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

[renewable]

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

I'm not talking about price spikes related to those events. Rather that those events helped fuel inflation and negative real interest rates, in what otherwise might had been deflation, it was first after the Iraq War started, that you got the boom from 2003 really going.

Ah, I see. So you believe that the gold boom was caused by inflation and negative real IRs. Does it not follow that the most likely things to stop the gold boom would be deflation and positive real IRs? Both seem unlikely in the near future - the Fed has printed away any deflation scares, and positive real IRs (say 7%+) would crush western economies.

[c1ue]

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

Folks,

It is strongly recommended not to feed the troll, nero3.

Every fact, every piece of data you bring up, will only be responded to by a fatuous paragraph.

He/She/It doesn't have any interest in real debate, only in provoking motion. Wasted motion.

[nero3]

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

real IRs (say 7%+) would crush western economies.

I think you are wrong on that one, you don't need very high real rates, but they don't need to stay negative. Nothing would boost consumer confidence in the US as a strong dollar, a Chinese economy going bust, and generally weak commodity prices, in a sense I think some of those things were on the way, before Lehman collapsed. Im totally convinced the federal reserve brought the world into a total unnecessary mess, as they should have bailed out lehman. Now it's back at that lehman level.

You don't need 7 % IR to have positive real interest rates. 2,5 % would be more than enough.

[metalman]

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

I think you are wrong on that one, you don't need very high real rates, but they don't need to stay negative. Nothing would boost consumer confidence in the US as a strong dollar, a Chinese economy going bust, and generally weak commodity prices, in a sense I think some of those things were on the way, before Lehman collapsed. Im totally convinced the federal reserve brought the world into a total unnecessary mess, as they should have bailed out lehman. Now it's back at that lehman level.

You don't need 7 % IR to have positive real interest rates. 2,5 % would be more than enough.

nah... the weak dollar is the only thing keeping the usa economy afloat via exports... strong dollar = weak stock market...

US Stocks Fall, Cisco Weighs After Weak Outlook; DJIA Off 101
Nov. 11, 2010, 11:51 a.m. EST
By Steven Russolillo

NEW YORK (MarketWatch) -- U.S. stocks slumped Thursday as disappointing news from Cisco Systems hit technology stocks hard and dragged down the broader market.

The Dow Jones Industrial Average was recently down 101 points, or 0.9%, at 11256. Cisco led the blue-chip index's decline, plunging 16% and erasing nearly two months of gains after the technology bellwether offered a weaker-than-expected sales forecast. The decline erased as much as $24 billion from the company's market value on Thursday.

The Internet-equipment giant said its fiscal first-quarter profit rose 8% from a year ago, but warned of slower revenue growth, citing weakening orders from cable-TV operators and government agencies.

Cisco's results weighed on Hewlett-Packard, Microsoft, International Business Machines and Intel, which were all among the Dow's biggest decliners. IBM's drop of 1.3% combined with Cisco's decline to account for roughly half of the drop in the price-weighted Dow on Thursday.

The technology-heavy Nasdaq Composite, which has risen in 21 of the last 25 trading days, was recently down 1.5% at 2541. The Standard & Poor's 500-stock index fell 0.8% to 1209, with technology and financial stocks leading the declines.

"To have a major tech bellwether warning like this is very concerning for the market, especially considering that Cisco gets a lot of their revenues from exports," said Jeffrey Sica, president and chief investment officer at SICA Wealth Management. He noted that exports have been seen as a big driver for U.S. companies.

"It was somewhat of a shock to the market," Sica said.

[nero3]

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

If you think global multinational players, then they need a strong dollar so their workers can get a huge wage cut through currency devaluations, and also lower input costs through lower commodity prices. Even companies within the US, producers, like Eaton, would benefit tremendously if the commodity prices went down, boosting profit margins. One thing I'd question was if the dollar was all that strong in the era of the 1950-s, even commodities were bad, but i think that's what the US at some point will be going back to.

[nero3]

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

This whole inflation trade is in my opinion a bubble. I see it were well in the trading as well. Nomura, Goldman Sachs and other international players like Morgan Stanley really dominate our local stock exchange, especially on the buy side on days like this, covering shorts I assume. It's like it's bad in the US or Japan, so it must be so great here goes the thinking. And in China, it's even better, where I live it's more like we are a derivative on China, that means that the fundamental economy here really don't count. When I last was in China my feeling as that bubble feeling. It was great to, it's nice to feel that wind in the back business atmosphere, it's business everywhere you go, I guess you can take the hotel elevators to the business floor if you are feeling home sick. I have not been in the US recently but I have heard from others saying it's very depressed. That is how these bubbles get created, through this combination of pessimism and a perception that things are greener somewhere else, however, the real unemployment in the US is like 17-18 %. I think it's probably a great time to invest or start a business in the US, as it probably won't get much worse. For the commodity producers it's still this fantasy world that existed in the US before the housing bust. That fantasy will likely go down with the real estate bubble in China. The US is bullish because there is an actual process towards improvement. In many other places it's not even began.

