Where Is Gold Going In This Market

[Naam]

$1350 in 10 months. Some $25 to $50 swings. Thats all in US fiat though. Gold has been getting cheaper for me here in Canada, which means I am getting wealthier.

Imagine how much wealthier you would be if Gold halved for you there in Canada.

Canada seems to be an interesting country for those who's assets lost during the crisis and perhaps still lose. all what they have to do is emigrate to Canada and live wealthier ever after.

[Abrak]

$1350 in 10 months. Some $25 to $50 swings. Thats all in US fiat though. Gold has been getting cheaper for me here in Canada, which means I am getting wealthier.

Imagine how much wealthier you would be if Gold halved for you there in Canada.

Canada seems to be an interesting country for those who's assets lost during the crisis and perhaps still lose. all what they have to do is emigrate to Canada and live wealthier ever after.

Well you can only go outside 3 months of the year.

But I do think it is interesting that Canada has done so well and noone asks why. Surely proper Government regulation in the banking sector helped them avoid a banking crisis? (So far, although in a world of bad banks, even good banking governance will eventually lead to an asset bubble that will destroy your banking system. You simply need a larger bubble.)

[Naam]

$1350 in 10 months. Some $25 to $50 swings. Thats all in US fiat though. Gold has been getting cheaper for me here in Canada, which means I am getting wealthier.

Imagine how much wealthier you would be if Gold halved for you there in Canada.

Canada seems to be an interesting country for those who's assets lost during the crisis and perhaps still lose. all what they have to do is emigrate to Canada and live wealthier ever after.

Well you can only go outside 3 months of the year.

But I do think it is interesting that Canada has done so well and noone asks why. Surely proper Government regulation in the banking sector helped them avoid a banking crisis? (So far, although in a world of bad banks, even good banking governance will eventually lead to an asset bubble that will destroy your banking system. You simply need a larger bubble.)

we are talking about CAD, a mainly commodity driven currency.

[flying]

But I do think it is interesting that Canada has done so well and noone asks why.

we are talking about CAD, a mainly commodity driven currency.

Uh-Oh I hear rusty hinges squeaking Or is that light bulbs popping on?

[Abrak]

But I do think it is interesting that Canada has done so well and noone asks why.

we are talking about CAD, a mainly commodity driven currency.

Uh-Oh I hear rusty hinges squeaking Or is that light bulbs popping on?

Admittedly I know nothing about currencies. I am slightly bemused at the whole concept of buying most of them at zero return when their underlying fundamentals are so crap. If you think about it most Governments are working their hardest to give you less than zero return. This is a remarkable achievement by Bernanke and all. How ten years ago anyone could possibly envisage a time that they would finance a 14% UK fiscal deficit for nothing is a magical trick that is beyond me.

So currencies are a total mystery as is why my bank will lend to me at 2.6% - I feel like withdrawing all my funds. However, currencies is one area that I am incredibly lucky. My sophisticated the GBP trades between US$1 and US$2 works remarkably well. Canada is at least making an effort and Canadians are good guys strategy does ok. The baht always looks cheap because it stubbornly refuses to appreciate (except in the last 2 months) at least seems a sound theory. Admittedly the most disciplined major seems to be the Euro but I simply refuse to invest in a concept so fundamentally flawed and yen - they were the ones who warned us - that eventually we will all end up buying currencies in essentially bankrupt countries at zero returns. I mean Greece used to pay 12% and they are saying that they are being unfairly penalized paying 6%. I couldnt live with myself for buying something with a 6% return in anything at all, let alone an insolvent country like Greece.

[Naam]

$1350 in 10 months. Some $25 to $50 swings. Thats all in US fiat though. Gold has been getting cheaper for me here in Canada, which means I am getting wealthier.

Imagine how much wealthier you would be if Gold halved for you there in Canada.

Canada seems to be an interesting country for those who's assets lost during the crisis and perhaps still lose. all what they have to do is emigrate to Canada and live wealthier ever after.

