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Gold Bull Market: Final Phase Approaching
Gold and hard assets have been in a bull market for nearly 13 years. History has shown that cyclical bull markets tend to last between 16-18 years. Of any bull market, whether in stocks or commodities, the most money is always made in the mania phase for those investors that can hang on.
By understanding how the other asset classes impact and effect one another, investors can easily understand why the mania phase has yet to arrive.
Roy-Byrne explains that bubbles cannot occur when various asset classes are challenging each other for supremacy. The parabolic move in Gold, Silver and mining equities, from 1976 until 1980, had some interesting variables worth discussing. Interest rates soared in that period, while bond prices declined. The complete opposite of today's environment. This all took place amidst rising fears of inflation. The S&P 500 peaked in Q3 1976 and didn’t bottom until Q1 1978. When it bottomed, cash flowed into gold because there was seemingly nowhere else to protect your purchasing power. The moral of the story is that overall, precious metals faced little competition in the late 1970s from conventional heavyweights: Bonds and Stocks.
The current PE ratio of the S&P 500 is 14. The bear market will not end until that reaches single digits in the coming years. In respect to bonds, Roy-Bryne notes a powerful breakout from two and a half years ago until now. It is believed bonds can move quite a bit higher from here, but a blow off top in the next 12-18 months is expected.
In regards to the debt super cycle fueling the devaluation of currencies and increased inflation concerns, look no further than this excerpt from Chris Puplava:
Looking at the outstanding debt for the top 10 combined shows that just between now and the end of the year more than $5 trillion in debt will mature, or 17% of their total outstanding debt, and by 2015 nearly 50% of the top 10 debtor nations total outstanding debt will come due. That is more than $15 trillion in debt coming due in the next two and half years!
Lastly, the writer explains one important point that as investors we ALWAYS need to remember; the majority of gains in a bull market come in the last phase. The Nasdaq gained 5-fold from 1982 to 1994 and then surged more than 7-fold in the last six years. If that is indicative of what is coming for the gold sector, hold onto your shorts. If history is any guide, the final phase of the gold bull market, which is 13 years in, should begin relatively soon.
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Re: Gold Bull Market: Final Phase Approaching
http://www.scribd.com/doc/20314099/Fed-Arthur-Burns-on-Gold-6-3-1975
via Zerohedge
Re: Gold Bull Market: Final Phase Approaching
Hi Thinker, thanks for the great comments. I agree with most everything you say with just one exception.
Scottiepimps59 asks; "I wish someone would tell me who is going to do all the buying to drive gold to much higher levels?"
and my answer is, the incresing number of people who are beginning to recognize that the promises of politicians are just so much "hot air" and their paper currencies a "promise to pay" that can not be kept in REAL purchasing power terms.
I think you meant StarGazer, but that's besides the point. Those expecting a rush of any kind into gold, still view the metal as a commodity rather than a currency. See the stock vs. flow argument which concludes with:
"Once you understand this, you will know why you don't need a rush into gold for gold to be "priceless".
Freegold will come when the price of gold's purchasing power is high enough to encourage accumulators to dishoard their gold for goods. Hence the moniker "Freegold". Said differently, the ultimate price of gold in a Freegold system won't be determined by new accumulations, it will be determined by distributions from the hoarders.
What price are the hoarders waiting for? $5,000 in purchasing power? $10,000? $30,000? $50,000???
Some have suggested that Bullion Banks lease out paper gold at a ratio of 10:1 against their physical holdings. So at least to the Bullion Banks, gold is worth at $16,000+ per ounce. What would it take for them to dishoard?
Why are central banks on record buying sprees at $1,600-$1,900 gold? They clearly think there is much upside left (or downside to dollar) before dishoarding and Freegold.
Re: Gold Bull Market: Final Phase Approaching
Coming late to this party it is interesting to read the divergent opinions and the reasons given for them. It would require far more time than I can spare to respond to every point made even though I have studied the subject for over 50 years in considerable detail.