[nero3]

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

The way I see it. The gold market is expensive, yet you still have the bubble in bubble expectations. A finale where Jim Sinclair, Howard Ruff and all the others, could have a cozy remembrance of the 1970's, while trying to outwit each other in the final bubble days of trading, would of course be the best.

[metalman]

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

The way I see it. The gold market is expensive, yet you still have the bubble in bubble expectations. A finale where Jim Sinclair, Howard Ruff and all the others, could have a cozy remembrance of the 1970's, while trying to outwit each other in the final bubble days of trading, would of course be the best.

hate to break it to you guys who think gold is a retail market, it ain't. it's central banks & insurance co. etc. not at all like 1970s... per itulip model, is gold in 'late majority' stage?

FIRE Buys Ice

Back when we started talking up gold in August 2001 when the metal traded at $270, if we suggested that some day a large insurance company will buy hundreds of millions of dollars worth of gold to "hedge against further asset declines" we'd have been laughed off the Internet. And then...

Northwestern Mutual Makes First Gold Buy in 152 Years
June 1, 2009 (Bloomberg - Andrew Frye)

Northwestern Mutual Life Insurance Co., the third-largest U.S. life insurer by 2008 sales, has bought gold for the first time the company’s 152-year history to hedge against further asset declines.

“Gold just seems to make sense; it’s a store of value,” Chief Executive Officer Edward Zore said in an interview following his comments at a conference hosted by Standard & Poor’s in Brooklyn. “In the Depression, gold did very, very well.”

Northwestern Mutual has accumulated about $400 million in gold, and Zore said the price could double or even rise fivefold if the economy continues to weaken. Gold gained 10 percent last month, the most since November. The commodity has more than tripled since 2000, rising for eight straight years. Gold futures for August delivery slipped $4.80 to $975.50 at 4:03 p.m. in New York.

AntiSpin: Today, with this announcement, gold officially exited the Early Adopter stage of market development and entered the Early Majority stage.

We entered at the Innovator stage. We intend to exit during the Late Majority stage when most of the price appreciation can be expected to occur. The dates are, of course, guesses. Our long term gold price target is $2,500.

[jk]

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

Nothing would boost consumer confidence in the US as a strong dollar, a Chinese economy going bust, and generally weak commodity prices, in a sense I think some of those things were on the way, before Lehman collapsed.

ask under what conditions we get generally weak commodity prices, a chinese bust and a strong dollar. the necessary antecedant to these conditions is a global recession. nothing would boost consumer confidence more than a global recession. [/sarcasm]

btw, nero3, i understand you are inhibited about discussing your current investments for fear that the process of discussing them will somehow influence your psychological ability to manage your assets properly. nothing, however, should preclude you telling us how you have performed in the markets in the past. we have no ability to audit you, but i'd be interested your self-report. please.

[nero3]

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

ask under what conditions we get generally weak commodity prices, a chinese bust and a strong dollar. the necessary antecedant to these conditions is a global recession. nothing would boost consumer confidence more than a global recession. [/sarcasm]

The reason emerging market's is strong, is because the US is having loose monetary policies. If the US can have a tight monetary policy emerging market's will suffer, and when the time is right the US market will love tight policies. I think it's a misconception in the market's that emerging markets and the US market will be in a great trend at the same time, the US can't send all their money to Venezuela and still be great.

[jk]

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

The reason emerging market's is strong, is because the US is having loose monetary policies.

agreed

If the US can have a tight monetary policy emerging market's will suffer,

yes

and when the time is right the US market will love tight policies.

you've got to be kidding. give me an example of any country, any time, "loving tight policies."

I think it's a misconception in the market's that emerging markets and the US market will be in a great trend at the same time, the US can't send all their money to Venezuela and still be great.

i think the us market is struggling in inflation adjusted terms, and em's are rising.

p.s. i notice you ignored the 2nd half of my post, asking for your historical performance. if you can't or won't discuss present investments, and ignore requests to discuss past ones, i don't know why i should pay attention to your thoughts about future ones. poof, you're gone.

