Where Is Gold Going In This Market

[gregb]

Naam, with all respect to you, comparing 1980 with the steady rise of gold for decades is silly. Or do you think that money in 1980 were of the same value as today, with all the quantitative easing a.k.a. printing money from the thin air? Be a realist, the prices of metals or any commodities are only going to rise in the long term as is rising the amount of money in the system. Temporary short-time movements are not important, it is a normal correction.

'Since the 1970s, however, the correlation between inflation and gold has disappeared. From 1983 through 2004, inflation averaged about 3%. Yet the nominal return on gold in Canadian dollars during this period was –0.3% annualized. That’s a real return of –50% over a period of 22 years. Not only was gold useless as an inflation hedge for more than two decades, it lost half its value along the way.'

Where did that quote come from? www.naamsense.com ?

Here is the historical gold price including the period referred to: 1983-2004 followed by the Canadian inflation rate.

You will see that for the period referred to the statement is correct.

'Since the 1970s, however, the correlation between inflation and gold has disappeared. From 1983 through 2004, inflation averaged about 3%. Yet the nominal return on gold in Canadian dollars during this period was –0.3% annualized. That’s a real return of –50% over a period of 22 years. Not only was gold useless as an inflation hedge for more than two decades, it lost half its value along the way.'

The essential point being made is that for a 20 year period gold was useless as a place of safety and cannot be relied upon to perform consistently, a story the gold bugs have to stand on, otherwise they are in tatters.

Now here is the Canadian inflation rate:

The problem with this line of thinking is the continuing belief by those who actively try to be ostriches that today's economy is not a fundamentally different place than the economy that existed throughout the latter half of the 20th century. The simple fact is there is no conflict between saying it was not necessarily a good inflation hedge then, however it is a good hedge now. The reason is because we are transitioning from an era of abundance, where growth was possible, to an era of scarcity, where traditional growth is no longer possible.

The essential point being that fiat debt bugs need to address the concern of how they plan on growing an economy in the face of resource depletion, short of finding a few spare earth's nearby to colonize. Anyone with any sense of honesty will admit gold was not needed during the last century to fulfil its monetary role. But that was a short period of history in a very unusual age. As we move forward, the concepts that economic "innovators" have used to establish the current global industrial economy are going to face the hard limits of physics and geology. So you have a choice to make. Bet on the proven characteristics of a monetary asset with thousands of years of history. Or bet on a paper dream built on a bubble of highly concentrated energy extraction.

So I see no problem being a "gold bug" and simply ignoring the above graph as totally irrelevant to the real issues that are facing us. It is a distraction at best by those who don't wish to face the real problems of the world from here on out.

Edited June 25, 2012 by gregb

[Naam]

As we move forward, the concepts that economic "innovators" have used to establish the current global industrial economy are going to face the hard limits of physics and geology. So you have a choice to make. Bet on the proven characteristics of a monetary asset with thousands of years of history. Or bet on a paper dream built on a bubble of highly concentrated energy extraction.

"betting" on thousands of years of history and "betting" on a paper dream are not the only two options and there is no urgent and valid reason to make any choice today or tomorrow.

[farang000999]

bloody hell gold was supposed to be at 2500 by now.

i hope there is some drama in the US gov with the debt ceiling and elections at least.

[Naam]

Naam, with all respect to you, comparing 1980 with the steady rise of gold for decades is silly. Or do you think that money in 1980 were of the same value as today, with all the quantitative easing a.k.a. printing money from the thin air? Be a realist, the prices of metals or any commodities are only going to rise in the long term as is rising the amount of money in the system. Temporary short-time movements are not important, it is a normal correction.

nobody said paper money in 1980 had the same value as paper money today. that all commodities are going to rise in the long term is a mere assumption. it goes without saying that some commodities will definitely rise, e.g. food stuff because the number of this planet's inhabitants is exploding and it does not take rocket science to figure out that demand for basic food stuff will be nearly equivalent. but that does not necessarily mean that the raw material for paper will rise because more people will read books, more people will use computers, more people will buy and drive cars, more people will buy jewelry, more people will heat or cool their homes to a comfortable temperature, the list is endless... for the simple reason that they don't have the means to pay for it.

i also agree that temporary short time movements are not important for an investor as long as the expression temporary is not applied to a stretch of 20 years or actually 30 years when taking inflation into consideration. yes, i am talking about Gold which has not yielded a single inflation-adjusted copper penny since its peak in 1980 whereas other investments multiplied incredibly as well as provided the disposable income mandatory for those who don't have an income by working to make a living.

i'm alsways blamed for using the afore-mentioned period arbitrarily. i admit that for a certain age group this period is indeed arbitrary. but for me it represents half of my life and i can look back at hard facts and tangible evidence instead of assuming what the future might hold or not.

