This page has been archived and commenting is disabled.
A Report From The Front Lines Of The Gold Bubble
A very illuminating report out of BNY's Nicholas Colas and Beth Reed describing the front lines of the so-called gold bubble. A must read for everyone who would rather listen to third-hand anecdotes and speculation instead of actually doing their homework. As Beth summarizes: "Bubbles are clearly punctuated – and driven to their final demise – by bad behavior on the part of market participants. My short, but colorful, excursion to the heart of the physical precious metals market revealed no such excess. Is that enough proof to eliminate the possibility of a gold bubble? Of course not. But I think it is enough to characterize recent calls for the demise of the gold/silver rally as very much premature."
@#$% My Boss Makes Me Do – A Trip to the Center of the Gold “Bubble”, from BNY ConvergEx
Summary: We recently did some firsthand investigation into the likelihood of a gold/silver bubble by heading straight to a source of the would-be bubble – the precious metals mecca that is New York City’s 47th Street Diamond District. Surprisingly, absent from our findings was any sort of bubble-like human behavior. Yes, the booming asset prices are there, but just as critical to any bubble is the bad behavior that launches it into the stratosphere. Think subprime jumbo mortgages sold to part time hairdressers or 10x oversubscribed IPOs for profitless dot com companies. We tried every way possible to get salespeople to lure us into unwise, non-economic precious metals investments, but with no luck. Yes, we know this is “anecdote” rather than “data.” But the utter absence of heavy-duty hustling and cajoling in what precious metal bears call a bubble leads to a common-sense conclusion: this is no bubble. Not yet, anyway.
(Note from Nick: Nearby our office in New York is 47th Street – the toughest, most aggressive retail/wholesale marketplace for jewelry, gemstones, and precious metals in the world. A logical place to find proof of a retail-driven gold bubble, but too daunting for me. I hate pushy salespeople. So I sent Beth. This is her report from the front lines of the precious metals market.)
A typical day at the office entails about 10 hours at my desk staring at computer screens backed by a blank white wall. I have my own window view of sorts – about a 1” x 2” opening that gives a 48th floor perspective of lower Manhattan, and if I lean over a bit I can even see New Jersey. Nonetheless, it does occasionally feel like I sit in one of those sensory deprivation tanks, just one that is equipped with a keyboard and screens.
Wednesday, however, was quite a different story. I spent my afternoon trapped in a non-air-conditioned Midtown pawn shop with a Swiss tourist who wasn’t permitted to leave after politely declining the owner’s offering price for a used Rolex. Yes, not only do they buzz you in the door (for security purposes), they must buzz you out as well. Apparently the shop girls are instructed not to let customers leave if they haven’t purchased anything. That way the owner has more time to cajole, haggle and even harass.
Eventually the girl allowed the tourist to leave, at which point she was berated by the owner while I stood awkwardly in silence.
Ahh, the things I do in the name of research… And why isn’t Nick here? This was his idea originally…
However, there was a purpose behind this field trip to the only pawn shop in Midtown. With all the commotion surrounding gold and silver these days and speculation we may be in the midst of a precious metals bubble, it made sense to do a little firsthand investigation.
Every bubble has a “home” – Wall Street for the dot com bubble, literally “homes” in Arizona and Florida for the housing bubble, and so on. Naturally, one home for any potential gold/silver bubble must be jewelry and coin dealers, long known as a bastion of high-pressure sales and don’t-let-a-prospect-leave-empty-handed intensity. Hence the point in visiting New York City’s (in)famous 47th Street Diamond District: to scope out the source of the bubble in retail demand for precious metals.
Yes, we know that central banks and ETF buyers are also sources of gold demand. But when one of the global hubs for the jewelry trade is about 500 yards from your desk, there’s just no excuse for not taking the pulse of one key part of the market – small buyers purchasing physical gold and silver – with some site visits.
What I was looking for, in two words, was bad behavior. Yes, everyone thinks they can spot a bubble just by looking at a price chart. But there is a lot more to a bubble than price action. There are all the greedy, unscrupulous, sordid actions that humans engage in when greed takes over. Stupid negative amortization mortgages sold to senior citizens. Initial public offerings of online retailers whose only real asset was a well-known sock-puppet spokesperson. A jumbo loan issued to a part-time hairdresser with no working knowledge of English or basic math.
So it came as quite a surprise that my trip to 47th Street was, in this sense, uneventful.
