I'm still waiting.
I'm still waiting.
george.shaw
Registered User
- Messages
- 252
Thats your problem 'Cancan' - u have a short attention span.
But as you know investing is about the long term.
If I recall correctly you like many others (Paul Somerville of Delta Index most prominently) said gold was a bubble at $800/oz (believe Paul said it at $600/oz in 2006 - hope Delta Index clients did not take his advice and short gold then (in a high risk leveraged fashion) as if they had they would have lost a lot of money.
Paul is contrarian on all assets except gold and gets very brave after gold sells off and advises his clients to go short (gold promply does the rallies on Paul's pronouncements). Delta Index were very quite and did not offer crystal ball guidance on gold when it was over $1,200/oz and now that it has had a slight correction, Paul says it is a short again.
Trying to predict the future movement of any asset class remains a fool's errand. Avoiding speculation and leverage remains key to preserving wealth and diversification with a range of asset classes and a healthy allocation to cash, short dated government bonds and gold remains key in these very uncertain times.
Great article here:
The Collapse of Sovereign Government Bonds The Next Financial Crisis Contagion
http://www.marketoracle.co.uk/Article16927.html
But as you know investing is about the long term.
If I recall correctly you like many others (Paul Somerville of Delta Index most prominently) said gold was a bubble at $800/oz (believe Paul said it at $600/oz in 2006 - hope Delta Index clients did not take his advice and short gold then (in a high risk leveraged fashion) as if they had they would have lost a lot of money.
Paul is contrarian on all assets except gold and gets very brave after gold sells off and advises his clients to go short (gold promply does the rallies on Paul's pronouncements). Delta Index were very quite and did not offer crystal ball guidance on gold when it was over $1,200/oz and now that it has had a slight correction, Paul says it is a short again.
Trying to predict the future movement of any asset class remains a fool's errand. Avoiding speculation and leverage remains key to preserving wealth and diversification with a range of asset classes and a healthy allocation to cash, short dated government bonds and gold remains key in these very uncertain times.
Great article here:
The Collapse of Sovereign Government Bonds The Next Financial Crisis Contagion
http://www.marketoracle.co.uk/Article16927.html
You recall incorrect sir.
When you were shouting about $2000 oz gold here, gold was at $900.
I pulled you on persistant comments of $2000, ignoring any possible downside.
I mentioned that there could be a bubble, as many people here know on too well, bubbles are easily idenitified after the fact.
You were advising all and sundry to buy gold, which as it turns out, was one of the worst performing investments of the past year.
At it's current $1112 per ounce rate and falling, it does appear to be a long way from the $2000 you predicted.
Gold has not done what every gold bug predicted it would do in the wake of a huge economic crisis.
I wonder if you really have only 10% of your portolio in gold, given your constant posting of articles that suit your cause, while trashing any article, or respected economist, that differs with your view.
At the end of the day, it's a metal with few uses, held by people nostalgic for a different economic times. It's hard to price an asset like that.
In the long run we're all dead, and stopped clocks can be right sometimes.
Buying gold has all the certainty of tossing a coin and hoping for gains.
I'd recommend people put their money somewhere where the real economic value can be studied and identified at their leisure, determined and priced much more easily, rather than stashing gold coins under the floor with a tin foil hat on.
george.shaw
Registered User
- Messages
- 252
Lol. You really crack me up. 
Litany of fallacies and half truths there Cancan - as is your stock in trade.
Most glaring fallacy is you said that gold "was one of the worst performing investments of the past year." In fact, gold was one of the top performing assets last year in all currencies and in recent years.
The beginning of 2009 saw gold at €625/oz and gold closed at €780/oz at the end of 2009 and is trading at over €800/oz per day. Thus Irish investors holding gold saw their investment increase in value of some 25% in local currency (euro) terms. Gold rose similarly in all major currencies including dollars and sterling and has been doing so gradually in recent years:
Gold's Rate of Appreciation Against 23 World Currencies
[broken link removed]
The best currency compared to gold is the Swiss franc, but even this paper currency lost 10.1% per annum on average against gold in the past ten years.
AAM users can check all my posts and they will clearly see that all I have ever said is that I believe that gold could reach $2,200/oz (its inflation adjusted high of 1980) again in the coming years - I have never given short term predictions. I have also said that investments can fall as well as rise and thus it is important to be DIVERSIFIED and hold a range of asset classes including equities, bonds, cash and a small allocation to gold.
