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Charting David Rosenberg's Thesis: "No Gold Bubble Until $3,000"

Tyler Durden's picture





 

Today's "Breakfast with Dave" from David Rosenberg is a veritable chartapalooza, the inspiration for which appears to have been the "reversion to the mean" theme presented in yesterday's IMF chartpack, presented here. There is, however, one section that is unique: that dealing with gold, and more specifically, why in Rosenberg's opinion gold is still quite cheap and why it is trading at about 50% of what the Gluskin Sheff strategist would consider bubble value. As Rosie says: "we have liked gold for a long time and we remain very constructive. It is more than just a hedge against recurring bouts of global financial volatility. The growth rate of gold production is roughly stagnant while the growth rate of fiat currency in most parts of the world continues to accelerate. It's all about relative supply curves - the supply curve for bullion is far more inelastic than is the case for paper money. It really is that simple." Indeed it is: when one strips out all the fancy talk, mumbo jumbo, and syllogistic gibberish out of modern economic theories, be they neoclassical Keynesianism (or, god forbid, just classical), chartalism (sorry, infinite debt-money issuance won't work: in two years we will all see why), or any other attempts to reduce a broken imbalance in supply and demand propped up by the "invisible hand", it is all about supply and demand. Sure enough, one thing we have an infinite supply of is fiat money, and the resulting debt necessary to "back it up." As for demand, well that's another matter. With gold: it is just a little inverted.

So here are Rosie's charts many of which we have presented in the past, but always good to see once again.

Gold, viewed from the prism of Supply and the US monetary base:

Gold and M2: "Whether you normalize gold by the money supply or the CPI, the bull market has a long way to go. By my estimates, this does not even turn into a bubble until we get north of $300 an ounce."

More: "when gold hit its bubble climax in 1980, it got to 5x the level of the S&P 500; today gold is 20% higher. No bubble in this chart, yet anyhow."

"The story is just as valid when gold is measured in "bond index" terms (using the Ryan labs historical data for treasuries)

"Gold market cap in S&P 500 is $26 billion... only 0.2% of the entire market"

And the last observation: "gold company EPS has been blowout with earnings rising 34% in the past year and 220% in the past two years."

 


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Tue, 07/26/2011 - 14:21 | Link to Comment Ahmeexnal
Ahmeexnal's picture

Gold and M2: "Whether you normalize gold by the money supply or the CPI, the bull market has a long way to go. By my estimates, this does not even turn into a bubble until we get north of $300 an ounce."

$1600 is north of $300.

Tue, 07/26/2011 - 14:25 | Link to Comment Crisismode
Crisismode's picture

$300./oz. in 1980 dollars maybe?

Tue, 07/26/2011 - 14:25 | Link to Comment Franken_Stein
Franken_Stein's picture

 

Typo of Tyler's.

Append a 0 in your mind please.

 

Tue, 07/26/2011 - 14:30 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

Rare earths seem to be taking note of your comment Comrade Stalin:

http://www.google.com/finance?q=NYSE:MCP

 

Tue, 07/26/2011 - 17:02 | Link to Comment WilliamShatner
WilliamShatner's picture

Lovin' the rare earth stocks, I've made thousands so for on MCP, REE and AVL.

Still have some AVL, but now my exposure to MCP and REE are via the REMX etf.

Got a nice pile of Lynas and Great Western Minerals.

Long term hold on those, I'm hoping to make a small fortune on the rare earths.

Can't wait for that market to go into warp drive.

Tue, 07/26/2011 - 19:00 | Link to Comment Killer the Buzzard
Killer the Buzzard's picture

Do you like dilithium?

Tue, 07/26/2011 - 14:35 | Link to Comment pupton
pupton's picture

How do we know how many zeros were dropped?  Perhaps $30,000 is the mark? 

Tue, 07/26/2011 - 14:43 | Link to Comment Franken_Stein
Franken_Stein's picture

 

Have a look at the article's headline, please.

