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Fred Hickey On Gold
With the inexplicable recent reorientation by a traditionally very erudite, pragmatic and realistic Jim Grant (well, not that inexplicable) into what can only be described as pulling some serious wool over his readers' eyes, we decided to fall back to our other favorite newsletter writer: the inimitable Fred Hickey who writes The High-Tech Strategist. While we can not find enough praise for his work, it bears pointing out that whereas one may accuse Grant of selling out, such an accusation will be impossible of Mr. Hickey, who is a florid, objective and insightful as always, and maybe more so now than ever. His latest letter, Fighting the Fed, is a must read for all, and while we wish we had the copyright latitude to repost it in whole, we would like to at least share Fred's thoughts on gold (among many other things, some of which have made his readers serious money over the years).
Owning Gold Becomes More Respectable
When Paul Volcker employed his tough love solution by driving interest rates skyward nearly three decades ago, he squashed inflation and also squashed the gold bull market of the 70s, banishing the metal into a near 20-year bear market. Gold plunged from a peak of over $800 an ounce to well under $300 an ounce in 2000, right at the top of the 2000 stock market bubble. Gold has been propelled ever higher since by the Fed's extraordinarily easy money policies. At the bottom in 2000 there was absolutely no interest in holding gold (only internet stocks). It was a capitulative moment topped off by UK Treasury Chancellor Gordon Brown's decision to dump half (395 tons) of England's gold reserves at the rock-bottom average price of $275 an ounce. The only people left holding gold at that point were those derisively labeled as "gold bugs."
Thanks to the Fed, gold has been building up a head of steam ever since. Nevertheless, despite nine consecutive years, gold has remained disrespected and and under-owned, both by the public and by the professional money-managers. More recently, that has been changing. This past month I've read speeches from both billionaire John Paulson and David Einhorn, both of whom famously predicted (and capitalized spectacularly from) the collapse of the housing and credit bubbles. Both eloquently explained how they had never been gold bugs, yet both have made hold the core holding in their portfolios. This weekend the Wall Street Journal ran a full-pages story on how Paulson made billions from the recent financial market's crash. At the very end of the story, Paulson explained his new trade- betting against the dollar through billions of dollars of gold investments. Paulson stated: "Three or four years from now, people will ask why they didn't buy gold earlier."
Last week I also read legendary hedge fund manager (and billionaire) Paul Tudor Jones' third quarter letter to his hedge fund clients which included a detailed, 10-page appendix examining gold's current valuation. His conclusion: "In our opinion, the scope for increased investment demand over the coming years is much stronger than the potential from new supply. As a result, incremental new demand must buy gold from current holders. With a macro backdrop that suggests gold is undervalued, we doubt the transfer of gold from current holders to its new owners will occur at, or near, current prices."
These heavyweight endorsements of gold are making the rounds among the investment community. I've read them, and so have a lot of others. If I was a money manager underinvested in this category (that's nearly all of them), I know I'd have to begin to reconsider my stance on the precious metal. This process of discovery takes time, but the wheels are certainly in motion. The smartest of the smart money is now positioned in gold, awaiting sharply higher prices.
And some more:
When gold went over $1,000 recently a lot of gold owners expected a sell-off similar to what occurred in March 2008 and earlier this year. They moved to the sidelines expecting to buy back at lower prices. There were a litany of reasons the sellers used as excuses to lower their positions, including this one that I wrote about in last month's letter: "The last excuse to sell gold (and the bears have been flogging this for over a year now) was last month's formal endorsement by the IMF to sell 403.3 tons of gold. However, the gold is expected to be sold within the limits of the new Central Banks Gold Agreement which caps central banks' gold sales through September 2014. That assumes that the Chinese don't buy the whole 403 ton lot all at once, as I've heard they've offered to do."
As I write this it was just announced this morning that India had beat China to the punch, buying 200 metric tons in one fell swoop from the IMF. Bloomberg quoted Suresh Hundia, president of the Bombay Bullion Association today: The purchase is "not so much about India betting gold prices will increase but that the dollar will fall. They are looking to diversify their foreign exchange reserves."