Sure. Then cough up the 300K to 400K for a condo, or the 600K for the average home. Then turn around, bend over rover and grab your ankles, as here comes the tax man!! No thanks!!

highest taxes of all the Americas but still slightly lower than those of some european states.

[Naam]

But I do think it is interesting that Canada has done so well and noone asks why.

we are talking about CAD, a mainly commodity driven currency.

Uh-Oh I hear rusty hinges squeaking Or is that light bulbs popping on?

if you think i was referring to gold then you are on the wrong track. i am talking about oil, gas and electricity.

[flying]

if you think i was referring to gold then you are on the wrong track. i am talking about oil, gas and electricity.

No I was not thinking gold....but commodities as you mentioned here

[Naam]

if you think i was referring to gold then you are on the wrong track. i am talking about oil, gas and electricity.

No I was not thinking gold....but commodities as you mentioned here

then what about rusty hinges and popping light bulbs?

[flying]

then what about rusty hinges and popping light bulbs?

I just thought it was a very good example when Abrak asked why is Canada doing so well & you answered as you did.

Because Abrak gave the Q & you gave the A so quickly

An answer that it seems is hardly considered these days.... Which could be why Abrak wondered?

That a countries fiat can be actually driven by something real/tangible .... in this CAD case at least ........

Not like some places where the backing is consumption .....& then creation & auctioning of debt

These types of places seem to no longer create production...instead they seem to create advisors

Edited March 19, 2010 by flying

[sokal]

Canada's housing bubble is contained in a more traditional banking system, same as Australia. In order to deflate these bubbles we actually need a recession. A recession is when credit contracts (interest rates go up)

[Naam]

then what about rusty hinges and popping light bulbs?

I just thought it was a very good example when Abrak asked why is Canada doing so well & you answered as you did.

Because Abrak gave the Q & you gave the A so quickly

An answer that it seems is hardly considered these days.... Which could be why Abrak wondered?

That a countries fiat can be actually driven by something real/tangible .... in this CAD case at least ........

Not like some places where the backing is consumption .....& then creation & auctioning of debt

These types of places seem to no longer create production...instead they seem to create advisors

there is much more than the answer i gave and my answer is based on today's commodity prices which are relatively high but not stable. i would also like to point out that Canada's gold reserves are tiny and that its 5% share of global gold production is nothing to rave about. one of the other major factors which cause a rather strong CAD is that the canadian banking system is extremely sound (no contagion from across the border) and that the market expects an interest rate hike. in short, no hinges squeaking and no light bulbs popping but a realistic view of the canadian situation.

sorry for popping your "tangible" bubble Flying

[flying]

sorry for popping your "tangible" bubble Flying

No popped at all....

Soundness is good to see at all these days.

Whether it be tangible in one sense or the other.

Sound banking is a tangible when compared to unsound.

Lastly I did not mean to imply the hinges squeaking belonged to you

Thanks for the insight

[manarak]

Canada's housing bubble is contained in a more traditional banking system, same as Australia. In order to deflate these bubbles we actually need a recession. A recession is when credit contracts (interest rates go up)

Wow, 110% bullshit! rarely seen!

1- If a recession (strong negative fundamental) is needed to make prices go down, then it's not a bubble!

2- A recession is not when rates go up - rates mostly go up when the economy is doing fine!

The definition of a recession is when the GNP goes down in 3 consecutive 3-months periods.

And lo and behold, in most cases the governments will try to boost the economy by lowering the rates!!!

3- if interest rates are going up, the currency will grow even stronger, since foreign money will be flowing into public debt.

Edited March 19, 2010 by manarak

[sokal]

$1350 in 10 months. Some $25 to $50 swings. Thats all in US fiat though. Gold has been getting cheaper for me here in Canada, which means I am getting wealthier.

Imagine how much wealthier you would be if Gold halved for you there in Canada.

Yeah, 1 CAD would be worth 2 USD and 64 bht, sounds good to me.

[sokal]

Canada's housing bubble is contained in a more traditional banking system, same as Australia. In order to deflate these bubbles we actually need a recession. A recession is when credit contracts (interest rates go up)

Wow, 110% bullshit! rarely seen!