 

Tue, 07/26/2011 - 16:23 | Link to Comment pupton
pupton's picture

I read the headline, comrade.  I think you'll find that I'm not the only one who finds the $3,000 mark not quite bubbly enough...that is all. 

Wed, 07/27/2011 - 03:04 | Link to Comment Redneck Makin-tosh
Redneck Makin-tosh's picture

A fraudian slip?

Tue, 07/26/2011 - 14:36 | Link to Comment Ra-Marduk
Ra-Marduk's picture

Clown boy, see my comments below.

Tue, 07/26/2011 - 14:36 | Link to Comment johny2
johny2's picture

Maybe he meant $300 for Silver?

Tue, 07/26/2011 - 18:37 | Link to Comment drom
drom's picture

So you must have been one of the fools selling at $300 in 2002

Quit the bull run you have missed out on then, we might be between the middle and end of this bull run now but its far from over brochacho.

We still have a large output gap and its pretty obvious that will continue into the next recession now.  I just wonder how they will find ways to print more then?  Thats really the only mystery, as we know the Bernank does not allow deflation.

Tue, 07/26/2011 - 18:53 | Link to Comment automato
automato's picture

It's a typo!

Tue, 07/26/2011 - 14:21 | Link to Comment HungrySeagull
HungrySeagull's picture

Gold is Heavy in Bullion form. Trading is slow right now.

When the paper money vanishes and we go back to Gold and Silver etc It's going to crush anyone who does not own it NOW!

Tue, 07/26/2011 - 14:22 | Link to Comment swissaustrian
swissaustrian's picture

TYLER

Ron Paul is holding a hearing with FED´s FOMC member Hoenig (Kansas City FED chair) right now:

Stream: http://financialserv.edgeboss.net/wmedia-live/financialserv/16489/300_financialserv-qwertyuiop_070131.asx

 

Tue, 07/26/2011 - 15:23 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

I read that article, Silver Shield!

The Bearing HIGHLY recommends that article.  Hope you get my email, Silver.  It is about, well, silver and something else for my blog.

Cheers everyone while the PMs roll!  Let's just hope that DC doesn't mess us up with their crap.

Tue, 07/26/2011 - 15:51 | Link to Comment HungrySeagull
HungrySeagull's picture

PM's are like a big Salmon Run right now where I am looking at the river!

Also a Member of Silver Shield. Hope to see you there DoChen.

 

One trader placed 25000 coins onto the bid and it will serve as a launch pad for the rest of us at that big low price/spread.

Tue, 07/26/2011 - 14:22 | Link to Comment SheepDog-One
SheepDog-One's picture

How can there be a gold bubble when our only economic policy is to print more paper 'money' out of thin air, while amount of gold stays about the same? Im calling 'no gold bubble ever'.

Tue, 07/26/2011 - 14:29 | Link to Comment problemfixr
problemfixr's picture

+10

Tue, 07/26/2011 - 15:25 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

+ $1616

Tue, 07/26/2011 - 14:57 | Link to Comment Smiddywesson
Smiddywesson's picture

Agreed Sheepdoggie, gold can't stop appreciating until the fiat Ponzi scheme is fixed.  The fiat Ponzi scheme won't be fixed until it goes to zero (IT'S A PONZI SCHEME).  The dollar has depreciated 98% since the creation of the Fed.  The last 2% is not the strongest 2% when we are talking currencies.  This won't take long.  

Therefore, gold has no ceiling in price.  It is impossible for it to become a bubble until the dollar melts down.  

Tue, 07/26/2011 - 16:53 | Link to Comment mayhem_korner
mayhem_korner's picture

A Ponzi scheme cannot be fixed...er, corrected that is.  It has no choice but to fall apart.

Tue, 07/26/2011 - 15:52 | Link to Comment firefighter302
firefighter302's picture

Silver, too, Sheep-dog. :-)

And silver is increasing in industrial and investor demand faster than gold, imho. The direction of the government and FED are announcing to us to continue to buy metals.  Message recieved, loud and clear.

