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Jeremy Grantham Guarantees Gold will Crash
h/t Stephen
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Call me crazy but I've always thought that Grantham is a douchebag.
You're crazy, but your assessment may be correct.
i just feel i am really a fool .i just close all the window which seem to be not the right one.use Grain Cleaner For Sale to get rid of the sand as well as other non-magnetic impurities
i just feel i am really a fool .i just close all the window which seem to be not the right one.use Grain Cleaner For Sale to get rid of the sand as well as other non-magnetic impurities
i just feel i am really a fool .i just close all the window which seem to be not the right one.use Grain Cleaner For Sale to get rid of the sand as well as other non-magnetic impurities
Sir, you're not crazy, just plain dumb!
Lets talk about "dumb" shall we? I quote,
Thanks for quoting me, and as far I can tell, calm is restored and the markets are heading up again. Not good for gold.
Leo Kolivakis = Harry Wanger ???
that was true for an hour genius. It's back to selling again. When should we double down on solars?
Leo, you perspective is really interesting. Can you talk more about pension funds' bids for UST that you believe will happen, please? I know this is very general, but can you talk about the required rate on UST required to immunize the pension obligations.
I can see medium to long term pension obligations being renegotiated down and UST rates going up. This seems very positive for pension funds. Net a USD cataclysm, and obviously in your opinion are pension funds good medium to long term investments?
All I said is that there is a natural cap on long-term bond yields at around 8%, which is the required rate of return for most public pension plans. If bond yields head up, pensions will be buying more to meet their liabilities. this is why it's fantasy to think that US bond yields will skyrocket to levels not seen since the late 70s, early 80s. Also, let's not forget that the true threat remains debt deflation, not hyperinflation.
Earth to Leo Einstein, the current debt financed at 8% would be $1T interest per year. I am sure that *only* having a $1T interest bill will have the entire world flocking to Treasuries...
Genius, tell me what would happen if interest rates shot up above 8%. You don't think demand for Treasuries would surge?
Leo, I remember reading a few years back that Companies here in the states had to be back on track or up to date with all pension funding obigations. Now I erad the 10-K's all day as a credit analyst and see NO ONE is even close to this. I had thought this was n FASB requirement effect January 2011. Did something happen to that ruling, ala- mar-to-market? Or am I not remembering correctly????
Leo, I tend to agree with you on T bond rates but we did hit teens in early 80's. I still prefer Silver to Gold based on historical price ratios
I think gold will crash because Cramer was recommending it last night.
+1
you want to know fear? last night Cramer recommended the company for whom I work, no joke. I am terrified at the moment.
at least I got a good laugh when my MD (not an investment person by ANY stretch) sent the clip around for everyone to see.
let it rain
you'll need to perform a little dance first, sorry...
nary a sprinkle
OT:
Tyler you happen to see this from Bloomberg
http://www.bloomberg.com/apps/news?pid=20601109&sid=axH24KWxjVDE&pos=10
“The government continues to show that it simply doesn’t understand how this market operated,” Zelenko said in an e- mail.
There's the understatement of the day.
^^^. Nice find, thanks for the post!
TARP was certainly money well spent, sure am glad these banksters are TBTF.
John McCloy
Hadn't seen that, more enabashed thievery that will be swept under the redar.
Tyler, you should bring this up.
This is cool. I bet the politicians will take action now that they realize they have been played for the fools that they are.
You have to wonder is this what it took for the politicians of the Great Depresssion Era to write and pass the Glass Stegall Act?
It took...a Great Depression.
This is just revolting - the Justice Department is helping banks and impeding claimaint discovery:
http://www.onwallstreet.com/news/antitrust_wells_fargo_derivatives-26665...
Of course they will! Those pesky lawyers are going after their paychecks.
or not.
Or they're holding people off something before indictments.