[Naam]

I love the funny math that is thrown out to show that even though gold costs more now that it has lost (put in your value here) % in value.

And then they say.. "the gold bugs...blah blah bah..."

Don't think you are going to convince anyone here that the gold they bought in the 80's or 90's is worth less today. But if you want to keep trying it will only push you further to the "cool-aide" drinkers anonymous group.

Or as you friend so frequently puts it...

some people claim that "two plus two equals nine point five" but that does not change the fact that the result was always and will always be "four".

having said so, i admit that a mathematical proof that "2+2=4" cannot be provided. we only know that based on empirical counting "1+1+1+1" and calling the result "4".

[Naam]

The inflation is a real killer and you can only dream to buy gold or any other metal for the same amount of papers called dollars or THB as a few years ago, it will never happen. Everything is getting more expensive, even som tam.

only idiots would make the claim "...can be bought for the same amount of paper". at the same time only ignorants (nomen est omen) would ignore the fact that invested paper generated more of the paper called Dollars or Baht.

[falang07]

only idiots would make the claim "...can be bought for the same amount of paper". at the same time only ignorants (nomen est omen) would ignore the fact that invested paper generated more of the paper called Dollars or Baht.

Well, I hope you admit that invested paper often generated less papers than was invested, many people have lost a lot, especially in recent years. And using the temporary hike in price in 1980 (which everyone knows was a bubble) for starting the maths is not fair either. If someone buys in a bubble, it is hard to make profit. I do not buy gold now, too, but if it falls substantially, which I doubt, I would buy more.

[Naam]

only idiots would make the claim "...can be bought for the same amount of paper". at the same time only ignorants (nomen est omen) would ignore the fact that invested paper generated more of the paper called Dollars or Baht.

Well, I hope you admit that invested paper often generated less papers than was invested, many people have lost a lot, especially in recent years. And using the temporary hike in price in 1980 (which everyone knows was a bubble) for starting the maths is not fair either. If someone buys in a bubble, it is hard to make profit. I do not buy gold now, too, but if it falls substantially, which I doubt, I would buy more.

whatever you said about "less generated paper" applies to gold too. let's forget 1980 and look at the two decades after the bubble, let's say from january 1982 onwards. what we saw were sky high interest rates, long term debt from AAA rated debtors e.g. UK, US and Germany yielded between 12 and 16% per annum. anybody who locked in at that time saw his capital doubling every four to five years depending on which currency he selected.

what did Gold do from 1982 @ $390/ounce till today @ $ 1,585/ounce? did it double every five years or did it yield double digit interest (averaged out over that period)?

I hope you admit that invested paper often generated less papers than was invested, many people have lost a lot, especially in recent years

tell me how much an investor lost if he invested for example 100,000 Pound Sterling, bought the British War Loan (a perpetual bond without maturity) @ 32, cashed in every year 11.20% until this very day and tripled his capital.

alternatively tell me how much an investor lost who bought a 30-Year treasury in 1982, cashed in every year 15.50% and getting his worthless fiat paper dollars paid back in full this year. yes i admit that the 100,000 Dollars he/she invested was much more worth in 1982 than in 2012. but what about 465,000 Dollars he got paid during that time? if he has not spent the interest but reinvested it at a modest yield then he'd have now 100k plus 750k "worthless fiat paper dollars" that buys him 537 ounces of gold. whereas the chap who bought 250 ounces of gold in 1982 with 100k Dollars owns today 250 ounces worth 396k = less than half of the bond investor.

yeah, yeah, yeah... nobody bought Gold neither in 1980, nor in 1985, nor in 1990, nor in 2000. they all started to buy gold in 2001

I do not buy gold now, too, but if it falls substantially, which I doubt, I would buy more.

i'm sure i can find a dozen of this kind of posting going back to last year when an ounce was 1,900 Dollars. we went down substantially in the meantime. did you buy or don't you consider a drop of 20% substantially?