Ironic as you actually gave 'advice' in January 2008 to "steer towards using a third of your money towards a house, and investing in a balanced fund portfolio of growth stocks, later in the year when the current market turbulence dies down." ( http://www.askaboutmoney.com/showthread.php?p=556492#post556492 ) 2008 was an extremely turbulent year and the ISEQ was near 7,000 at the time and Irish property is down by a lot since then with manyy who bought then, in negative equity now. Those who took your advice may not be so happy now.
Irish people have learnt and are learning the hard way that there are more assets than just property and equities.
EDUCATE yourselves, ignore the vested interests in the banks and brokerages (who almost exclusively focus on investing in stocks and property), DIVERSIFY and be prudent and risk aware.
Litany of fallacies and half truths there Cancan - as is your stock in trade.
Most glaring fallacy is you said that gold "was one of the worst performing investments of the past year." In fact, gold was one of the top performing assets last year in all currencies and in recent years.
The beginning of 2009 saw gold at €625/oz and gold closed at €780/oz at the end of 2009 and is trading at over €800/oz per day. Thus Irish investors holding gold saw their investment increase in value of some 25% in local currency (euro) terms. Gold rose similarly in all major currencies including dollars and sterling and has been doing so gradually in recent years:
Gold's Rate of Appreciation Against 23 World Currencies
[broken link removed]
The best currency compared to gold is the Swiss franc, but even this paper currency lost 10.1% per annum on average against gold in the past ten years.
AAM users can check all my posts and they will clearly see that all I have ever said is that I believe that gold could reach $2,200/oz (its inflation adjusted high of 1980) again in the coming years - I have never given short term predictions. I have also said that investments can fall as well as rise and thus it is important to be DIVERSIFIED and hold a range of asset classes including equities, bonds, cash and a small allocation to gold.
Ironic as you actually gave 'advice' in January 2008 to "steer towards using a third of your money towards a house, and investing in a balanced fund portfolio of growth stocks, later in the year when the current market turbulence dies down." ( http://www.askaboutmoney.com/showthread.php?p=556492#post556492 ) 2008 was an extremely turbulent year and the ISEQ was near 7,000 at the time and Irish property is down by a lot since then with manyy who bought then, in negative equity now. Those who took your advice may not be so happy now.
Irish people have learnt and are learning the hard way that there are more assets than just property and equities.
EDUCATE yourselves, ignore the vested interests in the banks and brokerages (who almost exclusively focus on investing in stocks and property), DIVERSIFY and be prudent and risk aware.
george.shaw
Registered User
- Messages
- 252
Ps
Not sure what your "stashing gold coins under the floor with a tin foil hat" reference is to as do not recall anyone on this thread advocating doing either.
Gold is as liquid as equities and far more liquid than property which is important. Gold can be bought in an ETF (more risky and costly) or government certificates or bought and stored in vaults internationally and government mints as central banks do.
As ever it should not be an "either or" and investors should look at their portfolios holistically.
In the words of the genius President George Bush Jnr:
"Fish and human beings can peacefully coexist".
Not sure what your "stashing gold coins under the floor with a tin foil hat" reference is to as do not recall anyone on this thread advocating doing either.
Gold is as liquid as equities and far more liquid than property which is important. Gold can be bought in an ETF (more risky and costly) or government certificates or bought and stored in vaults internationally and government mints as central banks do.
As ever it should not be an "either or" and investors should look at their portfolios holistically.
In the words of the genius President George Bush Jnr:
"Fish and human beings can peacefully coexist".
You need to get your facts right. Here are some numbers for you, all from first trading of the year. Notice that Gold has outperformed all major indices in each of the last 4 years.
dow Jones
2010 10396 (20.13%)
2009 8654 (-34.95%)
2008 13304 (6.09%)
2007 12540 (16.33%)
2006 10780
Euro stoxx 50
2010 2978 (21.55%)
2009 2450 (-43.60%)
2008 4344 (5.23%)
2007 4128 (15.37%)
2006 3578
Gold in $
2010 1102 (26.09%)
2009 874 (4.42%)
2008 837 (30.99%)
2007 639 (23.12%)
2006 519
DAX
2010 5998 (24.08%)
2009 4834 (-38.76%)
2008 7893 (18.14%)
2007 6681 (22.61%)
2006 5449
ringledman
Registered User
- Messages
- 620
Wonder how much gold has risen in Zimbabwe Dollar or Venezuelan Bolivar terms over the past decade ;-)
Gold rises under decades of poor governance. We sure have a lot of this in the West today. The Fed & Bernanke bankrupting the US, Brown destroying the UK, the Euro zone heading for collapse under the weight of ludicrous government expansion.