If you're right, I will be the first to say the DOJ is not legitimate whatsoever
This is huge and is being downplayed. Should be a major story.
massive. enuf reason for me to short certain stock
Interesting. I was just thinking about this. "The Justice Department is seeking to intervene and temporarily halt fact-finding by a group of localities in their class action suit against Wells Fargo & Co. and 15 other banks, broker-dealers and investment brokers for allegedly conspiring to rig bids and fix prices of investment and derivatives contracts in the municipal market." Remember my theory of shock and awe justice before November or the big Obama victim fund?
http://www.bankinvestmentconsultant.com/news/antitrust_wells_fargo_derivatives-2666555-1.html
so the banksters engaged in fraud and anti-trust behavior to rig bids and they also sold towns from Europe to Alabama on misrepresented investments that changed interest rates only slightly but at great risk unknown to their customers....These are real towns that are laying-off fireman, policemen, water utility staff and raising taxes because of banker greed.
How much treasure was sucked from the electric rate payers in CA because of Enron rigging that market.
These f^!*#$&+ers that play these markets like they are video games....but the carnage is real people and real communities, arrrgggg...hope the place in the Hamptons is worth the place in hell reserved for these selfish, oblivious, uncaring, corrupted souls...
i have never met the man but he doesn't appear desperate.
The law of supply and demand suggests that people must sell for the price to go down. Is that really going to happen?
Depends on whether the fiction that selling people paper gold is the same thing as selling people real Au can be maintained.
Ummm....How about the Law of Banksters taking a 10 to the N short position?
"We have a very simple approach to all assets. Everything will go back to normal"
Yes, gold will return to its 5000 year old value, as industrial society crumbles. My only question is will it happen this time or will there be another cycle first.
Peak oil, planet life expectancy, peak paper based finance, peak everything.
Agreed. If it is going back to normal, that means its going to have incredible gains.
Good way to put it...
Similar to my thought: "Everything will go back to normal" Yes, and FIAT money is not the historical norm--it is an EXPERIMENT that looks doomed to fail or in serious need of tightening up to something or REAL value. But even then, as Martin Armstrong points out, Gold is a sign of loss of trust in government's ability to govern effectively. Anyone seeing a bull market coming in effective government?
Yes, as he has pointed out, deflation, historical has come from fiscal discipline and control structures.
I'd be interested to hear if Armstrong has any thoughts on peak oil, or other planetary peaks.
In the 'irony of ironies' department, if I were a betting man I might place a wager on China. They are at least showing a willingness to prosecute and punish the fraudsters.
Evolution trumps Peak anything.
Yes, humans will be forced to adapt to peak everything, or perish. That doesn't mean life expectancy and standard of living won't go down.
Tell that to the dinosaurs when evolution trumped over Peak Temperature and Peak Luminescence ... oh wait. Humanity will meet its end; either by its own hand or by will of the Universe.
Evolutionary winners are those whose skeletons have been preserved in stone, losers do not show up at all.
Let the Grantham bashing begin.
Surprised you even posted this "bait" here.
His reasoning seems to be as follows:
Any bubble will eventually deflate as predicted by the magic maths.
*Gold is a Bubble.
Gold will deflate.
Genius.
His forecasting for future investments seems to be as follows:
Timber has already deflated and is a dead industry.
...
Bubbles inflate.
Invest in Timber.
Genius.
Emerging economies are emerging.
Emergence creates bubbles.
Bubbles inflate.
Invest in emerging economies.
Genius.
Oh your sarcasim gave me many belly laughs this morning. I liked the part about him predicting that he could make a .3% return on the SP500. I thought to myself, did he write this himself?
He simply hates gold, huh? Just ignore this guy on gold and listen to CLSA's Christopher Wood instead. Somehow he kinda hates fixed income too - because he missed a massive bull market in fixed income over the past few decades? Grantham is a smart guy but obviously he has his limitations too...
Every market expert that missed and continues to miss this ongoing 9 year bull market in the PM sector is expressing the same sentiment. When I hear this sort of argument, what I hear them saying is: "I hate that I missed this bull market and I need it to stop now in order to feel good about myself again."
