Where Is Gold Going In This Market

[jazzbo]

even the farthest fringe of the fringe claims anything other than a technical default in 1933 and 1971...

and how is Empress Josephine feeling today?

[flying]

even the farthest fringe of the fringe claims anything other than a technical default in 1933 and 1971...

I see so a currency that built its strength/reputation on "Good as Gold"

Can now say good as ?.....

If you have any actual facts present them.

Otherwise I will leave you to your movies.

Edited October 17, 2009 by flying

[jazzbo]

FACTS??

Yeah not like they ever defaulted before: 1933 & 1971

[flying]

FACTS??

Yeah not like they ever defaulted before: 1933 & 1971

Read a book.......or wait for the movie?

[jazzbo]

I only got involved in this topic because in a casual glance I saw some pundit claiming inaccurately that trees were cut down to print money... and you decided to respond. This is a non-moderated forum. If you want to claim that US dollars are made of phlogiston that is your right. So I, like an old soldier, will just fade away... and leave you to claim as facts whatever it is you so choose to claim as facts.

[Naam]

"It's The End Of The World As We Know It, And I Feel Fine"

shall we form a club? just you and me? with a big sign "doom&gloomers use service entrance!"

[sokal]

What the US dollar represents is not some underlying commodity, metal, or the cotton & linen on which it is printed: It represents "The full faith and credit" of the USA defined as "An unconditional commitment to pay interest and principal on debt, usually issued or guaranteed by the U.S. Treasury or another government entity." (InvestorWords.com)

With most, but certainly not all, rational investors and bankers around the world that sounds pretty good. For the rest, they can sit on and play with their gold and all sing in unison:

"It's The End Of The World As We Know It, And I Feel Fine"

Why do I need to do this.....

It is not the end of the world for the people that have the gold, Its only the end of the world for people without gold.

Go buy a bunch of US debt then. Put your money where your big mouth is. Are you even aware that a country can devalue its debt through inflation by creating more dollars. So the day you loan the US your money, by the time you get it back, it can only buy half as much gas bread or gold that it did when you lent it to them. That is default in itself but there is a sucker like you born every day but they are slowly running out.

What where you saying about Michell Malkin ? I think she is hot.

[flying]

I only got involved in this topic because in a casual glance I saw some pundit claiming inaccurately that trees were cut down to print money... and you decided to respond. This is a non-moderated forum. If you want to claim that US dollars are made of phlogiston that is your right. So I, like an old soldier, will just fade away... and leave you to claim as facts whatever it is you so choose to claim as facts.

So that is the sum total then?

Your whole existence in this thread is over whether a quote by some guy using an analogy as to the validity of one worthless substance being better than another for paper currency?

Yes by all means your correct that literally paper fiat is made of material not from a pine tree. Yet even the US treasury describes their currency as paper notes. So where is the beef?

http://www.ustreas.gov/education/faq/curre...roduction.shtml

The basis for much of the gold thread is not even based on currency but the direction of gold. But if you must harp on your small contention of a bad analogy of what makes up a paper note go for it.

But you miss the point..... yet again.... as the analogy was trying in vain obviously.... to show you it is not what the dollar is made of but what it is backed by.

Kow Jai Mai?

Edited October 17, 2009 by flying

[Abrak]

This confiscation of gold by the US was to be later repeated on an international level. But instead of only forcing Americans to abandon gold as it had in 1933, in 1971 the US would force the entire world to do so.

To be honest all this is well behind my time.

As I see 1933 was literally 'confiscation' of gold.

While 1971 was arguably simply a depegging of the dollar against gold (or a confiscation of gold if you wish to say there is no longer a dollar link) so that gold is effectively made no longer a currency (as there is no gold standard).

To be honest, I never can get round the circular arguments. If gold is a currency then it is too volatile. If it is a commodity it has no use other than a currency so it must be a currency. If it is an investment it is non productive.