[nero3]

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

agreed

yes

you've got to be kidding. give me an example of any country, any time, "loving tight policies."

i think the us market is struggling in inflation adjusted terms, and em's are rising.

p.s. i notice you ignored the 2nd half of my post, asking for your historical performance. if you can't or won't discuss present investments, and ignore requests to discuss past ones, i don't know why i should pay attention to your thoughts about future ones. poof, you're gone.

Actually you edited your post, so it was not there while I replied. Anyway, it's not interesting to me if i'm credible to you are not, if you need any kind of track record then what you are saying is that you can't evaluate what i'm writing yourself, so you want to find some guru to put your trust into. One thing you can notice, that I have noticed, is that someone that's a cheerleader for something (Abby Cohen of the 90's comes to mind), rarely get's their act together and predict the end to "their story". Sometimes they get bearish, but they will be reluctant to call the top. If you follow someone then, wait for their attitude to change, as their way of telling you the story have changed. It might be a minor thing. With companies it's usually that they start going into things outside their competence. Another thing is that many of these different fund managers get used by the smart one as long as it works, like the husband of Biggs daughter quit at Soros, Soros knew where things were going with the dot-com bubble, but apparently his manager was still bullish while Soros thought they were going to get hammered, and then found other work. It's not like you can keep going at one manager or one guru, you must realize they each have their time and place.

[metalman]

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

Actually you edited your post, so it was not there while I replied. Anyway, it's not interesting to me if i'm credible to you are not, if you need any kind of track record then what you are saying is that you can't evaluate what i'm writing yourself, so you want to find some guru to put your trust into. One thing you can notice, that I have noticed, is that someone that's a cheerleader for something (Abby Cohen of the 90's comes to mind), rarely get's their act together and predict the end to "their story". Sometimes they get bearish, but they will be reluctant to call the top. If you follow someone then, wait for their attitude to change, as their way of telling you the story have changed. It might be a minor thing. With companies it's usually that they start going into things outside their competence. Another thing is that many of these different fund managers get used by the smart one as long as it works, like the husband of Biggs daughter quit at Soros, Soros knew where things were going with the dot-com bubble, but apparently his manager was still bullish while Soros thought they were going to get hammered, and then found other work. It's not like you can keep going at one manager or one guru, you must realize they each have their time and place.

you're on the wrong site.

ej was in the vc business during the dot com bubble... told us all to sell in march 2000... sold all his cisco in the 70s... what's it now? 20? he played it like a bubble... not even soros did that.

ej bought gold in 2001 & hung on... issued a gold correction warning in 2008 & again last week for gold for 2011...

in one article he calls itulip 'crowdsourced market intel'... he posts extensive analysis & we all beat it up... after 12 yrs our knowledge builds. but to help the community refine the ideas that ej comes up with & we refine first you have to know the foundation of knowledge here...... & you're not interested... so you can't add anything.

you have an opp to add to the knowledge base here but you're happy scratching in the dirt with sticks.

whatever.

i'm adding you to my ignore list.

[nero3]

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

Suit yourself: http://www.telegraph.co.uk/finance/c...d-landing.html

If you read the article, clearly there are some memories of their hard landing in the 1993-1994. Since the US stock market is as cheap now as in the 1990-s, I want to know why the market will have stagflation with higher gold prices, instead of disinflation, falling commodity prices, maybe even deflation and booming stock-market.

I would think a crash in China could bring down bond yields, something that would probably help the US housing market recover. (not through inflation or stagflation, but through making housing more affordable).

I'm totally amazed nobody seems to agree with my scenario. Then you have the corporate tax lobby, the very low dividend payout ratio in many companies (20-25 %), it's just logical that profits are ready to go up as the dollar rise, inputs costs go down, taxes go down, and then you get payout ratio's boosted to 60-70 %, I can't imagine that won't boost the market.

[touchring]

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

I would think a crash in China could bring down bond yields, something that would probably help the US housing market recover. (not through inflation or stagflation, but through making housing more affordable).

The China factor is one which many analysts in the West have ignored. Commodities are booming only because of the construction and real estate bubble in China. I've intentionally put up this thread to show the construction boom in China - http://www.itulip.com/forums/showthr...ilton-Shanghai

A crash in the real estate will sharply bring down prices and probably also doom the bulk shipping industry.

Hey, is there a way to short bulk shippers? ;)

There's also one factor at the back of my mind - China may have actually pledged treasury bonds for tens or even hundreds of billions in dollar denominated bank loans to purchase commodities. What will happen if the commodity bubble bursts. Will China default on these bank loans?