Why is Gold Going Up?

[grapejelly]

Re: Why is Gold Going Up?

gold is going up because the smart peeps are realizing that in the near future, the world will be run with commerce based upon gold rather than the present fiat and FIRE regime. Smart peeps are slowly buying gold. Gold will go up to perhaps US$40K or $200K per ounce and even much more.

Miners are good but not the same as owning physical gold.

[shiny!]

Re: Why is Gold Going Up?

gold is going up because the smart peeps are realizing that in the near future, the world will be run with commerce based upon gold rather than the present fiat and FIRE regime. Smart peeps are slowly buying gold. Gold will go up to perhaps US$40K or $200K per ounce and even much more.

Miners are good but not the same as owning physical gold.

I hesitate to even participate in this thread anymore because I can't match the intellectual strength or education of others who are posting here, but I must respectfully disagree with your conclusion.

I would say:

"gold is going up because the smart peeps are realizing that in the near future, the world will be run with commerce based upon SOMETHING rather than the present fiat and FIRE regime."

Gold may very well become the basis for the new currency, in which case it's good to have a position in it. But I think "most" smart people right now (not necessarily the iTulip crowd) are exchanging their fiat money for gold as a way to protect their wealth until stability returns and/or there are better places to invest it. They may wake up one day surprised to find gold as the basis for a new currency because they never saw it coming.

Gold is functioning as a currency- the ultimate reserve currency for now, but it may or may not be the final currency to replace our current system. It looks likely, but nothing is certain.

Maybe things will be priced in gold.

Maybe things will be priced in oil or some other form of energy.

Maybe there will be a new world currency, or a world reserve currency made up of a basket of new currencies.

Maybe we'll become enlightened and live in a perfect Star Trek world where there isn't any more money, or greed, or corruption...

Maybe the power elites behind the curtain already have it planned out and aren't talking yet... or maybe they're still fighting amongst themselves and it hasn't been decided yet. Or maybe I give them too much credit for being that smart. After all, these are the guys running Treasuries and Central Banks that sold gold at its low and are buying at its high!

All I know is, nobody can even predict their next breath with absolute certainty...

[raja]

Re: Why is Gold Going Up?

EJ writes in:

Since 1998 we have talked about policies that result in currency depreciation. You can go back 13 years and not encounter one instance of the use of the word "devaluation." If you find in any of the 100s of articles on iTulip a single reference to "devaluation" please let me know.

EJ . . . at your request . . . here's an instance of your using dollar "devaluation" instead of dollar "depreciation". It's from one of your articles that I cut and pasted in 2008 for later reference.

"One way or another, by Q3 2009 or sooner the results of the Fed's Q1/Q2 all out war in deflation via The Three Ways of Inflation, used either separately or in combination, will begin to produce inflationary results:
1. Dollar devaluation: Private and public foreign holders of dollar denominated assets sell, flooding the world with excess dollars, reducing the exchange rate value of the dollar, raising the prices of imports, inducing inflation. This is classical Ka-Poom Theory."

I went into the Advanced Search tool of the iTulip website, put in "Major Trends for 2009", the article title, but could not find the original article. Has it been removed from the site? I sometimes have problems finding items using this search tool. Perhaps someone could provide a link? metalman?

In the article, EJ makes his highly accurate gold call: "spot prices may fall below $700, albeit only briefly." It also includes his not-so-accurate prediction that "The DOW will end the year between 5,000 and 8,000." There are a few other misses for Q1/Q2 2009, such as, "One third or more retail chains and stores close," and "Foreign central banks will not finance additional foreign purchases of US debt, leading to higher interest rates on the long end of the Treasury yield curve."
Hey, nobody's perfect . . . the hardest thing to predict is the future

[FRED]

Re: Why is Gold Going Up?

EJ . . . at your request . . . here's an instance of your using dollar "devaluation" instead of dollar "depreciation". It's from one of your articles that I cut and pasted in 2008 for later reference.