Before I tell you the details of my visits, however, a little background on this slice of jewelry heaven/hell: An estimate popular with the press places the value of a single day’s trade on the block at a cool $400 million, and other reports say as much as 90% of diamonds in the U.S. first stop on this 150 meter stretch of real estate. And as home to more than 2,600 independent businesses (most of them simply one-man-operations who have set up booths within the various jewelry exchanges), it is in theory a jewelry hustler’s dream.
As someone who can’t even stand being approached by a Bloomingdale’s salesgirl, believe me when I say there was a complete absence of sketchy con-man types, high-pressure salesmen, and any other shady characters trying to rip me off. I’ve spent 3 years of my career working in close enough proximity to this block that I’ve aimlessly ventured down it on my way to 5th Avenue more than a few times. As often as I’ve been unwillingly harassed by unabashedly intense salesmen, I was shocked at the low pressure atmosphere that awaited me when I willingly approached them.
The idea once inside was to get a feel for what average, non-financial people in the precious metals trade think about the direction these assets are headed. I simply told them I had $500 that I wanted to invest in a precious metals portfolio of sorts and that I would like their opinion on what I should purchase, whether it be gold or silver, coins or jewelry. And then I let them talk.
The six vendors I spoke with fell into one of two camps – those who love gold and those who champion silver. Though they didn’t agree on which specific precious metal should highlight my $500 portfolio (one even suggested platinum), they all quite emphatically discouraged me from purchasing jewelry as an investment. I unintentionally approached two vendors who only dealt in jewelry (no coins, etc.), and even they reluctantly told me they couldn’t recommend jewelry as an investment. The reasoning behind this revolves around the labor and design costs associated with “wearable” precious metals.
Though everyone was in agreement that coins are the way to go, surprisingly gold coins were not the overwhelming favorites. Half of the dealers suggested that with my $500 I purchase one ¼ ounce gold coin (cost = approximately $350) and use the remaining $150 to buy seven 1-ounce silver coins at about $21 each. One vendor with supposedly 20+ year of experience reasoned that gold will always gain in value. While it may not go up as rapidly as we’ve become accustomed to lately, his belief was that it will never experience another significant, lasting drop in value.
On the other side of the spectrum, three of the six retailers recommended without hesitation that I invest all of my $500 in silver coins. That would equate to about 23 silver coins at roughly $21 each. Reasoning varied from the simple (although not necessarily inaccurate) to the complex. For example, one retailer hypothesized that since silver is the poor man’s gold, and there are more poor people than rich people, obviously silver is a better investment. He asked what I did for a living, so I replied for the sake of simplicity that I worked for a bank. His response? “And they don’t tell you that there? You have to come to me?”
A more complex argument for silver over gold involved the ratio of the price of gold to the price of silver. Currently it stands at 60:1 while in previous peak times it has been closer to 20:1. Currently, silver is proportionately undervalued in comparison to gold, by this logic, and hence it theoretically has more room to grow. The price of gold is also rapidly approaching the price of platinum, and some of my contacts questioned how high it can actually go from here. I’ve attached a chart showing the gold/silver price relationship over time so you can reach your own conclusions on this point.
The main takeaway here is that there was no bubble-like bad behavior. I expected something out of the high-pressure school of sales. Men dangling gold chains with “Beth” in fake diamonds and telling me it was a better investment than a prosaic gold coin. Or perhaps a creative soul pushing some crappy ¼ carat uncut diamond as a “superior” choice to precious metals. But none of this happened, despite my repeated attempts and encouragements to all who would listen. As a final note, keep in mind that recent or current issue gold coins have some of the thinnest margins in the business. Maybe you buy some as a dealer and the price of the metal rises, but generally the bid/ask spread is no better than 10-15%.
To me, this experience was somewhat like walking into a mortgage broker in Florida in 2006, asking for a $750,000 loan with no income verification, and being laughed out of the office. Which is what should have happened, but obviously rarely did. I am not trying to portray every jewelry and precious metals dealer as the paragon of virtue; that’s obviously not true. If you keep up on this space, you know the criticisms of organizations like Goldline International.
But perhaps what my visits highlighted most clearly is that the precious metals business, at least at high volume locations like 47th Street, does not feel the urgency to “make hay while the sun shines.” Maybe my non-hustling salespeople have confidence that underlying demand is robust (so why push?) Perhaps the family/small business nature of their enterprise gives them a longer term perspective on the precious metals cycle.