Here are what I consider indisputable facts. 1) Nothing in history has proven more stable as money than gold, it has all the qualities required for such use. A) It is scarce and can not be created or duplicated by the unscrupulous. B) It is easily divisible and durable. C) It maintains purchasing power, i.e. has intrinsic (store of ) value and is recognized worldwide for its historically proven value. Simple test, check how much oil, wheat, clothing or any other living essential ONE OZ. of gold will buy historically, do the same with ANY paper currency and see which you would rather use to preserve your wealth? Surely 6000 years of history should be instructive?
D) It alone as currency has no counter party risk, it represents final settlement as no other substance ever has in history, everything else is simply an I.O.U. a promise from fallible humans, whether individual or collectively through government.
2) As my major contribution I submit that the major problem that we as human beings have not solved, and may well be incapable of solving, is the simple fact of human nature being PRIMARILY GREED!
In the simplest of terms every individual should be able to utilize and maximize their talents too contribute to society at large. We all have the same 24 hrs. per day to employ our unique proclivities in a way that maximizes our potential earnings and with a stable and honest monetary system that would PRESERVE PURCHASING POWER we would be able to provide for our future by prudent saving of a percentage of everything we earn.
What prevents that? Obviously counterfeit money and various nefarious schemes mankind has come up with over the centuries to sureptiously steal from his neighbours. The ugly truth is few of us are saisfied with a simple but FAIR return for the hours we put in to PRODUCE goods and services others are willing to pay for, yet bottom line, that is ultimately what we truly deserve.
Interest, inflation, false government, over regulation, excess taxes and many more factors make it next to impossible for the average person to SAVE and become self sufficient, so we believe the promises of NON PRODUCERS (parasites) who have managed to elevate themselves into positions where they are able to live "high on the hog" on the backs of those who do produce society's needs.
Scottiepimps59 asks; "I wish someone would tell me who is going to do all the buying to drive gold to much higher levels?" and my answer is, the incresing number of people who are beginning to recognize that the promises of politicians are just so much "hot air" and their paper currencies a "promise to pay" that can not be kept in REAL purchasing power terms.
Stargazer says; "If you want to take advantage of inflation there are better and safer investments then gold." and i respond, give me an example with facts to back it up.
The fact that the gold price "fluctuates" is due mostly to manipulation by bankers in cahoots with government who want the flexibility of fiat currencies and that "competition" from REAL MONEY (gold) is unwelcome because it limits their manipulative power and ability to make promises to get elected by a naive and brainwashed public.
scottiepimps59 concludes an excellent post with this comment; " I'm still trying to crystalize some of these concepts in my little mind." showing both humility and wisdom in his post. The key fact here is not just "commodity vs monetary attributes" but a complete reversal of perspective. The mistake that most people make is looking through the wrong end of the telescope, i.e. looking at gold through the lense of "dollar cost" and noting its fluctuations.
Viewed from the perspective of gold being real and honest money, and as I have noted previously, checking its historic PURCHASING POWER relative to essential goods it becomes crystal clear that it is "fiat currency" that it fluctuating in purchasing power, in reality then it is NOT gold that is rising in cost, its purchasing power has for 6000 years remained relatively stable, fiat currencies on the other hand are, and will continue, to progressively deteriorate which means in simple terms that their DECLINING purchasing power means it requires MORE of them to buy an oz. of gold whose purchasing power remains relatively stable.
SHOW ME ANY OTHER COMMODITY THAT HAS REMAINED IN A RISING CHANNEL FOR OVER A DECADE?
scottiepimps59 is correct that a "fixed reference point" is needed on a world scale against which all national currencies are measured and I am not sure that fool proof system is possible, particularly not unless human nature changes as I have well noted.
I particularly liked spouthpens insightful comment; "95% of the population has no clue re; money, yet many have a lot of money ,so they're content and life goes on, in ignorance" and that is precisely what the elites that created the system count on, the "useful idiots" they promote to positions of power are too dependent on the perks of their position to oppose them and the masses are too ignorant to understand how they have been enslaved.