[flying]

Well, I hope you admit that invested paper often generated less papers than was invested, many people have lost a lot, especially in recent years. And using the temporary hike in price in 1980 (which everyone knows was a bubble) for starting the maths is not fair either. If someone buys in a bubble, it is hard to make profit. I do not buy gold now, too, but if it falls substantially, which I doubt, I would buy more.

whatever you said about "less generated paper" applies to gold too.

I think most in this thread from the start knows I was/am quite bullish on gold & happy I loaded up on both AG & AU in 2008

But I will say this...........During that shock & Awe crisis time when folks were scurrying for shelter I also bought out of disgust

with the system & what they had achieved with their greed in the way of pain for decades to come in regards to the ordinary working man.

So it was also a freak flag play for me.....If you remember that song

Anyway at the time I did almost go the other way via Ford (F)

My thinking was & in hindsight correct that there was a major over correction there in their stock price.

Folks were freaking out mainly because GM now known as Government Motors looked like a Lehman Brothers

In the same way the correction to banking took others way down GM took Ford

Ford was trading at $2 + change at that time

I looked & looked...rubbed my eyes & looked again.

In the end I went Gold mainly because of the disgust but..............

Had I invested the same in Ford?

Don't get me wrong gold....& Silver did very well for me

But that Ford will always be in the back of my mind as a woulda,coulda,shoulda

[Naam]

flying, Today, 12:38 , said:

But that Ford will always be in the back of my mind as a woulda,coulda,shoulda

here's something more interesting from Ford than its boring stock. those who bought this bond during the crisis peak of 2008 have cashed in every year 26%, will cash in another 19 years 26% per annum based on their initial investment which increased by 545%.

Ford 5.275%, maturity 2031 - ISIN US345370CA64

of course, we are only talking "worthless fiat paper dollars" and not something with intrinsic value... like gold which gained during the same period 100% but didn't pay a single penny on top of the capital gain

[churchill]

flying, Today, 12:38 , said:

But that Ford will always be in the back of my mind as a woulda,coulda,shoulda

here's something more interesting from Ford than its boring stock. those who bought this bond during the crisis peak of 2008 have cashed in every year 26%, will cash in another 19 years 26% per annum based on their initial investment which increased by 545%.

Ford 5.275%, maturity 2031 - ISIN US345370CA64

of course, we are only talking "worthless fiat paper dollars" and not something with intrinsic value... like gold which gained during the same period 100% but didn't pay a single penny on top of the capital gain

There are 1000,s of 'if only's ' that is why people are conned into penny shares .

Trouble is only 1 in a 1000 makes it !

[churchill]

'Linda Yueh ‏@lindayueh

#BOE Miles: #QE better than rate cut for helping economy'

Anybody see any alternative for Europe .? Zero interest rates for some ... borrow to help others ???

or Euro break up ..

[Naam]

flying, Today, 12:38 , said:

But that Ford will always be in the back of my mind as a woulda,coulda,shoulda

here's something more interesting from Ford than its boring stock. those who bought this bond during the crisis peak of 2008 have cashed in every year 26%, will cash in another 19 years 26% per annum based on their initial investment which increased by 545%.

Ford 5.275%, maturity 2031 - ISIN US345370CA64

of course, we are only talking "worthless fiat paper dollars" and not something with intrinsic value... like gold which gained during the same period 100% but didn't pay a single penny on top of the capital gain

There are 1000,s of 'if only's ' that is why people are conned into penny shares .

Trouble is only 1 in a 1000 makes it !

why the irrelevant yada yada yakety yak Churchill? Ford was not a penny share and neither were its bonds penny bonds.

the "Ford 31" i was presenting above was issued at par ($100), could be bought for $20 in 2008 and trades today at $129 - period! was Gold "Penny Gold" when it traded at $35/ounce?

but why am i muttering? one can't expect a rational comment from somebody who wears blinkers and refuses to accept facts.