Bubbles are clearly punctuated – and driven to their final demise – by bad behavior on the part of market participants. My short, but colorful, excursion to the heart of the physical precious metals market revealed no such excess. Is that enough proof to eliminate the possibility of a gold bubble? Of course not. But I think it is enough to characterize recent calls for the demise of the gold/silver rally as very much premature.
»
- 17149 reads
- Printer-friendly version
- Send to friend
- advertisements -
No, you can't wipe with gold, but I can hire somebody to wipe my ass 'cause I have gold.
The possibilities are endless here ;-)
Gold and Silver Charts
http://99ercharts.blogspot.com/2010/10/gc-gold.html
http://99ercharts.blogspot.com/2010/10/si-silver.html
For more, see 99er Charts in the Market Commentary Forum.
Slvr appears OB,(but their are a LOT of mitigating factors not in that chart,globally) and Gold has a downside to around $1,290.00,I'll take that.
Entertaining read. However, the author does not really make reference to the overarching economic instabilities/uncertainties driving demand. Hearing about the 47th Street Diamond District is fun but in my mind hardly representative. More importantly I would have liked to have heard what the large physical bullion dealers had to say along with their customer’s feedback as well.
My doorman is 30% in gold and silver coins
He also is, unlike you, smart and rents.
Smart doorman. I don’t see this as being analogous to the famous investor comment from the 29’ Crash which went like – “I knew it was time to get out of the Market when the bellboy was giving out stock picks.” How many people are in physical PM’s? Not many. We’re in a different situation now. Prepare yourself. When the paper markets disintegrate your doorman may become your new neighbor!
I actually haven’t heard one person in my normal world talk about gold or silver at this point. They are still far too concerned with sports, politics, etc… They are distracted by the things designed to distract.
For me it is really just a matter of believing what you see. When in doubt I look here http://www.usdebtclock.org/
No matter what else I feel and hear, I look at the numbers above and every bit of my intellect tells me that this can’t end well and is going to have to blow up one way or another. The dollar and most western currencies are toast be it next month or in 20 years. The fact that it has not happened yet does not mean it isn’t going to happen. Bravo for those who saw the collapse of real-estate and made $ from it. 99% of the world was denying that it could happen in 2006.
I don’t expect Mad Max but I am ready for opportunity. My favorite movie line ever is “in chaos there is opportunity” I will be ready.
I sprung a gold mention to computer nerds. A couple people knew about the conomy and where it was heading. But oh it was so funny watching the bullshit ooze out of the collective unconciousness. My favorite is race riots and hordes of zombies eating each other because we just don't know how to act without our army and police keeping things all orderly for us.
Really? Mine's 100% in dollars and other paper.
I do believe everyone thats investing in Gold/Silver etc. should invest a small amount of that in jewelry..If you are void in physical metal then by all means stick with coins/bullion..But for those already in the game, Its my opinion that some select jewelry pieces are a must..My reason is for the very small chance there is a confiscation{I do not believe there will be} jewelry should be exempt..Who's going to turn in there wedding rings etc..?
W/out margin or excessive credit there is no bubble.
Like someone above said, the bubble is in the means being used to hold the price DOWN, not force it up.
Been a while since I reposted this, so I'll indulge myself.
A gold bubble? That would be terrific, thank you. Please let me know when we have the following in place:
A $250K/$500K capital gains tax exemption on gold (as opposed to taxing all capital gains in gold at the higher short-term tax rate, regardless of how long it's been held).
A "President's Working Group on Gold Markets" to support the gold market in the event of sudden sell-offs.
A tax deduction for interest on margin debt used to buy gold.
A "Federal National Gold Association" and "Government National Gold Association" who use taxpayer money to purchase margin debt used to buy gold.
Thousands of government boondoggles at the federal, state, county, and city level to promote "The American Dream of Gold Ownership".
It should be possible to buy physical gold, or to go long on gold futures, on 0% margin. There should be thousands more government programs to "help people keep their gold" and prevent repossession of physical gold when buyers default on their payments.
A "National Association of Goldsters" whose sole purpose in life is to chant "They're not making any more gold", "Gold never goes down", and "Buy gold now or be priced out forever". This NAG should be one of the most powerful lobbies in America, and their members should be quoted by the media as though they (1) are disinterested parties and (2) know a fucking thing about economics, or, for that matter, anything else.
