Where Is Gold Going In This Market

[flying]

Actually the 'simple question' in this thread is 'whether you believe gold is going up or not'

If you believe I post so as to get someone like you to offer me investment advice, I am afraid you have overstated your view as to your own abilities in your own mind.

Yes goes without saying I think it is going up. Not Straight up but up.

You said in your last post if folks who bought at 6-700 are happy. But are they buying now?

Yes I bought there but I also added to that 2 more times in the low 8's. As to why I am not buying now the reason would obviously be what I said about a pullback & a new higher low being set. Not that a new higher low needs to be any certain number.

Also I do not know how much metal others buy but when I buy I buy a good amount. So I do not need to be buying weekly.

Sorry if my last post gave you the impression I thought you were asking for advice. I did not think you were asking for advice.

What I said was you & others seem to want a reason to own. But it seems like more a justification for having sold. That is quite impossible to satisfy on a forum.

I have no qualms about going back & forth from buyer to seller. But at this time I own & see no reason what so ever to be selling. But my reasons are probably different than yours would be. You saw a reason to sell & sold. Its all good.

[sokal]

Which also confirms that gold is the only form of currency that is not an IUO.

I still dont quite get this concept. Gold is not really a currency - you cant use it to buy groceries at Villa. You could borrow say US1million dollars against a holding of US2million dollars of gold which would turn the gold into currency but then the gold becomes an IOU. Seems you could do much the same with land in Nacorn Nowhere.

I do get the concept that both gold and the dollar worth is based on perception and that when a) the government that is the largest debtor of dollars continues to spend infinitely more of them than it earns and c) has the ability to print as many dollars as it wishes at virtually zero cost, then it is highly optimistic to put much value on the dollar at all.

The creditor that holds the 2 million in gold still has the gold. A creditor that loans out based on nothing has nothing but a non performing loan.

[sokal]

The funny thing about these threads is they start out as a simple question like...

Why is gold nobody's IOU?

Then in turns into a big merry go round where folks like you want a good reason to own it?

Own it if you like...sell it as you have done before....choice is yours.

It is just another thing.

Who is to say what is best for you? Only you my friend

Actually the 'simple question' in this thread is 'whether you believe gold is going up or not'

If you believe I post so as to get someone like you to offer me investment advice, I am afraid you have overstated your view as to your own abilities in your own mind.

The only thing that will stop gold from going up is if the Federal reserve raises interest rates. It took 20% interest rates to restore value to money in the 80s. Raising interest rates is like burning $100 bills, the more of them you burn, the less of them there is in circulation which makes them scarce which gives them value.

[Abrak]

Sorry if my last post gave you the impression I thought you were asking for advice. I did not think you were asking for advice.

What I said was you & others seem to want a reason to own. But it seems like more a justification for having sold. That is quite impossible to satisfy on a forum.

Quite right. I am giving reasons why I sold. But why not, I am only saying why I dont think it will perform and that is part of this thread. It should be that people explain their reasons for being bullish or bearish about gold. Isnt it useful in some way to see why people are selling it?

Is it unreasonable that I tell you why I dont own it anymore while you are telling me why you do? To be fair my major complaint about gold is that it is dishonest while you see it as honest!! I can see why you hold it. I can see why you and many others will be little bothered if it falls back 15%. What I am slightly puzzled by is why anybody is buying it now as all the reasons for buying it in the first place seem to be evaporating.

You might argue as you dont own, dont bother. But as an investor it matters as much to me why I dont own and others do, as why I own and others dont.

[Abrak]

The only thing that will stop gold from going up is if the Federal reserve raises interest rates.

This I agree with 100% (not the 20% bit). I believe that monetary policy will (and is) being tightened far earlier than people expect. I also believe (very much based on Bernanke's theories) that he will see the costs of destroying the dollar as the world reserve currency as far higher than keeping it.

The concept of 'helicopter' Ben very much misrepresents his analysis. I genuinely believe he considers the credibility of the Fed as essential to the financial stability of the US as well as the importance of the dollar as the reserve currency. Obviously I might very well be wrong, I mean he has said some unbelievably stupid things. It just seems a cost/benefit analysis at current circumstances.