I mean say someone chooses to call it a commodity or investment (speculative) (try doing a DCF) then the returns are not that good and if it is a currency then it has pretty fantastic returns recently. Presumably this is why it gets a green color.

[AlexLah]

OK, I have posted my model many times before and it was (90%) accurate on where Gold was going.

Yes I know it is a crappy looking picture due to copy and paste stuff which degenerates the quality.

Took the one year trend and overlayed in my model. Hopefully you can see what I am seeing.

[khunjake]

New Weekly High Closing Price..

Yes doing nicely ! Old pic though? Or did it get cropped?

I think it will go sideways till Nov but remain consolidated above 1k USD

That's just the TV auto-cropping. Click on the pic and it opens it to 100%

I agree with your opinion in that gold should Should consolidate down into the 1k base for a while. End-November/Early-December this consolidation should finish and the next phase up begins.

[sokal]

I only got involved in this topic because in a casual glance I saw some pundit claiming inaccurately that trees were cut down to print money... and you decided to respond. This is a non-moderated forum. If you want to claim that US dollars are made of phlogiston that is your right. So I, like an old soldier, will just fade away... and leave you to claim as facts whatever it is you so choose to claim as facts.

So basically you are frustrated that you cant figure out why gold is money. Read a little slower, you might get it.

[flying]

To be honest, I never can get round the circular arguments. If gold is a currency then it is too volatile.

I must say that anyone who looks at pretty much any fiats history or the FED & the dollar & then says gold/silver is volatile.....I just dont see that at all.

That is comparing the history of both.

But since you say...To be honest all this is well behind my time.

I assume you mean as it stands now... then I would attribute all volatility you perceive again due to the fiats/FED's instability

Also not to mince words but Gold/Silver is money not currency.

What is money? The best answer to this continual question was provided in 1912 by the Austrian economist, Ludwig von Mises. In his book, "The Theory of Money and Credit," he provided an answer in six words: money is the most marketable commodity.

Part 1: http://www.lewrockwell.com/north/north761.html

Part 2: http://www.lewrockwell.com/north/north763.html

Part 3: http://www.lewrockwell.com/north/north764.html

Part 4: http://www.lewrockwell.com/north/north765.html

Part 5: http://www.lewrockwell.com/north/north769.html

Part 6: http://www.lewrockwell.com/north/north770.html

Part 7: http://www.lewrockwell.com/north/north771.html

[Abrak]

I must say that anyone who looks at pretty much any fiats history or the FED & the dollar & then says gold/silver is volatile.....I just dont see that at all.

Well you can prove me wrong but if I take the US$ or GBP, they have only been fiat for a relatively short time (GBP pulled off that neat silver to gold switch in about the 1700s).

So in terms of volatility I do not believe that either currency has achieved a 85% decline in 22 years or so similar to gold (taking into account interest) and I would be surprised if either currency had increased 4 fold in less than ten years (obviously more like 3 fold including interest.) And that is just in the last 30 years.

In fact, I would be surprised if you can find half that volatility.

I mean here I think is the dollar trade weighted index over the last 40 years.

And sterling's....

By trade weighting the currencies I am taking out some of the interest rate effect.

But with gold?

Essentially gold's volatility is higher than the stock market (probably by a factor of 1.5x) when including dividends as far as I can see (and probably bonds although I dont know). And risk premium is added to stocks due to the inherent volatility verses cash. So presumably gold must be more volatile than cash - possibly the risk premium higher than stocks?

Obviously the big triangle of green at the bottom of an upside pyramid simply argues that it is not gold that is volatile (you could simply assume its price is unchanged) but the dollar/GBP is volatile around gold. Still this doesnt really stack up if you look at the massively volatile inflation/deflation rates during much of the 1800s.

Obviously I am being highly selective about the currencies and would readily admit say that gold is a good currency in Zimbabwe.

[flying]

But with gold?

Essentially gold's volatility is higher than the stock market

I maintain that you are not seeing volatility caused by gold.