The future will be grim in the West for at least a decade. The upside for gold is immense. The downside risk over the next decade is low.
Marc Faber recently said that he thinks the US is past the point of no return and cannot ever repay their debts. Inflating their way out is the only option.
The Euro zone is a complete disaster too. Even if the Euro zone or just Ireland experience deflation instead of inflation over the next 10 years, gold will still perform in 'real terms' against other assets and goods.
There is even evidence done by Robert Pretcher that gold performs better under deflation than inflation. Gold may not rise much or fall slightly within a deflationary environment, but it keeps its value far better than all other assets or goods that are falling in value.
So whatever the potential outcome for the West, gold in real terms will rise significantly. I will sell out once the dow is at 1-2 times the value of gold. Wherever that may be, 5000, 10000, 20000. It doesn't really matter.
Jim Rogers recently said that he gave a speech to 300 mega large money managers and '74% had NEVER owned gold' let alone joe public.
http://www.youtube.com/watch?v=lHyQIo6jiHs
Legend.
Schiff, Faber, Rogers: The only 'real' economists in the world today.
Hardly a bubble yet. The 'intelligent' central bankers of the world (aka Asia) are actually increasing their holdings in the greatest transfer of wealth toward the New World that civilisation has ever seen.
Gold rises under decades of poor governance. We sure have a lot of this in the West today. The Fed & Bernanke bankrupting the US, Brown destroying the UK, the Euro zone heading for collapse under the weight of ludicrous government expansion.
The future will be grim in the West for at least a decade. The upside for gold is immense. The downside risk over the next decade is low.
Marc Faber recently said that he thinks the US is past the point of no return and cannot ever repay their debts. Inflating their way out is the only option.
The Euro zone is a complete disaster too. Even if the Euro zone or just Ireland experience deflation instead of inflation over the next 10 years, gold will still perform in 'real terms' against other assets and goods.
There is even evidence done by Robert Pretcher that gold performs better under deflation than inflation. Gold may not rise much or fall slightly within a deflationary environment, but it keeps its value far better than all other assets or goods that are falling in value.
So whatever the potential outcome for the West, gold in real terms will rise significantly. I will sell out once the dow is at 1-2 times the value of gold. Wherever that may be, 5000, 10000, 20000. It doesn't really matter.
Jim Rogers recently said that he gave a speech to 300 mega large money managers and '74% had NEVER owned gold' let alone joe public.
http://www.youtube.com/watch?v=lHyQIo6jiHs
Legend.
Schiff, Faber, Rogers: The only 'real' economists in the world today.
Hardly a bubble yet. The 'intelligent' central bankers of the world (aka Asia) are actually increasing their holdings in the greatest transfer of wealth toward the New World that civilisation has ever seen.
ringledman
Registered User
- Messages
- 620
The 3 greatest global crises of the last century -
1929-1931
1973-1975
2008-201?
I think we can all agree on this.
So on this basis lets view the dow to gold ratio after each of these major downturns -
1929-1931 Recession - Dow is only worth 2 times the price of gold.
1973-1975 Recession - Dow is only worth 1 times the price of gold (Interesting how gold peaked 5 years later).
The dow/gold ratio even hit a low of 3.6 times after the relatively mild 89 recession!!!
Ahh but gold is now in a bubble somehow at $1,1000 an ounce and the dow at 10 times its price you say! Gold is the most expensive ever (nominally) I hear!
Don't just look at the 'nominal' price isolated from reality. Look at history. Look at the price compared to other assets. Look at the price of gold compared to any property index in the world!
On a historical basis gold is a heck of a lot cheaper than most assets in the world today. it is also a lot cheaper than it has been after major crises of the past. It is after such crises that gold performs.