Individual retirement plans and pensions invested wholly in gold, so that supporting the price of gold becomes a matter of national security. Any hint of a gold price crash should lead to congressional hearings and SEC investigations. Anyone who shorts gold futures should be decried as "un-American" and a cowardly leech who profits off others' misfortunes and deserves to be destroyed by short squeezes. Most importantly, anyone who complains that gold is overpriced should be derided as a "bitter fiater" who missed the rally and, furthermore, can't get laid.
"and, furthermore, can't get laid" made me laugh out loud. thanks for that.
fucking realist.
Your spoiling the bubble head mantra. Let's join in and buy some commercial real estate.
The only part you got wrong IMHO, is that nobody has missed any rally -- the rally comes after later after QE2 and Stimulus 2 and esp. if the Persians figure out that putting a Goldman Sachs office in Tehran is worse than a Zionist frontal cruise missile attack with nukes.
Gold is a store of value. Comparasions between the price of gold in FIAT money is a waste of time and effort. Buy gold and hold it for when the inevitable collapse of FIAT arrives and golds ability to protect your wealth becomes self evident, all other analysis is a waste of time.
They've missed the whole point. When you are in a bubble, no one asks if it is a bubble, and if they do they are dismissed as a lunatic. Gold and silver are years away from bubble territory.
My problem is with the barrage of commericals on radio/TV, its been going on for awhile. They're also selling small gold bars in vending machines in Germany.
Not a problem! The gold advertisements are about even in buying and selling -- that's an equilibrium. When they can't restock the gold vending machines is when you should worry.
Here's my take on Beth's experience:
Salespeople who have been doing this for a while have seen people they couldn't sell gold at $600, who bought happily at $900 - so the secret to success is NOT being a condescending douche and getting repeat business and referrals, as well as giving the most straight-forward advice you can.
I must say I agree 100% with their take on Silver vs Gold, especially for someone with a $500 dollar budget.
FYI - The US mint has raised the premium to dealers On Silver Eagles from $1.50 to $2.00. The last time they raised the premium was Feb. 2009 when silver was $13 an ounce. Before that - Oct 2008 at $11 an ounce. I'll leave the moral of this story to your imagination.
http://news.coinupdate.com/us-mint-raises-premiums-for-american-silver-eagle-0479/
I can provide a similar story from new england. I have been going to a store on a regular basis in town for almost 3 years. Each time i go, there are usually 5 to 6 people selling their old stuff in the time it takes me to buy a few bars or coins. There have been no changes lately in the number of people selling and the dealer said things were normal.
One of my colleagues from work said that in 1980, there were lines out the door and around the corner to buy gold at this store, which has been around for almost 50 years.
There will be no lines forming outside coin dealer stores since the Internet provides a very convenient way to buy or sell. I have not been in a coin store nor been to a coin show in over 5 years, and there is a large coin and stamp shop in my town. There are at least 6 large coin shows in the state yearly. I am a coin and stamp dealer and I buy/sell exclusively by Internet sales. If there is a bubble this time it won't be obvious by the mobs at coin stores. Perhaps there will be at coin shows, however, because a lot of people show up there to sell their hoards to dealers and other attending "vultures". It's a lot like gun shows in that respect.
After the Hunt Bros/Arab corner on silver collapsed, Ag rebounded to around $24 after the Iran-Iraq War began. 30 years later, price is $22. Cannot be a bubble. Can be a bull market that is peaking; only the future can tell us that.
Re Au, its real tradeable high in 1980 was about $700. Some bubble, 30 years later. Run a compound interest rate of return from, say 1940 and 1910 on gold in dollar terms. No bubble there. Look at the gold/oil ratio, gold/SPY ratio. Normal.
As Bill Fleckenstein has said, if gold goes into a bubble, banksters will organize expeditions to gold mines, or shall we say "gold mines" quote unquote; etc. Most of the country thinks that gold-based monetary systems comprise voodoo economics, if they think of the topic at all.
Thus while the post was mildly entertaining and there is no complain about it, basic observation proves that gold, which may go up or down in FRN fiatsco terms, is definitely not in an identifiable bubble phase. (If it goes into one, it will be academic as to exactly when the bull market became a bubble.)
Greenspan of course had it wrong. Mature bubbles are identifiable. Short-term government debt (up to say, 7 years) in the US/Japan/UK has many more of the characteristics of a bubble than anything else in the financial markets today, including stocks.
Ohh you think so, eh?