[flying]

It should be that people explain their reasons for being bullish or bearish about gold. Isnt it useful in some way to see why people are selling it?

Agreed 100% sorry for the confusion

To be fair my major complaint about gold is that it is dishonest while you see it as honest!! I can see why you hold it. I can see why you and many others will be little bothered if it falls back 15%. What I am slightly puzzled by is why anybody is buying it now as all the reasons for buying it in the first place seem to be evaporating.

This is where we go 180 degrees from each other & that is fine.

Your right I see it as honest & cannot fathom a dishonest thing about it compared to most other things. I like the physical sense of holding this asset myself & not relying on cooked books, slight of hand & so many other lies that plague many other assets.

As to your being puzzled & thinking in your opinion the reasons for buying it is evaporating..... Well I would say you live in somewhere other than the US

I live in the US & can tell you they are flat out lying about many things here & now.

My opinion is that the reality is that we have been broke or close to it for quite some time. What you see as reasons for evaporation I see as the result of the insane amount of additional debt being created. Of course you cannot throw the kind of fiat at a problem as the US has & not see a result. But the result is not sustainable. When I say they are flat out lying to the citizens of the US I should also say I 100% feel I understand that they have no other option & they perhaps hope it is for the greater good.

( I am being very generous here with that comment )

They are trying to get the machine rolling again & to do that they need the confidence of the citizens. The confidence to spend & resume their old ways of accumulating debt. Debt that in turn will tie them to the machine & force them to work & spend...Which for them will be income in taxation & more importantly confidence for the buyers of our debt...confidence that the IOU is backed by something more than Mr Geithner saying so.

Again all in my opinion but this is not going to end well. They cannot double or triple the cause of the problem & expect it to suddenly this time be the solution.

I am not a nobel economist but I have eyes to see what is plainly & clearly occurring here.

Again this is all just my 2 satang & I could just be some 9 year old kid on my dad's computer right?

PS: Your post above to sokai I just saw is at odds with what you said in this one.

You said in this post the reason for buying has evaporated.

Then you said to him you agree gold will stop going up when interest rates are raised.

They just had the fed meeting a day ago & rates have not been raised....again

Edited August 14, 2009 by flying

[Abrak]

PS: Your post above to sokai I just saw is at odds with what you said in this one.

You said in this post the reason for buying has evaporated.

Then you said to him you agree gold will stop going up when interest rates are raised.

They just had the fed meeting a day ago & rates have not been raised....again

I meant it in this context. Bernanke is viewed as a highly adventurous and irresponsible Central Banker who will probably monetize government debt and attempt to devalue the dollar. He has suggested such policies in his works. However these policies were meant to illustrate why deflation could not happen in a country with the reserve currency, the value of being the reserve currency is stressed.

He now (rather mistakenly in my opinion) sees most of the crisis over. The impression of irresponsibility was a key policy to manage inflation expectations. Given that budget deficits will persist it is important NOW to show monetary responsibility. He also stresses fiscal responsibility so as to minimize the burden of fiscal deficits.

If Bernanke had just raised rates, I think he would have been placed in an asylum. My point is that monetary policy is currently fairly tight with no MS growth, he may well raise interest rates much earlier than expected, he isnt going to monetize debt. He will finance the deficit through increasing the credibility of the Fed rather than debasing the currency. M three is growing at a lower rate than gold supply yet people are worried the dollar is being debased. He is known as helicopter Ben when he will be anti-inflationary biased so as to maintain US deficit financing.

[sokal]

PS: Your post above to sokai I just saw is at odds with what you said in this one.

You said in this post the reason for buying has evaporated.

Then you said to him you agree gold will stop going up when interest rates are raised.

They just had the fed meeting a day ago & rates have not been raised....again

I meant it in this context. Bernanke is viewed as a highly adventurous and irresponsible Central Banker who will probably monetize government debt and attempt to devalue the dollar. He has suggested such policies in his works. However these policies were meant to illustrate why deflation could not happen in a country with the reserve currency, the value of being the reserve currency is stressed.

