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re: Gold...why is it down?
Posted on 2/20/13 at 1:45 pm to goodgrin
Posted on 2/20/13 at 1:45 pm to goodgrin
Claiming that inflation is going to go up is like claiming that the sun will rise. At least we know that the sun will rise tomorrow and yet nobody can identify if and when inflation will set in and to what degree. The only thing we can say is that eventually the inflation claim will hold true even if its 20 years from now. Periods of inflation are a well documented part of history in the ebb and flow of the US economy. So too are gold and PM bubbles. I believe Gold is like any asset and most academic peer reviewed data suggests that charting and historic pricing has little to no bearing on future earnings. If the market is efficient then all that info is already in Gold's current price. Perhaps I'm old school but the whole current gold phenomenon seems oddly tulip bulb like. There's just too much uncertainty for me to jump in and many of the most outspoken buyers would certainly be classified as irrational, so I'll stick with what I know...
As I listen to the illuminati who invest heavily in PM scream "dont sell" I honestly dont know if its because they believe the price will go up or hate the idea of a rash of sales bringing down their own portfolio value. We'll see if they are right or fell victim to the reluctance to sell/overconfidence biases that Investment Psychologists write about.
As I listen to the illuminati who invest heavily in PM scream "dont sell" I honestly dont know if its because they believe the price will go up or hate the idea of a rash of sales bringing down their own portfolio value. We'll see if they are right or fell victim to the reluctance to sell/overconfidence biases that Investment Psychologists write about.
1
Posted on 2/20/13 at 2:06 pm to LSU0358
quote:
As far as metals go, the one I like the most at the moment is platinum. Big time supply issues with south africa mining problens and Chinese auto sales (combined with government crackdown on the cars having effective catalytic converters) increasing demand could set up an explosive scenario.
I think Platinum is going to do well too. But, it doesn't interest me as much as gold and silver. It's still mostly an industrial demand based metal.
Posted on 2/20/13 at 2:14 pm to wiltznucs
quote:
Claiming that inflation is going to go up is like claiming that the sun will rise. At least we know that the sun will rise tomorrow and yet nobody can identify if and when inflation will set in and to what degree. The only thing we can say is that eventually the inflation claim will hold true even if its 20 years from now. Periods of inflation are a well documented part of history in the ebb and flow of the US economy.
What do you think inflation in the U.S. is? The official government value of 2-3% or more like 9-10% calculated by John William's Shadowstats.com?
Do you believe that hyperinflation is possible?
quote:
Perhaps I'm old school but the whole current gold phenomenon seems oddly tulip bulb like.
This makes absolutely no sense. Why? Tulip bulb like is when everyone is involved (i.e. dot com in late 90's/early 2000's, flipping real estate in early to mid 2000's). How many people do you know that actually invest in gold/silver/mining shares? 1%? 2%? 3%? 0.1%??? Gold is no where near a bubble now. It will be eventually, just like in 1980, but we're still not there. I'm holding on to my gold and silver until Time Magazine proclaims that gold is the investment of the century and has a cover with a Wall Street guy hugging a gold cast bull.
Posted on 2/20/13 at 2:17 pm to goodgrin
So, in effect, the local purchasing value of a dollar is more tied to it's relationship relative to other countries (manipulated) currencies, than it is to the amount of dollars that our Fed prints? I understand how a currency war where they devalue their currency relative to ours, would increase the value of ours...but something in this equation don't make sense to me.
I guess that's why I dropped out of school and picked up a wrench.
Thanks guys!
I guess that's why I dropped out of school and picked up a wrench.
Thanks guys!
Posted on 2/20/13 at 2:29 pm to goodgrin
quote:
What do you think inflation in the U.S. is? The official government value of 2-3% or more like 9-10% calculated by John William's Shadowstats.com?
Do you believe that hyperinflation is possible?
I have greater faith in the established measures that have been used since the 1940's. No hyperinflation or sign of it yet...
LINK
I do believe that hyperinflation is possible, but I do not believe that it is predictable. If it were then every investment house would be in the arbitrage business.
quote:
This makes absolutely no sense. Why?
The core of the tulip bulb phenomenon was that there was for some time a never ending supply of irrational investors willing to buy tulip bulbs at a price higher than the seller actually paid for them. Like all things an asset eventually reaches a price where there are no buyers, be it tulips or Gold and the bubble bursts.
Just one man's opinion, I'm not assaulting one's choice to do Gold. It's just not for me...
