major industrial uses, but up until that point the others will outperform.

Edit: Also note that I don't think oil will necessarily reach $500 a barrel. At some point it become a a national strategic material.

[shiny!]

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

One thing gold have is fraud. You have it in the Internet companies buying gold for cash. It all started in around 2005, I think. It was like that in the seventies too. People selling their gold due to high prices. However ,without the same fraud of these Internet companies. That means, this gold bull-market have fraud, cash for gold, and fake gold in HK or China, one of the main things of a bubble as a bubble certainly attract that kind of action.

When people on the street are selling gold, that is not a bubble. When all the "Cash for Gold" ads change to "Buy Gold Now!", and when people on the street start doing it in large numbers, then we might be in the big growth phase of a bubble.

Right now, we have Central Banks and a small percentage of wealthy individuals buying gold. Most mutual funds still don't have gold in their holdings. Most people still don't have any gold in their investment portfolios. Most individuals, at least in the USA, have never seen, let alone own, a gold coin.

[karim0028]

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

When people on the street are selling gold, that is not a bubble. When all the "Cash for Gold" ads change to "Buy Gold Now!", and when people on the street start doing it in large numbers, then we might be in the big growth phase of a bubble.

Right now, we have Central Banks and a small percentage of wealthy individuals buying gold. Most mutual funds still don't have gold in their holdings. Most people still don't have any gold in their investment portfolios. Most individuals, at least in the USA, have never seen, let alone own, a gold coin.

Exactly! I still get looks of stupidity when i discuss gold, currency risk, sovereign risk, etc... For the average person shit is still hunky dory... When the average person knows these things it will be time to sell gold... Bc, i will almost guarantee that by the time gold is in a bubble EVERYONE will know these terms and tell you that you should own gold to protect yourself and like Shiny! mentions the theme will be buy gold to protect yourself not "we will buy your gold"...

Gold is not uranium, where it can go in a bubble w/o most folks noticing bc the reasons for its rise and fall are much different than every other commodity. Fear is a major driver in the end of a gold bubble.

By that time folks may have lost their pensions due to defaults or notice that their gas bill has gone up significantly and begin to ask why, or US interest rates may begin to hurt; as the average joe doesnt remember the last time interest rates were above 8%... Hell, during my adult lifetime the highest interest rate i have seen is 7%....

[shiny!]

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

I wonder if we will see a traditional bubble in gold, like we did in the late 70's. You know... people lined up on the sidewalks trying to get into their local coin shops. Back then, people had savings to spend and did not carry so much debt as they do today.

Back then, people still remembered "real money" that had contained or been backed by silver. People today are dreadfully ignorant about money! Most don't remember silver coins used to be in circulation. Most don't know of, or even think of, alternatives to fiat money. Even a very smart 40-something CPA I know doesn't understand the problem with Federal Reserve Notes not being backed by anything real. He believes dollars have always been this way.

I think that this time around, the bubble, if bubble it be, might just occur with the Central Banks and large institutional investors, rather than the man or woman on the street. When Joe-or-Jane-6-pack realize what's happening, they might only be able to afford silver, if it can be found.

All mere speculation, not worth the price of electronic bytes.

[nero3]

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

When people on the street are selling gold, that is not a bubble. When all the "Cash for Gold" ads change to "Buy Gold Now!", and when people on the street start doing it in large numbers, then we might be in the big growth phase of a bubble.

Right now, we have Central Banks and a small percentage of wealthy individuals buying gold. Most mutual funds still don't have gold in their holdings. Most people still don't have any gold in their investment portfolios. Most individuals, at least in the USA, have never seen, let alone own, a gold coin.

I think this time could be different from the 1970's. In the late seventies treasury bonds had been in a 30 year long bear-market. When the bear-market in treasuries started it was actually low inflation and a bear-market from commodities until around 1965. Still, China is printing a lot of money and have a very high inflation. their money supply during the last 10 years is almost 600 %, it's no surprise they are hoarding gold and apartments, while the US have expanded around 120 %. What I think is likely is that China eventually will overheat like in 1993 or 1994, devalue, and that commodities fall down to earth and the US will experience a bull-market in stocks at the same time US government bonds is in a bear-market.