1- If a recession (strong negative fundamental) is needed to make prices go down, then it's not a bubble!

2- A recession is not when rates go up - rates mostly go up when the economy is doing fine!

The definition of a recession is when the GNP goes down in 3 consecutive 3-months periods.

And lo and behold, in most cases the governments will try to boost the economy by lowering the rates!!!

3- if interest rates are going up, the currency will grow even stronger, since foreign money will be flowing into public debt.

1) In a traditional banking system, during credit expansions(low interest rates) you get booms, during credit contractions(high interest rates) you get busts. Canada has had the boom but interest rates have gone down so it has not had the bust. Fairly simple eh ?

2) Was the economy doing fine in the 70's when Paul Volker raised interest rates(credit contraction) north of 20% ?

3) Yes, I think you where right by accident When a currency is facing high inflation, interest rates must go up to stop the devaluation. When interest rates go up, it contracts the amount of money outstanding, making each unit of money still in the system worth more.

3)

[Naam]

$1350 in 10 months. Some $25 to $50 swings. Thats all in US fiat though. Gold has been getting cheaper for me here in Canada, which means I am getting wealthier.

Imagine how much wealthier you would be if Gold halved for you there in Canada.

Yeah, 1 CAD would be worth 2 USD and 64 bht, sounds good to me.

who was your maths teacher?

[sokal]

$1350 in 10 months. Some $25 to $50 swings. Thats all in US fiat though. Gold has been getting cheaper for me here in Canada, which means I am getting wealthier.

Imagine how much wealthier you would be if Gold halved for you there in Canada.

Yeah, 1 CAD would be worth 2 USD and 64 bht, sounds good to me.

who was your maths teacher?

The wording might have mixed you up because my math is good. If gold halved in CAD that would make it worth $550 an oz CAD. The USD and the CAD are basically 1 to 1 so that would make 1 CAD worth 2 USD because gold is still 1100 in USD. If 1 USD is worth 32 BHT that would make one CAD worth double which is 64 BHT.

[manarak]

1) In a traditional banking system, during credit expansions(low interest rates) you get booms, during credit contractions(high interest rates) you get busts. Canada has had the boom but interest rates have gone down so it has not had the bust. Fairly simple eh ?

2) Was the economy doing fine in the 70's when Paul Volker raised interest rates(credit contraction) north of 20% ?

3) Yes, I think you where right by accident When a currency is facing high inflation, interest rates must go up to stop the devaluation. When interest rates go up, it contracts the amount of money outstanding, making each unit of money still in the system worth more.

it seems the guy in your forum pic taught you economics...

1) interest rates have gone down everywhere, so why haven't the other countries avoided the bust?

The bust doesn't come because of rates going up - the rates go up because central banks reduce access to capital to prevent a bigger bust. Busts come when bubbles pop or when important fundamentals change negatively.

2) There are 2 reasons for interest rates go up: tightening access to credit and wanting to attract funds for debt coverage. the first reason is linked to the economy, the second reason is linked to public debt.

3)

When interest rates go up, it contracts the amount of money outstanding, making each unit of money still in the system worth more.

Another fine piece of nonsense.

In periods of inflation, high rates contribute to the multiplication of money, because inflationary rates are based on expected future inflation which is higher than present inflation. This causes fiat money to expand exponentially.

=> to reduce inflation, the central must not raise rates, it must reduce the amount of credit, which will effectively reduce money mass.

And, BTW, it is not possible to "reduce devaluation" because devaluation is a deliberate act of a central bank - you probably meant depreciation - not that this detail would have mattered to your economics teacher!

[sokal]

1) In a traditional banking system, during credit expansions(low interest rates) you get booms, during credit contractions(high interest rates) you get busts. Canada has had the boom but interest rates have gone down so it has not had the bust. Fairly simple eh ?

2) Was the economy doing fine in the 70's when Paul Volker raised interest rates(credit contraction) north of 20% ?