 

Tue, 07/26/2011 - 14:26 | Link to Comment wang
wang's picture

Good for Rosie, reinventing himself as a goldbug after a failed career predicting equities

Tue, 07/26/2011 - 14:37 | Link to Comment Johnny Lawrence
Johnny Lawrence's picture

Rosenberg has been bullish on gold for at least the past 6-7 years.  Try again.

Tue, 07/26/2011 - 14:41 | Link to Comment SheepDog-One
SheepDog-One's picture

LOL, yea Rosie is somethin else. Nice avatar too funny!

Tue, 07/26/2011 - 14:27 | Link to Comment kito
kito's picture

sorry rosie the bear, but thats a ridiculous call to make.  if we wake up one day in the not too distant future and the govt announces the new widely circulated 1000 bill in place of the 100 bill, im quite sure gold at 3000 wont be in a bubble. 

Tue, 07/26/2011 - 18:47 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Numeraire is the measuring device that apportions value. Gold is the numeraire of paper. 1/1620 of an ounce of gold measures the current purchasing power of the paper promise of the US government's $1.00 bill or credit note. It also measures the government's ability to tax the people. The higher the number, the less revenue it gathers. That just means the nation is fucked but hey, what would gold know?

Tue, 07/26/2011 - 14:28 | Link to Comment problemfixr
problemfixr's picture

+10

Tue, 07/26/2011 - 14:30 | Link to Comment Ra-Marduk
Ra-Marduk's picture

Ahmeexnal, you are an idiot. $3000 is the platform for a bubble and even that is incorrect. Try bubble $10,000. Put that figure through your pea-brain you baffoon. Thank you and have a nice day - don't forget to catch the short bus.

Tue, 07/26/2011 - 15:05 | Link to Comment Smiddywesson
Smiddywesson's picture

Taleb might explain it like this.  In real terms, gold might have a maximum price.  But in the world of Extremistan, where numbers are not controlled by the physical world but are delineated by the make believe world of men, gold can rise to any price.  The dollar can be devalued to zero, so the price of gold in dollars can go to an infinite price.

All of these arguments that call a price target ignore this fact.

Tue, 07/26/2011 - 16:51 | Link to Comment mayhem_korner
mayhem_korner's picture

Agreed.  The notion of a "bubble" in part is based on a "Mediocrastan expectation" of reversion to the dollar as the alpha currency.  If and when it loses enough of its value, the dollar-denominated price becomes irrelevant.

Wed, 07/27/2011 - 06:38 | Link to Comment DrunkenMonkey
DrunkenMonkey's picture

Quite, when gold is $3000 an ounce, bread will be $50 a loaf.

Tue, 07/26/2011 - 14:30 | Link to Comment Cole Younger
Cole Younger's picture

 "By my estimates, this does not even turn into a bubble until we get north of $3000 an ounce."

Hmmmm, once we get north of $3000.00 an ounce, I suggest dollars are close to ( if not completely ) worthless. For gold to be in a bubble, the dollar would have to have some value. There has to be a number / price discovery where pricing gold in terms of dollars (or any fiat) becomes meaningless. What that number is I haven't a clue. 

Tue, 07/26/2011 - 15:09 | Link to Comment Smiddywesson
Smiddywesson's picture

Hmmmm, once we get north of $3000.00 an ounce, I suggest dollars are close to ( if not completely ) worthless. For gold to be in a bubble, the dollar would have to have some value. There has to be a number / price discovery where pricing gold in terms of dollars (or any fiat) becomes meaningless. What that number is I haven't a clue. 

What number?  How about 911?  When you call 911 because your neighbors are fighting over road kill carcases, and the police don't come, gold probably has topped.

Less than two years from now.

Tue, 07/26/2011 - 16:08 | Link to Comment legal eagle
legal eagle's picture

I remember telling someone to buy gold in 2009 and telling them it would go to above $1,500.  They said "listen, if gold goes to $1,500 I think we have allot more to worry about"   I do not know if he was right, or wrong, but I am sure he wishes he had made the purchase!

