Riddle me this...

why would you buy gold when you can buy oil?

Seems like a lot of people saw this coming. A 10% correction isn't that odd at all is it? Anyway I have more faith in gold and silver right now than I do in the U.S. and the U.S. dollar.

Exactly, its not odd at all, so why the hurry to shove as much money as possible into gold?

False dichotomy. Most of us are not choosing between holding gold and holding US dollars. I'm not aware of anyone, in this thread or anywhere else, advocating holding on to any substantial amount of dollars.

The gold bugs love talking about gold's outperformance of cash, which is just a trivial corollary of the obvious fact that money inflates, and completely irrelevant to the subject of INVESTING because no one invests in cash.

The whole point is that gold has INTRINSIC value. It does not matter what its value is versus the currency of the day, because it's always of use.

That's why I've taken to eating MY gold. Delicious!

lol?

Story time!



I wouldn't think of gold as an "investment." It's static. But it can be good protection at times of instability.

But anyways, carry on...

Yes, if you bought gold in 1980 and sold it in 2000 then you didn't do so well. People telling you gold was going to 2K in 1980 were wrong. What is your point?

People will always try to sell you things. People will always be wrong about things. There was probably a guy who tried to sell you a shoddy toaster in 1980 too, do you want to start a thread about that?

I think those are all reasonable forecasts for what's ahead of us. (Maybe eventually you and your ilk will realize we are in a severe crisis.)

lol

Why would you inflation adjust for gold? Gold is static. You don't buy gold because you expect it to lay eggs; you buy gold because you want a store of monetary value. Adjusting it for inflation would be like investing in $100 bills and storing them under your mattress.

If you buy and hold gold for 30 years, then ya, there probably isn't much method to your madness. That's what happens when you hold a static "investment" for 30 years. I'm not sure why you're referring to a 30 year hold or who has been advocating such a thing though.

There's a difference between advocating that gold is a good buy and advocating that it should be held for several decades. The people predicting great depression etc. aren't also advising you to hold your gold for 30 years.

I think you maybe inflate how significant this dip actually is. Who is it that you think is "hiding"? You may as well name names if you're determined to make the thread so personal.

I don't think any "sky is falling nit" would be all that concerned with the inevitable ups and downs. (I don't understand why you're so interested in it either, for that matter.) Do you expect gold to be up every single day before anyone has a right to defend it?

The "sky is falling" not because gold's performance had been rock steady, but because of the economic mistakes we continue to make. Gold's inevitable rise is just the reaction to them. I'm really not seeing what you're trying to get at/discuss in this thread.

You should stop worrying about what people said about gold in 1980 and just use this dip as an opportunity to buy some.

chirp chirp chirp

You don't care about what's actually important?

So what *was* the point of the post?

I'm still not quite sure who "they" are, but perhaps you could ask them?

What factors other than the movement of dollars themselves do you think account for the changing value of gold? How significant are these factors (compared to the movement of the dollars)?

Maybe "they" defend gold based on what the dollar is doing because it's a sensible way to look at gold?

Do you want to actually... *explain* what you think is causing gold's rise that other people apparently aren't getting? All you're doing here is asserting that you have some sort of point and smearing those who disagree with it as ignorant.

If your intention here is to discuss why gold is rising, you probably could have come up with a better OP than "gold is down 90 points, ouch, LOL @ these 3 posters."

My point was I guess to ask you what your point was, and what you were trying to say. (I'm still utterly confused, fwiw.)

I think the economy is in ruins and gold is a great buy. Does that make me "one of them"? Who knows. But I wasn't alive in 1980, and if I was, I doubt I would have advised you to buy gold and hold until 2000 lol.

You too. Buy some gold.

Chirp.

Everyone talks about this, but I've never seen any definitive proof put forward using historical tests or behavioral ideas. It seems to me to be one of those ideas accepted by all but never quantified into a real strategy.

stephenNuts,

interesting, but what do you have to say about this?

http://forumserver.twoplustwo.com/sh...00#post3189700

"A fool and his money are quickly parted"

any chance that with all the banking stuff going on, some banks and investment groups sold gold to get more liquid?

As I have stated many times....GOLD nits always pop their heads out of the sand during turbulant market times screaming 'the sky is falling'....or ...'we are doomed'.But they usually return to their holes within short time with their tales between their legs.
And ANYBODY that says that people "dont buy GOLD as an investment' (or that they dont percieve it to be an investment for that matter) ......just LOL.The above link makes that even clearer proving my point

You have NO idea how the ignorant masses think.I used to have respect for some of your posts ALAW...but that has done a complete 180 now

Later

Its the apocalypse bias. Because you're perpetually wishing for an inevitable event, you can always use reverse logic and explain any outcome with regards to your theory. Its an extremely dangerous concept if you're in the business of making money, because you can use it to explain mediocre long term results. The one thing that keeps them on the path is the idea that maybe if it does come true, they'll be insanely rich, almost like winning the lottery. They figure this gives them the leeway to be wrong constantly.

