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Is Gold In A Bubble? A Visual Aid
The traditional response by all septics who see spot inches away from $1,300 (in addition to you can't eat it of course) is that it is in a bubble. Where do they get the basis for this conclusion? Irrelevant. It is up. It must be in a bubble. So for all who actually do care about factual justifications, here is a case by case comparison of all other assets that have previously been in a bubble compared with the levels achieved by gold and silver in the recent move (which courtesy of the race to the bottom, or two bottoms as we will shortly highlight courtesy of John Taylor, will go much higher, as devaluation on an absolute basis relative to something tangible means gold has only one way to go). So courtesy of Sharelynx, here is gold/silver vs 50 historical bubbles.
h/t Eric
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LOL
Meat grinder comes to mind.
:^)
followed by the acid and arsenic baths...
i suppose cremation would be most practical, but that's not nearly as interesting - too practical - not enough jobs created
I dont trust gold here and wouldnt be surprised at all to see central bankster/elite air raid on gold bugs by tanking it. Whats it matter to them?
Of course they're going to. It's what they do.
What you need to understand is that there are significant buyers of size on every dip/selloff. The Evil Empire will continue with their price capping but gold will continue to make new highs. 1350 before Halloween. 1500 by 12/10/10.
I'd use Bingo but can't top your vid.
Very deep pockets in Asia and the Arab world are locked like a heat seeking missle onto the LBMA and COMEX isn't far behind. These physical buyers will be raiding on regular intervals until the shorts are 6 feet under. Figuratively and perhaps literally as well.
The game has changed. TA types will be baffled. The raiders are working systematically to destroy the home bases of the Shorts but doing so gradually so as to not overpay as they go.
Brilliant strategy, no?
the game has definitely changed and, as you point out, the players have changed and they have a different set of board rules
Davey and Bob: +++++
Davey and Bob sitting in a tree
K-I-S-S-I-N-G
First comes love,
then comes marriage,
then comes the baby in a golden carriage.
DJ, i gotta argue. i don't think the players have changed at all. maybe they're becoming more visible, but that's not their usual MO.
you gotta figure if the BRICs really want gold (and they do, both culturally and politically), they're *not* going to put on visible 'runs' on the stuff. they want it to stay as low as possible so they can accumulate. so do we, BTW. this isn't day-trading for them.
every time the westerners push it down to protect their local fiats, the BRICs suck up the excess on those dips.
while there's no doubt that the western mechanisms (CRIMEX/GLD/SLV, etc.) are all designed to deflect and defer real demand (instead of buying a coin, you buy a promise... demand->deferred), they cannot hold back 2/3rds of the world. especially now.
these western banks/gubmints are *not* competing with main street, as many of the myopic US investors might think. the real battle is between the west and the BRICs/oil sheiks.
the dollar is not dead, but its position as world reserve currency is ending as surely as the world turns.
i believe the world price of gold will actually be the *cause* (not result) of the inevitable reset. everyone knows what gold is, and has a rough idea of its place in the investment psych. can't say that about CDS-s or MBS-s, etc.
i just just wish i could afford lots of it and could figure out when the big bubble is gonna blow. i'm still thinking 5-10 years, but dam the curves/sentiments are ugly right now.
I will be happy to buy it from them, provided they have any more.
Methinks China and other central banks will probably beat me to it, though.
Another way of looking at gold and silver pricing is here:
http://seekingalpha.com/article/213852-golds-value-based-on-money-supply
It shows that gold is actually still at the extreme low point of its historical valuation range.
Ah, the good ol' days of Bre-x....
Dude just LOVED They Live!
(aka A Day in the Life of Jamie and Blythe)
Oh look Dow futures right now at 10678 two points from 10680 just like I said.
Ok, you're a goddam genius. What's your next prediction. Polish up that crystal ball.
The number of people worried about gold being in a bubble (bearish) is a good sign.When people stop talking like that....