Every time the PM's pull back they feel vindicated in having avoided "buying the top", and every time the market subsequently breaks-out to new highs they go back to screaming and pounding on the table, demanding that the bull market stop.
The fact is: trying to "pick the exact top" in an ongoing 10 year secular bull market is folly.
"Everything goes back to normal"? Is that the "old" normal or the "new" normal?
+100 and more insightful than one thinks
My thoughts too. What exactly is his baseline for normal?
Exorbitant privilege coming to an end, folks.
Come on guys, he has a fancy letterhead and nice portrait of himself . . . the report must therefor be accurate
+100 :)
I would never trust anyone named Jeremy.
Good advice - you never know when Jeremy will speak in class today.
Crash? OK, 20% correction brings to to about $1,000, there is your crash, so what. Gold is not in a bubble yet. Sure, everyone is talking about it and it ran a lot lately, but it is 24% above it's 2008 high, that is not parabolic compared to 70%+ in stocks off their March lows. Why are metals always in a bubble and stocks never are? These are also the same idiots who thought real estate would go up every year, forever. I can make the argument that silver is a better investment, but one must do their own homework.
+1
Let me see...gold is up 24% HIGH-TO-HIGH vs. stocks up 70% LOW-TO-HIGH. This hardly seems like a fair comparison. Let me illustrate using your same data capture points, only flipped for each asset:
Gold is up 75% from its 2008 LOW, whereas stocks are down 21% from their 2008 HIGH.
I suck at school. To win or avoid losing one has to remember to stay frightened.. correctly.
just a function of the liquidation of middle America and Europe imho and then to the moon we go. Timing is of the essence. I prefer silver, bitches.
Where do I begin to trash his logic...
Hmm... just because you were right 10 years ago does not mean you will be right in the future. This is like a guy calling heads on a coin toss and get it right the first time claiming he can predict the next coin toss.
Anyway... anyone who uses PE ratios as their means to monitor valuation should be dropped right away. For PE ratios to be valid the E (Earnings) must be measured accurately and consistently. It's not! E is an accounting function. You can make earnings be whatever the heck your financial engineers make it. Personally, the only measure I look at and have ever looked at is Free Cash Flow (which may or may not be normalized in the case of say buying real-estate vs renting). But, in the end, looking at Free Cash Flow is the only way to really measure the health of a company. It is also worth looking at the Balance Sheet and make sure that the Free Cash Flow was not at the Expense of something else (like stop investing to increase cash). But, looking at Earnings is the child way to measure a company's enterprise value. The morons masses may buy it because it is easy. But, it is completely useless from an "investment" perspective.
Also, please note that taking Free Cash Flow to the next level, you can argue that any large company that does not distribute the Free Cash Flow is not worthy of an investment. Basically, you can be assured that the cash will be used for executive pet projects and not for the benefit of shareholders. But, that is another discussion altogether.
Rich
+1 here also
"This is like a guy calling heads on a coin toss and get it right the first time claiming he can predict the next coin toss."
It's actually nothing like that. A well reasoned argument and a guess on a coin toss are two dissimilar events.
Yes, but "I hate gold," is not a well reasoned argument. And ten year normalization will miss longer cycles. He'll misss the failure of the biggest return to normal of all---the return to currencies backed by something of real value.
"I hate gold" is his comment today, not 10 years ago. My comment compared his argument 10 years ago to a coin flip. You compared his comment today. Not the same.
No intention of addressing the coin flip. Just disagree with the idea of "well reasoned argument."
If you want to get esoteric, there's really not much differece. The scope of the 'equation' he's trying to solve, with the limited variables he's using, makes his answer no better than a coin flip. He's trying to solve a 10,000 variable equation knowing 5 variable.