Thanks to Jordan Roy Burne for initiating this interesting debate. It will take a lot of "thinking outside the box" to make any dent in improving our application of monetary policy but I submit that a major start would be rejecting "socialization of DEBT in favour of socializing CREDIT by bringing our currency supply into existence as a CREDIT against our resources as opposed to interest bearing debt against them. Do "WE THE PEOPLE" as natural born citizens own the natural resources of our respective countries or do people who call themselves "bankers" own everything and have a natural right to charge us interest for developing them?
thinker70
Re: Gold Bull Market: Final Phase Approaching
I realize the system would be riddled with problems.I'll try and give some answers.
If a country wants to boost their GDP or build more infrastructure,those are both good things for them.As far as gaming the system by printing.That's an important point.Money printed ,as is done today would increase debt ,which would devalue ,just as it does today.GDP/debt ratio is something I have mentioned in the past and from memory (since we have no archives),I simply forgot.It is of course part of a GDP ratio. ie;what you take in ,minus the debt you owe,how many people it must serve GDP Ratio
I don't understand why this system wouldn't protect capital?
Stockpiling currencies,Yes ,Why not. That's one reason why reserve currencies are printed so much. If a China based refiner buys a billion in crude from a Canadian exporter,the Canadian company would be paid in Chinese currency based on what it was valued at that day.The Canadian exporter has a big market in Canada to trade Chinese currency for Canadian because ultimately ,it's useful for importers to buy goods from China or they could pay the Chinese in Canadian and use the Chinese currency to buy Gold from South Africa. Currency is numbered and with International currencies all over the world in different hands ,it would be simple to detect if currency was being printed beyond what their balance sheets say.Remember ,this is all free market.If a country wants to print with no reported backing and their found out,the markets will punish the currency .There doesn't have to be any currency cops.lol
It's a system that I think would be superior to what we have today which is really an absence of a working system because even though gov'ts print monopoly money and life just goes on,it's because there is not enough currencies floating around.Reserve Currency,like the USD is depended on too much and that's why it continues.Too big to fail, We need essentially a World Currency Exchange where nearly all Industrialized countries are represented and valued daily. Not really as difficult as it sounds,imo.
Re: Gold Bull Market: Final Phase Approaching
Thats an interesting concept, Southpen.
My question is, how do you prevent sovereigns from gaming the system by printing to boost GDP and infrastructure. e.g. China?
What is more important, GDP, GDP growth rate, Debt/GDP?
Also, how does this work to protect the capital of savers?cant have Capitalism without protecting capital.
Also, how does the oil producer decide which currency to take? Its not like the values are static and they may want Aussie dollars over Yen over USD because they have a stronger trading relationship with one country vs the other. Are they to stockpile all currencies?
Re: Gold Bull Market: Final Phase Approaching
SDR's are a basket full of currencies .I'm not suggesting that at all. I was using the USD index just to show how currency value's change daily due to a number of economic conditions relevant to that country.
I'm suggesting no reserve currency ,just a set measurement that currencies would be subjected to. Based on ; 33% Gold or other PM. 33% GDP ratio (GDP/per capita) 33% Infrastructure
Each countries data would be collected daily to an exchange Worldwide which would analyze in a set process to arrive at a value compared to 100% Much of the data would not change at all day to day but in example .If Japan had a nuclear disaster ,it would effect the 33% value in their infrastructure,thereby lowering their currencies value.
If a country ,like China decided to use some currency they had collected from other countries to purchase gold ,it might strengthen their currency
If Australia GDP rose substantially one month and their population did not ,the value of their currency would likely rise
Everything would be determined by economic conditions in their country but there would be no need for use of a reserve currency.When making a purchase internationally ,you would use your currency based on it's value that day in comparison to the country's currency where you were purchasing a product or service.
Like I said ,it's all just something we were discussing a long time ago,but the general idea is to get away from one or two supreme World currencies ,which are likely unfairly valued.
Total
Re: Gold Bull Market: Final Phase Approaching
I guess it was similar to Bretton Woods in that even though there was no reserve currency,there was a subjective measurement which all currencies would adhere to as far as value. Like the USD index currencies would be on a sliding scale. Gold would be a big part of that measurement but not the only criteria. It has similarities to your GOLDSOLAR system and BRETTON WOODS
We cant use commodities and cant use other currencies as those are subject to market forces. The reference point must be stable. Gold is unique in its ability to serve this role.