Gold vs Apples not looking so good. And you can eat Apples. And you can bob for apples. Try bobbing for gold sometime...glug glug glug.
You're out of your league. It's RobotTrader's job to go down on AAPL.
What an image. :>)
Eureka! Now I know how will the endgame play.
It will play like pacman...
Uncle Sam's dollars tried to put golden pacman out of the screen in 1971 but it appeared on the opposite side.
Uncle Ben's print frenzy will give golden pacman the power pellets that will turn all dollars into doomed blue ghost dollars.
The ounce of gold will eat all those ghost blue dollars.
Gold will be a Bubble until it isn't.
The market will drive the gold price until Sovereigns get involved. And then it's a different game.
http://fiatcollapse.blogspot.com/2010/09/gold-will-be-bubble-until-it-isnt.html
http://fiatcollapse.blogspot.com/2010/09/jockeying-for-power-at-imf.html
If you stick an Oz of gold with a pin, it just does not pop! What a World, what a World!
The USA and Europeane economies are totally stuffed with no good prospect in the short term, China cannot keep up its current growth for that long without a resurgent globe.
Nobody knows how this is all going to end except that it will be bad, there is no avoiding some form of very bad outcome. The question is how do I protect my wealth when I can't predict what kind of very bad outcome it is going to be. Being blind to what kind of disaster certain disaster is coming leaves only two options to insure/protect wealth.Gold and Silver.
China, Russia, India, central banks, Soros etc are buying...
All of these gold bugs are waiting for the developed world to fall apart and the Mad Max fantasy will come to fruition. Someday in the future, this will occur. Sorry to break your little fantasy, but it is NOT NOW. Until the wheels fall off, the value of gold may rise but it is not going to skyrocket. Our gubimint is in control and people still have confidence in the broken economy. We have minimum 2 to 3 years before the SHTF. Really, the charts above show that gold and silver are slightly overvalued. Next stop for gold and silver will occur when the next panic strikes causing a sell off when investors liquidate everything. Then would be an ideal time to buy.
Oooohh, you are so smart Ms. Cleo. Quick, ask your crystal ball when I'm going to meet that special someone.
when you visit... the alamo...in the basement of the alamo
Davey, I live in Texas. I have been to the Alamo many times.
why in the hell would anyone liquidate gold? It would be smarter to just bury it and default. You're talking endgame theory where economic, gov't, and/or dollar collapse are apparently imminent
This is my argument. The current price of gold is being manipulated by ETFs like GLD and the commodities market. Yes it is manipulated.
Put yourself in the perspective of a professional investor. The equities market crashes. Margin calls come rolling in over panic phone calls from your broker. You are going to sell anything to keep you damn job. You give a flying f*ck less what it is to keep your job. Gold, silver your spouse and anything you can sell. This is what will bring the artificial price of gold and silver down. That is the time to take physical delivery.
You are taking one huge gamble by assuming that physical will be available -- at any price. By the time you say it's right to get our grubby hands on the real thing, the very strong hands will already have a death-grip on supply. See Yardfarmer immediately below. He has said it much more eloquently than I.
+1e6 Rocky beat me to it.
APMEX has delayed delivery dates for some silver bars. They were available last month, just like the month before that. There are already shortages. If an equities squeeze comes on and there is a solid sell off (paper) to cover, there may not be any inventory to buy.
Rocky is right there are some very strong hands out there. And for anybody who thinks its a bubble; ask around at work/family, who actually has physical. Alot of talk but very few acting on it.
Gold fell a peak to trough 20% during one of the most destructive margin call situations in modern finance of 2008 where markets halved.. With the Central Banks now mobilised i dont see markets halving in as quick a fashion , and should they , i suspect the sell off in gold will be less than it was this time around. Professionals will do everything to STORE wealth. Thats the name of the game. There will be dips but they wont be deep. Being without gold is now the risk , now being long gold. Give it another few quarters and the herd will work that out , and then eventually the speculative phase will begin which could take Gold from >1300 to who knows where. Thats when we are in bubble territory. Not now.
