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Is Gold A Bubble? 14 Charts, The Facts And The Data Suggest Not

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From GoldCore

Is Gold a Bubble? 14 Charts, the Facts and the Data Suggest Not

Introduction

For more than 3 years - since gold rose above its nominal high of $850/oz in February 2008 - there has been much talk about gold being a bubble.

Nouriel Roubini, professor of economics at New York University's Stern School of Business, is one of the more prominent financial and economic experts who said gold was a bubble and many other experts internationally echoed his sentiments.

On December 10th, 2009, with gold at $1,100 per ounce, Roubini, said, "all the gold bugs who say gold is going to go to $1,500, $2,000, they're just speaking nonsense". Roubini went on to say ,"I don't believe in gold."

Gold has now risen 50% since then and Roubini has been silent on the gold price.

We believe that he was wrong regarding gold as he, like many in the western world, is simply not aware of the facts and the fundamentals driving the gold market. He also is not aware of gold’s diversification benefits.

The fundamental drivers of the gold market are not appreciated by most and rapidly get forgotten by many due to the daily barrage of noise and fear emanating from the markets.

The facts and charts below strongly suggest gold is not a bubble.

However, even if it were a bubble, those calling gold a bubble should acknowledge the diversification benefits of owning gold and urge diversification rather than vainly trying to predict the future and the future movement of asset prices.

Gold Drivers

The precious metals of gold and silver are driven by a wide variety of factors, including money supply, debt levels, currencies, CDS spreads, interest rates, inflation and fabrication demand from downstream sectors such as jewelry, electronics, and solar applications.

Investment demand has been one of the primary drivers more recently as investors have used precious metals as a store of value in the face of dollar and currency depreciation as well as a general hedge against inflation.

Investment demand includes significant and growing demand from store of wealth buyers in Asia, investment and diversification demand from hedge funds, pension funds and central banks and monetary demand from central banks.

This demand is due to concerns about the global economy, growing inflation risks and the real risks posed by currency debasement being seen globally.

Gold remains the preserve of the smart money, many of whom predicted the current financial and economic travails. 

Risk aversion and concerns about wealth preservation due to currency depreciation remain the primary demand drivers.

Demand is due to ‘risk aversion’ hedging and diversification and can be broadly characterized as ‘prudent diversification’ rather than the ‘fear trade’ that some have called it.

There is no irrational exuberance or broad based belief amongst journalists, analysts, experts and the public in general that gold is a one way ticket to being rich. Indeed, there continues to be very little coverage of gold in local media and only the occasional coverage in the non specialist financial press. This is especially the case in the UK and Ireland and in the European Union.

There is no “greed trade” or buying of gold by the general public in the belief that making a return or a profit is guaranteed.

This was seen in the Nasdaq bubble and more recently in the property bubble that afflicted western countries.

Thus, retail demand, contrary to some hype and silly talk of people “piling in”, remains negligible but is gradually increasing from a very small base.

Increasing global demand (especially from Indian and Chinese savers, investors and their central banks) is being confronted with anemic supply as mining supply is marginally lower than the record levels seen in 2001 (see chart below).

This year scrap supply (due to the global ‘cash for gold’ craze) will be much lower than last. Hard pressed consumers internationally, and especially in the western world, have already misguidedly parted with the ‘family gold’.

All of the gold in the world that has ever been mined, if refined (0.9999 pure), would fit into a 21 metre high cube and is very rare. Thus, if even a fraction of flows in global capital and currency markets flows into gold, prices could rise very sharply and go parabolic.

Another factor, not known by most, is the massive concentrated short positions held by a few Wall Street banks.

The Gold Anti-Trust Action Committee (GATA) has gradually amassed evidence of market manipulation and a covert attempt to keep gold and silver prices low. Its London conference is this week and will hear from very astute analysts that there is now the real risk of a massive short squeeze that will lead to a gold cartel losing control of prices and a parabolic surge in the gold price and significant dislocations in financial markets.

GoldCore does not endorse GATA but has always found its work thorough and thought provoking. Indeed, its key contention has never been refuted or rebutted by the banks in question or in the media.

Should gold go parabolic, it may be time to reduce allocations to gold – but we appear to be a long way from there yet.

This is not the end game which unfortunately looks increasingly like an international monetary crisis – centered on either the U.S. dollar or the euro or both.

Having looked at the reality of supply and demand in the gold market let us now look at some important charts courtesy of Bloomberg Industries. 

Gold Charts

These 14 charts from Bloomberg Industries strongly suggest that gold remains far from a bubble.

Declining U.S. Dollar Continues to Drive Precious Metals Higher

A declining U.S. dollar has been one of the primary drivers for precious metals. If the historic negative correlation between the dollar and precious metals continues to  persist, further dollar declines will ultimately be positive for precious metals.

Gold Outperforms Currencies as Demand for Hard Assets Rises

Dow-to-Gold Ratio: Financial Assets vs. Hard Assets

The ratio of the Dow Jones Industrial Average to gold displays the cyclical nature of the battle between paper and hard assets.

Paper assets (i.e., financial assets) have excelled when economic growth has been strong. When growth has faltered or the outlook was less certain, hard assets have outperformed.

Gold and TIPS Moving in Tandem Amid Record Low Interest Rates

Record low interest rates have moved gold and TIPS higher in  2011. While the correlation between gold and TIPS declined  earlier in the year, the recent rise suggests investors are more willing to pay more for inflation protection. New highs in the gold  price may be signaling increased TIPS prices and inflation expectations.