Tue, 07/26/2011 - 14:35 | Link to Comment zebrasquid
zebrasquid's picture

Been long gold since '01, and heard yadda yadda why it was just was a junk investment all the way up, and from most of the same people who utterly don't get it even now -- with all this looming crisis and QE and bailing out and spending almost half of what we spend using borrowed money.

The people that were bullish back then, and mostly all the way up, are people that actually understand the macro picture and gold (Turk, Faber, to name a couple). They are still as bullish as ever.

Who you going to listen to, them or, say, Paul Krugman(says gold is up because of flim-flammer Glenn Beck!)

 

It seems a no brainer to most of us, but then again, so does most common sense things.  Scary that 90% of investors seem to not get common sense.

Oh well, more for the rest of us. 

Tue, 07/26/2011 - 14:36 | Link to Comment High Plains Drifter
High Plains Drifter's picture

i remember reading karl douchinger's blog a few years ago,  and he always used to poo poo  the barbaric metal.......probably still does for all i know. some things never change.

Tue, 07/26/2011 - 16:05 | Link to Comment sskid
sskid's picture

karldenninger.com

his unofficial fan site

Tue, 07/26/2011 - 15:12 | Link to Comment Smiddywesson
Smiddywesson's picture

They can't come to grips that they were fools whose mind's were controlled for the majority of their adult lives.  That's why they can't admit, ever, that they were wrong about gold.

Tue, 07/26/2011 - 14:32 | Link to Comment SheepDog-One
SheepDog-One's picture

'Money printing wont work, in 2 years we'll see why'...far sooner than that we'll see why.

Tue, 07/26/2011 - 14:34 | Link to Comment High Plains Drifter
High Plains Drifter's picture

would his opinion change if the percentage of americans who own gold now at 1600 did not change , even when gold is at 3000?   what is the true definition of a gold bubble when we are in a gold bull market? 

Tue, 07/26/2011 - 14:36 | Link to Comment Element Investing
Element Investing's picture

must be bullish for tungsten

Tue, 07/26/2011 - 14:40 | Link to Comment Segestan
Segestan's picture

The best mind in the business of common sense is Martin Armstrong...... Great read...... http://www.martinarmstrong.org/files/The%20Sovereign%20Debt%20Crisis%200...

Tue, 07/26/2011 - 15:54 | Link to Comment Shell Game
Shell Game's picture

Term limits would eliminate career politicians. -from Armstrong, pg. 5

 

Hear, hear..

Tue, 07/26/2011 - 15:57 | Link to Comment augmister
augmister's picture

.... AND stop the legal bribery of the private interests... no money from the lobbyists!  NONE!

Tue, 07/26/2011 - 15:34 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

FOFOA (fofoa.blogspot.com) and Antal Fekete are both excellent too.

I like the new Up and Down voting options!  Your third Up will be mine Segestan.

EDIT:

I tried to up arrow you too Shell, but it won't work...

Tue, 07/26/2011 - 15:47 | Link to Comment Shell Game
Shell Game's picture

Well, yours worked.  That's just not fair, I hope they have a blue pill for that..  ;)

Tue, 07/26/2011 - 15:53 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

This one worked though, thumbs up!

Tue, 07/26/2011 - 14:41 | Link to Comment zebrasquid
zebrasquid's picture

I hear a lot of curiousity about gold from the same class of investor who still believe bonds are "conservative".  But, not a one who actually has gone and bought gold, or even knows how to do such a thing.   

This bull has a long, long, long ways to go.

If fiscal/monetary things crumble, as they probably will, there is no guess high enough for what gold might be worth in dollar terms (or most other currencies).

And this doesn't even take into account geopolitical risks, which are getting riskier by the moment.

 

 

Tue, 07/26/2011 - 15:02 | Link to Comment Dr. Engali
Dr. Engali's picture

 

 

I have the same conversations all the time. They all say the same thing. Then they ask me "even if I have gold what do I do with it then?" " Do I bury it in the basement?"  So when I hear this I conclude that  gold is just getting started.