I expected a pull back to 750 last year from 1000 but i hadnt factored in how desperate Bernanke and his ilk would be in destroying fiat. So game on Ben Shalom.
When all those Cash4Gold.com sites turn into SellUGold.com and jewelry stores get cleaned out, we might be in a "bubble." It will be too late for the majority, they will have to sell/barter their possessions (maybe even their children and wives!) for necessities. I just hope inertia keeps the electricity and water flowing.
Gold fell a peak to trough 20% during one of the most destructive margin call situations in modern finance of 2008 where markets halved.. With the Central Banks now mobilised i dont see markets halving in as quick a fashion , and should they , i suspect the sell off in gold will be less than it was this time around. Professionals will do everything to STORE wealth. Thats the name of the game. There will be dips but they wont be deep. Being without gold is now the risk , now being long gold. Give it another few quarters and the herd will work that out , and then eventually the speculative phase will begin which could take Gold from >1300 to who knows where. Thats when we are in bubble territory. Not now.
I expected a pull back to 750 last year from 1000 but i hadnt factored in how desperate Bernanke and his ilk would be in destroying fiat. So game on Ben Shalom.
First and foremost, in the Anglo/American empire gold and silver are and always have been the currency of the elite. For the rest of the masses engaged in stacking bricks on the lower levels of the pyramid there is fiat paper.The hoi polloi sweating so profusely and vainly to accumulate its bricks and paper will never wake up to the fact that gold is the only true currency of exchange.
The only reason it is suggested that gold is "in a bubble" is that it is moronically and myopically associated with credit/debt evaluations in which it can have no possible part. Indeed gold and silver are antithetical to the exponential credit expansion of fractional reserve banking and will provide the only sound footing out of the approaching catastrophe of massive international currency devaluations which will bring the fiat system to its appropriate denouément
In the case of our present reserve currency, the world is presently flooded with increasingly worthless FRNs, a situation which even the most cursory financial overview understands is stoking the blast furnace of approaching hyperinflation. Rothschilds, Warburgs, Rockefellers et al. have created and manipulated this state of affairs for decades and will profit from the phase transition cyclic economic collapse as planned. And so will anyone else who has the minimal foresight and acumen to understand that, "He who owns the gold makes the rules".
Gold and silver bullion do not change. I peeked inside my gun safe and, sure enough, my coins and bars look the same as last week, month, year.
Only the currencies change and they are all hastening their death march to the fiat graveyard, then fiat hell, as the central banking/warfare/welfare model reaches the mathematical life span for Ponzi finance schemes.
The parasite class and their minion enforcers will follow orders from TPTB to debase their electron/paper currencies, wiping out honest savers who trusted their paper, rather than repudiating the debt, wiping out those who have financed out-of-control gubmint and wagered that gubmint can forcibly extract payment from me.
When the sheeple finally wake up, under a bridge, traditional 3/4 inch Manila hemp rope will be the next bubble. The parasites and minions won't see it coming either.
Yes, we'll get some of them, and they'll hang or they'll burn or maybe it will be the Guillotine again, and bad cess to em, those we catch and probably their entire family as well. Who knows what angry, hungry mobs will do. Most likely the ones the mobs will be able to get their hands on will be lower echelon lap dogs of the elites, politicians and TV personalities and those who stand out as more successful than the rest. Those are the ones who will die as effigies for the true TPTB. We'll catch some of their tools, but the friggin royals, the pope, the Rothchilds, the Bushes and all the others of their ilk? I think they will be beyond the reach of the mob. It will take more than a mob to pry them out of their hiding places.
Someone like Soros, with his heavy Hungarian accent, and predatory financial history uses the word "bubble" and everyone takes notice. Hmmm. What is this "bubble"? Here are a few definitions:
Gold and other metals are the only 0% BS products. They will continue to rise because the billions of people on planet earth recognize these metals as precious and desirable. "Bubble" has become a cliche, and like "military intelligence" is an oxymoron when applied to silver and gold.