World Gold Production – 2000 - 2011

China Consumers Increase Jewelry Purchases at Quickest Pace

China has been the largest buyer of gold jewelry since  2008; its demand has grown rapidly during the past decade,  and it has surpassed India, which had been the largest  buyer for decades.

Chinese consumers are fearful of rising inflation, and have diversified into gold.

China and India Jewelry Demand Rises

Demand for jewelry has increased steadily as individuals buy gold and other precious metals as a hedge against inflation.

China, in particular, has had a large increase in jewelry demand, spurred by a change in government rules allowing easier access to precious metals.

U.S. M2 Growth Expands in June, Correlates High With Gold

The U.S. M2 money supply accelerated in June to a 6.0% yoy pace, the highest reading in 22 months. The U.S. consumer price index (urban consumers) remained at a 3.6% yoy pace in June, in line with May's results. The correlation between the total U.S. M2 and gold has exceeded 0.90 since November 2004.

China M2 Money Supply: M2 Growth is Decelerating, Yet Still Rising

Gold Moves Higher with Chinese Inflation

China’s M2 money supply has been rising by 20%, Switzerland’s by 25%, Russia’s by 30%, and the world’s by 8%-9%. Japan’s M2 is expected to move higher after recent events. In order to fight economic and debt issues, paper currency has been printed at historically high levels.

Rising Debt Levels Drive Gold and Silver Higher

Precious Metals Outperform Other Asset Classes

Institutional investors have avoided precious metals during the last decade. Comparable performance from other assets such as stocks and bonds has been poor and as this gap widens and the need to diversify intensifies, institutional ownership in precious metals could increase driving prices higher.

Conclusion

As a percentage of assets, gold ownership remains negligible vis-à-vis assets such as equities and bonds. Ownership of gold is likely to be less than 2% of global investable assets. This is in marked contrast to the end of gold’s last bull market when gold and gold stocks accounted for over 20% of global assets.

Gold remains badly analysed, under-owned and under-appreciated. This will change in the coming months and years when the importance of gold as an investment and currency diversification and as a store of wealth is appreciated again.

 


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Wed, 08/03/2011 - 09:06 | Link to Comment oobrien
oobrien's picture

Gold IS in a bubble in the sense that the United States government will kill it if it threatens to become a currency.

Don't underestimate Uncle Sam.

The U.S. will start taking measures when it passes 2000 dollars.

It's all a rigged fucking game.

Just my 2 cents.

http://geraldcelente.proboards.com

Wed, 08/03/2011 - 09:10 | Link to Comment SheepDog-One
SheepDog-One's picture

Problem with that is, gold isnt only in the US. When all the other big nations are saying 'Yes, gold is the new world currency and we're stockpiling it' what does Uncle Scam do about that? Launch nukes? Gold plate some more tungsten bars?

Wed, 08/03/2011 - 09:16 | Link to Comment oobrien
oobrien's picture

Gold just isn't a threat to the dollar.

It's a threat to the RMB.  It's a threat to the Euro.  It's a threat to the Pound.  It's a threat to the Won.

Do you think the global powers that be are going to let average citizens own gold if it sky-rockets to 3000 dollars?

The central banks will own it.  The citizens of the wold will have it confiscated.

But maybe I'm paranoid.

http://geraldcelente.proboards.com

Wed, 08/03/2011 - 09:21 | Link to Comment SheepDog-One
SheepDog-One's picture

No gold is not a 'threat' to anything, its just the mirror of monetizers gone wild. 

BTW I dont need the lecture on 'do you assume' as Ive been the one here on ZH saying since gold was under $1,000 you will have to defend your gold against confiscation and be a felon when its banned and illegal to trade. How many are really considering that?

Wed, 08/03/2011 - 10:28 | Link to Comment hardcleareye
hardcleareye's picture

There are no "safe havens" for what is to come.

Wed, 08/03/2011 - 10:42 | Link to Comment The Limerick King
The Limerick King's picture

.

.

The "bubble" in gold is a ruse

Like Genocide Ben drunk on booze

He needs to stay straight

To correctly inflate

While denying such acts in the news.

Wed, 08/03/2011 - 10:52 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I love The Limerick King.

Maybe you need to be my editor. I pay poorly and usually not at all. Best work around though considering the 17% unemployment rate. I would rather owe you your wages than cheat you out of them. :)

Wed, 08/03/2011 - 14:17 | Link to Comment akak
akak's picture

A thunderous din

Printing press roars, Ben cackles

Which is the louder?

Wed, 08/03/2011 - 12:59 | Link to Comment RafterManFMJ
RafterManFMJ's picture

They've said my gold’s in a bubble

And it’ll have no use in the rubble

Tho I got in late

And bought it at 8

I’ve watched it inflate, in fact it has doubled!

Wed, 08/03/2011 - 09:22 | Link to Comment mayhem_korner
mayhem_korner's picture

So he who has the most gold wins?  That argues for upward price pressure.

Wed, 08/03/2011 - 09:28 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Agreed. But those of us who own Gold Miners are not feeling much joy lately. Can you say divergence?

GDX vs GLD 2 years

Wed, 08/03/2011 - 09:38 | Link to Comment mayhem_korner
mayhem_korner's picture

Victimized by the fact that their swimming in the same current with other equities (and not a favorite among equity bugs anyway).

Gravity will win out.

Wed, 08/03/2011 - 09:40 | Link to Comment Cheesy Bastard
Cheesy Bastard's picture

There is also considerable counterparty risk.  Mines can easily be nationalized.

Wed, 08/03/2011 - 09:45 | Link to Comment mayhem_korner
mayhem_korner's picture

Good point.  They're not very portable.