[nero3]

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

One thing that is worrying about some Chinese companies listed on the American exchanges is the use of computer images, just computer generated factory images made in some 3d software, false blue sky, instead of actual images of the factories and surrounding areas.

In one of these companies, I won't mention names, I figured out the manager was working in the work of selling cabin cruisers in Japan in the late 80's. It might be accidental, but I'm afraid there is some truth to those fearing bad things in China. Maybe China is only where japan was in 79, relative to japan's 89 high. It's just concerning.

Back in 2007 the emerging market exchanges were casinos for hedge funds. And when it crashed people were desperate. It was as if the speculators had dumped the market into the local poor people's hands. Now it's suddenly back to the growth story. What if it's actually the US that will decouple?

I think Peter Schiff is like a Captain on a boat convincing his passengers that there is a fire and everyone needs to abandon the ship, into small vessels like australian dollar where they will be eaten up by sharks.

[jpetr48]

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

I thought the dollar has been in a long term down trend since 2007 with a 20-30% decrease- one exception is period of 2008.
There is positive momentum for the dollar right now to get stronger according to targets on my point and figure chart but this is a short term bullish trend in a bearish dollar chart.

Read EJ's most recent postings. This is not too complicated. If you have faith in fiat currency, then you ought not to be in a gold position. Gold and the dollar for the most part have been inversely correlated. As EJ said the time to get out of gold is once there is a renewed confidence in another new currency. As of end of December gold in other currencies euro, yen, sterling was strong.

Someone else I respect is Hussman. He's a terrible stock market timer (which is a good thing) but over the long haul John is fairly accurate in his assessments too. He has a complete archives going back to at least 2000 where you can verify his credibility. The link below is on the dollar collapse done a few months ago.
http://www.hussmanfunds.com/wmc/wmc100823.htm

[rshimada]

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

I'm absolutely sure gold is in a bubble.

Since I was nutty enough to bait the trolls...

This raises two questions:

1. How does nero3 define a "bubble"?

2. Does nero3 think the US stock market is in a bubble?

[nero3]

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

Since I was nutty enough to bait the trolls...

This raises two questions:

1. How does nero3 define a "bubble"?

2. Does nero3 think the US stock market is in a bubble?

Listen. The NASDAQ was in a bubble back in 2000. 1995 was really when the US market started to get hot. That tech sector have largely healed, and most of the larger companies have very healthy balance sheets and reasonable valuations as compared to the stratospheric valuations in 2000. The broader market was even very expensive in 2000, but this era of inflation have pushed earnings in many of the best companies very high. You can get a return of 30 % on equity just by owning Coca Cola, 46 % by owning Microsoft. What's the rental income on Chinese real estate? How about gold? How does that compare with the return Microsoft is getting? A company with almost 20 % cash relative to the market value and very little debt. Is the US stock market a bubble? No. Is there a bubble in copper? yes. Australian dollar? yes. Oil? yes. Dollar? no. Gold? yes. Chinese real estate? yes. treasury bonds? that's the great question.

Gold walks, talks and feels like a bubble, however it needs to go higher, at least double, to really satisfy the speculators.

[nero3]

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

And, i'm saying. If you are conservative and Microsoft return on equity of 46 % to bad. Go for IBM and get 70 %. Then there is the potential for a stronger dollar, a bursting of the gold bubble and exploding profit margins.

[lektrode]

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

Listen. The NASDAQ was in a bubble back in 2000. 1995 was really when the US market started to get hot. ...Is the US stock market a bubble? No. Is there a bubble in copper? yes. Australian dollar? yes. Oil? yes. Dollar? no. Gold? yes. Chinese real estate? yes. treasury bonds? that's the great question.