Quick little story -
My Great, Great Grandfather was a wealthy man in Poland during the rise of Hitler. Eventually, my Grandfather found himself in one of the Warsaw ghettos, along with many relatives. My Grandfather had smuggled in a relatively large amount of gold and other trade-ables, and was considered one of the wealthiest men in the ghetto. As a result he had bodyguards with him at all times.
Needless to say, my grandfather became a target. His bodyguards, who were well paid and fed, killed him on one pleasant, sunny day.
This isn't a commentary on gold - just a story out of history that involves gold. I like gold. btw - the closest number we have been able to come to regarding the extermination of my family and close friends is roughly 300. Our blood line was saved by four members of my family who escaped. Form of payment for their release? Gold.
Thank you Village Idiot! Everything is only worth what someone is willing to pay for it. Gold and silver are only worth what someone is willing to give for it, whether that be fiat currency or other more valuable bartered goods. If only a small percentage of the population has gold, who gives a shit when people are hungry? The basic necessities of life will be valuable, food, clothing and shelter, not some shiny metal. It will be as the Romans thought, "might makes right".
I am not betting on the Mad Max scenario, that does not seem realistic. Obviously in that case gold might not be of much value (though it certainly would be tradeable as currency I imagine.) I am betting on "status quo" into the forseeable future: rampant deficits, dollar debasement etc. that will cause gold to increase in price (in dollar terms) steadily for many years.
Vamp, you are making the same simplistic mistake that many of the diehard (and diabolically pro-establishment) gold-haters keep trying to make: that gold is of limited if not zero value, because "when the shit hits the fan", either few or none will want it in preference to food and/or weapons. Disregarding the fact that such extreme conditions of complete social and economic breakdown are historically rare and limited in scope and duration, such arguements take nothing away from the value of gold in preserving and carrying one's wealth through such events, and into the inevitable recovery period to follow. Indeed, for the well-prepared, using one's gold during such events would be unnecessary, undesirable and counterproductive.
I grow weary of continually trying to point out this fact to the innumerable, disingenuous, strawman-raising, gold-naysaying Nadlers of the world (not that I am calling you any of those things yourself, Vamp).
"...the closest number we have been able to come to regarding the extermination of my family and close friends is roughly 300."
Genocide and holocaust and bears, oh my! Things were tough all over, before, and will be once again. Plan accordingly.
http://en.wikipedia.org/wiki/Cromwellian_conquest_of_Ireland
That was a great story Village! Thanks for sharing it with us.
R U telling the truth? cause that wouldn't be a good story if you are lying. R U really truly from Poland. i don't know much about P o land. i think your stretching the truth with your sad story.
Kathy, I don't stretch the truth around here. Credibility is everything - if a person wants to be taken seriously. And I sure as fuck am not bullshitting about the loss of my family. Use your head, woman.
Gold could go into a bubble but we're a long way from there.
For now the vast majority of people who are buying gold are buying it as a secure store of value. But since the numbers of buyers are constantly growing, gold is delivering steady capital gains in real terms.
If the situation changes and we get constantly growing numbers of gold buyers who are motivated by those real capital gains, and especially if they buy on leverage, then gold's value would shoot up in real terms into vulnerable bubble territory.
Gold is historically one of the best stores of real value, but it's not immune to bubble and bust.
Thanks for sharing, VI, that is some story. The numbers of families who survived through gold is legion. But we supposedly have the rule of law in the US, that is why I am willing to pay my taxes. I spent some time with the paytriots who do not pay taxes and who would be glad if the US degenerated into a "might makes right" scenario like Mexico. Those people have a lot to hide as do the kleptocrats and banksters. I would rather have a little socialism than a lot of anarchy.
Various places on the internet inform me that the price of a loaf of bread in 1940 was 10 cents and the price of an ounce of gold was $35, for a ratio of 350.