[churchill]

flying, Today, 12:38 , said:

But that Ford will always be in the back of my mind as a woulda,coulda,shoulda

here's something more interesting from Ford than its boring stock. those who bought this bond during the crisis peak of 2008 have cashed in every year 26%, will cash in another 19 years 26% per annum based on their initial investment which increased by 545%.

Ford 5.275%, maturity 2031 - ISIN US345370CA64

of course, we are only talking "worthless fiat paper dollars" and not something with intrinsic value... like gold which gained during the same period 100% but didn't pay a single penny on top of the capital gain

There are 1000,s of 'if only's ' that is why people are conned into penny shares .

Trouble is only 1 in a 1000 makes it !

why the irrelevant yada yada yakety yak Churchill? Ford was not a penny share and neither were its bonds penny bonds.

the "Ford 31" i was presenting above was issued at par ($100), could be bought for $20 in 2008 and trades today at $129 - period! was Gold "Penny Gold" when it traded at $35/ounce?

but why am i muttering? one can't expect a rational comment from somebody who wears blinkers and refuses to accept facts.

Did you buy ? If not why are you talking about it ...?

I could find hundreds of stocks that have risen 100% +++ in a few years / so what ?

[Naam]

Did you buy ? If not why are you talking about it ...?

I could find hundreds of stocks that have risen 100% +++ in a few years / so what ?

of course i bought and i sold (a long time ago). but that was not the reason why i posted the example. it was Flying's posting about Ford shares that caused my posting. but people like you either don't read all postings or deliberately pretend not having read them to present their irrelevant bullshit. what does it matter whether i bought or not? why the utmost stupid comment about penny stocks that has no bearing at all on bonds?

is it frustration because there are abso-<deleted>-lutely no positive goldilocks news since nearly a year? or did you want to order a "gentlemanly" suit in Savile Row for ¾ of an ounce of AU and the tailor whistled for his two Dobermans?

[Jayman]

http://www.reuters.com/article/2012/06/26/farmland-britain-investment-idUSL5E8HM87Z20120626?feedType=RSS&feedName=financialsSector

British farms a better bet than gold

(Reuters) - The price of British farms will rise higher than any other class of real estate in Europe over the next four years driven by investors buying farmland to capitalise on growth in global demand for food and also to s hield wealth and pay less tax.

British farmland has broadly tracked the price of gold over the last several decades as a safe haven investment and defensive hedge against inflation, though the price of gold is expected to fall by 2016, Oxford Economics said.

[Naam]

http://www.reuters.c...inancialsSector

British farms a better bet than gold

(Reuters) - The price of British farms will rise higher than any other class of real estate in Europe over the next four years driven by investors buying farmland to capitalise on growth in global demand for food and also to s hield wealth and pay less tax.

British farmland has broadly tracked the price of gold over the last several decades as a safe haven investment and defensive hedge against inflation, though the price of gold is expected to fall by 2016, Oxford Economics said.

that agricultural land has and is still exploding applies to continental Europe too. in some areas of former East Germany prices have tripled since 2008. but it makes sense. globally the population increases exponentially and therefore the demand for foodstuff too.

[falang07]

i'm sure i can find a dozen of this kind of posting going back to last year when an ounce was 1,900 Dollars. we went down substantially in the meantime. did you buy or don't you consider a drop of 20% substantially?

Well, I was buying in EUR and the price in EUR still stays close to the all time high so I will buy more if it returns closer to 1000 EUR/oz.

[falang07]

Also, it was close to 1,900 Dollars only for a very short time so it was a local bubble so to say, but I am sure it will be back soon. Therefore, I do not think it fell that much, it was just a small correction. And today you are hardly going to get such interest rates as you mention for the 1980 - 2000 era.

[Naam]

i'm sure i can find a dozen of this kind of posting going back to last year when an ounce was 1,900 Dollars. we went down substantially in the meantime. did you buy or don't you consider a drop of 20% substantially?

Well, I was buying in EUR and the price in EUR still stays close to the all time high so I will buy more if it returns closer to 1000 EUR/oz.

if the EUR is your reference currency the exchange rate did indeed compensate more or less the loss in nominal USD. but personally i think that's not a view an investor should adopt because it distorts the actual situation.