 

Personally I think $3,000 is light when you consider the amount of U.S. dollars out there. To be safe I try to buy 10oz of silver for every 1 oz gold.

Tue, 07/26/2011 - 15:16 | Link to Comment Smiddywesson
Smiddywesson's picture

To be safe I try to buy 10oz of silver for every 1 oz gold.

An 100 oz of lead (in multiple calibers) for every ounce of silver.

Tue, 07/26/2011 - 15:54 | Link to Comment Dr. Engali
Dr. Engali's picture

I do that too.

Wed, 07/27/2011 - 01:10 | Link to Comment Hook Line and S...
Hook Line and Sphincter's picture

what about the 1000 oz of zinc for protection against a nuclear flash?

Tue, 07/26/2011 - 14:41 | Link to Comment Sudden Debt
Sudden Debt's picture

If China would put O,1% of it's reserves into silver, which has a estimated 700 million ounce a year production without even mentionning the industrial side.

Silver would go to 90$ in a hartbeat.

Silver industrial use is set to rise 32% by 2015. By then, silver will become a rare earth material and prices will tripple yet again.

Why does everybody keep talking gold while it's silver that deserves the attention?

 

Tue, 07/26/2011 - 15:06 | Link to Comment SilverDreams
SilverDreams's picture

...tradition

Tue, 07/26/2011 - 15:18 | Link to Comment Smiddywesson
Smiddywesson's picture

Because central banks are stacking gold, not silver, and those banks will determine who the winners are under the new system.  

And yes, I agree, the holders of silver will not be numbered among the losers.  

Tue, 07/26/2011 - 16:05 | Link to Comment Ghordius
Ghordius's picture

Because Central Banks have a lot of gold.
Hard to ignore, even for the Bernank!

And the Chinese, the Arabs and the Indians love silver

...and love gold even more.

Tue, 07/26/2011 - 17:35 | Link to Comment long-shorty
long-shorty's picture

Sudden,

Gold and silver are heavy to carry around, but graphene is nearly 2-dimensional, so China is going to put all of its reserves into graphene. You can have a really big wad of graphene bills in your wallet, without having that uncomfortable bulge in your back pocket.

Tue, 07/26/2011 - 14:43 | Link to Comment Vinny
Vinny's picture

Idiocracy is prophetic. Expect to pay 1 trillion dollars for a Whopper soon.

Tue, 07/26/2011 - 14:51 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

Would you like extra cheese for just half a trillion more?

Tue, 07/26/2011 - 14:57 | Link to Comment Sudden Debt
Sudden Debt's picture

NO thanks, I'll just that the 350 billion mayo for my fries.

Tue, 07/26/2011 - 15:20 | Link to Comment Smiddywesson
Smiddywesson's picture

Half trillion?  Must be a value meal or you had a coupon.

Tue, 07/26/2011 - 16:00 | Link to Comment augmister
augmister's picture

Royal with Cheese would be worth double THAT!   :)

Tue, 07/26/2011 - 14:45 | Link to Comment plata pura
plata pura's picture

Gold be a bubble; compared to the precious, it has been weighed, measured and found wanting. It compared to the precious lacks utility and scarcity.

Tue, 07/26/2011 - 14:49 | Link to Comment GiantWang
GiantWang's picture

This is great, so why am I hesitant to invest heavily in gold right now?  Is the 100% runup over the last 3 years scaring me?  What is the historical average percentage price increase of market bubbles?

Tue, 07/26/2011 - 15:38 | Link to Comment Smiddywesson
Smiddywesson's picture

Average???  First of all, even in good times, there is no "typical bubble" metric to measure safe bubble investing vs unsafe bubble investing.  This is a hurricane, abandon your Navy issued, this is whatusually happens" yardsticks.

The difference is that there is a fundamental reason for the rise in gold, as opposed to other bubbles which strain reality to explain what really is being powered by the greater fool principle.  With less than 1% of the public in gold, you can bet your entire life savings this is not being driven by the greater fool at a bubble top.  This trade is as safe as they come.