Art

It has ALWAYS been impossible to debate the GOLD BUG phenomonom with these very same people that SELECTIVELY choose the timeframe of the argument

See, if you preach a doomsday scenario, you need a way to profit off it. You obviously can't buy traditional assets, since if everythings crashing they get hit too. So you find something, tie a mythical relationship that doesn't exist, and use that as your beta mover against all other assets.

Or you could do what some smart but extremely cynical trading friends of mine do; construct advanced portfolios that take advantage of various volatility and liquidity problems that arise, thus profiting off the slow and steady death of modern finance, but also still profiting in case the modern world wins again and we go back on the course to capitalism utopia. but you know, that requires you to open complicated books, ask hard questions, and really seek out truths! Why do that when you can just read some silly articles about some out of date guru preaching ideas where you have no idea whether he's just hedging against his own portfolio or actually betting money on it? Then you just need to open the most basic entry level retail account anywhere and click BUY BUY BUY I'LL BE RICH!

one thing i'll say is that i think the probability of gold doubling or tripling again is way overstated by those who think that the economy will collapse and the dollar will fail as a currency (i.e. *if* those fears are realized, gold will double, triple etc....but those fears are not correctly assessed probabilistically imo by those people).

further, i think the probability of gold staying where it is or falling is also way understated by those who think that the economy and the dollar are fine (i.e. *if* those assessments are true, then gold will stay where it is and the panic will ease etc....but those assessments are not correctly assessed probabilistically either by those people imo).

instead, i think there is a strong possibility that the economy as a whole is priced to be stronger than it is by the market, and that the dollar is currently overvalued against many global currencies (mostly EM currencies). since gold is correlated with those views of mine (i.e. short BRL/USD, short S&P500), it makes sense that i believe it will rise in the coming terms. the degree to which i think it will rise though is far less than the first group above and more than the second group above.

the issue is what it would mean for the economy and the markets if the situation occurred in which gold doubled or tripled again. that imo, is basically a dollar CRASH against all the major currencies. this is simply highly unlikely imo for a number of reasons including, but not limited to the two following reasons:

1) if the dollar continues to fall, strong US assets (exporting companies, property, manufacturing, mining, agriculture assets etc.) will become attractive to foreign buyers including china, canada, and europe. this provides a sort of economic support for the USD similar to that provided for the JPY as it neared 125 to the dollar (a floor of about 125-135 would have made japanese assets extremely attractive to foreign buyers).

2) the fact that it is completely against the interests of large dollar holders to "send that inflation home to roost" as the "gold bugs" love to claim (for those who are unaware of this argument, it is that the chinese and oil exporters have been providing a haven for dollars - treasuries etc. - that has kept the US consuming. eventually, "they" will realize that they are holding a worthless asset and they will sell it and get rid of it in favor of domestic demand). even the HINT that those countries are selling falling dollar assets into a falling market will simply destroy the trillions held by those countries in value since the market will take that as a sign of further sales. even if the chinese and commodity exporters think the dollar is crap, instead of selling what they currently hold, they'll use new flows to buy other things (like shares in US and european companies for instance as they have been during this dollar fall). they are well aware of the impact any sales into the open market of their reserves will have. chinese central bankers and saudi ministers have been complaining quietly but they know the selling course of action is against their own interests. it is simply infeasible that the countries in question would risk their own interests in satisfaction of that theory described above.

so overall, i'd expect gold to continue to increase in value as the next leg of the dollar decline and economic decline occurs, however those expecting massive (100%/200%) gains in the precious metals markets are likely to be sorely dissappointed...but they will have likely made a decent amt of money in the meantime (if they get out in time over the next few years).

Barron

good post barron

BTW .....Gold DOWN another $30 today

QFT

I couldnt have said it better Art

QUICK, CALL THE LONDON MEDICS AND KEEP ALL SHARP OBJECTS OUT OF JOHN KANE'S HANDS!!!

Barron

LOL.....he is a very scary "investor"(or whatever he is trying to accomplish).But I like his resilience

As I've said before to John, you really have to be ahead of the curve, and I just don't believe going long hard in commodities now is a winning play just as a fundamental trade. Maybe if you combined a few ideas and babied the portfolio (which he's proved he probably isn't capable of doing) you could still do it, but this was the play in 2003/2004, not now. The next play is something else, and thats where the skill is, researching and taking that shot where everyone think you're crazy. If you have friends with your investment strategy, you should probably reconsider.

departing from my fundamental bent for a moment, this last point you raise is very prescient at the current moment. my boss's dad constantly emails him about how everybody should move their assets to gold. i have a few friends who are starting to preach the same thing. i don't ever really argue with them since they've already made up their minds...but the fact that they are all of a sudden "on the bandwaggon" signals to me this euphoria for gold may be ready for a bigger correction.

the issue against this is that there are a number of udnerlying supports for gold and some of them haven't hit full force yet (pension plans allocation to commodities for instance). just historically, when "your friends" are all of a sudden investing in the "new fad" ... that fad has typically blown up in their faces.

not saying this will happen this time as i don't think gold will all of a sudden plummet and not recover, just that it is something that i've seen recently.

fundamentals for gold and speculative demand for the metal are still quite high.

Barron