[churchill]

Inflation lobby is about to win the argument

Yes I think/hope so

http://www.marketwatch.com/story/inflation-lobby-is-about-to-win-the-argument-2012-06-27

[Naam]

But right now, that power balance is shifting. Europe and Japan are about to switch to inflation. That will have huge implications for the markets. Such as? Property and blue chip equities will do well. Bonds will do badly. Most of all, gold will spiral up into the next phase of its bull run.

http://www.marketwat...ment-2012-06-27

yeah right! they just press a button and inflation will knock at the door "you asked for me? here i am!"

the Japanese are trying since two decades to stop their deflationary spiral which is killing their domestic economy. smartàsses like The Right Honourable Matthew Lynn , Esq., MBE (and what not) could make millions as an adviser to the Tankan and Japanese CB instead of writing rubbish for "marketwatch" and getting paid peanuts per word or line.

and when he has successfully advised the Japanese he could become an adviser to the FED and the White House who both don't leave any rock unturned in search of inflation.

oh well...

[Naam]

Matthew Lynn is a financial journalist based in London. He is the author of "Bust: Greece, the Euro and the Sovereign Debt Crisis," and he writes adventure thrillers under the name Matt Lynn.

here we go!

[churchill]

But right now, that power balance is shifting. Europe and Japan are about to switch to inflation. That will have huge implications for the markets. Such as? Property and blue chip equities will do well. Bonds will do badly. Most of all, gold will spiral up into the next phase of its bull run.

http://www.marketwat...ment-2012-06-27

yeah right! they just press a button and inflation will knock at the door "you asked for me? here i am!"

the Japanese are trying since two decades to stop their deflationary spiral which is killing their domestic economy. smartàsses like The Right Honourable Matthew Lynn , Esq., MBE (and what not) could make millions as an adviser to the Tankan and Japanese CB instead of writing rubbish for "marketwatch" and getting paid peanuts per word or line.

and when he has successfully advised the Japanese he could become an adviser to the FED and the White House who both don't leave any rock unturned in search of inflation.

oh well...

Evening naam

and so without inflation ... money printing at least to try ..

What is the alternative ?????????

[churchill]

Matthew Lynn is a financial journalist based in London. He is the author of "Bust: Greece, the Euro and the Sovereign Debt Crisis," and he writes adventure thrillers under the name Matt Lynn.

here we go!

Any reason why a financial journalist should not also write fiction ? Perhaps a directive from Gollum

[Naam]

Evening naam

and so without inflation ... money printing at least to try ..

What is the alternative ?????????

goodness gracious Churchill! why is it difficult to understand that the money has to go to whoever who spends it, churns the economy, causes scarcity of products which in turn causes producers to increase prices and (God willing) increase salaries and wages of their employees causes inflation. one way to do this to force banks to give loans instead of using liquidity trying to make profits out of thin air via derivatives.

the freaking politicians had the banksters by their balls and could have applied pressure. at least that what it looked and still looks like to a layman like myself. but perhaps i am completely wrong and Midas is right by claiming that the banksters have the politicians by their balls (or in case of Merkel et al by their... ahmm... you what).

quantitative easing and debt buy back by central banks (falsely called "money printing") by handing over billions to banksters to cover their losses, illiquidity and/or insolvency or handing over billions to freaking countries who accumulated debt because of decades of dolce vita does not generate inflation! Bernanke's helicopter idea however would

[IAMSOBAD]

So...Where is gold going...UP or DOWN IN THIS MARKET?

Sent from my GT-N7000 using Thaivisa Connect App

[Naam]

So...Where is gold going...UP or DOWN IN THIS MARKET?

Sent from my GT-N7000 using Thaivisa Connect App

try this:

sent from planet Kronos on subspace carrier wave using Klingon Encryption App

[churchill]

' one way to do this to force banks to give loans ' .... don't think that will work ..imagine ..loans for what ..

I see QE as a positive .. what we need is confidence in markets and that central w/bankers know what they are doing .. so inflate markets .. create confidence so people start investing and spending ..

Get the wheels turning ...

[Naam]

' one way to do this to force banks to give loans ' .... don't think that will work ..imagine ..loans for what ..

I see QE as a positive .. what we need is confidence in markets and that central w/bankers know what they are doing .. so inflate markets .. create confidence so people start investing and spending ..

Get the wheels turning ...

i give up and go for a dip in the pool