In 1950, bread was 12 cents, and gold was $40, for a ratio of 333.
Today, a loaf of Brownberry bread at my local grocer is $4.00, and gold is about $1300, for a ratio of 325.
The price of gold is going down, and has been for decades. That's about to change.
You touch on aspect of inflation few people know about. Traditional foods including bread were mostly high quality. Factory foods especially bread were low quality, but were treated as equivalents or even premiums to traditional foods in the consumer price index. The re-emergence of quality food made by traditional methods since the 1980s has been treated as a shift from standard into luxury. You probably would pay $4 today for a loaf of bread as good as cost 10 cents in 1940, but in the CPI, they assume 1940 bread is equivalent to wonderbread.
wonderbread will just damn kill ya. i never ever trusted wonderbread back in the day. i swear white bread was invented to kill white people.
White bread is bleached. Therefore it contains dioxins. Dioxins don't harm people. You can stick your arms in bleach and keep them in it all day long and it won't hurt you. Bleach however is deadly to many animals and plant life. But most specifically rats. This why books started becoming bleached paper. Rats won't eat them. Rats won't eat bleached wheat grain.
well, white flour is bad.
so if bread falls to $2, and the ratio holds, guess that means gold is a bad investment in deflation huh?
""One thing I know for certain is volatility is in the cards. Gold is the enemy of fiat. Thus Gold has strong and desperate enemies.""
Read and remember this. Strong takes on a different meaning here. The US can sell to England at $999. England can sell to france for $899. And it can go on. Gold can be at $600 without problems. This of course would not be where you and I can buy it. There are two gold markets at this time, Wall Street/Governments and the guy we get our stuff from. An artifical drive down of price may not impact the real market to the extent the manipulators desire. I bought in mostly at the $400 level of gold and silver at $3 to $4. If there is a nice pull back, I will extend my position.
Hi onlooker
You're quote is pulled from my comment, yet you're way down here at the bottom of the thread. You're not new here on ZH, but maybe you don't know that to respond directly to someone's comment, all you need to do is hit the word "reply" under that comment and a new comment box will open up.
I fully agree that the price of Gold can and will be pushed around. Including down, possibly way down. This is why I talked about volatility and Gold being opposed by desperate enemies. The obvious inference is that they will continue to suppress the price of Gold and may at times succeed.
your like the god damnn soup nazi, but instead your the zerØhedge hall monitor nazi man.
Nice tits.
You are so way off target it is not even funny.
What grave did they dig you out of?
Not really, that is Velobabe's old avatar. One boob is higher than the other and Velobabe explained all that. Velo posted an avatar for a very short period that was much more revealing but it disappeared -- fast. Wonder where she went?
We have no idea what Kathy's bod is like. She prefers to steal another's identitty.
Nice. It took a second reading to catch it.
I believe you know this, but Kathy is Velobabe, by her own admission. She also seems to have a few more ID's on standby.
Remember, the poor girl is bored. Time for Zero Hedge to entertain her. Everyone, all together now. Sing for Velo...er...Kathy.
I really didn't know that. I guess I must have blinked for a few seconds and missed the post. As I've stated before, I have a life for the other 12 hours a day I don't spend here.
Maybe we could get her to use that old avatar! I should have saved it.
Glad you liked the little titty-ditty.
I'm leaning towards multiple personality's, I mean avatars, but one nut case. Cheeky was hitting on Velobabe at one time. Maybe that's why he's hiding.
"Maybe that's why he's hiding."
lol
no i got a hold of cheeks email, well, next thing you know. B O O M. i was spreading porn around on the internet. i know he is out there, saw him on the 24th day of september. i was asking him to post one of my pics, guess he isn't interested in exposing my true nature.
The bubbles that you show were all created with leveraged money and extreme sentiment/confusion. Gold/Silver are 'real' goods so you can't compare them.
If Gold is the canary in the coal mine... then the contraction of M3 is the matchstick on the mine floor.