I'd actually take a coin flip over him. The variables he does know were probably fed to him by 'powers' more knowledgeable than him, moving him in their chosen direction. I.e. it's more likely he's being, indirectly, manipulated than correct. Of course we don't know which way he's being manipulated, so we're back at him being a coin flip again.
"so we're back at him being a coin flip again. " That's quite a leap in logic.
No, it's not really. The crazy leap in logic is when people think that science and math, which work well in controlled environments, can be applied to economics with equal results.
+1, I agree with you
My point of the coin flip is really that if you make a decision using the wrong assumptions and variables, yet reach the same outcome, are you really right? In a world where you make a call like Emerging markets will outperform US markets, you are really just making a coin flip if you simply use variables like PE.
Why is nobody talking about the elephant in the investing room of emerging markets where minority shareholders, using ponzi like share classes and subsidiary corporate control, really the owners of the company. Basically, most foreign investors really don't own any piece of a company's future success. What you own is the right to find another sucker to sell your shares to. However, most profits and Free Cash Flows will never go from the company to the shareholders (at least not the majority shareholders). So, you are buying on the hope that somehow, someway, the company's success will flow to your account. But how? International shareholder protection is miserably worse than in the US, and the US shareholder rights are disgusting! Sheeple have made pretty stupid assumptions of what it means to be a shareholder in the US, and worse, what it means to be a shareholder in emerging markets.
Rich
heres the bubble
http://cbs2.com/local/vivos.hidden.bunker.2.1699568.html
trolls, haters - this thread's for you!
"Everything goes back to normal" vs. The 2nd Law of Thermodynamics.
My money is on the latter, thank you very much.
What is normal? FIAT money on average fail in about 18-20 years. We are running on year 38 and the phenomenon is world wide. So, I guess that if we go back to "normal", the whole financial system has to collapse.
As for your comment, both are right. Entropy vs Enthalpy. Both are in play. Point is that enthalpy requires some normalization forces to be in play. Otherwise, entropy takes over. When people ask why the current system has been working for the last 38 years, it is because the enthalpy forces (central banks around the world) have been working really hard to keep it together. The problem is that they require exponentially more force to keep it together over time as enthalpy can be inherently unstable. This will eventually fail and entropy (2nd law of Thermodynamics) will have to take over. The other alternative is Martial Law, dictatorship, and complete control where ENTHALPY becomes the law!
Rich
This is outrageous. It flies smack in the face of our unified groupthink!
Priceless (or sarcasm?). Group of people with views totally contrary to the MSM and the average investor, come together to ZH and argue their beliefs (which has some correlation, but are not highly correlated) and we are guilt of "unified group think!"
He has tunnel vision and completely ignores the ramifications of massive govt spending / money / credit creation. I don't see how anyone can ignore the difficulty of our situation, there's too much debt and more being created all the time, in an attempt to fix a crisis of too much debt.
He may have a good track record, or so he thinks, but I would suggest that this time it's different.
Short gold/ long Chinese solars!
Do you actually believe solars are a good investment (in terms of making the world better), or just that they'll go up in price?
I'm sure they'll go up in price, as both private and public interests throw money at them; but they'll prove to be a failure just like ethanol.
Leo, I have finally been able to realize what it is that makes me queezy about Chinese solars.
The best businesses (for the owners) are monopolies or near-monopolies. Our business in Peru has competitors, but we do have a good chunk of our business, a good niche, where we are the only ones in that space.
Chinese solars are everywhere, there are even US competitors. Means lower profits.
Of course I do not know the industry, you have obviously studied it detail.
Re gold, sure it could go down, even hard as a trade. Most of us who own physical gold have no intention of selling it, it is insurance against .gov and the banks. I am not selling my gold. I will buy MORE of the price goes down.