Your system sounds alot like SDRs.
Re: Gold Bull Market: Final Phase Approaching
It is called the Freegold system. It is on wikipedia and the possible negative consequences are listed as well.
One of the more obvious consequences is that the US financial system will collapse, but this is more a result of the dollar losing reserve status and our dependency on exports of financial innovation than adopting a modified gold standard.
If you're familiar with the petro-dollar cycle. Oil is sold for dollars and those excess dollars are converted into US financial assets such as treasuries to beat inflation. Same with Chinese imports. We pay in dollars and those dollars are converted into treasuries, etc. The primary dealers make commissions and those dollars flow into our domestic economy, creates jobs and therefore goes back to the US govt in the form of taxes. If the OPECs decide to trade their oil for gold instead, this breaks the petro-dollar cycle and banks lose a big chunk of their investment base (sovereigns like China and Saudi Arabia). Producers like China no longer have any need to hold dollars as it wont be required to buy oil.
This is already happening. http://blogs.ft.com/beyond-brics/2012/07/09/whats-iran-doing-with-all-that-turkish-gold/?catid=491#axzz20FVNm6au (I am Pamplona in the comments section).
Unless we reconfigure our economy to produce goods rather than financial assets, were in for a rough ride.
Re: Gold Bull Market: Final Phase Approaching
If it were possible to access archive posts from PD ,I had many conversations with fastfoot about trying to explain a currency system ,long before your time here.
I guess it was similar to Bretton Woods in that even though there was no reserve currency,there was a subjective measurement which all currencies would adhere to as far as value. Like the USD index currencies would be on a sliding scale. Gold would be a big part of that measurement but not the only criteria. It has similarities to your GOLDSOLAR system and BRETTON WOODS
Re: Gold Bull Market: Final Phase Approaching
That's really interesting scottie.I mean that. However ,if you think this system is good to replace or have a new beginning on Planet Earth,start looking for fallacies.No system is perfect but if you know what possible negative forces could come through this system ,then we as a people can be more aware. That's been the problem in the U.S. ,for years,95% of the population has no clue re; money ,yet many have a lot of money ,so they're content and life goes on,in ignorance
.i
If there is no name to this system ,I propose calling it the GoldSolar currency system.
Re: Gold Bull Market: Final Phase Approaching
I like the interpretation of Gold being the sun shining on solar panels.
I use the solar system analogy because the Sun is fixed while the planets are moving. Currently, all currencies are valued against the dollar, which is erratic itself. How is one to know the value of anything if the reference point keeps moving? By having the a fixed reference point (gold/sun), the value/coordinates are known. Removing price volatility.
Re: Gold Bull Market: Final Phase Approaching
Just a quick word on silver.
I am negative on silver because by all accounts, including the BIS, silver is not to participate in the resetting of the global financial system and therefore will not be revalued.
"This section establishes a minimum capital standard to cover the risk of holding or taking positions in commodities, including precious metals, but excluding gold (which is treated as a foreign currency according to the methodology set out in paragraphs 718(xxx) to 718(xLii) above). ... The price risk in commodities is often more complex and volatile than that associated with currencies [ie gold] and interest rates. Commodity markets may also be less liquid than those for interest rates and currencies and, as a result, changes in supply and demand can have a more dramatic effect on price and volatility.”
Silver IS a commodity. The only reason why Silver was previously considered money is because with a collateralized currency system, there was not enough gold and silver was used to fill in the gaps. Perhaps if you believe a Bretton Woods-type system will re-emerge, Silver is a good speculation. However, I believe that wont be the case and only gold will participate for reasons already mentioned at length.
Re: Gold Bull Market: Final Phase Approaching
Hey Southpen. I didn't intend to misquote you.
I think my confusion comes from your use of the term "collateralized". To me that sounds like currencies are backed by things such as gold.