"One way or another, by Q3 2009 or sooner the results of the Fed's Q1/Q2 all out war in deflation via The Three Ways of Inflation, used either separately or in combination, will begin to produce inflationary results:
1. Dollar devaluation: Private and public foreign holders of dollar denominated assets sell, flooding the world with excess dollars, reducing the exchange rate value of the dollar, raising the prices of imports, inducing inflation. This is classical Ka-Poom Theory."

I went into the Advanced Search tool of the iTulip website, put in "Major Trends for 2009", the article title, but could not find the original article. Has it been removed from the site? I sometimes have problems finding items using this search tool. Perhaps someone could provide a link? metalman?

In the article, EJ makes his highly accurate gold call: "spot prices may fall below $700, albeit only briefly." It also includes his not-so-accurate prediction that "The DOW will end the year between 5,000 and 8,000." There are a few other misses for Q1/Q2 2009, such as, "One third or more retail chains and stores close," and "Foreign central banks will not finance additional foreign purchases of US debt, leading to higher interest rates on the long end of the Treasury yield curve."
Hey, nobody's perfect . . . the hardest thing to predict is the future

Thank you for letting me know. EJ asked me to fix all errant references to "currency devaluation" that mean "currency depreciation." As there is only one and you found it for me, that makes my life easy!

An advanced search for "depreciation" turned up 8 pages of 20 links to articles that discuss currency depreciation. A random search of ten of those turned up an average of three references each to the concept of currency depreciation. We can estimate that EJ's articles make 480 such references:

8 x 20 x 3 = 480

The ratio of erroneous references to devaluation versus depreciation are 1:480.

The iTulip track record since 1998 is:

• November 1998: Warns on Internet Bubble
• August 1999: No Y2K Disaster
• November 1999: How the Internet Bubble Will End
• March 2000: Internet Bubble Top
• April 2000: A Bear Market is Born
• January 2001: Post-Bubble Recession
• September 2001: Gold Price Bottom at US$270
• August 2002: Warns of Housing Bubble
• January 2004: How Housing Bubble will End
• January 2005: Housing Bubble Correction
• June 2005: Housing Bubble Top, crash to follow that leads to severe recession
  
• October 2006: Severe recession starts Q4 2007
  
• December 27, 2007: Start of Debt Deflation Bear Market, 40% decline to follow
  
• June 16, 2008: Top of commercial real estate market, crash to follow
  
• September 15, 2008: Fed Funds spread signals crash
• March 27, 2009: Debt Deflation Bear Market: First Bounce
• April 29th, 2011: Time at last to sell silver

The call you refer to is a bad call on the length of the first bounce of the Debt Deflation Bear Market. The call was off by four months. Since 1998, iTulip's record since 1998 is 94%. It's higher if you count repeated assertions since 2006 that gold is not a bubble, the forecast in 2008 of inflation expressed as declining product quality and unit packaging reductions starting in 2010, and others.

[raja]

Re: Why is Gold Going Up?

Thank you for letting me know. EJ asked me to fix all errant references to "currency devaluation" that mean "currency depreciation." As there is only one and you found it for me, that makes my life easy!

When I first read EJ's assertion that he had never used "devaluation", I did an Advanced Search on "devaluation", and nothing came up. It was only when I was reviewing an article of his that I saved on my computer, "Major Trends for 2009", that I accidentally discovered a use of "devaluation".

This suggests either that the iTulip search engine missed it, or that the original article was accidentally deleted from the website. So I wouldn't necessarily assume that there are no more uses of "devaluation" elsewhere on the website . . . .

Do you have a link to Major Trends for 2009? I notice you do not include this article in your "iTulip track record since 1998". Why?

Since 1998, iTulip's record since 1998 is 94%.

That is an excellent track record.

[FRED]

Re: Why is Gold Going Up?

When I first read EJ's assertion that he had never used "devaluation", I did an Advanced Search on "devaluation", and nothing came up. It was only when I was reviewing an article that I saved on my computer, "Major Trends for 2009" that I accidentally discovered "devaluation".

If you are using the iTulip search engine in your search, don't assume there are not other uses of "devaluation". There may be others lurking somewhere.