Gold will crash if and only if LBMA cartel decides to increase derivatives/gold-on-deposit ration above 10-1 [IMHO, its more than that, but im being conservative here]. And, IMHO, that is precisely what is going to be done. That should take gold of the spotlight for another decade or two and once again name it a "barbaric relic". But of course lower-thank-a-brick IQ pundits and paper bugs, who either do not have enough technical knowledge about gold market or any knowledge about gold and gold market whatsoever [or derivatives, fractional bullion banking etc etc], will bask in the glory of "i fucking told you so". See, it is really simple; the higher the d/god ratio is the more is physical gold naked shorted. Its that simple. Official line is that derivatives=liquidity in historically highly illiquid market, the truth is; derivatives=price suppression.
If they do that, it will only lend credence to the the delivery conspiracists. Delivery will be the end of that strategery, no?
Granted, they could outlaw delivery... Not to be ruled out.
Delivery does not need to be outlawed. You simply stipulate in the legal structure of an ETF that xxxxxxxxxxxxx shares are needed to be own for delivery option to be exercisable. Think GLD which could crash at any given moment if GOFO goes up [well technically it could; but since custodian of GLD is an LMBA member bank it only has to cover some leasing costs for the gold which serves as a basis of GLD SPDR ETF]. GLD is nothing more than exchange traded set of commodity-currency swap CLOs which pretend to be an ETF.
Interesting. I don't know if they'd get away with it right now. (Which is probably why they haven't done it) I think we'd need an increase in totalitarianism first, like the internet being shut down(whether purposely or through some type of system collpase), or major western countries moving closer to dictatorship. Both of which seem possible in the next decade.
Edit: I wonder if a hyperflation situation somewhere(not that I wish it on anyone) is the way the gold cartel will ultimately be broken, as the masses run for safety. It would have to be a country that can't be marginalized, maybe top 15 GDP.
Since LPMCL OTC commodity derivatives clearinghouse has almost identical membership structure as does LBMA. Its really no problem to fractionalize gold-on-deposit by electronically stamping the same gold bar with multiple CUSIP #s. The thing about OTC commodity derivatives is that you need to focus on forwards [basically selling of non-existent gold which is than multiplied by LBMA and structured into derivatives with GOFO then dumped onto the market, diluting the price] and FWD/GOFO ration. Whenever LBMA buys gold from a miner it is always done so via forward contracts [although LBMA does not report on proprietary gold purchases and it never has] and it is not hard to create new 100k blocks in GLD by creating demand by the same banks commodity desks. It really is rather technical and arcane but it can be done, and i suspect it is being done. Also i suspect primary miners-LBMA forwards are only 10% of primary miners-LBMA forward based GOFOs.
This is what I am talking about:
CB writes good stuff
Awesome commentary
Cheeky, I agree with you, but I think the scenario you pointed out would simply induce more (frenzied) buying from the usual suspects, especially the Chinese government and central bank, as well as India and, now, the Germans and many other European citizens.
Would it take gold 'out of the spotlight'? Probably, but only for a short while, let's say a couple of years at best. The truth of the matter is that more and more people are adding two plus two and are coming to understand the entire system is a (very wobbly) house of cards. They just don't believe in fiat currency anymore
So, at this point, I am afraid no one can stop that runaway train. Which does not mean the _________ (insert favourite conspiracy villain here) are not going to try. And they even may succeed, at least for a little while.
I've come to a similar conclusion.
Synthetic everything until all confidence is lost...straight into a wall, full speed.
Perhaps the point is to crash the gold "price" by making the futures market dislocate. There's a ton of synthetic oil out there too, paper gold, paper oil, paper paper.
The way I figured it also, was thinking about your GOFO post the other night, shorting gold naked and then borrowing from the Fed at discount or through a facility to cover it is one way to grow credit even in the face of deleveraging. It would be highly desperate.
Years ago I said on another forum that it all comes apart when the Fed loses control of the POG
I don't buy it. He doesn't roll up his shirt sleeves, punch sound effect buttons, and yell "buy,buy,buy" at the camera.
My money's on the bald yipping clown dog.
No money in recommending gold. But he does seem to know nothing about gold,maybe he has reached his level of incompetence, or he is just so bullish he doesn't believe in looking for safety.
un-poisoned fresh seafood and
a honest government , BITCHES !!!