Let's see how long you get to keep that gold when the government mandates that all people must submit to daily x-ray scans.
National Security, for your own protection of course. ;)
You imply we are all fools like those who go to the airport and allow themselves to by violated with impunity by some young punk in uniform under color of authority. I would rather be shot dead.
I will NOT submit. No H1N1 shots . If they come to my door with violence i will not die alone. Now they can come in your house, take your computers with no reason cept you are against the wars and vocal. And thats supposed to be OK? I am a very peaceful sort, live and let live but there is a point where one must stand for themselves or submit.
I submit america has submitted.
I salute you.
"I will NOT submit. No H1N1 shots."
People looked at me like I was insane when I told them flatly my children would not be getting pig flu shots...like I was a bad parent or something. Not only did I tell the school in writing to not do it, I told the kids to leave school if they came at them with a mister or syringe or anything and call me immediately. I was doing my job to protect them from God only knows what was in those shots.
A worldwide "epidemic" that killed how many?...100,00 tops?...and they can't even separate regular old influenza from pig flu in those figures.
"I submit america has submitted."
I humbly submit you are wrong...keep the faith baby.
My son's school tried a trick. They wanted us to fill out medical papers that looked normal enough, questions about allergies, who is his doctor, permission to get him to the doc in case of an emergency. I hummed along filling it out, thought "I've already done this at registration, oh well, no biggie." Then second to the last form was an announcement about these "free medical services" to all students. Last page a permission slip to get shots. Slick, eh? Not announced on the cover sheet to the packet at all.
My son had instructions to tell them to screw themselves if they came at him with a shot. I told him the same things you did. Call me. Leave school. Resist. You will not get in trouble, I will. I did not let him hand in any of the forms.
I called his school to complain about the forms. Folks did not seem to even understand the concern.
They told him in class I had to get in the forms and he was kind of embarrassed to tell them why I would not hand in any of them. Don't need free services, I have insurance. They said, okay, just hand in the front forms. Stunning. Fuck them. They had all that info from when I registered him any way. They did not need that form.
Apparently enough of us reacted this way that they ran a story about it in our local news paper that some parents were questioning the shots.
They never got their forms from me, partially filled out or otherwise. They really harassed my kid hard over it but no shot or other "free" services were rendered on him.
Excellent MsC.
One of the things I was struck with was the waiver of liability. It's like hey...your kids really need this...it's quasi-mandatory and we're from the government and here to help...but we can't be held liable for pushing this crap into your kids blood stream.
SAY FUCKING WHAT !?!?!?! Not only no, but hell no!
Then after the fact we start getting reports of connections between those screeching from the roof tops and the makers of the perishable drugs they were pushing at us.
And it's getting close to that stupid time of year again, where we will be treated to more flu scares without any reportage on the natural ability of the human body to defend itself. Hell back in the day mothers (not so much dad's as was the social norm of the time) would actually expose their kids to other kids who had the mumps or the assorted pox's.
I feel fortunate to have been brought up in a time where you questioned authority instead of being docile and treated like a lab rat by the unseen and unaccountable. My kids will learn this as well.
For their own good.
It's a limited liability world. Limit your liabilities but insist your responsible only you won't let anyone hold you responsible. Because your just to responsible for that. It's called legalized hipocracy.
Where I live, people do now and always have willingly/happily accepted gold as payment. For some payments, it is required, paper won't do.
whre do you live. just curious - vietnam ?
If gold was in fact a viable investment opportunity and not simply the lemming's choice of gambles none of you wise guys would be so furiously defending this momentum trade. When the Soros's of the world take their profits most of you will be left holding the bag of $800 fool's gold.
methinks thou dost protest too much.
gold/silver...is for conspiracy theorists....doom and gloomers......
talk to people.....everyday people....they don't know....nobody knows!!!!!!!
They will soon!!!!!
gold/silver...is for conspiracy theorists....doom and gloomers......
talk to people.....everyday people....they don't know....nobody knows!!!!!!!
They will soon!!!!!
Fail much?
We'll assume that you hold no precious metals. That's not a recommendation from any financial advisor, even the ones who dislike the metals. At least they have no problem with 5% of a portfolio. You are not normal nor prudent.
Correct. No PM. Mostly unencumbered AAA real estate and liquid cash.
Not bad. So, what's with the rabid comment about gold? I could disparage your property holdings and say that the gov't (State, local, etc.) could tax the crap out of your property -- and probably will. Gold can be secreted, but you can't hide acreage.