Wed, 08/03/2011 - 09:51 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Agreed.

But Miners traditionially have been the play to leverage Gold prices. As you can see from the chart they have not even been a 1 to 1 play. When people begin to believe in Gold, will Miners finally catch that rocket?

Wed, 08/03/2011 - 10:09 | Link to Comment mayhem_korner
mayhem_korner's picture

Unless, as cheesy points out, TPTB swoop in and take over.  If not, I would expect the mining companies to fare well.  Whether the actual miners (workers) do, well, that's another story...

Wed, 08/03/2011 - 10:17 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

While I agree there is that risk, not here, not now. Gold will need to go much higher and panic set in before the Miners are seen as the way for the CBs/PTB to attain heaven.

This 5 year chart of GDX vs GLD is very telling.

GDX vs GLD 5 yr

Wed, 08/03/2011 - 10:10 | Link to Comment Pegasus Muse
Wed, 08/03/2011 - 11:15 | Link to Comment Smiddywesson
Smiddywesson's picture

I think nationalization of mines is more likely than confiscation of PMs.  In the US, the environmental ploy would be my best guess, saying that these mines are big polluters and making their operations unprofitable because of baned techniques and fines. 

Wed, 08/03/2011 - 09:48 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I ran some charts and that doesn't seem to be the case. Miners have been clobbered since May much worse than the S&P and only in the last 3-4 weeks have they responded well. Miners, while always affected by general stock trends, usually respond well to Gold price increases. This time has been the exception compared to over the last 2 years.

Much catching up to do.

Wed, 08/03/2011 - 11:04 | Link to Comment GetZeeGold
GetZeeGold's picture

 

The equities are tied to indexes.......so goes the markets......so go the miners.

You want to have physical right now.....real and in your hand.

 

Wed, 08/03/2011 - 09:29 | Link to Comment trav7777
trav7777's picture

lol...man, think about what you are saying.  Do you think the average person is going to be ABLE to own gold at $3000 an ounce?

How many ounces is the average monthly salary going to be able to run out to the coin dealer and buy?  None!  Sheeple are net SELLERS of gold.

Wed, 08/03/2011 - 09:35 | Link to Comment oobrien
oobrien's picture

Brother, the more things change, the more they stay the same.

It used to be illegal to own gold in America.  That's just history.

If you do manage to buy gold, it will be illegal and on the black market.

The powers-that-be aren't going to risk their wealth so that gold vigilantes can prosper.

It's a fixed game.

http://geraldcelente.proboards.com  

Wed, 08/03/2011 - 09:43 | Link to Comment mayhem_korner
mayhem_korner's picture

History shows that TPTB have always fallen to greate forces.  There is no infinite tower.

Sat, 08/06/2011 - 07:10 | Link to Comment BigJim
BigJim's picture

When FDR confiscated gold, anyone who had any money at all had gold, because gold was money.

Who owns gold now? Yes, gold bugs (what percentage of the population are they? 1%?) may have a few miserbale kilos stashed away. But most of it is held by central banks and people like Soros and the Rothschilds - ie, the politically well connected. I can't see confiscation going down well with them, can you?

Wed, 08/03/2011 - 09:35 | Link to Comment mayhem_korner
mayhem_korner's picture

Sheeple are net SELLERS of gold.

I think you may have just coined the definition.

Wed, 08/03/2011 - 09:40 | Link to Comment fuu
fuu's picture

When you're right you're right.

Wed, 08/03/2011 - 09:49 | Link to Comment Floordawg
Floordawg's picture

EXACTLY! Plus, TPTB would have an easier time manipulating the price(s) when J6P, Chinese/Indian buyers, etc. are priced outta the PM game. Wonder what that "magic" number would be? With all the recent economic data of late, seems like the current price would suffice!

Wed, 08/03/2011 - 10:46 | Link to Comment Pegasus Muse
Pegasus Muse's picture

Do you think the average person is going to be ABLE to own gold at $3000 an ounce?

That's why they mint gold in sub-ounce weights.  For example: 

http://www.apmex.com/Category/1236/IRA_Approved_Gold_Products.aspx

Wed, 08/03/2011 - 09:39 | Link to Comment Floordawg
Floordawg's picture

...too much Celente will do that to you, that lil guy gets excited!

Wed, 08/03/2011 - 10:05 | Link to Comment FranSix
FranSix's picture

If its such a threat to the Won, the South Korean central bank seems to have a different opinion, actually buying gold at market:

 

http://www.google.ca/search?aq=f&hl=en&gl=ca&tbm=nws&btnmeta_news_search...

Wed, 08/03/2011 - 10:12 | Link to Comment oobrien
oobrien's picture

Brother, I was in South Korea in 1997 when it was raped by the IMF.

For that time period, it was the biggest bailout in history.

Do you know what the government did?

They "asked" the people for their gold.

And the people turned it over.

Central banks owning gold is far different than average citizens owning gold.

http://geraldcelente.proboards.com

Sat, 08/06/2011 - 07:14 | Link to Comment BigJim
BigJim's picture

People wise up. Even the most obedient Asians will think thrice about sacrificing their gold for the collective, having watched it quintuple in price after they did so last time.

Voluntarily gve the overlords our gold? Hmmm... maybe not this time.

Wed, 08/03/2011 - 10:06 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Again, they would have to tender a price at or above melt value as they did before. 

Wed, 08/03/2011 - 11:00 | Link to Comment sskid
sskid's picture

Spoken like a person who owns no gold.