The psychological barrier of $1,000 gold has been broken. That $1,000 number might as well be $100. There is no longer a limit to the upside. As you know, I've been waiting for the "crazy phase" part of the long, secular bull market to being. That's how secular bull markets work - eventually momentum takes over and there's a parabolic run to the top. It happened at the end of the last gold bull market. After rallying from about $250 an ounce to over $400 in September 1979, gold had some indigestion problems at that level and entered into a several week consolidation. Around Thanksgiving of 1979, gold was still trading at about $400 an ounce. By January 21, 1980 the price of gold had doubled to $850 an ounce. This was the blow-off top. The action was not unlike what we saw in tech stocks in 1999-early 2000.
I doubt that what we're seeing is the final blow off. I have no idea when it may come. It could be months or years from now. I just know that it hasn't yet occurred. In the meantime, prepare yourself for a lot more company (besides the smartest of the hedge fund managers) and more head-fakes. In the end, the public will come in en masse. They'll also be buying gold stocks with abandon. That is clearly not the case today.
October is typically a seasonally weak month for gold (November-February are usually very strong months) and the bears were out in force, expecting a selloff. Commodities "expert" Dennis Gartman harrumphed that requests for interviews from him about gold had reached "unprecedented levels." He warned "The public's and the media's attention to things such as gold always reaches a fever pitch and then falters... or collapses." Gartman has been consistently on the wrong side of this trade.
And in case it is not evident, here is the simple conclusion:
Gold is no longer being driven by jewelry demand, as in the recent past. It is investment demand that's wagging the yellow dog's tail. It's a loss of confidence in the U.S. dollar and U.S. government policies around the world that's driving gold to record levels. As it has been for thousands of years, gold is the safest store of wealth, not so much something to be fashioned into a necklace.
Not surprisingly, Fred, as increasingly more people, is long many, many gold stocks.
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Gld, Slv long, yes.
GLD and SLV??? With their huge counterparty risk??? Are you nuts?!?!?! You may want to read GLD's 10k and pay attention to their LACK of insurance, their lack of regular audits of the counterparties that claim to hold their gold and who knows if those counterparties are also leasing the same gold on to the market. Even GLD's largest shareholder recently sold his interest and purchased physical.
Smart investors hold physical gold. Always had been that way, always will be. Paper gold is just paper and ink like any FIAT currency imho.
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I like your ideas and thoughts. While chat and sohbet with my friends talking about it.
With all of the recently published information (and speculation) about what GLD and SLV truly "own", I'm surprised anyone recomends them.
http://www.youtube.com/watch?v=VWcciJGHs9s
BUY PHYSICAL. TAKE DELIVERY.
GLD is for trading, not owning. Get the real deal.
-
GOLD & SILVER, THE REAL BUY AND HOLD ASSETS...
Monthly Gold Chart:
http://stockcharts.com/h-sc/ui?s=$GOLD&p=M&b=5&g=0&id=p68616833438&a=182333562&listNum=2
F6
Gold has always been used by the wealthy to retain & store their wealth.
Now they'll use it to enforce and increase their wealth while marginalizing the middle and lower classes.
Keep moving the cheese, that's the name of the game.
What remaining* member of the middle class can't at least buy silver if they can not save up to buy gold???
* not in foreclosure, jobless, etc., that's why I said "remaining".
I'm nowhere near upper class, and barely in middle class, but I'm storing my hard-earned wealth in PM's until RE drops further and I can buy land. (Guess I shouldn't follow those darn Austrians for the last several years and got out and protected myself when the timing was necessary...)
The OECD countries are rapidly divesting themselves of their middle class.
This, of course, is one reason it's the End of the Era...
My plan as well, hopefully I'll still have some gold and other PMs left after I buy a place.
Gold and silver are great, but I've been doing quite well with Palladium (started buying that at around $250 an ounce).
Good luck to you.
I really don't want to sound like a smartass but I've been reading the same thing for years by people like Jim Sinclair, Bob Chapman, Jim Willie, Eric Janszen, John Embry, James Turk, Bill Murphy, Chris Powell, Clive Maund, Martin Armstrong, Peter Schiff, James West, Antal Fekete and many others who will probably never be given the credit they deserve for guiding schmucks like me to the path for preserving wealth with gold.
You are not a smartass according to my definition. If you are, that makes two of us.