That's is not so. The search engine has its flaws, but a search covers the entire vB MySQL database going back to March 2006. If you search on "depreciation" in articles by "EJ" you get over 80 articles. If you search on "devaluation" in articles by "EJ" you get zero articles. That makes my life even easier!

We revise our estimated ratio of references from 1:480 to 0:480.

If you use google instead of the iTulip search engine you will also find zero references to devaluation among articles written by EJ.

Speaking of search engine, as I mentioned in my previous post, I cannot find the article I has saved, "Major Trends for 2009". And, I notice you do not include this article in your "iTulip track record since 1998". Should that not be included, since it contained several predictions?

You must have saved the article to your computer with a title other than the one used when the article was published. If you can remember the original title and approximately when it was published, you'll find the article.

As for the instance of the word "devaluation" in the article you saved, either it is not in fact an iTulip article or you saved an early edit.

That is an excellent track record.

Didn't you know? After 13 years, iTulip is an "overnight success."

[c1ue]

Re: Why is Gold Going Up?

Krugman wants to be able to draw a graph that explains precisely why gold is where it is. He really thinks very reasonably and thinks he can treat economics like a hard science. The science of gold is more closely related to psychology than to any data that can be produced by the FED or BLS. Gold is not only the ultimate currency, in some ways it's the ultimate fiat currency. It's only value is the faith that the holders have that it has any value at all.

I think Krugman will eventually start talking about fear, and will express puzzlement that something should have such value based on the psychology of fear.

This is a false dichotomy.

Krugman talks all the time about inflation expectations. What are these but the fear of inflation?

And how is this different than the fear of currency devaluation or currency depreciation?

The problem isn't Krugman's lack of psychological component in analysis.

The problem is Krugman intellectual framework, or lack thereof. Whether by accident or design, Krugman doesn't believe in currency devaluation or currency depreciation in the US.

[raja]

Re: Why is Gold Going Up?

You must have saved the article to your computer with a title other than the one used when the article was published. If you can remember the original title and approximately when it was published, you'll find the article.

Now that you mention it, it's quite possible that I saved it without including the title of the article. The Major Trends for 2009 may have simply been a heading. However, I'm pretty sure it was an EJ acticle, because I labeled the file: EJ's Major Trends for 2009.

The date I saved it into Word was 11-22-2008.

I believe it was a subscription article, so I don't want to re-print it here. But I will exerpt a tiny portion so that you will recognize it, and can provide a link. It was the article in which EJ described the Three Ways of Inflation, and also made the amazingly accurate gold-to-700 call:

"The Three Ways of Inflation

One way or another, by Q3 2009 or sooner the results of the Fed's Q1/Q2 all out war in deflation via The Three Ways of Inflation, used either separately or in combination, will begin to produce inflationary results:

1. Dollar devaluation: Private and public foreign holders of dollar denominated assets sell, flooding the world with excess dollars, reducing the exchange rate value of the dollar, raising the prices of imports, inducing inflation. This is classical Ka-Poom Theory.
2. Quantitative easing: a policy of quantitative easing (targeting quantity versus the price of money) was recently been admitted to by the Fed, as we forecast February 2008 (see Zero Bound Diaries: Is Bernanke Volcker's Mirror Image) that the Fed was due to pursue after the Fed Funds rate fell below 2%. Historically, quantitative easing never fails to produce inflation, in fact, tends to be difficult to modulate. The likelihood of too much stimulus is greater than the likelihood of too little."

[FRED]

Re: Why is Gold Going Up?

Now that you mention it, it's quite possible that I saved it without including the title of the article. The Major Trends for 2009 may have simply been a heading. However, I'm pretty sure it was an EJ acticle, because I labeled the file: EJ's Major Trends for 2009.

The date I saved it into Word was 11-22-2008.