Hey, there's a new one: "You can't eat gold -- You can't hide land."
AAA real estate is actually very difficult to acquire even in a down market. It takes patience. Mine has been held for decades for the most part.
I fully expect weakness going forward that will probably devalue my holdings but not enough to trigger transaction costs and taxes and then the arduous task of parking my capital somewhere that will return a decent yield and then re-entering the market at some magically defined bottom. I'd rather hold and get paid to wait for opportunistic acquisitions.
I'm not concerned about hiding anything. If you have to worry about the govt confiscating your assets then a better place to hide is Switzerland, not your basement. A structural breakdown of the system is not something I foresee. Rather, I envision a cocktail of gradually increasing trade barriers coupled with a creeping withdrawal of many of the 1st World luxuries that we enjoy in North America- parks, public education, arts festivals, grants etc. The combination will eventually increase employment and slay the deficit but not before causing more damage to the economy. I do not foresee the breakdown that most here envision and therefore do not endorse the 'Gold at any cost to preserve my wealth' scenario.
The amimous of the forum towards my remarks is well worth the opportunity to vent to what is for the most part a very sophisticated assembly of enlightened intelligence.
you are a sitting duck in your $US, Client 9. buying any $Canadian as a hedge. The Fed is telling you that your cash position is under attack. that is a forgone conclusion. why not diversify to protect your buying power?
Well, why didn't you say that!? Look at what you wrote:
How would you react to that? The response you got was quite benign by ZH standards.
You have also laid out part of the case for gold in your comment above.
Most gold adherents have been holding for years if not decades. Not day trading ETFs.
You'll find all of us agreeing with that sentiment! But we gotta do what we gotta do.
Agreed! Damage to the economy will be reflected in greater purchasing power for known and trusted assets... your land, our gold. Same concept, different vehicles.
Agreed! There is an upper limit. And it's not the only thing that an average gold holding person has. Over and above survivalist scenarios that is.
I think that you have the idea that we have daily transactions in buying and selling ETFs. Not so. They are the bane of the real PM adherent. Real estate is even less tradable and absolutely not fungible. That's not to speak in real estate's favor.
Thank you for clarifying your position, but I hope you'll notice that nobody attacked your choice of investment/wealth preserving tactics. Just your intolerance of ours.
As usual, spot-on and eminently logical and well-reasoned. An excellently argued and civil response to somebody who deserved less, Rocky.
He is experiencing some trepidation as it concerns his "investment" in land. What better way to bolster the decisions he has made than to speak ill of others' decisions? It is self-inflicted confirmation bias.
+1
Prices for silver coins on eBay have gone from high to obscene. Though the average eBayer is buying just one or two coins, the price going from 10X face value to 20X face and more doesn't seem to phase them, and they continue buying. These are coins with not any real numismatic value that exceeds their cull / melt value.
Breaking News: the modern day american consumer has a computer...They can buy gold whenever they want...This wasn't available in 1984. Gold will..SELL OUT...SILVER will Sell out......Think Elmo...think Teddy Ruxpin....Think iPhone.....the American consumer is very good at one thing.....consuming.....That same fear that same exact fear of no Elmo on Christmas Day will Drive gold to enormous heights!!!!
Fear Fear!
+ 1
Gold is money to central banks. It is NOT money to you because it is prohibited from being your money by law. Anybody hoarding it is betting the law and maybe even the lawmakers are going away. Given fiat money is collapsing almost any commodity is a better bet than government sanctioned debt markers. A pile of turnips may beat them.
its a fair point, certainly. except for the fact that turnips rot, and it would be difficult to store enough turnips to barter for a holiday home in the future.
that said, after the shelves are stocked and the cupboards are full, some platinum or silver may be worth keeping for barter, if not gold. the local butcher and baker may just accept your illegal coinage black market style. still, i'll take my chances in gold. if it gets to a point where Congress attempts to make it illegal to hold then i'll consider my choices.
Dumb article. There are plenty o' 'questionable' gold(like) trades at the fringes of finance.
Any 'You Buy and We Hold' scheme is questionable.
The amount of paper gold is expanding fast. More crooked 'painted gold bars' will be uncovered. This is the beginning of the bubble, not the end.
The end will be when everyone has 'some' gold, just like the end of the real estate bubble when everyone capable of fogging a mirror 'owned' a house or two. (HINT: the banks owned ALL the houses ...)