Posted on 2/20/13 at 3:19 pm to wiltznucs
quote:
Gold has a well documented history of increasing in value as investors flee the market in periods of economic decline/uncertainty. The fact that gold is now decreasing in value is probably an indication that the leading macroeconomic indicators (CPI,Inflation,Housing Starts) combined the DJI topping 14,000 has investors moving back into the equity market.
The majority of the world has been in an economic decline/uncertainty since 2008. Gold was increasing in value well before that. If investors are jumping back into the equity market because the DJIA is topping 14,000, then it looks like they still haven't learned their lesson and are going to lose money, again and again and again. Didn't anyone hear about the leaked emails by Wal-Mart execs worried about February being the worst revenue month in years?
Federal Reserve proganda smashing gold and silver prices.
Posted on 2/20/13 at 3:29 pm to wiltznucs
quote:
Gold has a well documented history of increasing in value as investors flee the market in periods of economic decline/uncertainty. The fact that gold is now decreasing in value is probably an indication that the leading macroeconomic indicators (CPI,Inflation,Housing Starts) combined the DJI topping 14,000 has investors moving back into the equity market.
This is my understanding, as well.
Posted on 2/20/13 at 3:48 pm to goodgrin
Gold investors haven't lost money? Doesn't long run history show that Gold has underperformed or barely met the broad S&P?
My issue is the irrational investors in Gold. I don't debate Golds value as a hedge or for diversification and for those investors using it as such I agree with it's value. What I see is too many undiversified and undercapitalized investors flocking to Gold as a get rich quick scheme. 100% of their assets chasing what has proven to be unsustainable returns. The moment the next best thing comes around their out and Gold crashes. Eerily similar to any number of the bubbles we've seen before.
Will that happen? I've got no idea otherwise I'd be busy beating the market silly right now and not posting on TD.com...
My issue is the irrational investors in Gold. I don't debate Golds value as a hedge or for diversification and for those investors using it as such I agree with it's value. What I see is too many undiversified and undercapitalized investors flocking to Gold as a get rich quick scheme. 100% of their assets chasing what has proven to be unsustainable returns. The moment the next best thing comes around their out and Gold crashes. Eerily similar to any number of the bubbles we've seen before.
Will that happen? I've got no idea otherwise I'd be busy beating the market silly right now and not posting on TD.com...
This post was edited on 2/20/13 at 4:11 pm
Posted on 2/20/13 at 4:11 pm to RCDfan1950
Why does gold do anything? Nobody knows.
But in terms of historical fundamentals compared to consumer purchasing power, gold is still too high. It has remained as high as it has for as long as it has because we are not in a normal financial environment.
When interest rates finally start going up, gold is going to sink like the rock it is, but rate hikes might be 5+ years away, so gold will still just do weird stuff for no reason.
At least that's my take on it.
But in terms of historical fundamentals compared to consumer purchasing power, gold is still too high. It has remained as high as it has for as long as it has because we are not in a normal financial environment.
When interest rates finally start going up, gold is going to sink like the rock it is, but rate hikes might be 5+ years away, so gold will still just do weird stuff for no reason.
At least that's my take on it.
Posted on 2/20/13 at 5:01 pm to Doc Fenton
Doc...if interest rates go up, doesn't that shrink the economy and the Stock Market with it? So the money would bail on gold and the Market and go into bonds, etc., with higher interest rates of return being paid?
Where does inflation play a role?
TIA.
Where does inflation play a role?
TIA.
Posted on 2/20/13 at 5:13 pm to RCDfan1950
It doesn't necessarily need to shrink the economy, but it will put downward pressure on it, and investment will certainly shift from gold to bonds.
As I argued in the other thread, inflation plays the role of the catalyst--as in until consumer inflation actually shows up, interest rates never have to rise.
Nobody knows how long it's going to take for inflation to show up though, at least with any significant force to it--especially if there are further recessions in Europe and/or China. It could take a while.
As I argued in the other thread, inflation plays the role of the catalyst--as in until consumer inflation actually shows up, interest rates never have to rise.
Nobody knows how long it's going to take for inflation to show up though, at least with any significant force to it--especially if there are further recessions in Europe and/or China. It could take a while.
Posted on 2/20/13 at 5:41 pm to RCDfan1950
I know some people might have some nice long answers but I got a short one: The Dollar.
Go look at the charts for the dollar vs gold and you'll notice the trend this month.
Go look at the charts for the dollar vs gold and you'll notice the trend this month.
This post was edited on 2/20/13 at 5:42 pm
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