3) Yes, I think you where right by accident When a currency is facing high inflation, interest rates must go up to stop the devaluation. When interest rates go up, it contracts the amount of money outstanding, making each unit of money still in the system worth more.

it seems the guy in your forum pic taught you economics...

1) interest rates have gone down everywhere, so why haven't the other countries avoided the bust?

The bust doesn't come because of rates going up - the rates go up because central banks reduce access to capital to prevent a bigger bust. Busts come when bubbles pop or when important fundamentals change negatively.

2) There are 2 reasons for interest rates go up: tightening access to credit and wanting to attract funds for debt coverage. the first reason is linked to the economy, the second reason is linked to public debt.

3)

When interest rates go up, it contracts the amount of money outstanding, making each unit of money still in the system worth more.

Another fine piece of nonsense.

In periods of inflation, high rates contribute to the multiplication of money, because inflationary rates are based on expected future inflation which is higher than present inflation. This causes fiat money to expand exponentially.

=> to reduce inflation, the central must not raise rates, it must reduce the amount of credit, which will effectively reduce money mass.

And, BTW, it is not possible to "reduce devaluation" because devaluation is a deliberate act of a central bank - you probably meant depreciation - not that this detail would have mattered to your economics teacher!

1) Yes, this time the cause of the bust was not interest rates going up. Credit just expanded until it hit a wall. That is why I am saying that we have had no real recession yet, we have had no credit contraction. Wait till interest rates go up, then we will have a recession.

For example,From Wiki-

The 1981 recession is thought to have been caused by the tight-money policy (high interest rates) adopted by Paul Volcker, chairman of the Federal Reserve Board, before Ronald Reagan took office. Reagan supported that policy. Economist Walter Heller, chairman of the Council of Economic Advisers in the 1960s, said that "I call it a Reagan-Volcker-Carter recession.[27] The resulting taming of inflation did, however, set the stage for a robust growth period during Reagan's administration.

2)interest rates go up to contract credit.

3) here is where you go off the rails. High rates rein in credit and reduce the money supply. A borrowed $1000 with 10% interest means the borrower has $900 to spend. A borrowed $1000 at 2% interest means the borrower has $980 to spend.

Inflation or devaluation is the same thing.

[lannarebirth]

Maybe > but more likely v .

[manarak]

1) Yes, this time the cause of the bust was not interest rates going up. Credit just expanded until it hit a wall. That is why I am saying that we have had no real recession yet, we have had no credit contraction. Wait till interest rates go up, then we will have a recession.

For example,From Wiki-

The 1981 recession is thought to have been caused by the tight-money policy (high interest rates) adopted by Paul Volcker, chairman of the Federal Reserve Board, before Ronald Reagan took office. Reagan supported that policy. Economist Walter Heller, chairman of the Council of Economic Advisers in the 1960s, said that "I call it a Reagan-Volcker-Carter recession.[27] The resulting taming of inflation did, however, set the stage for a robust growth period during Reagan's administration.

2)interest rates go up to contract credit.

3) here is where you go off the rails. High rates rein in credit and reduce the money supply. A borrowed $1000 with 10% interest means the borrower has $900 to spend. A borrowed $1000 at 2% interest means the borrower has $980 to spend.

Inflation or devaluation is the same thing.

Ouch - I feel like reading your posts makes me dumber-

I'll try not to read your posts on economy anymore. I just reply to this one.

1) we can agree on the cause of the current crisis, it was expansion of book money through credit.

2) No. What happens is that central banks reduce commercial bank's refinancing volume. The refinancing credit lines are usually auctioned in a reverse auction process. The banks bidding the highest rates will get the line. This makes the interest rates go up, because banks will then have to find more expensive ways to refinance themselves, and will concentrate the reduced available money on the most profitable investments, which causes rates to go up.

Related to money volume:

the stock exchange crash actually saved the US dollar.

The crash destroyed immense quantities of USD.

3) Your reasoning is absolutely surreal.

In times of rising inflation, people will take all the credit they can, because when they will have to pay it back, the nominal amount won't be worth quid!

