The gold bubble finally bursts, where will the money go? - Page 11

donkeykong2 · 02-07-2012, 05:35 PM

Quote:

Originally Posted by twofingerted

This is just 100% wrong. Do you just make stuff up?

Also, I keep seeing you say X currency is overvalued whilst having no real reason for them being overvalued. It's obvious you have no grasp of carry trades and interest rate differentials.

i have even mentioned interest rate differentials as not sufficient to explain the valuations you clown. and regarding housing, let s wait and see, houses built in the last 10 years are well below the long term trend by now after 3 years of an almost complete stall.

boobies4me · 02-07-2012, 09:11 PM

Quote:

Originally Posted by donkeykong2

the reasonable bull case for gold is Indian/Chinese jewelery demand, all that money printing arguments are ridiculously out of proportion and they should effect every non-reproducible asset in the same way, particularly land/housing prices but also the stock market. this part will break down pretty soon imo and certainly in the time frame of 5 years. also low real yields on safe assets are not really a new story (the long term average real return of treasury bills is just 1.5%) and most long term bonds are in bubble territory right now. i expect rapidly rising interest rates when the housing shortage (almost no houses were built in the last 3 years in the usa) will lead to a boom in housing once again in the near future.
all the investment demand is highly unstable and so gold is subject to high volatility as seen in the crash in the 80s.
while the long run development of india looks pretty good i see significant medium term downside risks as the currency is overvalued, public debt is high and the ratio of imports to exports is worse than that of greece.

This is a good example of the type of ignorance out there regarding gold, and how people are so confused that they don't even know the right channels to be concentrating on to begin analyzing.

Quote:

Originally Posted by brutti

The gold price has nothing to do with demand, ainec. Even gold investors knows that very well.

It has everything to do with demand. The notion that a price has nothing to do with demand is lol to begin with, but the type of demand driving golds prices isn't the "oh hey lookz, shiny metalz, lol?" demand that you're thinking of.

bahbahmickey · 02-08-2012, 10:15 AM

Quote:

Originally Posted by donkeykong2

i have even mentioned interest rate differentials as not sufficient to explain the valuations you clown. and regarding housing, let s wait and see, houses built in the last 10 years are well below the long term trend by now after 3 years of an almost complete stall.

Pop quiz:

You live on an island of 1k people who's population grows at a rate of 10% a year and the # of houses being built perfectly matches the demand. The price of homes has increased on an average of 4% a year for the past 100,000 years. Knowing that the price of real estate can only go up a few guys get together and decide to build 10,000 homes across the island. Next year what will happen to the avg. price of homes when the 1,100 people on the island have a choice of apx. 10,500 homes?

A. price of homes will go up because the price of real estate can only go up long term
B. price will stay the same cuz the 1.1k population will dump all of their money in the 10.5k homes to make sure the price of RE wont go down
C. prices will go down because the prices are directly related to supply and demand
D. the govt will take $ away from the hard working and give it to people new to the island or people who have never bought a house before to make sure RE only goes down a little

THAKID · 02-08-2012, 10:34 AM

D

donkeykong2 · 02-09-2012, 07:34 AM

Quote:

Originally Posted by bahbahmickey

Pop quiz:

You live on an island of 1k people who's population grows at a rate of 10% a year and the # of houses being built perfectly matches the demand. The price of homes has increased on an average of 4% a year for the past 100,000 years. Knowing that the price of real estate can only go up a few guys get together and decide to build 10,000 homes across the island. Next year what will happen to the avg. price of homes when the 1,100 people on the island have a choice of apx. 10,500 homes?

A. price of homes will go up because the price of real estate can only go up long term
B. price will stay the same cuz the 1.1k population will dump all of their money in the 10.5k homes to make sure the price of RE wont go down
C. prices will go down because the prices are directly related to supply and demand
D. the govt will take $ away from the hard working and give it to people new to the island or people who have never bought a house before to make sure RE only goes down a little

as i have mentioned the slump has been bigger than the boom already by a wide margin. you ll be surprised by the recovery to be seen in the next two years as the overhang becomes obvious.

boobies4me · 02-09-2012, 08:42 AM

Quote:

Originally Posted by donkeykong2

as i have mentioned the slump has been bigger than the boom already by a wide margin. you ll be surprised by the recovery to be seen in the next two years as the overhang becomes obvious.

lol.