In the Freegold system, currencies are still fiat and backed by goodwill... and not by any one commodity or gold. However, it removes the privelege of any one currency acting as the "permanent" global reserve and instead gives that position to the best currency vis-a-vis gold.
If your economy stinks, then gold will be astronomical in terms of your currency. However, if your economy and fiscal house is in order, your currency will be able to buy alot more gold. Therefore, the strongest currency will be favored as the transactional currency, ensuring stable prices of goods and balance in global trade. It is much more dynamic and is free of the conflicts of interest (triffins dilemma) we see in the dollar reserve system.
The strongest currencies will have greatest purchasing power and will be compelled to consume while the weakest currencies have the least purchasing power and will be compelled to produce. Market forces are left to work without the need for intervention or manipulation.
All the while, the capital of savers/productive members of society in ANY country, regardless of whether their local currency is weak or strong, is protected through their holdings in gold. See how this system rewards the productive? This is in stark contrast to what we call "Capitalism" today... which is actually thinly veiled consumerism and on the cusp of socialism/communism.
Re: Gold Bull Market: Final Phase Approaching
southpen wants a return to the Bretton Woods system.
What gave you that idea?
It was better than what we have now ,but as of 1971 ,it was really destroyed.
I've been an advocate of a system that is floating as well,not precisely the same as what you described . I like the interpretation of Gold being the sun shining on solar panels.
The system I've talked about would have PM''s as an explicit part of everyones currency ,but also I've said a GDP/debt ratio to go along with it as well as another ratio determined by the population of the country. That way ,some countries which excel in manufacturing might have a currency equal to a resource rich country. Countries that are over populated could have a larger GDP but it would be per capita so population is no advantage.
Every countries currency would be subjected to a set standard,.like the USD ,but not the USD or any other real currency. No reason in this day and age to have a reserve currency that is an object.It would be completely subjective. No reason for currencies to be bunched together like the EURO. Nightmare.
I only say that PM's will be part of currency collateral.That idea has infact been dead since Nixon in 1971. Bretton Woods gave the U.S. great power for a few reasons. The country was not blown up ,it was able to print reserve currency enough for the entire World and it had a huge supply of Gold.I've even stated on PD ,that I want the U.S. to be liberated from being the World's #1 Reserve currency. I do not see it as an ultimate advantage.
With that said ,I'd like to understand this system your describing better.I never meant to imply my system was full proof. I just like smarter people to get on the right track.
Re: Gold Bull Market: Final Phase Approaching
Also gold represents payment in full whereas dollars represent a claim on a payment. Financial transactions do not end with dollars in your bank account. You work for dollars and you use dollars to buy something. Only when you buy that something has the transaction closed. Dollars in your bank account therefore represent a claim but don't hold onto those claims for too long! If gold represents payment in full, it would have to be priced such that outstanding debts are wiped out by gold holdings. FOFOA has suggested an ultimate price of around $55,000 in todays dollars.
It seems crazy, but the logic makes sense to me.
Re: Gold Bull Market: Final Phase Approaching
Thanks StarGazer. I only ask that people look at gold through the currency lense as opposed to the commodity lense.
Rob Zoellick, President of the World Bank, is proposing we use a modified gold standard in which gold is the reference point for all currencies. This would essentially make Gold the Sun in the currency solar system and further implies its superiority to all other currencies. Gold has no attached liabilities, unlike the US dollar... making gold the most stable of currencies. It would make sense to use a stable currency as the reference point rather than the US dollar.
This is essentially the same as the Freegold concept, which FOFOA discusses on his blog. Gold floats against currencies rather than "collateralizes" it.
I know Southpen as well as others in the hard money camp would like a return to the Bretton Woods system. I used to carry this belief as well.
The problem with collateralizing dollars with gold is that it fixes the value of the dollar and gives no flexibility for governments to pursue fiscal policies. Dollars were redeemed at a fixed rate, $42.50 an ounce. While that gave intrinsic value to dollars, it was too rigid and stonewalled the US's geopolitical reach and the ability to spur economic growth... leaving us vulnerable to devestating depressions. If you didn't have enough gold, you were out of luck.