He now (rather mistakenly in my opinion) sees most of the crisis over. The impression of irresponsibility was a key policy to manage inflation expectations. Given that budget deficits will persist it is important NOW to show monetary responsibility. He also stresses fiscal responsibility so as to minimize the burden of fiscal deficits.

If Bernanke had just raised rates, I think he would have been placed in an asylum. My point is that monetary policy is currently fairly tight with no MS growth, he may well raise interest rates much earlier than expected, he isnt going to monetize debt. He will finance the deficit through increasing the credibility of the Fed rather than debasing the currency. M three is growing at a lower rate than gold supply yet people are worried the dollar is being debased. He is known as helicopter Ben when he will be anti-inflationary biased so as to maintain US deficit financing.

If you have any confidence in Ben Bernanke then watch this video from end to end. Ben Bernanke has never been right, never !

[Abrak]

If you have any confidence in Ben Bernanke then watch this video from end to end. Ben Bernanke has never been right, never !

I have seen this all before and some of his comments are so idiotic that you cant really think he believes them. Obviously I cant argue with someone who dismisses him as a fool. He is obviously pretty smart though 1590 out of 1600 in his SATS. He is probably one of the top ten most respected economists in the world. He does also say the most awfully stupid things.

So it is a punt but one with not much downside. He is seen as totally irresponsible so the only way is up. If he gets replaced it will be by an inflation hawk. The US is worried about inflation when there is none - thats not good for gold.

[sokal]

If you have any confidence in Ben Bernanke then watch this video from end to end. Ben Bernanke has never been right, never !

I have seen this all before and some of his comments are so idiotic that you cant really think he believes them. Obviously I cant argue with someone who dismisses him as a fool. He is obviously pretty smart though 1590 out of 1600 in his SATS. He is probably one of the top ten most respected economists in the world. He does also say the most awfully stupid things.

So it is a punt but one with not much downside. He is seen as totally irresponsible so the only way is up. If he gets replaced it will be by an inflation hawk. The US is worried about inflation when there is none - thats not good for gold.

Ben Bernanke is a Keynesian, he is considered one of the top Keynesian economists in the world. Keynesianism is economic witchcraft and Bernankes record proves it. Here is a crash course on Keynes from the CATO institute-

Paul Volker was not a Keynesian, he was from the Austrian school of economics. He knows what he is doing and there is another one of him out there, the problem is that politisians don't like real central bankers because a real central banker would deliver the painful medicine

[Abrak]

Ben Bernanke is a Keynesian, he is considered one of the top Keynesian economists in the world. Keynesianism is economic witchcraft and Bernankes record proves it. Here is a crash course on Keynes from the CATO institute-

Paul Volker was not a Keynesian, he was from the Austrian school of economics. He knows what he is doing and there is another one of him out there, the problem is that politisians don't like real central bankers because a real central banker would deliver the painful medicine

Ben Bernanke only in the way that all economists are keynesians now except for the Austrians. He is very much a monetarist blaiming most of the policy errors in the Great Depression to poor monetary policy. And he totally disagrees with keynes and all true keynesians that monetary policy is totally ineffective at zero interest rates.

Personally I think his support for deficit spending is not even a pro-keynesian policy approach but part of his underlying monetary policy. Deficit spending has exactly the same effect as following Friedman's advice to drop money from helicopters to boost inflation. At zero nominal interest rates cash and bonds are one and the same thing. They are a perfect substitute for one another.

Here is a very interesting article written for the IMF - It is called 'How to fight deflation in a liquidity trap - Committing to being irresponsible'

Personally I think it is worth a read because it essentially turns economic policy on its head.

http://www.imf.org/external/pubs/ft/wp/2003/wp0364.pdf

(There are a lot of equations in the paper (I dont understand them) - simply ignore them - but some of the underlying concepts - such as the underlying credibility of a central bank is part of the problem are very interesting.)

It isnt written by Ben Bernanke but (and I am only guessing here) his heavy emphasis on managing/manipulating inflationary expectations would make me guess his policies are very much based on the same approach. (As an aside, the author specifically thans Ben Bernanke for his contribution to the paper.)

[churchill]

Lots of equations based on the probability of this or that - I hope Ben is using the right one .