Gold walks, talks and feels like a bubble, however it needs to go higher, at least double, to really satisfy the speculators.

methinks nero, you a pretty smart guy, c1ue's comments not withstanding, as he's definitly a real smart guy(?), but seems you 2 reach diff conclusions on same data?

anyway - i liked the comment re: intuition, as i think that if one absorbs enuf info, one's subconcious mind will churn up answers to questions one doesnt even think about, until the thot pops into ones head - it just a question then of how to interpret and/or act on said thots - or something like that, but what do i know, i'm just a guy who cuts wires/turns screws for a living...

but anyway - heres my observation

if this is true:
from: http://www.itulip.com/forums/showthr...scendant-Again
"In the pecking order at Goldman Sachs Group Inc., traders trounced investment bankers for most of the past decade. Now, the Wall Street firm's army of investment bankers is making a comeback.
The 63-page internal report released by the New York company on Tuesday showed how Goldman is trying to reassert the traditional primacy of deal making while playing down the firm's recent reliance on trading."


or is this just a smokescreen to cover their asses while they continue to pillage/plunder 'behind the curtain'
thus continuing to pump up 'the bubble'

or does this mean that they think the run in the commodity sector is perhaps over or about to peak/pop and now (once again) GS, et al will be pumping up an equities bubble, in "the large caps" as eye have been seeing comments here n there about???

and what effects will this have in the PM's vs dollar trade?

from:

http://www.itulip.com/forums/showthr...lobal-Currency

China has launched trading in its currency in the U.S. for the first time, an explicit endorsement by Beijing of the fast-growing market in the yuan and a significant step in the country's plan to foster global trading in its currency.
The state-controlled Bank of China Ltd. is allowing customers to trade the yuan, also known as the renminbi, in the U.S., expanding the nascent offshore market for the currency which began last year in Hong Kong.

like someone said, bubbles can go on for longer than expected (while the smart money gets out)?

i dont even know if i'm asking the right questions, but i damn sure like reading y'alls answers!

[karim0028]

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

And, i'm saying. If you are conservative and Microsoft return on equity of 46 % to bad. Go for IBM and get 70 %. Then there is the potential for a stronger dollar, a bursting of the gold bubble and exploding profit margins.

I'm with you that alot of the tech stocks have very good potential to appreciate, INTC looks like its going to burst higher pretty soon here from looking at a 15 yr weekly chart (once it goes out of that major wedge pattern it finds itself in).. MSFT is in one big accumulation pattern.. But, that has got nothing to do with gold... Stocks going up doesnt make the dollar stronger... Dollar is mainly impacted by interest rates, amount of money created, sovereign risk of the issuer, etc....

The US is the least ugly sister of 3-4 very ugly sisters..... Doesnt mean i'm gonna stick around and play ball....

[nero3]

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

like someone said, bubbles can go on for longer than expected (while the smart money gets out)?

i dont even know if i'm asking the right questions, but i damn sure like reading y'alls answers!

Two quick observations: Goldman seems to be leveraging itself towards M&A, and Mcdonald's and Caterpillar seems to be taking advantage of the overvalued RMB to issue RMB denominated debt.

[charliebrown]

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

Pardon me,

but what exactly does 46% return on equity mean? I think it means take the earnings and divide by shareholder
equity, but how does that translate into share price?? What does it mean conceptually? If I buy 1 share of MS at 28, I don't have $28 of equity. Microsoft has done nothing pricewise for a decade.

I do have a small holding, but it is more for the dividend, price stability, and the ability to write calls on it. It is almost like
a stable store of value play. I do not expect strong price appreciation on this holding.

Additionally, I don't think Gold is in a bubble. Look at every major economy, everyone is deficit spending. Everyone of them
debt to GDP increasing. Normally when interest rates rise, Gold is in trouble, but now if we have a significant rise in
intrest rates, the treasuries of many nations are in trouble. There can be no Paul Volker to kill inflation. Kill inflation
by raising rates and kill the U.S. treasury.

Some at itulip here are 100% gold, and that is a bit risky for my take. I believe the itulip position is 30%. I am closer to 20%. I may move to 30% if we have any significant pull back. Gold is insurance against an accident, and the higher these debt to GDP ratios drift, the higher the likely hood of an accident.

Do you think the western economies are near their laffer tax curve limit? Marginal rates were cut in 2000, but inflation
and a bigger take in local and state taxes have more than made up for this. What if rates spike to 7%, 8% or higher can the gvt. raise taxes and increase revenue to quell the panic? When will the central bank charade of buying debt with
new currency end?