The Ultimate Gold Bubble Test

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ringledman

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How true. Joe public is only just talking about gold let alone buying it. This bull market has many more years to run.
 
Cheers George Shaw.

Yes moneyweek have a pretty good contrarian stance.

The lack of response to this post highlights the apathy towards gold. No one really has an opinion on it. Long may that continue!

Another interesting websource is www.madhedgefundtrader.com

Have a look at his daily diaries. Excellent.
 
I was going to start investing in gold about 12 months ago, but it just seemed a bit too weird for me, and I would be a lot more economically educated than the average person!

People can understand buying property because they can see it and they've lived in one all their lives. But buying gold which is in a vault somewhere in Switzerland and which you'll never see or touch... I think it's a bit too vague for most people.
 
Why is the price of gold getting higher and higher? Value of US Dollar is falling?
Will it increase more?
 
mystry4all said:
Why is the price of gold getting higher and higher? Value of US Dollar is falling?
Will it increase more?
Click to expand...

Gold supply increases by 2% or so per annum.

Paper money is being printed at between 10-30% per annum.

Tell me which way gold can go but up???
 
mystry4all said:
Price per ounce or gram....i am talking about the price of gold
Click to expand...

Yes and I am also talking about the price of gold? Bit lost in what you are saying.

It doesn't matter if you price it in ounces, grams, stones, whatever.

Gold is rising in price because we have appauling global governments, increasing fiat currency supply and government debt and mis-management.

There is s*** loads more paper notes circulating around the world chasing only 2% more grams of gold every year. When more money chases the same quantity of a commodity/item then the commodity/item generally rises in price.

Inflation is defined by the increase in supply of money. Globally we have massive, massive inflation in the order of 10-30% due to the printing presses. So far this inflation has fed itself into rising asset prices. It is only a matter of time before it feeds into rising consumer goods.

It is a myth that inflation is the rise in consumer goods. Inflation is defined as an increase in money supply. Rising consumer prices are a result of inflation in the money supply.

So gold is increasing in price for 2 reasons -

1) Global miss-management & poor governance.
2) Increase in inflation globally.

And before anyone say's Ireland and Europe have deflation, incorrect. The ECB is increasing money supply at 13% or so per annum. Yes consumer prices are falling in Ireland and Europe, but Inflation is still prevelant and therefore gold will continue to rise long term even against the euro.
 
No problem mystry.

In the very, very long term the return on gold is 0%.

An ounce of gold today still buys the same 4 suits as is written in the bible (the saying goes something like this).

So over the very long term gold doesn't make you a cent. It actually costs you 1-2% per year to store.

However the story of gold is that during decades of miss-management (as we have now with Bush/Obama/etc) the price can skyrocket.

Likewise, during good economic decades with good economic governance (i.e the 80s under Raegan/Thatcher/etc) then gold can plummet in value against the long term average trend.

Also as governments print and print and inflation increases then the purchasing power of gold also tends to increase. When it is skyrocketing in value, the currency is however falling massively in value (you hope at a lesser rate than gold's increase).

Gold also generally acts inversely to other assets. It has a low correlation so as other assets falls it generally rises.

So principaly buy gold in order to preserve your wealth and act as a hedge to your other asssets falling in value.

And in the very, very long term it is a pointless asset to own.

Nonetheless, in the next 5-10 years its prospects will likely remain good. One day however things will improve and it will be an asset to ditch in its entirety.

A 10% of my net worth is what I wan't to tie up in gold and silver for the next few years or decades.
 
ringledman said:
Also as governments print and print
Click to expand...

Is this more so for US dollars or for all currencies.

If oil is ever priced in euros (as i read somewhere) there would be even more of an over supply of dollars, but would the govt then stop printing. How would this scenario impact on gold, do you think?

I seriously considered buying it this time last year , but of course all talk. Im looking to do it now.

If you dont mind how do you buy & store it?
 
dockingtrade said:
Is this more so for US dollars or for all currencies.

If oil is ever priced in euros (as i read somewhere) there would be even more of an over supply of dollars, but would the govt then stop printing. How would this scenario impact on gold, do you think?

I seriously considered buying it this time last year , but of course all talk. Im looking to do it now.

If you dont mind how do you buy & store it?
Click to expand...

I don't know what would happen if oil was priced in euro's!

All I do know is that if the two largest holders of US government bonds (The Chinese and Japanese) lose confidence in the dollar continuing to be devalued they could well and truly f*** America by dumping the lot.

Then hyperinflation would hit the USA. Sounds remote but it could happen if the dollar continues to fall.

Marc Faber reckons the eventual worth of the dollar is zero. With total government liabilities heading for 500% of GDP with their stupid medicare scheme then it may well happen within a decade or two. The USA is technically bankrupt.

Buying and storing - Peter Schiff's books titled 'bull moves in bear markets' or 'crash proof 2.0' set out how to buy gold.

You also want to read about the gold pyramid -

http://www.moneyweek.com/investment...s/a-beginners-guide-to-investing-in-gold.aspx

I neded to buy some bullion! Some people say 'if you don't hold it you don't own it!'

ETFs come with third party risk. I personally don't trust holding gold in the US, UK or Swiss for the long term. I want to sell my ETF's.

If the s*** well and truely hits the fan then these countries will likely re-patriate individuals gold for worthless fiat currency to save the government. Also the US will put pressure on the UK and Swiss to do so.

If I had a lot of cash to invest in gold I would probably buy Perth Mint Australian share certificates or hold it in Hong Kong.

These countries won't give in to the USA's bullying. Australia cannot afford to lose its gold status so will protect individuals holding gold there. Gold and commodities are too important an industry to lose for the sake of helping out a crumbling USA.

And, Hong Kong too with China's backing won't give two hoots to a West looking to steal their gold off their citizens.

Warning - Gold is highly volatile and could easily crash 60-70% in its bull market. Buy on the dips. One could come soon so I would be cautious.
 
ringledman said:
Gold supply increases by 2% or so per annum.

Paper money is being printed at between 10-30% per annum.

Tell me which way gold can go but up???
Click to expand...


Yes, but we've actually reached peak gold, in the sense that mining ops have decreased so much, gold mining finds are decreasing etc. Its literally a question of supply much more so than the much trotted out Indian jewellery demand factor usually aired.
 
Where does the Dow/Gold ratio come into this? According to some, gold may rise to $3000 and the Dow go down to $3000. This being a 1/1 ratio. It has happened in the past. No reason it won't happen again. The only variable is where and when the 1/1 ratio will happen. As usual, it's a guessing game for us mere mortals.
 
I presume you guys have all heard about the Tungsten/Gold Bars scam?

Be careful what you invest in.

ONQ.
 
The last time this was tried was in 1983. I was just after the dow/gold passed its lowest and equities were on a recovery. Kinda funny that it's happening again. Could it be designed to keep us lowly people from becoming wealthy? Call me skeptical but i'd say so.
 
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