So if you think the dow will retest its lows of 6,600 gold should hit at least $3,300 an ounce before the bubble is over. If you think the dow is fairly priced now at 10,200 then gold should peak at least at $5,100. If the dow is going to rocket to 20,000 due to inflation (a la zimbabwe) then gold could hit at least $10,000 an ounce.
Who know's where gold or the dow are going in the future. All I know is that gold is not mega expensive compared to historical ratios and also whatever happens in the next 5 years (minimum), gold will be one of the best performing assets.
Don't isolate gold from the real world when arguing it is in a bubble. Don't isolate gold from history when arguing gold is in a bubble.
The gold bull market continues upwards.
The bubble has yet to start...
1929-1931
1973-1975
2008-201?
I think we can all agree on this.
So on this basis lets view the dow to gold ratio after each of these major downturns -
1929-1931 Recession - Dow is only worth 2 times the price of gold.
1973-1975 Recession - Dow is only worth 1 times the price of gold (Interesting how gold peaked 5 years later).
The dow/gold ratio even hit a low of 3.6 times after the relatively mild 89 recession!!!
Ahh but gold is now in a bubble somehow at $1,1000 an ounce and the dow at 10 times its price you say! Gold is the most expensive ever (nominally) I hear!
Don't just look at the 'nominal' price isolated from reality. Look at history. Look at the price compared to other assets. Look at the price of gold compared to any property index in the world!
On a historical basis gold is a heck of a lot cheaper than most assets in the world today. it is also a lot cheaper than it has been after major crises of the past. It is after such crises that gold performs.
So if you think the dow will retest its lows of 6,600 gold should hit at least $3,300 an ounce before the bubble is over. If you think the dow is fairly priced now at 10,200 then gold should peak at least at $5,100. If the dow is going to rocket to 20,000 due to inflation (a la zimbabwe) then gold could hit at least $10,000 an ounce.
Who know's where gold or the dow are going in the future. All I know is that gold is not mega expensive compared to historical ratios and also whatever happens in the next 5 years (minimum), gold will be one of the best performing assets.
Don't isolate gold from the real world when arguing it is in a bubble. Don't isolate gold from history when arguing gold is in a bubble.
The gold bull market continues upwards.
The bubble has yet to start...
Georgie - since you only joined in 2009, and every post you have ever made is related to gold, I do wonder if you are locked in a basement with a tin foil hat on
The question asked was:
So advising someone to stay away from the equity markets in early 2008, and also advising someone not to overstretch themselves in relation to buying a property in early 2008, was bad advise?
Ok goldbugs
Moving on. For every dubious link above, i could spend all night here throwing up opposing ones, but I must go feed the chickens.
What price do you expect gold to be at year end 2010.
I'm throwing in 1025, cos I'm feeling generous.
Post here, for all to see, just a number, no big long lecture.
I'll see you guys at the year end to see who is closest, rather than being the meat in a gold love sandwich.
The question asked was:
So advising someone to stay away from the equity markets in early 2008, and also advising someone not to overstretch themselves in relation to buying a property in early 2008, was bad advise?
Ok goldbugs
Moving on. For every dubious link above, i could spend all night here throwing up opposing ones, but I must go feed the chickens.
What price do you expect gold to be at year end 2010.
I'm throwing in 1025, cos I'm feeling generous.
Post here, for all to see, just a number, no big long lecture.
I'll see you guys at the year end to see who is closest, rather than being the meat in a gold love sandwich.
george.shaw
Registered User
- Messages
- 252
Very valid points by Chris and Ringledman and as ever Cancan you chose to play the man and not the ball.
And you do not have your facts straight and avoid addressing the facts put to you.
What price gold is at at the end of 2010 is absolutely irrelevant. That is the problem with much of the so called financial 'advisers' who try and predict the future. The future is unknowable.
What we do know is that there remains significant macroeconomic and systemic risk in Ireland and in the world and there is the risk of an international monetary crisis and competitive currency devaluations.
Thus, investors should be AVOIDING LEVERAGE and own a range of sound assets and hold then for the LONG TERM.
Irish savers and those holding prize bonds should realise that they have considerable Euro currency risk and need to diversify with gold (maybe Swiss francs) and international equities and bonds.