I.E. when you think money is going to depreciate, get credit and invest in real estate, gold, etc.

Borrow 1000$ today at 10% annual interest, to be paid back in one year. In the meanwhile, inflation jumps from 0.5% per month to 1% per month, and in real terms, you'll pay back 2% less than you borrowed!

And in the the same period, your real estate investment probably gained 5% of real worth + inflation!

That's what happened thoughout the 70ies until the middle of the eighties and made people who invested in real estate wealthy!

Edited March 20, 2010 by manarak

[sokal]

1) we can agree on the cause of the current crisis, it was expansion of book money through credit.

2) No. What happens is that central banks reduce commercial bank's refinancing volume. The refinancing credit lines are usually auctioned in a reverse auction process. The banks bidding the highest rates will get the line. This makes the interest rates go up, because banks will then have to find more expensive ways to refinance themselves, and will concentrate the reduced available money on the most profitable investments, which causes rates to go up.

Related to money volume:

the stock exchange crash actually saved the US dollar.

The crash destroyed immense quantities of USD.

3) Your reasoning is absolutely surreal.

In times of rising inflation, people will take all the credit they can, because when they will have to pay it back, the nominal amount won't be worth quid!

I.E. when you think money is going to depreciate, get credit and invest in real estate, gold, etc.

Borrow 1000$ today at 10% annual interest, to be paid back in one year. In the meanwhile, inflation jumps from 0.5% per month to 1% per month, and in real terms, you'll pay back 2% less than you borrowed!

And in the the same period, your real estate investment probably gained 5% of real worth + inflation!

That's what happened thoughout the 70ies until the middle of the eighties and made people who invested in real estate wealthy!

1) Yes, low interest rates caused the crisis, why not word it that way ?

2)The question is why interest rates go up, not how. Market interest rates go up for the same reason that a dividend on a stock goes up in a bear market.(when the payout ratio stays the same). As the market cap of a stock falls the dividend as a % of the price rises. The rising yield indicates higher risk but the rising yield also attracts new buyers. Its the same thing for bonds. As bond prices fall, yields(interest rates) rise. That is why German interest rates are way lower then Greek interest rates.

Related to money volume.

That is contradictory, its not how markets work.

The money escaping a market has to go somewhere, not everyone bought all their stock in the market top and not everyone sold their stock in the market bottom. If as much money got destroyed as you say then the dollar would not have gone up.

3)In the 3rd column on my last post I was explaining that higher interest rates reign in credit and make each unit of money worth more. That is the true definition of deflation. That is why the Canadian housing market has not crashed, because credit has expanded and not contracted. A borrower in Canada with a $1000 at 2% interest to spend, has $980 to put in the housing market. What do you think will happen to house prices when that same borrower is paying 10% on his $1000 and only has $900 to spend in the housing market ?

Class dismissed

[manarak]

enough now, where's the iggy button?

[Naam]

I'll try not to read your posts on economy anymore.

enough now, where's the iggy button?

welcome to the club!

[sokal]

enough now, where's the iggy button?

Thats right. Go hide out, so I can stop proving to you that you know nothing about economics.

[lannarebirth]

I'll try not to read your posts on economy anymore.

enough now, where's the iggy button?

welcome to the club!

To be fair neither one is compelling reading.

[flying]

Explain why you sold Britain's gold, Gordon Brown told

Gordon Brown has been ordered to release information before the general election about his controversial decision to sell Britain's gold reserves.

Full article at link above

interesting comments at bottom of article....

[manarak]

oh, wow, what a deal Gordon!!

7 billion pounds, hehe...

can't wait to see what excuses they will bring up...

"we were afraid that gold would fall even more"!!!

LOL

[Naam]

"Between 1999 and 2002, Mr Brown ordered the sale of almost 400 tons of the gold reserves when the price was at a 20-year low. Since then, the price has more than quadrupled, meaning the decision cost taxpayers an estimated £7 billion, according to Mike Warburton of the accountants Grant Thornton."

smartasses knew already ten years ago that gold will quadruple