The bubble is in the currency you are pricing gold in. It is not any different in this case because like usual, the general public doesn't understand.
Notice how everyone is experts and booms and busts now ? The general public thinks they have it figured out so they are staying in cash and cash equivalents because they believe that is safe. That is the bubble.
Yep, that is what it took to convince people that the fiat dollar was worth buying again, 20% interest rates. In case you didn't notice, gold has everything to do with interest rates, it was no coincidence. Buying treasuries at 20% yield was like buying BP stock at 10% yield just after the oil spill. There was risk in the investment, that is why yields where high in both cases. (That is why you buy gold now, rates are at 0%)
Why would you bother renting out houses that are cratering in value when you could get a better yield just having the money in the bank at 20% interest ?
^another guy completely blinded to the fact that world reserve currency denominated bonds have been going up in value for 30 strait years. That's what bubbles are made of, total blindness.
You don't even have the last bubble out of your head yet, you are still investing in housing. Thats like expecting internet stocks to be the best investment after 2001.
Last edited by socal; 01-11-2010 at 12:43 PM.
Look how fast Gold falls when conditions change. Look at 1979 - From a peak of 800+ down to 500 in just a few months. A year or two later and it was trading just off 300. For the next 22 years it traded between 300-450 on average. Gold is a hedge, and when conditions change (the ones that made people buy gold in the first place) so too does the value - and fast.
Source: BBC
My mind is not for rent to any God or Government, There's no hope for your discontent - the changes are permanent!
^ stop using logic, fools are fools and they love to be fools
The average person does not understand the macro environment we are in. Just remember that gold never goes below its old lows. People like BF thought 45 dollar gold was overpriced and thought it would go to 20. No different then the people in the late 60s,70s that thought 300 gold was stupid and thought it would go back to 150. You cant say that about intenet stocks, tulips, railway bonds, or any other so called boom and bust.
I don't think the comparison you made to the 80s are relevant. If you know what I mean.....
putting all kind of silly graphs on concept you obviously do not understand doesn't take away the fact that Gold is currently in a bubble cycle
the only question that remains about Gold is when to sell, not when to buy
^It (comparison made to the 80s) isn't relevant. If US interest rates go up gold is going to be worth more US dollars, obviously.
The macro economic is very, very weird right now, in fact based on my admittedly limited knowledge of economic history that the current situation is unprecedented. I still think gold is a good hedge with some good arguments for a lot of upside, but that certain other commodities, like oil, might be even better. What is a barrel of oil priced in USD going to cost when (if) gold hits USD2000? And all the while one is holding those oil company shares they are paying dividends, while physical gold is just sitting there, looking pretty.
“You can lead a horticulture but you can’t make her think.” Dorothy Parker
sell and buy what ?
You still have no strait answer to where you would invest 100k right now.
right....you said hedge funds but you dont know what those are. Surgar hit a 30 year high today, wheat is up 60% in three months. Do you think those are asset bubbles too or maybe it has more to do with the currency they are priced in......maybe.....just maybe.....
Last edited by socal; 02-11-2010 at 07:30 PM.
Whether its oil companies in your case, farm land in ripleys case, rental houses in Tomwhatevers case or US treasuries in Butterknownothings case, it is clear to me that everyone hates gold. Nobody understands it and nobody is buying it. Even people that have made money on it dont like it. That is not the sentiment that makes up an asset bubble.
Gold is cheap.
Silver looks a better buy right now than gold
Originally Posted by socal
yepOriginally Posted by socal
only if you understood the mechanics behind commodities futures and what they represent in the last few years
obviously someone is buying, and yes, it doesn't mean he understand itOriginally Posted by socal
As much as I think BF is a faggy moron, he's nailed this. This bubble will pop once a currency stabilizes - whether USD, Euro, YEN, RMB - or more likely a combination of all. Be well clear of gold when that appears to be happening. Oh, and is anyone stupid enough to think that those who have the power to stabilize these currencies aren't WAY AHEAD OF YOU and manipulating things?
Pyramid Power..101.
[quote=Tom Sawyer;1594619]You have it backwards. The bubble is in the fiat currency you are pricing gold in. The chaos in the currency markets has not even happened yet.As much as I think BF is a faggy moron, he's nailed this. This bubble will pop once a currency stabilizes - whether USD, Euro, YEN, RMB
You forgot the most important currency, gold.- or more likely a combination of all
.be well clear of cash and bonds when that 30 year bubble bursts. Gold is the best place to hide.Be well clear of gold when that appears to be happening.
Reminds me of the Soviet Union.Oh, and is anyone stupid enough to think that those who have the power to stabilize these currencies aren't WAY AHEAD OF YOU and manipulating things?
Pyramid Power..101
There is not one big happy family of world leaders out there that have everything under control.
explain to us how Gold is a currency again ?
can I buy my grocery with Gold ? of course not
can I buy Gold with cotton ?
can I buy oil with Gold ?
Well this has been an interesting read, though admittedly i only skimmed it...
i really shouldn't comment as i know fuck all about the subject, it having been the way i made my living and educated my children over the last thirty years...
....the key is the currencies, notably the USD, as it is the reserve currency of the world....
too much bad paper [read: bonds, debt, money [which is debt] gold, silver etc] chasing low yield in a deflationary environment, or a deleveraging environment.....
so gents.....when there is a shit load of paper [and more to come]...what is the obvious outcome....
[Germany post WW1...good for lighting fires....
Confederate currency...a keep sake....sentimental value...
and others to numerous to mention..... ]
for my part the answer is obvious, since QE2 has been gaining acceptance...
and my forayes over time have been into physical gold, equities, bonds, commercial paper, options, commodities, livestock, real estate.....
shit i bought and sold everything but drugs, women and guns...
correction.....bought a few women....but never sold any....
just sit down and look at it calmly......and the answer is obvious....
doesn't mean any of us are going to like it....every man is his own mechanic..
i am just the nowhere man...
living in the nowhere land...
forever...
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