I would like to buy some gold, but what bothers me is that it doesnt come with a nutrition label.
Like little packets of Silica Gel, the wrapper says: "Do NOT eat!" (Thank you, tort lawyers!)
Gold's not in a bubble because:
1. It's not being pushed up by large amounts of leveraged money. The leveraged money is mostly on the short side.
2. There's a large short interest.
3. Gold miner stocks are low-priced relative to gold on a historical basis.
4. Big money (central banks and big hedge funds) are buying, not selling.
5. There's still a big wall of worry (bearish comments abound).
I agree on 2. Large short interest. Internet stocks had no short interest. Especially when the dotcom mania took off. The few shorts got pounded. Eventually sanity wills out.
Hi there,
I have been reading -mostly here- about FED s POMO operations, its impact on markets, and it makes sense.
Whether FED can intervene to buy stock real estate is debatable, -I believe Hong Kong CB openly bought stocks during Asian crisis, with success, ie later sold them at profit, stopped declines. Effectively US government also bought banks and Auto companies.
I have a basic question about this.My question is: FED basically told that it wants more inflation in the US, now I know CPI numbers misstate true inflation rate for average people, or said to be manipulated. But till the given numbers do not show enough inflation.
Fed has the mandate to keep a low inflation number, -the official one-. The basic factors in CPI numbers, factors of production are labor, rent, and commodities.
So then can FED buy directly commodities in the market with dollar, itself creates, would this not be a most direct way to increase inflation in the US. Just buy starting with oil I guess, everthing tradeble , energy, agriculture, industial metals futures. Now when I think about what this means, basically making life of ordinary Americans more expensive, making most of them, -who dont own assets tied to these commodities poorer I think about what this scary talk about deflation really means. Fed isnt worried about the incomes of Americans, going down, stagnating, but about prices not going up.
But aside from this political angle, please tell me if this is not possible. And also if it is possible, and more direct then lowering interest rates, why does not FED do this instead? I said it can make Americans poorer, but I am not sure, afterall US is actually exporter of many commodities, self-sufficient in Energy, the biggest cost, and has lowest gasoline price, I guess-so alot of room for inflation creation there.
Would this be too much meddling with free market, why? By making the time value of money effectively 0, FED is doing this already a lot. The money I understand runs to precious metals, emerging markets where there is yield, but these dont create inflation in the US, actually by by lowering yields, it lowers inflation expectations, plus destroys balance sheets of pension funds, and savers. The real value it gives is to banks, making them huge carry gains.
I understand future markets in commodieties are relatively illiquid, so FED can make a lot effect with relatively little paper money.And this does nt create problems with exchange rates directly, It just increases the price levels around the world, may create hyperinflation in some emerging countries, but they are already growing rapidly, and have historically low rates now, besides many produce commodities. It may create problem for big commodity importers like China, but that will be offset if US begins to grow quicker, besides if deflation is problme number 1 why should US/FED care too much about inflation in China? On the contrary inflation in China, will mean high export prices of Chinese goods.
So why does it not do this? Will people object to such artificial inflation creation?
Why, they dont object to receiving 0 interest on their savings, having to keep money in the bank, or to the bailouts? or cash for new car purchases?
So I dont understand why creating inflation can be problem for a central bank system, where money can be printed? If it is not a problem, what is this talk about deflation?
And how will understanding that there will not be deflation, make US grow faster, solve unemployment problem? So inflation in US will make Americans, consumers paying more, for same goods, and they can buy less, right? How will this make them purchase more, and open new jobs, factories? It is said if there is deflation consumers will wait to buy at lower prices. Is this really the problem is US right now? Are they waiting for lower prices on cars, smartphones, Ipads?or new homes? If they believe home prices will go up, and start to buy -assuming they get mortgages- and new home construction jumps, is this a good thing?