Wed, 08/03/2011 - 11:25 | Link to Comment Smiddywesson
Smiddywesson's picture

I agree with you that gold and silver are the enemies of all fiat, because the PMs show that paper is utterly worthless and they provide a yardstick with which to measure how much TPTB of the world are stealing from their citizens. 

You do not have to appologize for being paranoid when it comes to money.  Most conspiracy theories are not true, but most concerning money are true.  That's the nature of money, it takes too long to make it honestly, so clever little apes instead focus on forming conspiracies. 

With respect to confiscation I can't say you are wrong for thinking there will be some, especially in countries where it has been effected before, like the USA.  However, this time is different:

Almost nobody of any significance holds gold.  It accounts for only 2% of worldwide assets and most of what exists is in the vaults of the central banks.  You can bet the people who form policy also have some squirreled away.  If the public doesn't have any gold, and the people in power do, why would they make the holding of gold illegal?

The necessity to confiscate does not exist this time around.  There are no gold coins in circulation that the Treasury has to collect and melt.  That wasn't the case in the 1930s.

Confiscating all the gold and issuing useless paper like in the 1930s involved convincing everyone that all was well and cash is king, while gold was just a barbarous relic.  Fixing a destroyed fiat currency will work that logic backwards.  You collect all the worthless paper and issue something which is purported to represent real value.  That paper has to be "backed" by something for people to accept it.  Most of the people here on ZH believe it will be backed by gold, or at least partially backed in some bastardized version of a gold standard.  They were able to make a logical (if false) argument in the 1930s that they were taking unnecessary gold off your hands for real money, but the logice doesn't work if you are going on a gold standard and taking gold from the public at the same time.  After seeing paper go to zero, it is harder to snow the public. 

Confiscation would create a confrontation.  They don't want confrontations.  They want you to go to sleep and become ignorant and pliable. 

TPTB are going to get all the gold they need to make the system that keeps them in power run.  If they need more than they can aquire before we switch to a new system, they will just ramp the price of gold so it is worth enough to liquidify the system.  That means big winners and big losers, but since they are among the big winners, why should they care?  They will eventually get your gold anyway.  Eventually, you will have to sell your PMs to buy the necessities of life, and that will allow TPTB to slowly acquire the small amounts that the public holds.  

They don't need to confiscate.  Confiscation is an impediment to what they want (a smooth transition without pitchforks), and confiscation goes against their personal interests.  So, my guess is no confiscation. 

Wed, 08/03/2011 - 17:09 | Link to Comment cynicalskeptic
cynicalskeptic's picture

Confiscation occurred in the 1930's for VERY different reasons.

In the 1930's there was no FDIC.  People pulled their savings from banks and - literally - put their money in mattresses or buried it inmason jars in the backyard.  Otherwise they might lose their money in a bank run.  Keep in mind the bank robberies that occurred - think Bonnie and Clyde, etc - could also mean the collapse of a small town bank.   As a result, there was a very real SHORTAGE of money.  There were not enough banknotes in circulation to conduct commerce.  

This was not a new phenomenon and occurred in the 1800's with regularity when there were nonational banknotes but only locally issued notes.  The lack of a national bank and national currency exacerbated this situation until the creation of the Federal Reserve.  (as bad as that 'solution' was it DID create a national currency).

AND with no money in banks, there was no money to lend - back in the day, banks needed SOME money in their own reserves to lend out any funds.  In fact banks were seeing massive losses on existiong loans - a destruction of capital.

BY LAW the dollar was still fractionally backed by gold in the 1930's.  You could not print more banknotes - eg create more 'money' unless you had gopld to back it.   With money being hoarded (held out of circulation) and not available to conduct commerce, there was a need for more currency.  

The confiscation of gold (and its revaluation) was a means to increase the money supply.

There are no longer ANY limits to the creation of money.  You can create TRILLIONS electronically and print to your hear's content now.  

I suspect that you COULD see some form of 'confiscation' for gold held in large funds like GLD (if it'as really there) and third party vault concerns holding gold for your IRA account and such.  These facilities hold large amounts in limited locations and are easy to access.  I suspect that much of the gold holdings in the US are in such vehicles.  You might also see nationalization of domestic minig - abrogating agreements like those CDE has wirth China who buys gold ore concentrate from them for refining.

I further suspect that any LARGE private bullion holdings are in the hands of very wealthy and powerful people - those that pull the strings of government.  THEY would not allow THEIR holdings to be confiscated.

The effort to go after small bullion holders would be prohibitive - compared to the return.  The risk would also be major as many small bullion holders seem to be anti-government libertarian types - well armed and already paranoid enough about a coming 'collapse'.   Besides, even under FDR, the government never made any effort to pursue such holdings - this was a VOLUNTARY 'turn-in' of gold. I doubt you'd see the private holding of gold made illegal - again wealthy, powerful large holders would not allow this.   You likely WILL see more vigorous controls on the sale and purchase - with a focus on collecting capital gains taxes - intersting to see of moves in Congress by more libertarian reps to eliminate capital gains on gold and silver evere make any progress (I doubt it).  

The US would be in an interesting conundrum if it tried to rein in private gold holding too much.  While the legislation enabling - mandating - the production of gold and silver coins was enacted to guarantee an outlet for US mine production back when precious metals prices were low, this legislation remains in effect and revoking it would face substantial opposition from western mining interests and libertarians.  It would also make a very public issue of gold and silver - something the US government does NOT want.  They have in fact gone to great lengths to downpay perecious metals as an 'investment' or even 'strore of value' - going so far as to actively suppress prices (see GATA's work) in an effort to 'manage perceptions.'   See 'MOPE - management of perception economics - and Rubin(?)'s paper on lower gold prices reducing interest on government debt (gold as a barometer of fiat strength).