I've been holding gold for 5 years now as a USD hedge. It makes me sleep better at night.
However, I am starting to see real interest from the sheep on investing in gold. If we see the same sort of action in Au as we saw in .com and real estate, I am going to hang on longer than seems rational.
If there is one thing I have learned, the common investor can blow a bubble much bigger than most of us rational people expect.
All of my Au proceeds would probably go into a tangible asset like farm land.
You are correct... But, when the "sheeple" get involved, and the actual amount of physical is restricted (you can build houses faster than dig new gold), you need to see yearly gains of 100-200-300% for a few years and then it blows up!
We could see gold $10k before it crashes back down to $4k, where the government will get involved and bailout the market! :)
Rich
you do have to ask though...
why does gold continue to soar while real estate and land values continue to go south?
If there are 2 historical measures of wealth in history.. they are gold and land..
one is soaring.. they other is floundering..
one is wrong.
sectoral inflation, sectoral deflation, capital allocation, liquidity, borrowing cost, yield, leveraging, de-levering.
google it.
please.. you can't have inflation and deflation in 2 speparate asset classes over time when both assets are denominated in the same currency.
borrowing costs are extremely low, there is no yield in either asset class, you may or may not leverage to buy land and you may or may not leverage to buy gold.
in the end.. if the dollar is going to collapse. I will take 10 acres of farmland over a 10 pound bag of krugerrands.
you will have to defend either one... either keep people off your land and food or keep them from stealing your bag of gold.
Oh; definitely Land > Gold
What im saying that you can and you do have binary economic environment in the same currency valued system; America.
Home prices are falling due to net outflow of capital and lack of liquidity in it; Equities are rising based on the exact opposite reasons.
techno242, you don't understand the relationship between gold as a currency that cannot be printed vs. people's loss of confidence in their governments to maintain the value of their fiat money and to govern effectively. What good is my land if the government strangles small farms by requiring irradiation of foods (for the benefit of the corporate farms) before it can be sold? Yes, I can "grow my own," but I'll take the krugerrands to buy farm land in the most free, farmer-friendly country I can find when the S stops hitting the F.
And "you can't have inflation and deflation in 2 speparate asset classes over time when both assets are denominated in the same currency"? Have you ever heard of Stagflation?
no..
i understand it perfectly fine..
what you don't understand is when the s hits the f.. nobody will want your dumbass gold..
no one will trade you land for a bag of coins... no one.
food, land, water, energy > gold
Thank you techno2242. You're obviously a wiser judge of value than over 5,000 years of human experience and history would suggest. I bow to you in humble awe. Will you let me pee in the corner of your land? Or will I need to pay a toll? Would you at least accept gold for that?
Lord knows it SURE worked that way in every other country where the shit hit the fuckin fan.
Do you idiots ever read any history at all?
If the shit really hits the fan, none of anything you own will be worth shit and you will die very promptly...fkin zombie apocalypse
Huh?
Of course you can.
Housing was heavily levered, gold was not.
Again, if Gold 'crashes' down to US$ 1,000/oz - that means only one thing: BUY MORE!
I can - up to a certain point - understand Grantham's point of view, but what he does not seem to understand is that there is no proper 'exit' from the situation we are all in. Either governments inflate the money supply, and we will ultimately get hyperinflation and/or default or governments do not inflate the money supply, and we end in Deflation and/or default anyway. Either way, we are in deep sh*t.
If inflation is your game, then buy Gold. If deflation is what you are looking for, Gold is still interesting, though a bit less than cold hard cash. Either way, Gold is INSURANCE - I don't hear anyone complaining about their insurance not paying any dividends when their house burns down to the ground.