Obviously, by completely removing any external controls, it allowed the US financial machine to print without consequence. It's status as reserve currency allowed (forced) us to print enough for the rest of the world to use. The expanding currency base thereby expanded our tax base, which in turn gave us an outsized advantage over other sovereigns whose political will was reduced to the size of their tax base. Why do you think the US spends more on military than the next 25 countries combined? We've obviously abused this power (Triffin dilemma).
If we allow gold to float/serve as a competing currency, it allows for fiscal flexibility but also imposes a consequence for profligacy. If you print more than is sustainable, your currency will fall vis-a-vis gold. However, if your government pursues prudent fiscal policies, your currency will gain favor as the preferred media of exchange.
This is all a long winded way of suggesting the possibility that when dollars lose its reserve status to a superior currency, i.e. Gold, that perhaps the price of commodities will NOT inflate. Oil prices, because it is a commodity, should be a function of supply and demand. It's price should NOT be a function of the strength or weakness in the dollar. I do believe that oil prices will rise due to its supply and demand characteristics but I think it may be wrong to believe that it will go parabolic because of hyperinflation of the dollar. Hyperinflating the dollar does not guarantee that people will consume commodities that they do not need this instant. If your dollars were going to shit tomorrow, are you seriously going out to buy a bunch of gasoline, food and beer? Or would the prudent action be to convert your dollars into a superior currency and store of value such as gold?
If you follow this logic, this would suggest that commodities will not inflate, it is gold that will soak up the excess liquidity. If currencies were tied to a basket of commodities or if hyperinflated dollars chase commodities, it would bring the global economy to its knees. Commodities will suddenly become even MORE scarce then they are already. Central Banks would need to hold a reserve of oil, copper, iron ore, whatever and would require ever higher prices to shake the stockpiles loose. There would be tremendous social unrest as those less fortunate will not be able to fullfill basic needs such as food or electricity. Gold is the clear remedy. If you want to save long term, why not use a metal such as gold which is indestructible, has no industrial uses and easily serves as a unit of account and store of value?
By using gold as a reference point, you avoid hyperinflation and prices of goods are stable. The only difference is the price of gold changes in value relative to your currency. This would also help balance of trade. Prices of domestic goods would be stable but the price of imported goods would rise as your currency devalues against gold. This puts a halt to the consumption of imported goods and spurs domestic growth and exports. As well, gold protects the capital of the savers and our domestic economy would be better insulated from depressions. Look at Japan, they were able to survive more than a decade of recession on the backs of their savers. If you tax the capital of the savers, it goes to the wasteful consumers and our productive capital forever erodes, leaving us very vulnerable to economic shocks.
Hope this all made sense, I'm still trying to crystalize some of these concepts in my little mind.
Re: Gold Bull Market: Final Phase Approaching
I most say you do make a good case for gold and you are no doubt a very intelligent individual. I know there is a lot of very credible people on the gold band wagon. Even if you and they are right about gold I know I will still profit from inflation, but just in different investments, that I feel strongly have more potential.
Re: Gold Bull Market: Final Phase Approaching
For those of you that may be too lazy to click through to Bron's (Manager, Analysis and Strategy at Perth Mint) blog:
BIS says gold is a currency, not a commodity
From the Bank for International Settlements International Convergence of Capital Measurement and Capital Standards:
Page 179
“Gold is to be dealt with as a foreign exchange position rather than a commodity because its volatility is more in line with foreign currencies and banks manage it in a similar manner to foreign currencies.”
Page 182
“718(xLiii). This section establishes a minimum capital standard to cover the risk of holding or taking positions in commodities, including precious metals, but excluding gold (which is treated as a foreign currency according to the methodology set out in paragraphs 718(xxx) to 718(xLii) above). ... The price risk in commodities is often more complex and volatile than that associated with currencies [ie gold] and interest rates. Commodity markets may also be less liquid than those for interest rates and currencies and, as a result, changes in supply and demand can have a more dramatic effect on price and volatility.”
This is not "opinion", for the benefit of his readers' convenience he is re-stating the most salient points in the BIS proposal.