I've been reading the same folks for years as well. They got me to buy PM's from 2001 to now.... agonizing over every $100 bump. The difficult part of the process will be deciding when to sell (I'm at retirement age). What do we look for now that there are no elevator operators, and very few shoeshine boys?
I like to invest (yeah, I know, gold is not an investment vehicle) in things I know. As the proverbial store of value the PM's have performed well. There is that tactile thing that determines where my money goes. I invested in real estate in the 1980's, stamps and coins in the 1990's, and now gold/silver in the new century. The PM's may not pay "interest", but tell me the difference when the value/price rises this much.
We should be enjoying the ride while keeping a careful eye out for the telltale signs of the blow-out top! These same folks you listed above should come in handy then as well.
"The difficult part of the process will be deciding when to sell (I'm at retirement age). What do we look for now that there are no elevator operators, and very few shoeshine boys?"
Studying the Dow-to-Gold ratio should make your decision-making process a bit easier:
http://home.earthlink.net/~intelligentbear/com-dow-au.htm
Thanks for the link. That March, 2009 dip was breathtaking.
I suppose the other alternative, and a lot less work, would be to study Dennis Gartman and do the opposite! (Insert self-satisfied smirk here.)
At the top of the tech bubble, my mum asked me about investing in options, and my postman, seeing I was receiving E*Trade statements, started talking to me about the market.
At the top of the housing bubble, one of my friends, against my advice, dumped a great tech job in Miami to go work for homebuilder Beazer in Atlanta.
I suspect we will see similar events in our personal lives signal a top in the metals. I also expect that, at the top, Gold4Cash TV ads will replace the current crop of Cash4Gold ads.
The lower and middle classes are selling what little gold they have left, and I predict will be buying it back at many times the price.
Thanks, bee. Me too.
Every day I am GRATEFUL!!! for the knowledgeable writers of the internet, who open these worlds to the rest of us and lift us up with their knowledge. These internet heroes are the people who have saved us from the matrix. I wish there were some way to thank them properly.
You can thank them!
Read, Learn, Draw your OWN CONCLUSIONS, and TAKE YOUR OWN advice!
We can try to tell you what "IS", but it is better for us all if each educates himself, decides for himself, and uplifts himself.
If that doesn't work for ya, do me a favor and go get yourself an assload of physical gold and silver and educate others to do the same.
Saving YOURSELF, so that you will be able to save and help others is the biggest compliment I could imagine.
So, smartass, if you have been reading it for years and buying it, then you are in fact doing well with gold.
Ever notice that Tyler seems to have an open mind about gold, but there are a ton of gold bashers that respond to his articles?
All the quant jocks here can readily follow Tyler's investigations into HFTing (Front Running), FED POMO's, and Zombie Banks. Yet, when asked about a lump of yellow metal, everyone just slips into total cognitive dissonance. "You can't eat gold!"--Can you eat dollars? "You can't buy anything with gold!"--What can you buy with a dollar bill from the 1950s? about half as much, now. "Gold does not produce cash flow!"--Neither do 0% Treasury Funds and 0% savings accounts.
Quant jocks go bats$!t bonkers when you tell them that inert metal has outperformed most asset classes for nearly 10 years now.
I've always called that crowd "B Schoolers", being the most derogatory handle I can ever hang on anyone, who seek not to create wealth or produce valuable goods and services but to skim it from some zero-sum contrived cash flow scheme.
Most of the "can't eat gold" crowd are the boomer-turned-armchair-survivalist; realizing this whole situation is ******.
They have not much "wealth" left to preserve, and as they look into the future they imagine having to protect their shiny stash from house invaders - but what's the point of buying seven Smith and Wessons to protect your shiny stash when your food has run out and you have to leave the immediate vicinity of your house to scrounge for something!
Only idiots would be content with their GLD and SLV sitting somewhere in cyberspace!
Buy #10 cans of dehydrated peas, potatoes, TVP, and powdered milk instead of inert metals - is what's on their mind - and my mind; because I never had a 401k.
0 percent treasury funds and 0 percent savings accounts coupled with QE madness produces A LOT OF cash flow. It sucks your money right out of the bank.
Not to mention this blog's own constant articles on how the USD is due for an unwinding ("Mother of All Carry Trades Roubini") and in such a significant correction, gold will take a tumble as it always does.