I'm bulllish gold in a default also. The dollar is the debt of the Federal Reserve, and "backed" by the "assets" of the Fed, e.g. treasuries, mbs, red roof inn debt. I can see how people might think cash will increase in value because somehow dollar denominated assets take a haircut. But those assets are also backing the currency, so what the hell actually happens? I like gold because it will still be gold before and after a default, or a hyperinflation. It is not clear to me that the dollar will increase in value when the assets backing it take a haircut.
So,
where are sound reasons why gold will crash?
Claim that markets are efficient and that gold has no value but can be sold into the "efficient market" at some 1200$/oz contradicts itself.
Someone please inform Master Jeremy that FASB suspended mark-to-market accounting before he further embarrasses himself.
exactly
Stop Pumping gold guys and read your history, look at Shays rebellion. If we go to gold standard and payment is required in gold the little guy is screwed even harder. Now a commodity based certificate is possible, but look at all the hard money nightmares that happened in history. The big guys get control of production, the government makes it hard to get ans suddenly you have to pay an insane premium in goods and services to get hard money.
No one ever said 'we' are going back to the gold standard...
good point. I don't like hard money solution either...but I believe the discussion here is focused on individual capital preservation, not monetary policy
So what does he call the trillions being thrown around by the fed and ECB?... A bull market?
um, at the risk of stating the obvious, no one KNOWS what the NORMAL price of gold is as it has not been allowed to trade freely for more than a decade.
same goes for silver.
give us even a day of normal, non-JPM manhandled markets in gold, and we would have some idea.
but now? Jeremy, hang on to your gold cause the "normal price" is more likely to be 2.5K per ounce than .8 per ounce.
"I hate gold. It pays no dividend, it has no value, and you can't figure out what it should or shouldn't be worth." So says the genius Grantham.
US dollars, anyone?
Dividend: none
(Utility) Value: none, other than toilet paper
What it should be worth: ??
Typical half-witted idiot, without a clue about actual economics.
Let me use the same argument on a company I love and made me some nice profits: Apple.
Value: has about $40 billion in cash flushing around. Has great Free Cash Flows.
Dividends: 0
Utility: Great gizmos and cool factor.
Counterfeiting: Company dilutes it shares for employee and executive stock/stock options.
What should it be worth? Technically, as a shareholder, I have no rights to the $40 billion in cash or any future cash flows. That is under the control of Mr. Steve Jobs. The only value in my Apple shares is my ability to find a bigger sucker than myself to sell my shares to. I have no say or get no insights to Apple's future. That is a secret! Heck, as a shareholder, I don't even get a discount on their products. So, what is the true enterprise value of Apple Corp to me? Technically: $0. It is only worth something because I can find others out there willing to pay $250+ for my (in street name) claims to a share of the company.
Rich
+1, this is the analysis I also have used for stocks. I'm really bothered by being nothing more than an unsecured creditor to a brokerage house when buying stocks... so, for now, I don't.
so true...its like real estate bubble, land true value is somewhere around the rental income value...but if asset is appreciating....that's how sports team owners can cry poverty, as sometimes their income does not cover their debt, but the amount the team value has appreciated since the bought is huge...
stocks have as much value as beanie babies, pokeman cards, baseball cards...as long as they are popular and more people are buying them everyday, they can make you money but when the music stops...you don't even want to waste the price of storing the damn things anymore
He mentions gold in the last line and suddenly its the Title of the article.....amazing !
Wood Bitches!
MsCreant, FTW!
Stainless Steel and Concrete. When they build this bridge loan to nowhere. They don't want it rusting!!!
If I could figure a way to make butter non-perishable, that's what I'd hoard. Life is not worth living without it. That's my gold.
Butter bitches!
Fire wood and spam,brown beans, and tuna !!!!!!!!!!!!!!
Wooden nickels?
I would put Grantham in the same category as the jackass Prechter.
Prechter, Grantham et al are no different than the shills that show up on Saturday morning radio in the fall, promising to give you today's "5-star college lock of the year". They can't help but occasionally be right and, when they are, the gambling fools pay big bucks for their "service" and their subsequent picks. All just a sham predicated on uncovering the next gambler/investor dumb enough to pay for their "picks" after the current group of followers (fools) wise up and move on.