All I have ever advocated is a small allocation to gold. Most central banks have massive allocations to gold and view gold as an essential monetary asset and currency reserve. The German Bundesbank recently clearly stated how they view gold: “National gold reserves have a confidence and stability-building function for the single currency in a monetary union.”
Name calling (bugs and tin foil hats) is the preserve of the intellectually unsure and of someone who does not want to deal in evidence based facts.
DIVERSIFY friends.
And you do not have your facts straight and avoid addressing the facts put to you.
What price gold is at at the end of 2010 is absolutely irrelevant. That is the problem with much of the so called financial 'advisers' who try and predict the future. The future is unknowable.
What we do know is that there remains significant macroeconomic and systemic risk in Ireland and in the world and there is the risk of an international monetary crisis and competitive currency devaluations.
Thus, investors should be AVOIDING LEVERAGE and own a range of sound assets and hold then for the LONG TERM.
Irish savers and those holding prize bonds should realise that they have considerable Euro currency risk and need to diversify with gold (maybe Swiss francs) and international equities and bonds.
All I have ever advocated is a small allocation to gold. Most central banks have massive allocations to gold and view gold as an essential monetary asset and currency reserve. The German Bundesbank recently clearly stated how they view gold: “National gold reserves have a confidence and stability-building function for the single currency in a monetary union.”
Name calling (bugs and tin foil hats) is the preserve of the intellectually unsure and of someone who does not want to deal in evidence based facts.
DIVERSIFY friends.
And here was poor ikkle me thinking that returns were a major factor in any investment decesion.
Buy gold folks, who cares what it's price does.
Meanwhile I'll be over in my "intellectually unsure" corner, "ignoring facts", and weighing up investment decesions based on a ratio of risk/return.
[broken link removed]
Later.
george.shaw
Registered User
- Messages
- 252
What the price of any given asset is in 11 months time is of no importance and is pure speculation. Speculation (particularly of the leveraged nature), predicting the future movement of asset classes and massive debt levels is what got us into this mess.
Gold as a monetary asset and finite currency is not simply about returns. More importantly, gold is a safe haven asset and is financial insurance and that is why central banks own significant quantities of gold in their currency reserves.
As Alan Greenspan said "fiat (paper) money in extremis is accepted by nobody, gold is always accepted." And "gold remains the ultimate form of payment in the world". Greenspan realised that gold cannot default, cannot be nationalised, cannot be devalued and cannot go bankrupt - unlike corporations, banks and nations.
Your refusal to deal in evidence based facts and anti gold bias is quite extreme and is narrow minded Cancan. It will likely cost you and others dearly in the medium and long term.
ps
Where can I get me some of those cool tin foil hats your family are wearing - I need them to protect myself from the CIA moonlasers.
Gold as a monetary asset and finite currency is not simply about returns. More importantly, gold is a safe haven asset and is financial insurance and that is why central banks own significant quantities of gold in their currency reserves.
As Alan Greenspan said "fiat (paper) money in extremis is accepted by nobody, gold is always accepted." And "gold remains the ultimate form of payment in the world". Greenspan realised that gold cannot default, cannot be nationalised, cannot be devalued and cannot go bankrupt - unlike corporations, banks and nations.
Your refusal to deal in evidence based facts and anti gold bias is quite extreme and is narrow minded Cancan. It will likely cost you and others dearly in the medium and long term.
ps
Where can I get me some of those cool tin foil hats your family are wearing - I need them to protect myself from the CIA moonlasers.
Well, you still haven't addressed the incorrectness in your post about gold being the worst investment last year, which I proved you wrong on, so I think it is very fair to say that you are indeed ignoring AND misrepresenting facts.
Personally I won't get caught up in calling the price of gold at the end of this year; as stated in another post that would be pure speculation. I am happy though to call $2500 gold within 4-5 years.
If I may - if you're going to try sell this stuff here, at least let people know what they could have made on similar metal plays.
2009 Precious Metals Performance
Gold - 25.04%
Silver - 57.46%
Platinum - 62.69%
Palladium - 114.75%
If you are going to pick a metal, may as well pick a good one.
Silver, Platinum and Palladium, while they are classified as precious metals, have predominantly industrial use, and are not used for monetary backing or inflation hedging. They are also far more volatile, nevertheless good investments.