If you look at the current status of gold in the US, you stillhave very minimal private investment holdings compared to elsewhere.  US citizens have never been through the type of economic crises seen elsewhere in the world.  Europeanshave Yugoslavia, the Ukraine and further back, Germany and Hungary as examples of currency collapses.  The rest of the world has never trusted paper money and wealth ahs been stored in alternate vehicles through history.  Vietnam which has a high inflation rate has unsuccessfully tried to better contrul gold holdings of its citizens.  Meanwhile China and India have made it easier for their citizens to both hold metals and actually use those stores of value (Indian banks now loan funds on gold).

In contrast, in the US you have investment advisonrs actively DISCOURAGING people from holding gold.  If you insist, they push you towards paper vehicles like GLD.  A case can be made that these vehicles are being used to divert demand away from physical buying and into these funds which may be holding 'borrowed' bullion.  The GLD prospectus is full of holes and legal 'get out of jail' clauses for the fund administrators.

Indeed, most ordianry people are SELLING gold now - often for far too less to walk-in shops.  They think of this as being like the 1970's where a run up in prices is temporary (not seeing a fundamental change in the status of the US dollar and the gorwing flaws in the financial system).  They are also being squeezed themselves economically and welcome the chance to turn small gold holdings - often jewelry - into cash.   They view tjhis as a 'windfall' not as a long term safe haven store of buying power.   I suspect that you are seeing gold and silver being vacuumed up from the 'sheeple' now - at what will soon be bargain basement prices.   when - not 'if' - things get worse, those selling now will not have ANY material assets of real value left to cash in.   Meanwhile, you hear anecdotal stoies of serious money buiilding up THEIR holdings of precious metals - and anything else that represents real stores of value (hence a run-up in commodities prices and the shares of copmapnies with real hard assets).

Under this scenario, you will have very little gold left in private hands - and that which remains is likely to be converted over into cash over time to meet living expenses.  

 

Wed, 08/03/2011 - 09:09 | Link to Comment spartan117
spartan117's picture

How are they going to "kill" it?  They're going to forbid the rest of the world to own gold?

Wed, 08/03/2011 - 09:31 | Link to Comment Bastiat
Bastiat's picture

There are some who think there is no "rest of the world" they believe they create history and reality. They are insane,  You can see it the Iraq and Afgan/Pak disasters and in the actions of the Treasury, Fed and Congress.

Wed, 08/03/2011 - 09:10 | Link to Comment DonutBoy
DonutBoy's picture

Why does the US want the price of gold under $2000?   As Jim Rickards has said, Obama's plan is to double exports in 5 years.  That only happens if the dollar continues to depreciate.  If the price of gold is $5000 perhaps we can export Chevy Volts.

Wed, 08/03/2011 - 10:17 | Link to Comment malikai
malikai's picture

In the last 3 years the dollar value is down over 50% in most commodities. Have US exports exploded since then? How much lower must the dollar go before the US exports anything besides paper and death?

Sat, 08/06/2011 - 07:28 | Link to Comment BigJim
BigJim's picture

Interesting question.

This is a bit of a tautology, but the US will become an industrial exporter again when it is competitive. Which means production costs in the US will have to fall, or production costs in other countries will have to rise, or a combination of the two.

We will see this when the US is no longer spending so much on its military, and when its labour laws are relaxed, or the dollar drops so much that minimum wage is irrelevant.

Wed, 08/03/2011 - 17:14 | Link to Comment cynicalskeptic
cynicalskeptic's picture

What's left ot export?  Our industrial base - the means of production - has already been 'exported'.  

Agricultural products - food - remains a big export BUT with every ton of grin we're exporting the oil we IMPORTED that fueled the tractors and combines, made the fertilizer needed to grow it.  Hectcres of water pumped from aquifers (not beintg replenished) also gest exported.  If you price food in terms of REAL and TOTAL costs, we are foolish for 'giving it away' at any cost when the arable acreage in the world is declinging.  China is buying u arable land in Africa and elsewhere at a breakneck pace

Sat, 08/06/2011 - 07:30 | Link to Comment BigJim
BigJim's picture

It's true that our industrial base has been exported. But this statement makes it sound like some kind of final, irreversable act.

If the US becomes a competitive environment in which to run industrial businesses, they will be just as quickly imported back.

Wed, 08/03/2011 - 09:11 | Link to Comment Pladizow
Pladizow's picture

Gold id the second coming  - here to save the financial/economic world - pay homage and repent now!

Wed, 08/03/2011 - 09:15 | Link to Comment mayhem_korner
mayhem_korner's picture

Not so sure about that.  Lotsa foreign CBs loading up on gold, which will make it tough for U.S. to coerce a sell-off without creating "act of war" sentiments.

Also, practically speaking, where would the bux flow to from a coerced selloff?  Crashing Au would boost the dollar, making it even tougher to melt away the debt, which is the grand plan.

I would argue that confiscation is a more likely route than killing gold.  Wouldn't want to have to expose all that tungsten sitting in Ft Knox...

Wed, 08/03/2011 - 09:41 | Link to Comment trav7777
trav7777's picture

by that point, who is going to obey?

Wed, 08/03/2011 - 10:11 | Link to Comment mayhem_korner
mayhem_korner's picture

I dunno.  I know I won't.

Wed, 08/03/2011 - 10:21 | Link to Comment malikai
malikai's picture

Exactly, and many of us have already taken steps to make sure most of our gold and silver is well out of the knowledge and reach of bankers and governments. In my case, the US government knows I've bought gold, but I'm outside the US, so good luck with that Uncle Sam. Also, the country where I live knows about some of my purchases, but again, my metals are unlocatable even in this country, not to mention the stash I've put away in a third country.