I bolded the only relevant bit, and this is the crux of this.
you really have no clue do you? what youre doing submitting content here I just cannot fathom.
I don't need an expert to tell me that the Gold is going to Crash.
No its not going to to crash but it will go up minimum 30% annually every year.
Its simple math,
look back the Gold price for last 30 years, its has been flat for some 20 years where there was a Gold Cartel , Central banks were selling and artificially keeping the price at same level for 20 years, its unbelievable but they kept this to print their own fiat currencies every year.
Now the trend is changed 10 years ago, Cartel is not working , Cb's are buying instead, result: 330% increase in 10 years, in the average 30% every year. the futures markets can press the gold price with paper gold shorts,leverages and in the end they try their best but still there is 30% increase, so at some point the demand is so high, they have to raise the price and fight again.
Nobody is selling physical gold. There will be drops in price for few months in future too but this will never change the big picture.
You just summarized the key to understanding the PM bull market.
Until I see anyone selling physical, which for this entire secular bull market run has not happened once, the bull market remains intact. End of story.
+ $1240
What's NAdler's handle on this thread? He gets into every gold thread and trolls around.
Gold going down? 1050 would be nice to pick up some more
.
This isn't bullish for gold, either, but Russell needs to be heeded.
http://finance.yahoo.com/tech-ticker/article/487564/Dow-Theorist-Richard...
Adjusted for 1980 prices gold should be 7,200 . We are in the early stages of a global crisis the world has never faced after 50 years of globalization. But hey, who cares about 6,000 years of human history when you can simply follow a single man, a brilliant financial prophet to safety.
Only paper gold (Ticker: GLD) will crash, not physical gold. Grantham is confusing the two entities. Perhaps he missed his morning cup of coffee and picked up a cup of Valium instead.
This guy is a plonker
i don't think the 'sheeple' are starting to wake up to the idea of investing in gold yet, not at all. probably won't for some time and it may be too expensive when that time comes. even with all the shortages in europe, it is still going to be a tiny minority, the smarter ones and the people that had an inkling all along, doing the actual purchasing. out of all the people i know who are seemingly clued up on some of these things, precisely 0 own any PMs. seems like 99% of people are too scared to follow their own common sense or just don't have any money for it in the first place.
my 2cents.
I know only 3 people who own physical gold not as jewelry.
I know one. people that know me don't know I own gold. You might be surprised. The best hidding place is not having to hide it.
Can anyone tell me what inherent value gold has? It's price appreciation is predicated solely on the continued speculative buying of investors... Sounds alot like a Ponzi scheme. It has no functional use, physical or otherwise. Don't get me wrong, I think gold can easily continue to rally, but how comfortable is anyone with an investment that plays purely on investor sentiment with no underlying fundamentals...
The same argument can be made for any stock out there that pays no dividends. Especially big cap stocks that pay no dividends. As a shareholder, you have no real rights to say what management does at the company or with any of the company's assets. So, the only value of the stock has is what someone else is wiling to pay for you claim of a share.
Rich
Of course, but regardless of a stock's yield there are financials underpinning price forecasts. And unlike gold, stocks do reserve the right to pay a dividend at some point in the future if they so choose.
From one Rich to a Rick,
What do financial underpinning price forecasts have anything to do with value and what something is worth paying for? Most stock analysts barely understand the underlying assets they evaluate. Passing a Series 65 does not mean you actually know anything. It just means that you understand the crappy measuring sticks the industry uses. Nobody challenges the assumptions being made in all the metrics. People use the word "inflation" without understanding how it is being measured. People look at the Unemployment Rate and never look at the raw numbers in the BLS. My favorite metric: Cost of Capital is by far the most important factor in evaluating a company's valuation, yet you never hear it mentioned.
Rich
Counter-party Risk.
No more complicated than that.