I believe it was a subscription article, so I don't want to re-print it here. But I will exerpt a tiny portion so that you will recognize it, and can provide a link. It was the article in which EJ described the Three Ways of Inflation, and also made the amazingly accurate gold-to-700 call:

"The Three Ways of Inflation

One way or another, by Q3 2009 or sooner the results of the Fed's Q1/Q2 all out war in deflation via The Three Ways of Inflation, used either separately or in combination, will begin to produce inflationary results:

1. Dollar devaluation: Private and public foreign holders of dollar denominated assets sell, flooding the world with excess dollars, reducing the exchange rate value of the dollar, raising the prices of imports, inducing inflation. This is classical Ka-Poom Theory.
2. Quantitative easing: a policy of quantitative easing (targeting quantity versus the price of money) was recently been admitted to by the Fed, as we forecast February 2008 (see Zero Bound Diaries: Is Bernanke Volcker's Mirror Image) that the Fed was due to pursue after the Fed Funds rate fell below 2%. Historically, quantitative easing never fails to produce inflation, in fact, tends to be difficult to modulate. The likelihood of too much stimulus is greater than the likelihood of too little."

Looked and looked and cannot find the reference to devaluation that you've posted! But you have located another forecast:

Quantitative easing: a policy of quantitative easing (targeting quantity versus the price of money) was recently been admitted to by the Fed, as we forecast February 2008 (see Zero Bound Diaries: Is Bernanke Volcker's Mirror Image) that the Fed was due to pursue after the Fed Funds rate fell below 2%. Historically, quantitative easing never fails to produce inflation, in fact, tends to be difficult to modulate. The likelihood of too much stimulus is greater than the likelihood of too little."

Who else was forecasting in Feb. 2008 for QE1 after rates fall below 2%? I'll have to add that to the forecasts list.

[jiimbergin]

Re: Why is Gold Going Up?

Looked and looked and cannot find the reference to devaluation that you've posted! But you have located another forecast:



Who else was forecasting in Feb. 2008 for QE1 after rates fall below 2%? I'll have to add that to the forecasts list.

I have found the quote. It is in http://www.itulip.com/forums/showthr...-II-2009-Pitch

[raja]

Re: Why is Gold Going Up?

I have found the quote. It is in http://www.itulip.com/forums/showthr...-II-2009-Pitch

jiimbergin, how did you find it????

I used the iTulip Advanced Search tool to look for "Debt Deflation Bear Market Update Part II" and the term "devaluation, and it came up with nothing. Perhaps it's operator error on my part.

Also, I note that this article is not listed in FRED's iTulip's Track Record Since 1998 in his/her post above. I don't understand why, because EJ made several calls in this article . . . including his excellent call on gold's drop to 700.

The iTulip track record since 1998 is:

• November 1998: Warns on Internet Bubble
• August 1999: No Y2K Disaster
• November 1999: How the Internet Bubble Will End
• March 2000: Internet Bubble Top
• April 2000: A Bear Market is Born
• January 2001: Post-Bubble Recession
• September 2001: Gold Price Bottom at US$270
• August 2002: Warns of Housing Bubble
• January 2004: How Housing Bubble will End
• January 2005: Housing Bubble Correction
• June 2005: Housing Bubble Top, crash to follow that leads to severe recession
  
• October 2006: Severe recession starts Q4 2007
  
• December 27, 2007: Start of Debt Deflation Bear Market, 40% decline to follow
  
• June 16, 2008: Top of commercial real estate market, crash to follow
  
• September 15, 2008: Fed Funds spread signals crash
• March 27, 2009: Debt Deflation Bear Market: First Bounce
• April 29th, 2011: Time at last to sell silver

[jiimbergin]

Re: Why is Gold Going Up?

jiimbergin, how did you find it????

I used the iTulip Advanced Search tool to look for "Debt Deflation Bear Market Update Part II" and the term "devaluation, and it came up with nothing. Perhaps it's operator error on my part.

Also, I note the this article is not listed in FRED's iTulip's Track Record Since 1998 in his/her post above. I don't understand why, because EJ made several calls in this article . . . including his excellent call on gold's drop to 700.