Another difference between gold and a bubble top is that all the market insiders in a simple stock bubble, to include the Fed, the Treasury, and  all the big players, are allied to KEEP THE PRICE UP.  Compare that typical bubble situation with the gold situation.  Every one of these players are giving it their all to suppress gold prices, including FIVE margin increases in the silver market, and yet they have failed miserably in keeping prices low.

Disinformation is also illustrative in detecting a bubble.  Market euphoria is usually rampant at the top, but we have seen an unprecedented campaign to downplay the gold and silver bull market.

I have joked with my gold vendor that I only call him and buy when prices are high, which is somewhat true.  However, Jesse Livermore said that stocks were never too high to buy, or too low to sell.  He said that because he understood that when he was right, the only thing to do was continue to be right.  

It is irrelevant how much of this move you missed.  Gold has a long, long way to go because it isn't simple speculation that is driving it. 

Wed, 07/27/2011 - 02:47 | Link to Comment BorisTheBlade
BorisTheBlade's picture

What is the historical average percentage price increase of market bubbles?

Even if historical average exists, it is ultimately irrelevant since you can have quadruppling prices without having a bubble. Hint: Zimbabwe.

Tue, 07/26/2011 - 14:47 | Link to Comment PaperBear
PaperBear's picture
Unless of course $3,000 is the cost of a loaf of bread.
Tue, 07/26/2011 - 14:50 | Link to Comment Crispy
Crispy's picture

But 2999 isnt a "bubble"? How can one put a tgt on something so dynamic?

These false prophets should stick to losing money in thier PA`s.

Tue, 07/26/2011 - 14:52 | Link to Comment Smiddywesson
Smiddywesson's picture

They are destroying the currency.  That means your charts from 1980 are not persuasive.  A chart of gold prices from 1905 would not be very illuminating in analyzing gold prices in Weimar Germany.  

I believe we are past the point of no return in saving the dollar.  To me, that means your $3000 target is orders of magnitude too low because our measuring stick is shrinking.  In a make believe world where the measuring sticks change, any price is possible.  $60k?

Tue, 07/26/2011 - 15:06 | Link to Comment jomama
jomama's picture

agreed.  while the analysis and charting is great work, some of them assume a generously stable value of bennybux.

Tue, 07/26/2011 - 15:13 | Link to Comment Clint Liquor
Clint Liquor's picture

The truth is the eventual price can not be known because we are where noone have been before. Never in 6,000 years of recorded history have all the currencies been fiat. Only for the last forty years (since the US reniged on Bretton Woods in 1971) has there not been 'safe money' to anchor the value of assets. All the comparisons are useless and many cannot accept that reality.

Tue, 07/26/2011 - 15:45 | Link to Comment Smiddywesson
Smiddywesson's picture

In addition to having a great moniker, Clint Liquor wins the prize for the most insightful comment.

Society is more efficient, and vulnerable than ever before.  All of your systems and institutions have reached peak efficiency.  When all of the worthless fiat goes down at once, what will happen?  Nobody knows, but they all agree it will be bad.  

If it gets bad enough, then gold won't be worth diddly squat because you will be contending with other people who don't know how to care for themselves without running water, energy, or food.  There won't be any warning, and it won't resemble what you or I predicted.  It will however, be predictably bad.

Tue, 07/26/2011 - 16:09 | Link to Comment augmister
augmister's picture

So the fiats become worthless and we will just be trading goods, pussy and precious metals... Hmmm, sounds like the Dark Ages, 700-1100 AD!

So, we need food, daughters, crafts (everyday utensiles) and precious metals (old precious metal jewelry would work!) to "commerce."  

Why is that too hard a concept for 21st Century man to wrap his brain and dick around?

Tue, 07/26/2011 - 16:46 | Link to Comment Clint Liquor
Clint Liquor's picture

22nd Century man will certainly devise a monetary system that eliminates the ability of humans to create wealth from nothing. The current monetary experiment will be useful, as a bad example.