Sure, Roubini said that there is a "likelihood of the Fed keeping interest rates low and thus weakening the dollar will prolong the carry trade and make it all the more painful when it starts to unwind."
http://www.cnbc.com/id/33616897
So, as long as the FED keeps rates low, the dollar carry trade will persist.
Any guesses as to when it will be politically acceptable for the FED to raise rates? (Hint: not before Election Day 2010, or Pelosi will throw a fit!) The "independent" FED will keep rates low until that time, unless bond vigilantees force them to raise rates. I wouldn't hold your breath waiting for the dollar carry trade to end. Japan's certainly did not last for only a few months.
This crack-ho (Federal Reserve Note; dollar; $) is spreading her thighs at new relative lows - no pimp will take her anymore.
If there were such a thing as gravity the FRN would implode as soon as they quit the carry trade carousel.
Just like any good "Robert Paulson" she's trying to hit rock bottom - but late-night-sneaky-uncle Ben isn't done with her yet.
...as it always does.
Well, I'd like to see evidence to back up that statement.
I am Chumbawamba.
Fine, just go back to the Lehman collapse, when most funds holding gold had to sell it to cover margin exposure/loss.
It always collapses when there's panic. It rises when there's fear. Counter-intuitive? Think about it.
Here's to hoping it does collapse so I can buy more from the schmucks who are selling! HAHAHACKHACKHA, as the Mogumbo would say.
So, you say gold "collapsed"? I say it was used for the purpose for which it was intended: a store of value. The selling was done to tap that value. The market reacted as it should have. When an asset is sold in bulk, and over a short period of time, it takes less and less to buy it. So long as gold is valued in dollars, and the dollar is volatile, you will have instances where gold serves the function it has historically held. I think you have it backwards! Gold saved a lot of financial bacon when the time came. They raised cash, and fast! I was there to pick the golden bones of a few of those sellers.
how do i subscribe to the high tech strategist?
ok , for those of you who are MEH about gold try this
go to a coin dealer and get yourself one canadian maple (not an eagle...nothing against eagles but wont work as well for this illustration
you want a maple that is fairly new cause the "field" on a maple is broad and the coin is .999 pure
ok so now take the coin outside on a sunny day and just look at it, and turn it over and watch the color iridesce in your hand
then think about those stinky ass dollars that are being debauched by QE and unfunded liabilities and war costs and current account deficit
and then look back at the gold maple glistening in the sun...
and then.... i think youll understand
That works with Silver Maples too.
Indeed, at first I was all about getting gold when I got the fever but then after realizing the gold to silver ratio was way out of wack (62/1 vs historic 15/1 or 20/1) and how whitish it looked changed my mind. I pretty much decided to go 100z silver per 1oz of gold that I buy.
Good strategy. You can't go wrong with silver.
I am Chumbawamba.
Hello America,
It’s been a while. How are you? By your calendar, July 20, 1969, 40 years ago you first visited me here at the Sea of Tranquility.
It was a brief two and a half hours. I remember our chat well. Now that you have your Internet up and running, I am much more informed about your goings on. As I recall, your leaders then kept a budget surplus – a strange concept.
Silver metal holds a fond place dear to my hearts. If I rub my hands together briskly, I can get them to glow like your silver coins in twilight. I like the softness of silver; it is quite unlike the harsh shine of nickel or steel. Stainless just doesn’t catch my eye the same.
But things have changed haven’t they? Your money was as good as gold. You thought nothing of that and stopped using gold as a reserve for your money in March of 1968. I guess your attention was distracted by your eagerness to expand your money. How’s that going?
Turtle,
nice to look at the shiny stuff, but from an investment perspective at one point in time taking the profit will be the thing to do.
Migtht be that will be at a dow/gold-ratio of 1 but be ready for it.
I have been wondering lately about the dow/gold ratio. If we are facing a reserve currency shift (and I think it's fairly obvious we are) then the loss of purchasing power for USD will be permanent, and the relationship between DOW and gold denominated in dollars will have been permanently altered. This might not be a reliable indicator.
OK, I used the dow/gold-ratio a an exaple.