Now I went a bit off topic, as I wrote, but going back to basic question, why does FED not buy commodities directly, and say it will do it as long as CPI is below target, thereby creating inflation directly, and with realively less money printed, and stop the talk, expectations of deflation?
Because Ben does what Ben wants.
They want the currently deflated assets like houses to reinflate solely to save the banks and their balance sheets. If bread goes to $70 a loaf the Fed could care less.
Note that it is not commodities they are buying -- it's mortgages.
You are hearing about deflation in things that hurt the Powers, not the common fella
YOU CAN'T EAT GOLD!!!
And you cant make wedding rings from spaghetti hoops.
Spaghetti does NOT conduct electricity very well either! A large enough brick can bash someone's brain out too!
You forgot "...bitchez!"
Isn't the time over which the appreciation took place somewhat relevant?
Gold and silver are the only worthwhile investments to make in a scared environment like the one we are currently encountering. They will retain value. How much? Depends, but, if fiat money is going the way of the dinosaur, which it eventually must, one can be reasonably assured that gold and silver will be worth multiples of what they are today. Stock certificates, bond coupons and FRNs may become wallpaper.
Other tangible items, especially those with function, like cars and houses, will also retain value, but, the beauty of gold and silver, in a system devoid of a real currency, or experimenting with various measures in fits and starts, is that they can be leveraged and used as collateral, which makes them, as they say, worth their weight in gold (or silver).
When the banks fail, people with gold and silver will become the new bankers. I heard a story today about a woman of some wealth who, hearing that some of her friends could not obtain credit for new business ventures, stepped in and made the loans herself and has profited handsomely. The 10% (and if you believe that number, I have a bridge to sell you) of people who own gold and or silver will rule the future. And, BTW, the real percentage is probably closer to 2%. So, buy, but do not sell. You never will have to. If you need cash, your gold or silver is ready collateral.
The only thing that can legitimately cause the price of gold and silver to fall is get the digits on www.usdebtclock.org spinning in reverse! Ain't gonna happen with Decepticrats in charge. The Republicons probably don't have enough spine either! But of course, those that have been paying attention have seen that there really is no difference between the two parties anyway!
kewl 'eyecon' :^)
looking at the famous late-eighties $800 spike, and the immediate crash that followed, i'd say yes.
the current slope of PMs isn't nearly-so-steep right now. if it's a bubble at all, i would wager its rise and fall will be over a much longer term.
Gold = True value; FRNs = Falsity = 1 / Gold
The Dollar (FRN kind) is becoming more unrealistic each day, especially due to out-of-control spending in the US Govt.
That is what I am thinking too. all this deflation scare, making 0 interest rates continue , people not question, lets banks earn billions of carry, reclycling Fed money to US reasury securities.
But it creates perverse consequences, incentives. Now yesterday I heard about Microsoft borrowing money to pay dividends. And shareholders getting happy about this. Now the investor holds cash in the bank, earning 0 interest, paying fees.The banks aggregates this cash channels it to capital markets via, investment banks, crating commissions, fees etc. Microsoft borrows from this liquidity, and instead of creating new software,hiring engineers, sales people, gives this cash to investors, and they go put it in the bank! By the way I understand Microsoft also has billions of cash overseas, again not earning interest. What is the logic of this. They say gold is unproductive investment, what is the productivity in this financial recycling, which is just one example.
Bubbles are caused by credit.
Gold price in euro is not up: it is going nowhere from 4 months. Look at the charts.
It is just the US$ that is crashing and burning. Being less dollar-centric just adds up to the argument that gold is definitely not in a bubble (ultimately it will, but then it will be not any more for sale at any price in terms of paper money).
its interesting to look at all the major currencies in terms of gold over the last year, five years, 10 years, 20 years. No currency has maintained its value in terms of the unit cost of gold. Its a steady erosion of the currency value for all currencies. So, for me, its not a question of bubbles; if you want to store value over time you do it in gold not currency. If you want to invest you do it in assets that do not rely on currencies for their appreciation.
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