You are seeing volatility caused by Central Banks leasing gold to control the price of gold. This may have less & less impact on golds price soon.

As for

I do not believe that either currency has achieved a 85% decline in 22 years

I am not sure how you mean that? The USD is constantly losing value by many comparisons

U.S. Dollar has lost over 23% of its value against a basket of the worlds currencies over the last 10 years. This correlates to a 2.34% loss per year on average. Think this is bad? It is but most analysts see the dollar loosing even more value over the next decade as well.

I dont have a 22 year chart for gold but here is 24 most recent years.

Lastly any perceived stability of fiat would not be too hard to imagine. Legal counterfeiting has no limits as BS Bernanke pointed out.

[flying]

Gold Market --accident waiting to happen, or Crime Scene?

Don't Shoot the messenger.

http://www.gata.org/files/ThunderRoadReport-10-15-2009.pdf

[Abrak]

As for

I do not believe that either currency has achieved a 85% decline in 22 years

I am not sure how you mean that? The USD is constantly losing value by many comparisons

Look the price went from US$800 to US$250 in about 22 years. US$800 compounded at say 6% interest would have roughly tripled. So I guess the dollar loss is 90% - assuming the dollar did not fall on a trade weighted basis by more than 50% then the loss was around 85%. Maybe I am being optimistic with interest rates but I suspect I have overestimated the fall in the dollar.

I dont have a 22 year chart for gold but here is 24 most recent years.

Yes your chart does go up. But again if I started at the beginning of your chart and assumed a compound return of 6% (i.e. interest) over the 24 years I would end up with something like US$1200 if I reinvested interest. So a 6% compound return selecting your data starting point from after a 60% fall from its peak over the previous 5 years isnt great (P.S I accept the number of fairly random - I mean you dont really choose US$800 (for 5 minutes in 1980) or US$250 in 2002). (And here is an important point, to the extent that gold is considered either a commodity or an investment then the return is inadequate because of the risk premium you have to attach to it. In other words even if my risk free rate of return is only 5% (no idea what it was) even 6% is not going to make up for the inherent risk/volatility.)

Why not do what goldbugs usually do and show that the value of the dollar has depreciated against gold because they assume interest received on the currency is wasted/worthless/stolen/or pinched by their mia noi? Only joking

Edited October 18, 2009 by Abrak

[sokal]

As for

I do not believe that either currency has achieved a 85% decline in 22 years

I am not sure how you mean that? The USD is constantly losing value by many comparisons

Look the price went from US$800 to US$250 in about 22 years. US$800 compounded at say 6% interest would have roughly tripled. So I guess the dollar loss is 90% - assuming the dollar did not fall on a trade weighted basis by more than 50% then the loss was around 85%. Maybe I am being optimistic with interest rates but I suspect I have overestimated the fall in the dollar.

I dont have a 22 year chart for gold but here is 24 most recent years.

Yes your chart does go up. But again if I started at the beginning of your chart and assumed a compound return of 6% (i.e. interest) over the 24 years I would end up with something like US$1200 if I reinvested interest. So a 6% compound return selecting your data starting point from after a 60% fall from its peak over the previous 5 years isnt great (P.S I accept the number of fairly random - I mean you dont really choose US$800 (for 5 minutes in 1980) or US$250 in 2002). (And here is an important point, to the extent that gold is considered either a commodity or an investment then the return is inadequate because of the risk premium you have to attach to it. In other words even if my risk free rate of return is only 5% (no idea what it was) even 6% is not going to make up for the inherent risk/volatility.)

Why not do what goldbugs usually do and show that the value of the dollar has depreciated against gold because they assume interest received on the currency is wasted/worthless/stolen/or pinched by their mia noi? Only joking

During the gold standard, all dollars where convertable into gold and gold had a fixed price. Gold is not volatile when it is being used as money so saying that it is too volatile now makes no sense.

[flying]

During the gold standard, all dollars where convertible into gold and gold had a fixed price. Gold is not volatile when it is being used as money so saying that it is too volatile now makes no sense.