Wed, 08/03/2011 - 11:48 | Link to Comment Smiddywesson
Smiddywesson's picture

Also, practically speaking, where would the bux flow to from a coerced selloff?

Agreed.  Once they have all the gold they can acquire, it will be in their best interests for the price to go up, not down.  They can thereby make the banks solvent and soak up all that extra liquidity they printed and lock it safely away in their gold vaults by making the price of gold go up, not down.

They have had four years to replace the gold in Ft. Knox.  It would be incredibly stupid of them not to have begun replacing that tungsten when it was clear the end was approaching.  A general acknowledgement of that theft would threaten TPTB's continued existence and they intend to survive the coming events.  (They can always steal it again when the dust clears). 

Wed, 08/03/2011 - 09:25 | Link to Comment Long-John-Silver
Long-John-Silver's picture

In a normal world economic condition I would agree with you. The world is no longer in a "normal" economic condition. Citizens no longer trust their government and so the no longer trust it's money. That's the reason Gold is $1,668oz now. As more people lose faith in their government Gold will continue to rise as the get out of the governments paper and into that hard asset.

Wed, 08/03/2011 - 09:31 | Link to Comment SMG
SMG's picture

If there is another Lehman type collapse, say like all of Europe.  Would people who have bought gold on leverage be forced to liquidate?  Would that give us one last price crash to load up.?

Feel free to comment on that thought.  I wonder if I'm missing something with that thinking.

Wed, 08/03/2011 - 09:42 | Link to Comment trav7777
trav7777's picture

how do you buy real gold on leverage?  You mean paper GLD?

Wed, 08/03/2011 - 10:21 | Link to Comment chumbawamba
chumbawamba's picture

Credit cards.

Wed, 08/03/2011 - 10:35 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

But if we do that, the system will crumble.

You sly dog you. :)

Wed, 08/03/2011 - 10:40 | Link to Comment chumbawamba
chumbawamba's picture

Heheh.

Fuck Citibank.

- Chumblez.

Wed, 08/03/2011 - 11:17 | Link to Comment malikai
malikai's picture

Platinum plastic standing by - to purchase real gold.

Wed, 08/03/2011 - 12:46 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

LOL, CogDis, Chumba, malikai!

+ $1665

And have some green on me!

Wed, 08/03/2011 - 10:21 | Link to Comment DaveyJones
DaveyJones's picture

Exactly. Things are fundamentally different than the last time they pulled this. It's not just a near universal distrust in government, it's a distrust in the old economic paradigm that presumes infinite growth, infinite energy resource, and infinite raw materials. It's a distrust in government's outlived assumption that our economic problems can be solved by pumping money and debt into the system without anything real to back it up or look forward to. And on top of everything, it is a distrust in their motivations, that even if the powers that be realize this, corruption is their own personal solution.  On that note, people more than ever feel justified in breaking their self serving / sheep serfing rules.  

Wed, 08/03/2011 - 09:30 | Link to Comment fuu
fuu's picture

Yeah the US can kill gold in dollars, it can actually start acting fiscally responsible.

Which will not happen in your lifetime.

Then again I disagree with anyone who so desperately pimps a website in every post.

YMMV

Wed, 08/03/2011 - 09:30 | Link to Comment Kokulakai
Kokulakai's picture

The only way to "kill" gold is to sell it,.... a lot of it.

The US governments ability to do that is open to debate.

Wed, 08/03/2011 - 09:55 | Link to Comment savagegoose
savagegoose's picture

stealing it also works

Wed, 08/03/2011 - 10:03 | Link to Comment Caviar Emptor
Caviar Emptor's picture

It's good to see that their propaganda still works on somebody. I don't think you get how deep the rabbit hole goes. 

First of all, keep in mind gold was not "seized" in April, 1933. It was paid for ABOVE the prevailing market rate. The justification? Hoarding was stalling the economic recovery. How? Because the country was still on the gold standard, which we are not on anymore. So "hoarding" gold today has no bearing on the flow of dollars and dollar-denominated assets and liabilities in the world. That justification is out the window. 

But that's the tip of the iceberg. 

Wed, 08/03/2011 - 10:42 | Link to Comment Silver Dreamer
Silver Dreamer's picture

Well, perhaps that's one reason why the banksters would support going back to a gold standard.  Then they would magically have that same argument as was sold in the past, right?

Wed, 08/03/2011 - 11:25 | Link to Comment prole
prole's picture

Maybe CE can help me understand this because I am really confused:  So taking something, from somebody, at the point of a gun, is not stealing?

Wed, 08/03/2011 - 17:17 | Link to Comment Ratscam
Ratscam's picture

dear caveat emptor
i would love to see or read the other 90% of the iceberg

Wed, 08/03/2011 - 10:25 | Link to Comment High Plains Drifter
High Plains Drifter's picture

how long has it been now, that there has not been any selling by central banks or the IMF?  I am not sure, but I don't think any of them are going to sell anymore gold anytime soon. This tells me the end game is in sight. when they start holding on to what they have, then that means trouble is ahead.......there is fear among the players now. despite all the gold bashing that their talking heads have done, they crave it for protection. we should listen to their quiet and secret  worries.............

Wed, 08/03/2011 - 12:50 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Yes.

Wed, 08/03/2011 - 09:08 | Link to Comment Byte Me
Byte Me's picture

Of COURSE it's a bloody bubble.

But what ya gonna do???