Still havent seen a valid counter argument to the Stock vs. Flow phenomenon in gold.
Also, beware of where you get your financial advice. CNBS talking heads often call a top in gold yet those that have been "winning" over the past decade (Kyle Bass, Paulson, Soros, Einhorn, et al) are heavily invested in gold and adding. Follow the talking heads or follow reason from the guys that are actually making money. Your choice.
Re: Gold Bull Market: Final Phase Approaching
I could not care less if some people or institutions consider gold to be a currency or commodity.
OK, but in my humble opinion I think this is critical to understanding the fundamentals of gold as currency and commodities are very different things. You accumulate one and you consume the other. Commodities are function of supply and demand whereas with gold there is little consideration for these forces. Just like cash, so long as you believe they represent a store of value, you will accumulate money regardless of the supply/demand characterstics... this is how one builds "wealth" afterall.
The fallacy we are seeing today, ppl are saving in dollars because they still think it serves as a store of value. It does not. You save in dollars and youll get taxed through inflation... and the government MUST inflate!
I am out of it after making good money while invested in gold companies. When I feel it becomes undervalued I will consider buying gold companies again.
So youre saying that gold equities are overvalued now?
Also, I wouldn't call the BIS just "some institution" or "just a man's opinion".
To each their own.
Re: Gold Bull Market: Final Phase Approaching
southpen I agree with your comment about Natural Gas, it is unfortunate PD did not feature my recent blog on it.
http://www.pinnacledigest.com/blog/stargazer/time-buy-ng-companies-according-article-it-time-start-buying
I could not care less if some people or institutions consider gold to be a currency or commodity. I am out of it after making good money while invested in gold companies. When I feel it becomes undervalued I will consider buying gold companies again.
Re: Gold Bull Market: Final Phase Approaching
scottiepimps you are wise...
I'm with you.
Re: Gold Bull Market: Final Phase Approaching
Stargazer,
I would agree with you at this juncture that oil and gas companies offer better investment value than gold equities but that situation can change,rapidly. Whether you consider gold to be a commodity or money is another debate. Don't you agree that currency should be backed up or "collateralized " with something ?.Something that does not change it's elemental structure ?
I've been saying since January ,it was a bad year for gold stocks ,because it is an election year in the States and neither candidate want gold to be an issue. That condition ,could of course be overwhelmed by the buyers in the rest of the World ,but so far ,even with a declining currency ,the U.S. Commercial Banking Industry (backed by the Central Bank), still seems to sway favor,WORLDWIDE. That's why gold has stalled and why gold stocks are in decline. The rhetoric is that collateralizing currency again is not going to happen anytime soon.Maybe that's true but buyers are still evident at 1600 ,all from countries that are still inclined to think of gold as money.What we think it is or how we dispose of it as an investment is entirely our own ignorance.
I still think this is a bad year for gold until Americans can assume WHO will be running the country over the next 4 years,(post EOY) That way an economic condition of ,what's valuable ,will have clearer indications. Dry , Natural gas is looking good.
Re: Gold Bull Market: Final Phase Approaching
So the BIS, FDIC and World Bank recommending gold as a currency is "just another man's opinion"?
If those institutions are issuing opinions then you must be vending facts.
What of the stock vs. flow argument? What of the fact that gold was currency for millenias up until about 40 years ago? What of the fact that currency is mainly traded on currency desks rather than commodity desks? You should know that, considering that you were a commodity trader in your former life.
No possibility that maybe fiat currencies are in a bubble and perhaps its gold that has been suppressed below fair value? No possibility that gold is simply regaining fair value?
What evidence do you present to support your argument that gold is in a bubble? Im sure you'll point to its price and I will counter by pointing to gold's price in terms of goods which has been more or less stable. Just look at the Gold Oil ratio which is hovering around long term averages. What about the fact that there is a Cash for Gold shop on every corner?
Just trying to have an intelligent conversation as I disagree with your opinion.
Re: Gold Bull Market: Final Phase Approaching
Just another man's opinion which I disagree with.