The 'gold @ (Insert number here)' is bubble talk. Ditto, "gold can only go up!" along with all the scare tactics. The 'ongoing destruction of finance' talk that is central to pimping gold is nonsense. Gold prices at any and all levels exist within the current finance context.
Not that any given price level is out of the question, gold is a bubble. Bubble prices can be astounding. What matters is what happens after the highest price is reached. Bubbles deflate.
Not that the central banks are perfect ... mind you. The bubble(s) are best indicator that the Fed and other CB's will fail. Inflation will take place in assets ... and unemployment will probably increase!
At what points did you discover that the NASDAQ was in a bubble, or the housing market was in a bubble? Be truthful. I'll assume you are not old enough to remember tulips.
I think Gold is in terrible bubble! Here are the facts:
- The GOLD P/E is crazy high
- The GOLD dividend has been raised continously
- The Public is now fully invested in GOLD - at least 0.2% is in
- India are recycling GOLD from electronics garbage by the ounce
- The Central Banks are creating more gold cheaply just by adding tungsten alloy to the bars.
- Invest in Tungsten - as much more will be needed.
- Primary Dealers will eventually figure out how to short all the Silver and GOLD with more printed linen and electronic numbers.
- GOLD is a relic, like silver, and oil.
- Ceramics have taken the place of GOLD for fillings.
- As India becomes more wealthy they will buy less GOLD, seeing the ways of the West as marriage rates decline eliminating the need for GOLD.
- You can buy replica GOLD on eBay for $40 /ounce, so why buy the real thing?
- The recession is OVER - fiat is back in vogue.
- A new global currency is coming - probably not based on GOLD, but hickory tally sticks.
- Invest in hickory slabs.
- You can't feed Gold to your starving babies, but you can keep them warm by wrapping them in 100 Dollar bills.
Those are the facts! GOLD is a looser people! -- get out while you can! Dumb as dirt.Heh heh.
+1
i recognize the truth when i hear it. :)
Price of gold on Sep. 10th, 2001, the day before Osama bin Subcontractor attacked us because he hates our Freedom Fries: $271.50. Current price of gold: $1,320 - up 386%.
S&P 500 on Sep. 10th, 2001: 1,093. Current S&P 500: 1,146 - up 5%
(by current I mean Friday Oct. 1, 2010)
Gold up 386% S&P 500 up 5%
This does not take into account the dividends that one would have gotten from owning the stocks but I doubt that it would make much difference.
Ladies and gentlemen, we have been at war with the horrible terrible Islamo-fascists for almost nine years. Show me one war in all history that had deflation, just one. Show me one war that had a fall in the price of commodities. Show me one war where the desire for precious metals went south.
"This does not take into account the dividends that one would have gotten from owning the stocks but I doubt that it would make much difference."
It doesn't take into account a portion of the dividend being taxed away either ;-)
... or the fact that the body and soul of Osama Bin Deaden (for three years) will be propped up by the neoZon inspired and orchestrated Bank-corpractracy that is the US Government for years to come. How easy it is to keep the party going when you can put whatever words you want into a dead man's mouth.... Kinda like the movie "Weekend at Bernie's" the party just keeps on going.
So as long as the NeoZon's perpetuate the myth about a boogey man global enemy organizing cells in every crack of a society that has been made to believe the newspeak that 2+2=5, war=peace, hate=love, etc... that HFT=a value proposition, FED money printing=economic benefit, Manipulated Markets=Animal Spirits, etc.. they will screw themselves and PM prices will stand as common "money" while fiat collapses around them.
The long term plan for a global bank control with a global currency that Timmah embraces with "we'd be open to that" will be designed to replace other fiats and take out the core columns of silver and gold, much like the NeoZons did on 9/11.
Until they can figure out how to make the run up of PM a thought crime (and they will try) Au and Ag will continued to be perceived, (even by the most common ignorant thug) as an exchange unit (with it's own unit value) and as stores of wealth.
Just kidding. Now keep shopping!
"It is no measure of health to be well adjusted to a profoundly sick society"
ooh, ooh...
that's a damn good bumper sticker
"Agreed! There is an upper limit.And it's not the only thing that an average gold holding person has; Over and above survivalist scenarios that is."
Alright. Care to share your upper limit and how you arrived at it then? The tone in this threat and others is zombie-like repetition of gold at any price.
i asked my attorney if i could start paying him in gold. he said he would have to think about it. wealth preserving, that's it.