Wed, 08/03/2011 - 09:09 | Link to Comment SheepDog-One
SheepDog-One's picture

Not a bubble, and compared to dollar printing, gold is low.

Wed, 08/03/2011 - 09:17 | Link to Comment Byte Me
Byte Me's picture

Perhaps you missed my implied sarcasm ..

In terms of dollars that you or I have access to -- in a deflationary envronment, it's a bubble; waiting for a liquidity draining "event" to pop it like in 2008.

But (again) -- What else ya gonna do??

Wed, 08/03/2011 - 09:23 | Link to Comment SheepDog-One
SheepDog-One's picture

An event such as what, global thermonuclear war?

Wed, 08/03/2011 - 09:26 | Link to Comment Byte Me
Byte Me's picture

NO. Because that would render it worthless.

A credit event (solvency if you prefer) that forces gold selling to  raise funding to meet margin calls.

Wed, 08/03/2011 - 09:43 | Link to Comment SheepDog-One
SheepDog-One's picture

Oh so gold will drop when gold bugs have to cover their margin calls on stocks. Is see. No wait....what?

Wed, 08/03/2011 - 10:06 | Link to Comment Byte Me
Byte Me's picture

Are you just dense?

Gold bugs (myself included) NEVER sell. It's anathema. But "gold bugs" like us account for fuck all of total physical gold on this microscopic planet. I made no reference to "gold bugs" in any of my posts, you inferred that - erroneously.

My only point is that it's a bubble, how can it NOT be? Just like all other bubbles, whether commodity or financial, it will pop. We just have to determine at which point in the distribution phase we are located. And whether it's time to hold -- or liquidate.

HTH

Wed, 08/03/2011 - 10:21 | Link to Comment SheepDog-One
SheepDog-One's picture

So your point is gold is up, therefore its a bubble. And you call ME 'dense'? You conclude everyone has to liquidate...OK for what, fiat currency that you bought gold to hedge against fiat printing madness in the first place? I dont think you have any leeway to be calling me 'dense' here. 

Wed, 08/03/2011 - 10:25 | Link to Comment Bay of Pigs
Bay of Pigs's picture

I've heard these dumbass bubble callers every hundred dollars since $500.

They are totally full of shit.

Wed, 08/03/2011 - 12:55 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

My money is in gold.  Yes, the price has just gone up and up, with little dips along the way.  Who believes the US is going to cut spending?  Huh?

I don't think gold will EVER be in a bubble.  FOFOA's call of $55,000 makes much logical sense.

MAYBE I will sell a little gold at $5000, you know, because I can't predict the future...

Green for the usual suspects...

Wed, 08/03/2011 - 17:30 | Link to Comment cynicalskeptic
cynicalskeptic's picture

You have to put this in perspective.

When gold is at $55,000 a loaf of bread will be $40.   

The buying oiwer of gold remains constant, it's the buying power of paper money that's DECLINING.

Zimbabwe is a good example.  A $Z was worth $US1.37 when Rhodesia became independent - and changed names.  After loppping off a few zeros, $Zim 1 TRILLION was worht a few hundred $US, the morning of that note's issue.  By afternoon it was worth 1/4 of that.  Today youhave people spending all day panning for gold to get a small pinch of dust - which will feed them for a day.

 

You really don't want gold to get to $55,000 and ounce because the implications of that are horrible.   Hopefully 'they' will stabiliize things and then you'll at least have preserved some buying power.  You'll get back the same relative buying power from your gold that you put in - maybe a little more.  But your paper money savings will be worth ????  - not much I expect.

Wed, 08/03/2011 - 19:39 | Link to Comment StychoKiller
StychoKiller's picture

"My car cost me 15 grand, some say I got a deal.

Melted down I got a thousand pounds of junk, ten dollars worth of steel!

A million dollar reserve note is right there in my hand -- I can't stand the thing!

Well, it's all that I got..."

Montrose, "Paper Money"

Sat, 08/06/2011 - 07:41 | Link to Comment BigJim
BigJim's picture

Your problem is that you see the price of gold as a linear thing. But it's not. Using Zimbabwe as an example of the constancy of the price of gold ignores the fact that Zimbabwe was a currency collapsing on its own, while other currencies were stable. What we are talking about with $55,000 /oz gold is where there is a massive influx of new buying as all currencies collapse - ie, demand will rise massively relative to supply. Its price won't just reflect the linear effects of monetary inflation, but a fundamental change in its valuation.

Sat, 08/06/2011 - 07:49 | Link to Comment BigJim
BigJim's picture

People say 'an ounce of gold today will buy a good suit, just as 2000 years ago it would buy a good toga', but in fact this doesn't represent maintained buying power, because it doesn't reflect increases in productivity. Today, if gold were to have maintained its buying power, it should be able to buy 20 suits. And if we go back to some kind of (official) re-monetisation of gold, it probably will, ceteris paribus (ie, we're still pulling the roughly same amount of oil out of the ground, the price of wool/cotton stays the same relative to a barrel of oil, etc, etc, etc)

Wed, 08/03/2011 - 10:46 | Link to Comment Byte Me
Byte Me's picture

You conclude everyone has to liquidate...

Uh, NO -- read my post again.

Just to clarify your obvious ineptitude at civil communication -- it's spelt FUCKTARD -- unless you're a moron who can't bother to try a spellchecker, or had remedial needs in the 7th grade English class.

Incidentally, I only enquired regarding your intellect -- I did NOT stoop to "calling (you) 'dense' " Previously I've always been impressed with your ascerbic invective and thought that, one day, we might be able to meet over a pint of Sheep Dip each. Clearly, your maggoty fleece needs that dip more.