That is basically what I am saying too.....

All volatility perceived in gold should be attributed to the unbridled creation of counterfeit money aka: fiat + CB's leasing gold to suppress/control prices to benefit their rule.

Gold/silver is the only real universal threat to their ponzi

But their calls are now being met with put's ....the world will see if they have the means to continue their bluff.

[flying]

Why not do what goldbugs usually do and show that the value of the dollar has depreciated against gold because they assume interest received on the currency is wasted/worthless/stolen/or pinched by their mia noi? Only joking

Well because ......

1) I am not a classic goldbug

2) The dollar looks bad enough all by itself.

[sokal]

Why not do what goldbugs usually do and show that the value of the dollar has depreciated against gold because they assume interest received on the currency is wasted/worthless/stolen/or pinched by their mia noi? Only joking

Well because ......

1) I am not a classic goldbug

2) The dollar looks bad enough all by itself.

sombody asked what the fair value of the dollar was ?

[Naam]

During the gold standard, all dollars where convertible into gold and gold had a fixed price. Gold is not volatile when it is being used as money so saying that it is too volatile now makes no sense.

That is basically what I am saying too..... All volatility perceived in gold should be attributed to the unbridled creation of counterfeit money aka: fiat + CB's leasing gold to suppress/control prices to benefit their rule.

Gold/silver is the only real universal threat to their ponzi But their calls are now being met with put's ....the world will see if they have the means to continue their bluff.

there is no proof that during the gold standard all dollars were backed by gold. "experts" claim that the dollar was backed less than 50% when FDR issued the confiscation law in april 1933. dollars backed by gold became science fiction especially after WWII and the war in Viet Nam was the final proof that the emperor had no clothes but was stark naked.

besides, i hear dollar, dollar, dollar and gold backing, gold backing, gold backing. who the eff is nowadays demanding any gold backing of the dollar or any currency? the answer is simple: "only dreamers who have no <deleted> idea what is feasible in today's globally intertwined macroeconomics!" but keep on dreaming. we pragmatics are happy with the gold our wives wear around their necks and wrists and what they have stashed away in their safes and bank lockers, we concentrate on making fiat money and are quite happy with the results.

[flying]

besides, i hear dollar, dollar, dollar and gold backing, gold backing, gold backing. who the eff is nowadays demanding any gold backing of the dollar or any currency?

I am of the opinion Fiat will not be backed by gold period.

At least not in any 100% way.

I am happy though that gold is a form of wealth & will continue to be.

Everything else dogmatic discussion wise is just silly.

[sokal]

During the gold standard, all dollars where convertible into gold and gold had a fixed price. Gold is not volatile when it is being used as money so saying that it is too volatile now makes no sense.

That is basically what I am saying too..... All volatility perceived in gold should be attributed to the unbridled creation of counterfeit money aka: fiat + CB's leasing gold to suppress/control prices to benefit their rule.

Gold/silver is the only real universal threat to their ponzi But their calls are now being met with put's ....the world will see if they have the means to continue their bluff.

there is no proof that during the gold standard all dollars were backed by gold. "experts" claim that the dollar was backed less than 50% when FDR issued the confiscation law in april 1933. dollars backed by gold became science fiction especially after WWII and the war in Viet Nam was the final proof that the emperor had no clothes but was stark naked.

besides, i hear dollar, dollar, dollar and gold backing, gold backing, gold backing. who the eff is nowadays demanding any gold backing of the dollar or any currency? the answer is simple: "only dreamers who have no <deleted> idea what is feasible in today's globally intertwined macroeconomics!" but keep on dreaming. we pragmatics are happy with the gold our wives wear around their necks and wrists and what they have stashed away in their safes and bank lockers, we concentrate on making fiat money and are quite happy with the results.

A gold standard does not mean you would need to walk into 7/11 with gold to buy a hotdog, for some reason that is what you think.