Basically you are proving my point, that gold, and other precious metals, were among the best investments of the last few years, and your statement that it was the among the worst investments is still incorrect.
The trouble is the phrase 'were'. Precious metals such as gold 'were' among the best investments of the last few years.
Past performance bears no reflection on future prospects, despite what some might say. Nostradamus may be able to predict the future prices of equities and commodities and other investments, but we mere humans cannot.
Basically to invest in gold right now is to bet on it continuing to rise when it has already risen enormously. Like tech stocks a decade ago, Gold will peak and eventually crater. The only question is how brave people will get before calling it at the top of the market. It may get to $2,400 or it may slide from $1,500.
The point is that we cannot with accuracy say. Gold is overpriced as-is in my view. I would buy it at around $350-500 perhaps, but certainly not at the marked-up price it is at now.
Then again, I'm not one for speculating on the price, and I tend towards long term, value based investing in my own thinking. So buying at these prices wouldn't make any sense to me, since I shop when stuff is 'on sale'.
Past performance bears no reflection on future prospects, despite what some might say. Nostradamus may be able to predict the future prices of equities and commodities and other investments, but we mere humans cannot.
Basically to invest in gold right now is to bet on it continuing to rise when it has already risen enormously. Like tech stocks a decade ago, Gold will peak and eventually crater. The only question is how brave people will get before calling it at the top of the market. It may get to $2,400 or it may slide from $1,500.
The point is that we cannot with accuracy say. Gold is overpriced as-is in my view. I would buy it at around $350-500 perhaps, but certainly not at the marked-up price it is at now.
Then again, I'm not one for speculating on the price, and I tend towards long term, value based investing in my own thinking. So buying at these prices wouldn't make any sense to me, since I shop when stuff is 'on sale'.
ringledman
Registered User
- Messages
- 620
Yes but you haven't provided any basis for saying gold is overvalued except for a hunch you have because it has already risen a lot.
What fundamentals support your view that gold is overvalued at $1,100 when any ratio of gold v property or stocks ratio shows it at fair value to undervalued?
Likewise gold is still way below its $2,500 inflation adjusted peak in the early 80s and arguably we are facing a much worse global crises this time around.
Add in the supply / demand imbalance, of gold being extracted at 2% growth per annum and fiat currency being printed at 20%+ per annum.
Add in the need for asia to diversify out of their huge dollar reserves and into a real asset that holds its wealth over the long term.
Granted gold is not the bargain it was in 2000 when commodities across the board were at their cheapest level (inflation adjusted) in 80 years.
The history of commodity cycles are approximately 20 year secular bears (as in 1980-2000) followed by 20 year secular bull markets as in 2000 to 202?.
The reasons for the secular cycle is that it takes 10-15 years to get new mines and oil rigs to market; so the supply always lags hugely the demand. Therefore when the world wants commodities there is a shortage and once the world becomes awash with new suppply of rigs and mines, prices fall thus creating the next commodity bear market. As rigs and mines shut down due to the price falls the next bull market occurs. This is history, you can't change it. We are now smack bang in the middle of a bull market that has some time to run.
We have at least another 5 years minimum to run. No commodity bull market has ever lasted less than 15 years. Most likely this will be one of the longest especially with the population growth of asia and the mess the west is in.
I would say at least 8 more years, possibly 15.
So please, in arguing against gold provide some 'fundamental' reasons for not owning gold, other than it has already risen a lot.
Ringledman,
Sorry, but I just don't buy into speculative crazes. That's my own personal position as someone who believes that investing is about creating wealth from tangible business activity. That's my own personal choice. And I believe it to be sensible.
You say you want fundamental reasons for not buying gold... very well.
1. Purchasing commodities and trading them is gambling on the future of the commodities markets. I have no objection to this. But talking about bull and bear trends are just another way of saying - "everybody is buying gold, you should do the same". It's a herd instinct. That's why the analogies are animal based.
2. I reiterate my point. It is not possible to predict with accuracy when prices of any tradeable investment will go up or go down. We can't predict the future with accuracy. Gold may well rise some more, as you say. But how much? For how long? Will it be a smooth perpetual curve upwards? How long to hold it for? These are questions I ask myself and I cannot in all honesty say. Can anyone?
