Very nice article on gold -- I find little to argue with

[jpatter666]

Wonder if these guys were iTulip readers....

http://www.zerohedge.com/news/must-r...er-perspective

[don]

Re: Very nice article on gold -- I find little to argue with

love your title, Pat.

Very nice article on gold -- I find little to argue with

Aren't the nicest people the ones that agree with you

[slippery]

Re: Very nice article on gold -- I find little to argue with

The theory is good, but price action this year is not supportive. The IMF just bought some gold, but where are the central banks that were supposed to hold up the price?

I know we are not even half way through the year, but it is getting harder to sit idle while gold is smashed over and over. I can't remember the last time it outperformed the S&P. The correlation with stocks since late last year is also a concern. When stocks are up, gold might be up, but less so. When stocks are down, gold is down more.

Hedge funds and big money seem to have soured on the gold trade. Fortunately, TIPS have offset most of my gold losses, but it would be a relief to see it back over 1600 and it is a long way to the end of year EJ target of 1750.

[jpatter666]

Re: Very nice article on gold -- I find little to argue with

love your title, Pat.

Very nice article on gold -- I find little to argue with

Aren't the nicest people the ones that agree with you

Ha....indeed.

[raja]

Re: Very nice article on gold -- I find little to argue with

Something I posted on another thread:

People can only buy gold if they have the money to buy it.

When the next crash comes, for whatever reason, there's going to be a shortage of money. (According to MSN Moneycentral, US families lost $11 trillion in 2008.) People who are feeling the pinch aren't going to be investing in gold.
Not only that, investors will sell what has value to make up for losses, e.g., margin calls.
This could create gold deflation due to demand destruction, and we're getting a tiny taste of that right now.

However, some scared people who do have some money will buy gold, but only if they think there will be big inflation trashing the dollar, or societal collapse. The last crisis, with it's QE's, did not create Big Inflation, the scary kind that makes people think their money's going to become worthless.

So, there are opposing forces here . . . .
Gold UP -- If there's scary inflation created by government "printing", and people believe inflation is coming. Or people feel like doomsday is coming.
Gold DOWN -- if there's not a lot of money around, and there is no Big Inflation.

To know where gold is going, we have to understand which is the stronger force -- lack of money vs. fear of inflation. And, we have to consider the timeline . . . .

It depends on politics . . . .
Will the government debase the currency with "printing", leading to inflation, or will a movement arise that prevents "printing"? I know itulip predicts the former, but I don't think it's a certainty.

My prediction: First, there will be a crash, and the gold price will go down. It will be deflationary, as unemployment goes up, and people don't have money to spend. In response, the government will "print", which will create dollar debasement and inflation. At that point, people will have no money to spend, and the little money that they do have will become worth less. The price of gold will not take off, as many people expect (sorry Mega), but it will stay constant or go up modestly. The opposing forces counterbalance -- all assets will be subject to deflation due to demand destruction, but the value of the dollar will weaken against necessities, which will not suffer lack of demand . . . because they are necessary. Gold is not a necessity.

[don]

Re: Very nice article on gold -- I find little to argue with

from Rickards' Currency Wars:

In a rapid sequence of moves, FDR had deftly confiscated private gold, banned its export abroad and captured the gold mining industry.

Contemporary estimates were that citizens surrendered over five hundred metric tons of gold to the Treasury in 1933. The gold depository at Fort Knox was constructed in 1937 for the specific purpose of holding the gold ... there was no longer enough room in the basement of the Treasury." (p.72)

Rickards feels in a replay should occur, gold would not be directly confiscated but the jump in gold dollar value would be surrendered by hoarders via a gold windfall tax.

[GRG55]

Re: Very nice article on gold -- I find little to argue with

Something I posted on another thread:

People can only buy gold if they have the money to buy it.

When the next crash comes, for whatever reason, there's going to be a shortage of money...

A "shortage of money"? Now that's a new one, in this unanchored fiat currency age with Central Banks that all seem to have a marginal propensity to reflate :-)

[Starving Steve]

Re: Very nice article on gold -- I find little to argue with

Already, the prices of homes, lovely homes in or near Silicon Valley, are soft and decreasing in value. I have never seen this happen before in my lifetime. The best of the best of the real estate in America is now soft, it's difficult to sell, it's difficult to transact, it's difficult to maintain; and it's deflating.

Several reasons for real estate de-flation: a.) the job market is soft, even now in micro-electronics, because of unprecedented worldwide competition for Silicon Valley; b.) the cost of upkeep for homes is outrageous: b1.) taxes; b2.) utilities; b3.) subdivision dues each month; b4.) upkeep and repair; c.) commuting costs; d.) uncertainty and fear; e.) the baby-boom is retiring and leaving the area; f.) credit is evaporating; g.) larger down-payment requirements; h.) an ugly market mood; h1.) an ugly mood at the bank; i.) the declining health of baby-boomers.

No, I do not own property anywhere in this area. And no, gold is not a necessity--- beautiful and fun to own, but not a necessity.

[lektrode]

Re: Very nice article on gold -- I find little to argue with

Already, the prices of homes, lovely homes in or near Silicon Valley, are soft and decreasing in value. I have never seen this happen before in my lifetime. The best of the best of the real estate in America is now soft, difficult to sell, difficult to transact,and deflating.

....

and you aint just a'whistlin dixie there, mr steve - and yeah, that and theres apparently a bankrun goin on in greece today??
http://online.wsj.com/article/SB1000...678151998.html

Newport Beach Mansion, Once Listed for $57 Million, Sells at Auction (fer 'only' 18)

http://blogs.wsj.com/developments/20...ls-at-auction/

[slippery]

Re: Very nice article on gold -- I find little to argue with

Today is another example of gold weakness compared to stocks.

I know this is just a snapshot, S&P -0.53%, gold -1.12% but this pattern has played out over the last two weeks.

We could end up below 1500 again very quickly.

BTW, I am not advocating a position in stocks, it's just that I didn't expect stocks to hold up better in a general liquidation.

[cityqat]

Re: Very nice article on gold -- I find little to argue with

Let gold crash - I will buy more for my stash. Let homes crash - I will buy a modest place in a great area. Let oil fall - I will fill my tank. Let the next generations into the economy without pummeling them with enormous debt due to the devaluation of cash.

I predicted this deflation 6 years ago and prepared myself. I'm by no means "wealthy", but I find that taking advantage of the low is not such a bad thing.

[charliebrown]

Re: Very nice article on gold -- I find little to argue with

in general yes let it crash. however, it will be very hard to tell who is going t be left holding the bag if it does.
Hopefully all the things you mention crash, but hopefully not my salary. hopefully not my money market account. hopefully not my bank.

I'm getting really sick of those NAR ads talking abut keeping home prices up. Who does that help. Only seniors or people looking to move to less house then they have now and pocketing cash.
fore Everyone else it is not so good. especially first time buyers the younger generation.

The Fed's would lose their inflation tax too. I just don't think they have the courage to see what will happen. I don't think anyone knows. They want to keep their cushy positions of power which means keep the status quo and stimulate and print, until that does not worki anymore.