Whatever a major turning point will look like, I am watching out to detect it around the time when it happens. Bottoming process in stocks indicated by single-digit P/E, signs of bubble in gold (everybody lining up to buy it,) real interest rates going up, Wall St becoming honest because nobody is there anymore...
That kind of stuff.
I apologize if I appeared critical, I didn't mean it that way. Historically, the dow/gold ratio seems valid and was one of my indicators, but now I am beginning to wonder about it for the reasons I indicated and I thought I'd share my thoughts.
SWR,
no need for apologies,
you made a valid point. I appreciate your feedback; on my side it was a compromise between a short answer and a more complete one.
Isn't this why Sinclair and FOFOA argue that it's different this time? In other words, once it goes up it will reach an equilibrium and stay up. I know that particular mantra historically has evidenced quintessential bubble thinking, but I'm not so sure this time. Of course, most people don't get out at the right time for fear they'll lose that much more upside. What's a goldbug to do?
I hear you mock turtle. Not only the glittery look, but the weight, simply screams value. If you purchase over 1000 dollars in gold, there is no sales tax. I remember in the not so long ago days when you had to get three eagles to make that number and deny the government their cut!
Hello America.
It’s been a while. How are you? By your calendar, July 20, 1969, 40 years ago you first visited me here at the Sea of Tranquility.
It was a brief two and a half hours. I remember our chat well. Now that you have your Internet up and running, I am much more informed about your goings on. As I recall, your leaders then kept a budget surplus – a strange concept.
Silver metal holds a fond place dear to my hearts. If I rub my hands together briskly, I can get them to glow like your silver coins in twilight. I like the softness of silver; it is quite unlike the harsh shine of nickel or steel. Stainless just doesn’t catch my eye the same.
But things have changed haven’t they? Your money was as good as gold. You thought nothing of that and stopped using gold as a reserve for your money in March of 1968. I guess your attention was distracted by your eagerness to expand your money. How’s that going?
This begs the question about why gold was given as jewelry in the first place. The wealthy could place some of their assets in the place they could directly protect the most: on their wives' person. As a metal that could be fashioned, that is secondary...
This begs the question about why gold was given as jewelry in the first place. The wealthy could place some of their assets in the place they could directly protect the most: on their wives' person. As a metal that could be fashioned, that is secondary...
Long gold (>90% bulls)/short US$ (>90% bears) to me sounds like the ultimate crowded trade.
heh - maybe on the internet.
Try at the office...at the family dinner...at the pub. Who's bought PMs vs who's 'all-in' the national fiat.
Then see how crowded the trade is. :-)
(Heaps of people talking *about* owning gold, who don't *actually* own gold. Example my Canadian brother-in-law: "Well, I don't actually have the physical stuff but my gold stocks are doing well...")
+2
I understand what you are saying, but the key is the marginal buyers to bid up gold prices. These marginal buyers appear to be central banks, idiots like Bernanke excepted. Not really fast money.
There are millions of small buyers of GLD and bullion who incrementally increase their holdings every month. These guys aren't selling until we get sane goverment policies.
In short, if GLD breaks below $100, there is huge demand for it.
If you consider only metal the trading volume does not support your thesis.
Look at the sales volume of the US mint and LBMA.
LBMA provides data only back to Jan '98 but the available data of the US mint and the LBMA show clearly that the volume is DOWN since the bottom in gold was made, except for a peak in may 06 marking the high of that time.
http://usmint.gov/mint_programs/american_eagles/index.cfm?action=sales&y...
http://www.lbma.org.uk/stats/clearing
That trade has a lot of room to grow; if the grow in voume gets stopped due to lack of metal it would be even more bullish.
On the Kondratieff scale T-Bond Yields & Aaa Corp Bond Yields declined
throughout the full length of K-Autumn & K-Winter in all three periods:-
1862-1901 39 yrs - low in early Spring
1920-1947 27 years - low in early Spring
1982-present 27 years. At this point we’re 10 years into the K-Winter with maybe another 10 Winter years to go. In this cycle Autumn lasted several years longer, 1980-2000, than previous Autumns. Both previous Winter starts were marked by the depressions of 1864 & 1929. This Winter started in 2000. The 1864 depression didn’t fully clear till the turn of the century.