[Naam]

Compare gold with cash, bonds and equities whose value hangs on their issuers' future ability to honor their obligations which can, in certain circumstances, become worthless.

You still cant use it to buy groceries at Villa.

But more seriously why not compare it to land which also cannot be debased (or even oil to some extent).

I realize gold has one advantage - you can swap it into cash at anytime.

But is there really a good argument that gold will outperform land as an investment? A house's value doesnt depend on the issuers future ability to honor their obligations.

Lets not compare gold with say equities where there is probably more risk but assuming a decent ROE much more reward.

As far as I can see the only real argument for gold is a comparison to cash where it stacks up well (but would seem a little on the expensive side)

Advantages to Gold are that it is portable and therefore probably concealable and as you say fungible globally. Disadvantages are that it's supply versus land is expanding more rapidly and under most circumstances has less utility.

Actually, I should correct that to say I don't know at what rate investable land is expanding, if at all. It's just my sense of it.

let's state a fact. somebody who has invested the lion share of his wealth in gold, can carry it concealed with him/her, therefore being able to use the global fungibility is.... a poor person.

[Abrak]

Lots of equations based on the probability of this or that - I hope Ben is using the right one .

I am sorry the equations put you off - I dont understand them either.

The concept would seem very sound though. If interest rates are zero then you cant drop them to see cash as less attractive. You believe there is a shortfall in aggregate demand. 'A commitment to irresponsibility' is to have actions so that cash is less attractive because of perceived higher inflation rates. People are will spend more and say buy houses and equities. You can do this through fiscal or monetary policy but what you dont want to happen is people sit on cash because they believe prices are going down.

Destroy the perception of the value of cash and restore demand and asset prices. US 300 billion of UST purchases is not monetizing it is simply manipulating peoples future value of cash. krugman's arguments about being unable to manage expectations of inflation are based on the fact that you cannot manage expectations of the financial authorities. I guess we shall have to see. But do not discount the fact that what Ron Paul is getting all worked about is exactly what the Fed was trying to achieve.

[sokal]

Lots of equations based on the probability of this or that - I hope Ben is using the right one .

He is not using the right equations. All Keynesian equations and assumptions are lunacy. Liquidity trap, what kind of BS is that ? If money is not finding its way to keep the price of something up then its because the market is saying that price needs to go down. Its not a liquidity trap. That is like saying Bernard Madoffs fraud ran into a " liquidity trap ". Should we have just printed more money to keep the fraud going ?

Remember the Bush stimulus checks ? Bernanke said it was to pump " liquidity" into the market. All it did was push the price of oil from $100 a barrel to $147 a barrel. Way to go Ben.

[flying]

Lots of equations based on the probability of this or that - I hope Ben is using the right one .

I will put money on the fact he will not be reappointed so it will not matter.

He will be retired smiling with Paulson et al

The new kid will cry the blame game.

but..but...you must all realize I inherited a real messy mess..sniff,,sniff

You think it bothers Bush when Mr O says that?

It will not bother Bernanke any more than it bothers Bush When Mr O says it.

[Naam]

Lots of equations based on the probability of this or that - I hope Ben is using the right one .

He is not using the right equations. All Keynesian equations and assumptions are lunacy. Liquidity trap, what kind of BS is that ? If money is not finding its way to keep the price of something up then its because the market is saying that price needs to go down. Its not a liquidity trap. That is like saying Bernard Madoffs fraud ran into a " liquidity trap ". Should we have just printed more money to keep the fraud going ?

Remember the Bush stimulus checks ? Bernanke said it was to pump " liquidity" into the market. All it did was push the price of oil from $100 a barrel to $147 a barrel. Way to go Ben.

an interesting theory Churchill. but isn't it a bit far fetched?

[flying]

an interesting theory Churchill. but isn't it a bit far fetched?

Kor Tort? Churchill did not present any theories

[Naam]

an interesting theory Churchill. but isn't it a bit far fetched?

Kor Tort? Churchill did not present any theories

proof? (youtube clips or copying and pasting from "blogspots" not acceptable).

[churchill]

an interesting theory Churchill. but isn't it a bit far fetched?