Prices rise and prices fall. That is the nature of a market. I don't believe that gold will rise perpetually for the next fifteen years. Rather, I think there will be a number of peaks and troughs. The reason I say this is that the primary consumers of gold are based in Asia. The Chinese economy, for one, is overheating on borrowed money. I believe that the economy will slow and demand for gold will fall to coincide within 3-5 years. It will recover, but prices will be unstable, in my humble opinion.
I'm not an economist, day trader or professional speculator. I am a humble small investor who takes a certain interest in the subject. And for someone like me, I'd rather find something which I can quantify in terms of return. I'm not looking to bet on it - there's a helluva lot of smarter people than me who call it both ways and I'd rather leave it to them than try and out-think the market.
Suppose you're right. Suppose gold does go bullish for another 7/8 years. What then? It can only come down when it peaks . The temptation when stuff is going up in price is to hold and hold and hold. And were the price to crash as loads of people get out of gold all at once? Unless you're very, very astute and skilled, and I don't claim to be, there is a BIG risk that your gains get eaten away, or that you could even be nursing a loss.
I'm not saying don't buy gold, I'm saying it doesn't suit me as an investment or as a speculative bet. And anyone who does buy gold better be damn clear in their mind that there are no sure things in life. Gold can drop in value as well as rise. If China or one of the other emerging markets such as India were to have an economic meltdown, I don't think demand for gold would be so high.
Then again, maybe I'm just too boring and cowardly to understand the appeal of taking the risk. Buying for long term holding, that I do understand, but again I'd not buy for this purpose now. I'd wait ten years if necessary and buy when the bottom falls out of gold again, and buy a LOT of it. Not because I expect it to rise in value quickly, but it's more likely to hold its value at a lower price level even if it stays low.
Sorry, but I just don't buy into speculative crazes. That's my own personal position as someone who believes that investing is about creating wealth from tangible business activity. That's my own personal choice. And I believe it to be sensible.
You say you want fundamental reasons for not buying gold... very well.
1. Purchasing commodities and trading them is gambling on the future of the commodities markets. I have no objection to this. But talking about bull and bear trends are just another way of saying - "everybody is buying gold, you should do the same". It's a herd instinct. That's why the analogies are animal based.
2. I reiterate my point. It is not possible to predict with accuracy when prices of any tradeable investment will go up or go down. We can't predict the future with accuracy. Gold may well rise some more, as you say. But how much? For how long? Will it be a smooth perpetual curve upwards? How long to hold it for? These are questions I ask myself and I cannot in all honesty say. Can anyone?
Prices rise and prices fall. That is the nature of a market. I don't believe that gold will rise perpetually for the next fifteen years. Rather, I think there will be a number of peaks and troughs. The reason I say this is that the primary consumers of gold are based in Asia. The Chinese economy, for one, is overheating on borrowed money. I believe that the economy will slow and demand for gold will fall to coincide within 3-5 years. It will recover, but prices will be unstable, in my humble opinion.
I'm not an economist, day trader or professional speculator. I am a humble small investor who takes a certain interest in the subject. And for someone like me, I'd rather find something which I can quantify in terms of return. I'm not looking to bet on it - there's a helluva lot of smarter people than me who call it both ways and I'd rather leave it to them than try and out-think the market.
Suppose you're right. Suppose gold does go bullish for another 7/8 years. What then? It can only come down when it peaks . The temptation when stuff is going up in price is to hold and hold and hold. And were the price to crash as loads of people get out of gold all at once? Unless you're very, very astute and skilled, and I don't claim to be, there is a BIG risk that your gains get eaten away, or that you could even be nursing a loss.
I'm not saying don't buy gold, I'm saying it doesn't suit me as an investment or as a speculative bet. And anyone who does buy gold better be damn clear in their mind that there are no sure things in life. Gold can drop in value as well as rise. If China or one of the other emerging markets such as India were to have an economic meltdown, I don't think demand for gold would be so high.
Then again, maybe I'm just too boring and cowardly to understand the appeal of taking the risk. Buying for long term holding, that I do understand, but again I'd not buy for this purpose now. I'd wait ten years if necessary and buy when the bottom falls out of gold again, and buy a LOT of it. Not because I expect it to rise in value quickly, but it's more likely to hold its value at a lower price level even if it stays low.