All it would mean is that a central bank would have a percentage of their reserves in gold so that it would limit the amount of money and credit the bank could create. But rather then have a hard stop limit on it, guys like you would rather have "full faith" in Ben Bernanke to know what the limit should be.

Edited October 19, 2009 by sokal

[Naam]

A gold standard does not mean you would need to walk into 7/11 with gold to buy a hotdog, for some reason that is what you think.

one should never think that one's own utmost and quite often clearly demonstrated stupidity, combined with absolute ignorance and a bragging big mouth applies to everybody else

[flying]

All it would mean is that a central bank would have a percentage of their reserves in gold

Along those lines it is interesting to note...

speech by Dr. Willem F. Duisenberg, President of the European Central Bank

In which he said.....

[The Euro] is the first currency that has not only severed its link to gold, but also its link to the nation-state. It is not backed by the durability of the metal or by the authority of the state.

Yet somehow its required 15% gold reserves have risen to 55.6% in ten years! And for some reason its gold reserves are still on LINE 1 of its financial statement!

[Naam]

besides, i hear dollar, dollar, dollar and gold backing, gold backing, gold backing. who the eff is nowadays demanding any gold backing of the dollar or any currency?

I am of the opinion Fiat will not be backed by gold period. At least not in any 100% way.

because that's not feasible. however, hardcore goldbugs think it is feasible. don't you remember our gold earlier discussions where wild theories were thrown in such as "one grain" (or whatever barbaric non-metric weight ) will have the value of a gram or perhaps an ounce? and of course my favourite "one Krüger for a bakery").

what they don't seem to understand is that "fiat values" comprise each and every value used in today's financial dealings and that includes any derivatives, mortgages, futures, options, shares, bonds et al which are a multiple of all currencies in circulation. some months ago i saw a conservative estimate (have no idea how correct it was) which tried to prove that all gold ever mined represents a FRACTION of ONE PERCENT of "fiat value" in circulation. backing up "fiat" with gold is an undertaking as hopeless as trying to melt the polar icecaps with a dozen lukewarm chimpanzee farts!

thanks for not listening to facts

[flying]

some months ago i saw a conservative estimate (have no idea how correct it was) which tried to prove that all gold ever mined represents a FRACTION of ONE PERCENT of "fiat value" in circulation. backing up "fiat" with gold is an undertaking as hopeless as trying to melt the polar icecaps with a dozen lukewarm chimpanzee farts!

Yes but that is part of the dogmatic arguments that can only circle aimlessly.

Of course if you take a non man made substance that is limited... give it a value that is fraudulently suppressed & then compare it to a man made substance that is unlimited in supply & give it a value that is inflated/deflated at the whim of its creators of course it is hopeless as you say.

But as history has shown the fiat system is flawed & implodes from time to time

Gold price is the ultimate test of value of a currency. We are seeing both now IMHO

Edited October 19, 2009 by flying

[Naam]

Yes but that is part of the dogmatic arguments that can only circle aimlessly.

you are diverting Flying. i stated facts as far as total "fiat value" is concerned. it is rather easy, using simple maths, to compare the (known) quantity of all mined gold with a conservative estimate of all fiat values and arrive at a result which is neither dogmatic nor aimless.

for those who are mathematically or arithmetically handicapped:

estimated gold mined 170,000 tons = value ! 6 trillion US-Dollars

compare with fiat values and and bury all wet dreams of gold backing

p.s. young scholars of the Austrian School of Economics are kindly requested to switch on brains before posting in order to avoid irrelevant statements.

[Naam]

in between a reminder. in my [not so] humble view gold might become much more valuable in future than it is today. markets, actually investors who make markets, have always acted irrationally when pricing any asset whether low or high. successful investing is based on many factors but much and foremost on luck, timing and suppressing greed.

because i'm in an excellent mood today, i will refrain from making any derogatory remarks about technical analysis, chartLATANERY and similar voodoo approaches.

INCOMING!