Tue, 07/26/2011 - 15:14 | Link to Comment Idiot Savant
Idiot Savant's picture

Ok, for the sake of argument, let's say that gold does get into bubble territory some day. What is one supposed to do with their gold at that time? Trade it for USDs?

I always hear people talk about getting out at the top, and I'm always confused by what they mean. Most here are like minded, and hold gold as a hedge against fiat currencies (esp. USD & EURO). So, even if gold hits 10K, and screams bubble, what would you do with yours? I'm sure I'll hear "buy land" from most, but it's far from a perfect investment with taxes, imminent domain, etc..

Tue, 07/26/2011 - 15:47 | Link to Comment Thorlyx
Thorlyx's picture

How about loading up on AAPL and NFLX ?

Tue, 07/26/2011 - 15:57 | Link to Comment Smiddywesson
Smiddywesson's picture

That is not a question you need to worry about.  This isn't a stock trade in the tech stock bubble.  It is your grandfather's market (x100)

If we have hyperinflation and SHTF conditions, you will know not to sell your gold.

When conditions settle and there is a new currency, but people still prefer real assests as barter, you will know to hold onto your gold.

When people prefer the new paper currency to gold or barter due to convenience, you can start looking for a sell target.

Your question assumes that your gold trade is just a trade.  It's not.  Your question is the same question people have when they ask if it is too late to buy gold.  It's not.  This is not a bubble.  It doesn't need to be perfectly timed.  If you hold PMs when fiat fails, you don't have to time your sales, you will be in the driver's seat and will know perfectly well when to sell.  Brother, you can't mess this one up unless you are forced to sell to meet imnmediate needs.  

Wed, 07/27/2011 - 02:21 | Link to Comment StychoKiller
StychoKiller's picture

You have learned well, Grasshopper.  Now, snatch the Kruggerand from my hand and become the Master...

Tue, 07/26/2011 - 15:55 | Link to Comment web bot
web bot's picture

By the time PMs "top" and start to decline, stability should start to return to the market... which means it will become obvious what you should move into.

This is going to be a very, very violent ride. Set a target price in your head, walk away and let the clock tick. You won't be disappointed.

Tue, 07/26/2011 - 16:59 | Link to Comment mayhem_korner
mayhem_korner's picture

Rather than set a price target, set a buying power target in mind.  You will come out with a different (and better) answer.

Tue, 07/26/2011 - 15:57 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

Ahem, you don't hear all of the 'people getting out at the top'. I have been accumulating for a very long time and my father and grandfather before me.

Of course, I realize that not all Americans, especially those that have lived and are now dying by consumer credit, think this way.

Gold represents many bridges with which to cross many troubled waters. Gold, if used correctly, will deposit the holder on the other side of troubled waters with a sound asset.

Knowing how to employ gold as an asset when it is really needed (not for consumer crap) is another asset (knowledge) and probably a more important asset than any other.

Those wishing to 'get out at the top' are simply selling a solid asset for a bunch of soon-to-be worthless fiat... Which doesn't strike me as a plan a knowledgeable person would employ...

 

Tue, 07/26/2011 - 15:35 | Link to Comment nuinut
nuinut's picture

What is rosie's definition of a bubble?

How about this:

when people start finding the utility of an item to be in its value (ie. ever increasing value or capital gain) rather than its normal utility, then it is a bubble.


Tue, 07/26/2011 - 15:56 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Another (!) adult has joined the conversation!

Wed, 07/27/2011 - 01:20 | Link to Comment Hook Line and S...
Hook Line and Sphincter's picture

as in a quote from another, or nuinut is another?

Tue, 07/26/2011 - 16:16 | Link to Comment BaBaBouy
BaBaBouy's picture

The "Normal Utility" of GOLD started over 8000 years ago,

as storage of savings, medium of exchange,

addornment for royals and rich, stabilized payment system,

form of money accepted virtually around the planet,

art medium Etc...

 

Need we say more?

Tue, 07/26/2011 - 16:03 | Link to Comment BaBaBouy
BaBaBouy's picture

The FED should just start handing out Bundles of $100 USD's in the streets and alleyways,

just like the US Army does in Iraq.