donkeykong2 · 02-09-2012, 08:45 AM

Quote:

Originally Posted by boobies4me

lol.

we ll see who will have the last laugh on this one you mongoloid, i m not gonna search out the data for you though.

bahbahmickey · 02-09-2012, 09:45 AM

Quote:

Originally Posted by donkeykong2

as i have mentioned the slump has been bigger than the boom already by a wide margin. you ll be surprised by the recovery to be seen in the next two years as the overhang becomes obvious.

a, b, c, or d? By the way you are missing the point of my whole analogy. Logically think about my exaggerated analogy, answer it, and then apply it to what may or may not be happening in the US.

donkeykong2 · 02-09-2012, 05:42 PM

Quote:

Originally Posted by bahbahmickey

a, b, c, or d? By the way you are missing the point of my whole analogy. Logically think about my exaggerated analogy, answer it, and then apply it to what may or may not be happening in the US.

the value of the houses might very well be low, as they are not usable and will depreciate over time. land prices of the houses should be high though as land will be scarce in the future and low real interest rate should mean the future does matter a lot. propping up house prices to avoid a downward spiral induced by a selling frenzy because of an institutional failure called "non-recourse loan" makes sense.
i dont see much relevance of your example though as the economic slump has led to too few houses built and that shortage will become obvious when unemployment falls and more people move away from their parents where they are stuck right now not finding employment just yet.

ShipDaSherb · 02-10-2012, 12:17 AM

Warren Buffett talks about gold in new Fortune article:

http://finance.fortune.cnn.com/2012/...holder-letter/

Quote:

What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As "bandwagon" investors join any party, they create their own truth -- for a while.

Over the past 15 years, both Internet stocks and houses have demonstrated the extraordinary excesses that can be created by combining an initially sensible thesis with well-publicized rising prices. In these bubbles, an army of originally skeptical investors succumbed to the "proof " delivered by the market, and the pool of buyers -- for a time -- expanded sufficiently to keep the bandwagon rolling. But bubbles blown large enough inevitably pop. And then the old proverb is confirmed once again: "What the wise man does in the beginning, the fool does in the end."

razrback · 02-10-2012, 12:25 AM

I wonder what post Obama promised him for coming out and bashing gold.

Fistdantilus · 02-10-2012, 12:35 AM

Quote:

Originally Posted by razrback

I wonder what post Obama promised him for coming out and bashing gold.

NotSureIfSerious.jpg

bahbahmickey · 02-10-2012, 09:53 AM

Quote:

Originally Posted by donkeykong2

the value of the houses might very well be low, as they are not usable and will depreciate over time. land prices of the houses should be high though as land will be scarce in the future and low real interest rate should mean the future does matter a lot. propping up house prices to avoid a downward spiral induced by a selling frenzy because of an institutional failure called "non-recourse loan" makes sense.
i dont see much relevance of your example though as the economic slump has led to too few houses built and that shortage will become obvious when unemployment falls and more people move away from their parents where they are stuck right now not finding employment just yet.

Do you remember when everyone and their mother said that there was only so much Florida coast line to go around. They all said that if you don't buy it now it is going to get "all bought up" and the demand for it will keep rising and the prices will follow. Then someone hit them on the head and they woke up and realized there was an infinite amount of Florida coast line.

Proping up home prices is dumb and unfair to taxpayers and everyone who doesn't own a home. You can't say it doesn't favor the middle/upper middle class can you/ why do you hate the poor?

Surely you aren't trying to make a claim that too few houses have been built. That has to be a typo, right?

Cliffs:
-housing prices have everything to do w/ demand
-there is an unlimited amount of real estate in this country
-propping up home prices is unfair to those who don't own homes
-you need to explain what you meant by "too few houses built"

twofingerted · 02-10-2012, 10:21 AM

Quote:

-propping up home prices is unfair to those who don't own homes

This also curtails demand because people won't start purchasing homes until they think that "it's a fair shake". A rational buyer isn't going to buy when he knows he is not getting a fair price.

twofingerted · 02-10-2012, 10:24 AM

Quote:

Originally Posted by ShipDaSherb

Warren Buffett talks about gold in new Fortune article:

http://finance.fortune.cnn.com/2012/...holder-letter/

Post like these are worthless because there are lots of very good fund managers that are bullish gold and Buffett is a shill for the Obama administration.

You can quote me a year from now on this.....

Gold shorts at 1720 will be crushed.