At the start of the 1864 Depression yelds had been in decline for 12 years. At the start of the 1929 Depression yields had been in decline for 10 years. By 2000 yields had been in decline for 18 years, by 2009 27 years.
Fred Hickey is clueless. He obviously has no experience of speculative bubbles and is patting himself on the back due to the short-term speculative move.
I have a great respect for Dennis Gartman and his investment track record. I have never heard of this clown Hickey, and nor do I expect I'll hear much from him again.
Any Gold bull needs to look at the unwind of any JPY carry trade in mid-2008 or the collapse of oil. Months of work can be eradicated in days. The gold bugs, who break one of the most important trading rules in getting emotionally biased about positions, run the risk daily of a sentiment unwind in the U.S. dollar, which will blow these speculative futures positions away.
Your breaking another "most important trading" rule. Buy all time highs.
well i never heard of Hickey either but there's a lot of people i never heard of. & i don't think he said anything we didn't know. but, 121980, Gartgirl IMO is a prick, very much a person full of himself. is his forecasting any good, I don't follow him. I think we need to understand is it's not gold in a bubble but the dollar & the bonds, abused fiat paper magaged by an odious FED-Gov-Banking clique of career criminals in the final stages of confidence trickery reverting to sociopathic fraud for all the world to see as their crap is exposed & continue to rape every normal human being in sight. Peter Varley, head of Barclays gave a sermon in an English church last Sunday telling the congregation the important job top bankers were doing deserving huge bonuses to keep them from wandering off so they could keep doing more of what they're doing ...
Florid is the correct adjective to describe that prose.
To Durden: Own any gold? Whenja buy? Whuddja buy? Gold mutual funds?
Don't forget about sugar. Still 1/3rd of all time highs and near yearly highs.
Sugar, silver, gold.
I am thelastcanary.blogspot.com
I'm long sugar - in my basement in duct-taped, Tupperware garbage cans.
Rambling ... the crowded trade phrase doesn't work in this case. The gold market is quite small, for example the mkt cap of the senior gold mines (all components of the HUI & XAU) is a little over $200B (by comparison Microsoft is $252B). That’s gold in the ground. Above ground govs own a few 10s of thousands of tons, the rest is stashed & traded. 90%+ of all gold mined still exists, most silver OTOH is consumed in electronics factories etc.
The US has $50T in personal & gov debt. The banks have 100s of trillions in worthless hidden CDS junk for which there’s no market except the public via FED slight of hand without which banks would be flat bankrupt & out of business. Government Treasury Bonds are no better than currency, paper IOUs & probably uncollectible as things deteriorate or holders get paid off with worthless script with severe purchasing power losses, legalized theft, not much difference. Houses, the biggest item in most people’s lives are in trouble & no hope of rescue for decades.
The buying power of twenty US dollars in 1913 bought you almost one troy ounce of gold or about 13 ounces of silver. Today $20 will buy you 1/54th of an ounce of gold (0.57 grams), a 98% drop in paper buying power in 96 years.
When the Spaniards looted Mexico, Espanola & Cuba of their gold & silver it flooded the market in Spain causing tremendous inflation much the same as 20thC Western bank fiat. Between 1503 & 1560 approx 112 tonnes of gold was brought to Seville in addition to 1500 tonnes of silver from Mexico & the Indes from 1530 to 1570. The gold silver ratio started out at 2:1 in the early 16thC & gradually widened to 12:1 by 1608. This was a one time world event exc for South African mines but SA mine assets were better controlled. For a while Spain was the leading power until they met their match in Elizabeth I. Europe’s lead bankers gravitated to Antwerp who the Prince of Orange brought to England when crowned William III then settled the remnants of Catholic ambitions at the Battle of the Boyne where James was routed. A few years later the Bank of England sprang into being & fractional money-lending went systemic across a growing empire refining the methods of the Knights Templar bankers Philip V had executed to resolve his debt, the Goldman Sachs of the day (or does Goldman answer to the BoE today?) stealing land along the Crusader corridor for a few hundred years offering protection for fees. Market manipulators similar in some ways to GS et al.