The iTulip track record since 1998 is:

• November 1998: Warns on Internet Bubble
• August 1999: No Y2K Disaster
• November 1999: How the Internet Bubble Will End
• March 2000: Internet Bubble Top
• April 2000: A Bear Market is Born
• January 2001: Post-Bubble Recession
• September 2001: Gold Price Bottom at US$270
• August 2002: Warns of Housing Bubble
• January 2004: How Housing Bubble will End
• January 2005: Housing Bubble Correction
• June 2005: Housing Bubble Top, crash to follow that leads to severe recession
  
• October 2006: Severe recession starts Q4 2007
  
• December 27, 2007: Start of Debt Deflation Bear Market, 40% decline to follow
  
• June 16, 2008: Top of commercial real estate market, crash to follow
  
• September 15, 2008: Fed Funds spread signals crash
• March 27, 2009: Debt Deflation Bear Market: First Bounce
• April 29th, 2011: Time at last to sell silver

i found it on a google search. There was actually a reference to it on another website. I then searched on itulip for the thread and found the reference. But it is true that the itulip search function is very very poor.

[FRED]

Re: Why is Gold Going Up?

I have found the quote. It is in http://www.itulip.com/forums/showthr...-II-2009-Pitch

Thanks! Fixed it. Let me know if you find a second erroneous reference to dollar devaluation among the ~480 references to dollar depreciation.

[raja]

Re: Why is Gold Going Up?

i found it on a google search. There was actually a reference to it on another website. I then searched on itulip for the thread and found the reference. But it is true that the itulip search function is very very poor.

I tried a google search, and I came up with another instance of EJ's use of "devaluation" in the article "Debt Deflation Bear Market Update Part I: 2009 Windup - Eric Janszen":

"I expected that after the technology bubble crash the Fed and government was certain via tax cuts, rate cuts, and stealth dollar devaluation a reflation boom like the 1934 - 1937 reflation created after the 1929 stock market bubble bust."

So that would be two instances unearthed so far.
I think the explanation is that FRED and I must be using different internets

Yikes, I just realized I'm getting too anal about this!
Who cares if EJ used "devaluation" a couple of times in the past? Or if FRED can't find these references for some reason or other? We all agree that "depreciation" is a more appropriate term, so there's no point in pursing this any further. My apologies for wasting time on such a trivial matter . . . .

[FRED]

Re: Why is Gold Going Up?

I tried a google search, and I came up with another instance of EJ's use of "devaluation" in the article "Debt Deflation Bear Market Update Part I: 2009 Windup - Eric Janszen":

"I expected that after the technology bubble crash the Fed and government was certain via tax cuts, rate cuts, and stealth dollar devaluation a reflation boom like the 1934 - 1937 reflation created after the 1929 stock market bubble bust."

So that would be two instances unearthed so far.
I think the explanation is that FRED and I must be using different internets

Yikes, I just realized I'm getting too anal about this!
Who cares if EJ used "devaluation" a couple of times in the past? Or if FRED can't find these references for some reason or other? We all agree that "depreciation" is a more appropriate term, so there's no point in pursing this any further. My apologies for wasting time on such a trivial matter . . . .

There is a subtle issue here. One of the kinds of dollar depreciation that EJ talks about is functionally equivalent to a devaluation, but without the political consequences of an outright, officially announced devaluation. It's equivalent to an unannounced Weak Dollar Policy.

It started around the time Hank Paulson stopped talking repeating the Strong Dollar Policy mantra that the Treasury has been spewing since 1980 because by 2007 that phrase was total BS and repeating it was irritating US trade partners.

You will see the phrase "devaluation via intentional depreciation" in EJ's work but that's clunky.

Any ideas? How about Stealth Devaluation or Sneaky Devaluation?

The online Thesaurus offers these synonyms:

Main Entry:	sneaky
Part of Speech:	adjective
Definition:	underhanded, dishonest
Synonyms:	base, contemptible, cowardly, deceitful, devious, disingenuous, double-dealing, duplicitous, furtive, guileful, indirect, low, malicious, mean, nasty, recreant, secretive, shifty, slippery, sly, sneaking, snide, stealthy, surreptitious, tricky, underhand, unreliable, unscrupulous, untrustworthy, yellow*