Kor Tort? Churchill did not present any theories

proof? (youtube clips or copying and pasting from "blogspots" not acceptable).

I wouldn't know where to start - You're the Mathematician .

[flying]

an interesting theory Churchill. but isn't it a bit far fetched?

Kor Tort? Churchill did not present any theories

proof? (youtube clips or copying and pasting from "blogspots" not acceptable).

Doh !!! What I mean is Churchill is not the one with a theory. I think you maybe meant Abrak? Churchill just said he hoped they were right. Or did a post get deleted? Ok we now return you to the small talk

[Abrak]

All Keynesian equations and assumptions are lunacy. Liquidity trap, what kind of BS is that ?

Ok while we are slagging off economists in general I would simply like to state that I find it amazing that 'Austrian Economics' is referred to generally as a 'school of thought.'

[Naam]

an interesting theory Churchill. but isn't it a bit far fetched?

Kor Tort? Churchill did not present any theories

proof? (youtube clips or copying and pasting from "blogspots" not acceptable).

Doh !!! What I mean is Churchill is not the one with a theory. I think you maybe meant Abrak? Churchill just said he hoped they were right. Or did a post get deleted? Ok we now return you to the small talk

seems the dàmn dogs used my computer again when i was out for a walk. here you go you little bàstards, that will teach you a lesson!!

[flying]

seems the dàmn dogs used my computer again when i was out for a walk. here you go you little bàstards, that will teach you a lesson!!

Cute little guys

[sokal]

All Keynesian equations and assumptions are lunacy. Liquidity trap, what kind of BS is that ?

Ok while we are slagging off economists in general I would simply like to state that I find it amazing that 'Austrian Economics' is referred to generally as a 'school of thought.'

Did you know that John Menard Keynes was a homosexual and a pedophile ? (no joke)

Anyway here is a list of Austian economists.

Max Keiser, James Grant, Peter Schiff, Paul Volker, Jim Rogers, Marc Faber. All of these guys called the recession in some way or another. Rogers predicted the commodity boom in 2000, Keiser predicted the bankrupcy of Iceland in 07, Schiff predicted the bankrupcy of Fannie and Freddie in 06, Faber predicted this summer rally in March.

These economists have very respectable records.

[Abrak]

Did you know that John Menard Keynes was a homosexual and a pedophile ? (no joke)

Anyway here is a list of Austian economists.

Max Keiser, James Grant, Peter Schiff, Paul Volker, Jim Rogers, Marc Faber. All of these guys called the recession in some way or another. Rogers predicted the commodity boom in 2000, Keiser predicted the bankruptcy of Iceland in 07, Schiff predicted the bankrupcy of Fannie and Freddie in 06, Faber predicted this summer rally in March.

These economists have very respectable records.

Well leaving aside keynes sexual deviations which many might put down to his Etonian education.

My main point is that we disagree that an economists major role is to predict stockmarkets (which I dont believe it is) - anyway Shiller and krugman are both keynesians that also predicted the crash (as is my brother who doesnt read books.)

I find it slightly surprising that the likes of Mises, Rothberg and Hayek (didnt he win a nobel prize) dont even get a look in.

But I am not really going to argue, feel free to write off keynes as a fool. I am in no position to insult the intelligence of those others (although I have a sneaking suspect they all have some admiration for keynes.)

[flying]

FYI : a bit of a gold rush here today.

One dealer had 459 gold eagles at the open this morning 1 oz coins.

He has 17 left this afternoon

[badge]

woeful performance from Gold over the last few days... again

[flying]

woeful performance from Gold over the last few days... again

What happened did you buy on the 13th?

I had mentioned a week or so ago of the pullback that was expected.

Watch after August 22nd for the continue of the performance

Edited August 18, 2009 by flying

[badge]

woeful performance from Gold over the last few days... again

What happened did you buy on the 13th?

I had mentioned a week or so ago of the pullback that was expected.

Watch after August 22nd for the continue of the performance

No, I like to buy things that go up Flying

If you forgot, I dislike Gold, and Im a 'deflationist'. I've been wrong before though, and if Gold goes above $1030 I'll buy some