Re: Gold Bull Market: Final Phase Approaching
StarGazer, I harbor no animosity towards you and you're free to believe what you believe.
Perhaps the BIS and Bron at the Perth Mint are also lacking of investment knowledge. I would be interested to see your response to the post below. Please educate him.
http://goldchat.blogspot.com/2012/06/bis-says-gold-is-currency-not-commodity.html
http://youtu.be/au3wfKFIXVo
bonus: http://www.youtube.com/watch?v=1EKQB4rJG44
Re: Gold Bull Market: Final Phase Approaching
scottiepimps59:
I feel it would appear rude of me to really comment on your last post. But it does show your lack of investment knowledge.
Re: Gold Bull Market: Final Phase Approaching
Gold is not a commodity. Thanks
Re: Gold Bull Market: Final Phase Approaching
I was a commodity trader years ago and I learned the best way to make money was before the run up began and not after. Get in before the herd and get out when all the bulls are trying to lead the herd to slaughter. The more bullish the hype the more dangerous the investment is, be it stocks, real estate or commodities.
Forget about gold it is Canadian Oil and Gas companies investors should be buying shares in. This is one of the main reasons.
If the Chinese company CNOOC is permitted to buy Canadian energy company Nexen. It will open up the flood gates for foreigners to buy more Canadian energy companies. If this happens investors in these companies should thank the Americans for this, because of the delay in building the Keystone pipe line. Resulting in Canada receiving less then WTI prices. The betting is the Canadian government will approve the sale to the Chinese
Instead of gold or gold companies investors should be buying Canadian Oil and Gas companies, which are at bargain prices, many of whom are paying good dividends, an opportunity to get in before the herd, not like gold that pays you nothing, or very little as in some gold companies.
Oil and Gas company investments are also a better inflation hedge in my opinion then gold.
Re: Gold Bull Market: Final Phase Approaching
I wish someone would tell me who is going to do all the buying to drive gold to much higher levels. Since the general public is selling their gold ( jewelry ) I for one am thinking of doing the same at current prices it is just to valuable to have on you. Besides people today do not think of gold as a store of value as in the past, this is a different world we live in.
Stock vs. Flow: Gold is a near indestructible element. Because of this special resiliency, almost every ounce ever mined still exists as above-ground stock. Yet of the roughly 170,000 tons of gold ever mined (the "Stock"), only about 4,000 tons (~2%) hit the market every year (the "Flow"). Annual mine supply, Central Bank selling and gold recycling constitute this Flow. So while we have over 40 years of annual supply in above ground Stock, gold still keeps going higher? Why? If this were any other commodity, the price would collapse to zero.
Think of this another way, it isn't dollars that are bidding on gold, it is gold bidding on dollars. For example, when you buy a car, you are offering your dollars in exchange for the car. BUT, from the viewpoint of the car salesman, he is also offering his car at a price of XXX number of dollars. If your offer is no good, he won't sell his car.
The gold Stock vs. Flow phenomenon can only mean that people are hoarding their gold and is refusing to sell their gold at the ridiculously low prices of $1,600-$1,900 USD. If, as you say, the price is "high", then why aren't the hoarders selling their gold? Its because they feel no need to convert their savings into dilutable dollars. These hoarders make dollars just fine to make short term transactions so they never feel the need to convert their savings into fiat. Dollars have no value to them and is only meant as a medium of exchange.
Gold is not being treated as a commodity. It is not something you "eat" or consume. It is in fact being treated as money. People "save" money, likewise, people are "saving" in gold.
Once you understand this, you will know why you don't need a rush into gold for gold to be "priceless".
The above are concepts learned on FOFOA.
Re: Gold Bull Market: Final Phase Approaching
Yes gold will never go away because we keep adding to the stockpile. Gold is dug from one hole and put in another hole ( vaults ) what a primarily overvalued useless metal, whose future value is only in the fantasy of gold bugs minds. Those who bought gold in 1982 for $850 following the gold bugs advice did not find it to be an inflation hedge, in fact found it to be a disaster as an investment.
If you want to take advantage of inflation there are better and safer investments then gold.