Modern political parties & royalty seek monopoly powers they share between each other according to society’s mood. Sometimes they like to experiment with feudalism, fascism, socialism, communism, today a weird mix of them all, governments like to be big & bureaucrats must be paid, socialist benefits funded to keep populaces orderly, in debt & in fear, bankers like to live like royalty, poppy fields protected in foreign lands, soldiers paid & equipped. How to keep all this going except by fiat & material growth without vast colonies to exploit, & excess fiat growth begins to weaken the Empire as demographics fall apart, consuming peaks out & the FED bungs its mates $12 trillion this year, $20 trillion next & the $100 trillion CDS won’t go away, so best solution is gear up the fraud & swap dollars for Euros, Reals, gold, oil, copper, anything except dollars before anyone stops them which of course isn’t going to happen, & unless Bernanke & co do something radical, which he won’t, it looks like fait accompli approaching & the ruling elite get the loot & the people get a kick in the head as usual.
In view of which, probably not a crowded trade though the dollar would climb ten or twenty points if banks & funds close their dollar shorts, frighten gold hoarders into selling their stash, then sell dollars again a year or so later.
This mess took 96 years to make. World reserve fiat kept it going smoothly till mid 2007 & finance broke down so the situation is very young, a short 30 months old. A look at an $INDU:$GOLD chart shows the DOW's real position. The 2000 high of 44 dropped to 7 in March & now 10. $USB:$GOLD is down from the 2000 high of 0.4 to 0.1 In due course gold will peak like the DOW in 2000 but, this is a trade that can & will get more crowded over the next 4 years. Sit back & watch.
+100. One of the best rambles I've seen, and a nice history lesson to boot!
Today $20 will buy you 1/54th of an ounce of gold (0.57 grams), a 98% drop in paper buying power in 96 years.
So paper money would have had to be invested to earn roughly 4.25% compounded for the last 96 years, which would result in it multiplying by 50 times, to stay even with gold.
is Hickey a good smart dude? what do you guys think about him? if it was somebody like prechter talking.. i'd completely disregard it.
do people pay dennis gartman for his advice? that guy is such a smart ass.....
someone in the ticker forum needs to ask the old square head, karl denniger, how does he like those door stops and paper weights now....over a thousand now and heading north...so, a thousand dollars/oz was always just a number? my, my, so it was true....
Either everyone is right (which drives prices up for a while)...or the tiny group of contrarians are right.
The fundamentals for the demand in gold make sense for the most part.
But it always seems that these extremely popular trades end badly somewhere down the line.
When the trade becomes crowded, but we aren't anywhere near there yet.
This doesn't seem like $147 oil, yet.
There isn't any mania.
$125 was my sell price for oil.
I have taken a little profit and sold 15% of my gold mining shares which I bought last Novemeber. Doubling money is nice and I always force myself to take profits.
I think $1300 is my next target gold price. I'll probably sell more mining shares then.
I'll hang on to the physical bullion.
to
silverisking
and
burnbright
yeah i like silver also and i have been told there is less silver bullion above ground than gold as silver is consumed and often 'thrown away" because of industrial applications
anonymous at 352 wrote
"Any Gold bull needs to look at the unwind of any JPY carry trade in mid-2008 or the collapse of oil. Months of work can be eradicated in days. The gold bugs, who break one of the most important trading rules in getting emotionally biased about positions, run the risk daily of a sentiment unwind in the U.S. dollar, which will blow these speculative futures positions away."
whataya mean im emotional...
emotional...
take it back...
take it back right now...or else ill....
hahaha
ok look anonymous..what you are sayin is i better not so fall in love with gold that i fail to switch back into dollars when the time is right
yeah ok after the next coming...
of a volker
Fred Hickey is a pretty brilliant investor--before bashing him, one might want to take a look at his Barron's Round Table record. Moreover, he is versatile. His technology stock recommendations, both long and short, have been solid, but he also sometimes recommends stuff like Cal-Maine, the egg producer.
Quote:
"As it has been for thousands of years, gold is the safest store of wealth, not so much something to be fashioned into a necklace."
I do think that when gold layed in "golden" kraftmanship gold get aditional value ecpecialy the Ancient Golden treasure like the death mask of Toetachamon for example and their are many. People should not underestimate the kraftmanship of the old gold design and workings.
Gold is also used in the making of computers and high tech equipment not to underestimated in Industrial Value.
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