 

Where's the Bubble?

Tue, 07/26/2011 - 16:14 | Link to Comment SILVERGEDDON
SILVERGEDDON's picture

Bubbles are for soap. Metals are for safety. Politicians are for lying. Banksters are for MAD, on the taxpayers nickel, after members of their club infiltrate government, push and pull the levers for a while, then crawl back to the bankster hole they crawled out of. We The People have been fed bullshit for so long, they believe it to be real food. Welcome to the Apocolypse, funseekers! Lead is the next bubble..........

Tue, 07/26/2011 - 16:21 | Link to Comment apberusdisvet
apberusdisvet's picture

The demand/supply for silver is even better; more gold in bullion form than silver by a 6:1 margin.  Even if industrial use of silver declines in an uber depression, investment demand will eat up the decreased production.  Don't forget that most silver production is  a by-product of base metal mining.

Tue, 07/26/2011 - 17:12 | Link to Comment mayhem_korner
mayhem_korner's picture

Silver's having contractions trying to push out a $41 in after-hours.

Tue, 07/26/2011 - 17:33 | Link to Comment Ag1761
Ag1761's picture

Here in UK stock of silver from a few of the dealers I use seems on the surface fine. However, I have noticed my last 3 deliveries over the last 3 months, each of 30 Oz a time ALL came via Frankfurt, approx 7 days to deliver. I used different dealers each time.

Anyone shed any light on this, is there now stock issues with Silver in the UK and bullion shops are having to bring in from Euroland. Last year when I was buying silver, I was getting delivery within 2 days, all UK despatch.

Something is afoot, any UK ZHers noticed similar?

Tue, 07/26/2011 - 17:48 | Link to Comment jackpile
jackpile's picture

Interesting, btw, gold was $20.67 in 1913 (depending on source you use). If USD has lost 98% of its value since then, $20.67 / 0.02 = $1033.50. The actual drop against gold is more like 98.721% (from $1616.00).

Tue, 07/26/2011 - 20:20 | Link to Comment gwar5
gwar5's picture

.

 

And by the time gold hits 3000K things will have changed again.

Even by many current calculations of money supply gold needs to be >> 4000K. Except for a 60 year failed experiment, gold is still money.  Fiat is a cheap little car that is so bad they named it after paper money.     

Wed, 07/27/2011 - 01:53 | Link to Comment Youri Carma
Youri Carma's picture

Disagree Gold $3,000 is notin!

Gold $2,000 is long due weren’t it for the Bizarro PPT.

Wed, 07/27/2011 - 07:49 | Link to Comment Jalaluddin
Jalaluddin's picture

Chewing gum is used for making bubbles; there is no gold bubble.

All that is happening is that the Amerazoo is going down like a lead balloon.

 

Thu, 07/28/2011 - 04:14 | Link to Comment bharat
bharat's picture

My comments, as I live in India, currently the biggest physical gold holder & consumer:

a) Massive amount of "black" money is going into Silver & gold. I am surprised that the price is still hovering at $1600 given the massive physical demand here.

b) Indians "hoard" gold, i.e. the physical doesn't come back into the market unless the holder is facing substantial financial difficulties OR the price has gone up multiples of purchase price. In my opinion, for trading purposes, they buy the ETFs.

c) The Indian gold ETFs seem to be better regulated than they are in the west, however, I still don't trust them.

d) I expect Indian imports of gold to be not less than 1,500 tons for this year if the price stays below $1700. Q2 demand itself may be 500 tons.

e) I don't understand how the math works out in terms of supply and demand if India and China together buy 2,500 tons - where does the supply come from? This doesn't include the stealth buying by the Chinese central bank.

f) The rise in gold helps the Indian economy via the wealth effect - I hope the gold price goes up substantially in case the western economies slip into recession. Indian private gold holdings estimated at 700 million ounces (approx 25000 tons).

Tue, 08/23/2011 - 22:49 | Link to Comment karmete
karmete's picture

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