Get a bath.

Wed, 08/03/2011 - 12:41 | Link to Comment Smiddywesson
Smiddywesson's picture

The yardstick by which we measure financial reality is not in a bubble, it is reflecting the fact that paper is in a bubble.  Gold isn't rising that fast, your paper is in free fall. 

I don't want to argue semantics, because you obviously get part of the argument.  However, your position that gold is in a bubble ignores the financial reality of the world economy, and most especially the USD, and implies that there is a mania about the price of gold.  You ignored the part of the article about how the public is selling their gold to hucksters, and how there is virtually no MSM coverage of gold.  You are also ignoring the fact that gold and silver are the most heavily manipulated markets on the planet, and yet, all of the massive manipulations we have seen have failed, and are yielding diminishing returns as each dip is progressively less severe and shorter in duration.  The manipulators are failing and gold is returning to its proper valuation, however that "true price" is a upward moving target as we continue to print.

There isn't a bubble yet, but there will be.  This will be the longest and most sustained parabolic price action in history.  I dare you to sell.

Wed, 08/03/2011 - 14:11 | Link to Comment Byte Me
Byte Me's picture

There isn't a bubble yet, but there will be. 

Perhaps you would be so kind as to enlighten me/all of us as to when clause A becomes clause B in your quoted statement above.

Answer: You can't. I can't. And SD1 won't even acknowledge that such a transition is possible. The problem that I see so often dodged, is that people think that they will sell into a functional economy. Or "sell a bit for food" Or "sell a bit to buy ammo"

Laudable intentions all, but this assumes that people will trade their (much more valuable) food for something small and shiny... Don't get me wrong --- or misunderstand me , but when the chips are down I won't be selling ANY of my food to anyone without a large markup, and food of the dry-store variety is a far larger % of my cap than PM's -- and the PM fraction is more than a few rounds of silver.

It's all relative -- right?

Wed, 08/03/2011 - 15:07 | Link to Comment Smiddywesson
Smiddywesson's picture

Drivil.  Sorry, that's Alan Greenspan's line that you can't spot, predict, or prevent a bubble.  He of course, is a villain and a liar.  Don't listen to him. 

I must disagree that the sell point for gold will not be apparent.  The sell point will be when people start to feel confidence in the new currency and it is accepted everywhere in exchange for real goods.  That point was apparant to the people who experienced the horror that was Weimar Germany, so I can't imagine it will be any harder to spot this time around. 

I also don't think the sell point will be that important.  Unlike most bubbles, when the printing presses have fallen silent and a new currency has some credibility, I expect a rounded top in gold.  It won't just crash like it does with most asset bubbles because it is not just an asset, it is also money and we will be on some sort of a gold standard.  Also, it won't crash because the central banks are not going to dump, and people will be afraid another round of inflation will occur so they will hold onto physical.  The air will go out of the bag slowly.

I can't disagree with the assertion that food will be very expensive.  Gold is worthless if you have to give it away for necessaries.  You are completely correct to prepare. 

 

Sat, 08/06/2011 - 07:57 | Link to Comment BigJim
BigJim's picture

Yes, gold is in a bubble... paper gold is in a bubble, physical isn't. At the moment, physical gold's price reflects paper gold price. And so it should, but only because there 'should' only be as much paper gold as there is physical. But there isn't; there's maybe 100 ounces of paper gold for every physical ounce.

So yes, the gold bubble will 'pop', but it will be paper gold that will pop, because paper gold is essentially priced at 100 times the spot price. Most Gold derivatives will be worthless because all they were were multiple claims to the same ounce, and, unless alchemists finally get lucky, those claims can't (and won't) be honored.

Wed, 08/03/2011 - 10:46 | Link to Comment Silver Dreamer
Silver Dreamer's picture

The only reason I'd be selling gold is if I felt I didn't have enough ammunition, food, etc.  Can you ever have enough ammunition though?  hmmm

Wed, 08/03/2011 - 11:05 | Link to Comment JohnG
JohnG's picture

Well, I'm all for ammo of course, but yes, there is a limit to what you need.

From my experience in the military, if you get into enough firefights, you WILL eventually be shot.

So, how much ammo do you think you need.

Kinda makes me laugh when I think about "survivalists" or "preppers" sitting on hundreds of thousands of rounds in the basement.  Good for barter definitely, but not worth a damn after you get killed.....

Just my two cents worth.

(I have a lot of ammo as well, just a reasonable amount.  If I hear uncontrolled automatic weapons fire, I immediately think I'm fighting muppets...easy targets.  Think like a sniper).

Wed, 08/03/2011 - 12:30 | Link to Comment Silver Dreamer
Silver Dreamer's picture

I'm planning on eating far more often than shooting, and my preps reflect that fact.  Both ammo and food will be excellent bartering items.  Ammo in a sustained collapse will become far more valuable than gold in my opinion too.

Wed, 08/03/2011 - 12:45 | Link to Comment Smiddywesson
Smiddywesson's picture

Ammo retains its value well, and its price rises when you need it.  I'm waiting for the bubble in ammo to barter for women.

Wed, 08/03/2011 - 12:30 | Link to Comment Silver Dreamer
Silver Dreamer's picture

D.P.

Wed, 08/03/2011 - 19:43 | Link to Comment StychoKiller
StychoKiller's picture

If I hear uncontrolled automatic weapons fire, I immediately think I'm fighting muppets...easy targets.  Think like a sniper).

Kinda like those nutty Arabs shooting into the sky -- por que?

Wed, 08/03/2011 - 11:06 | Link to Comment HellFish
HellFish's picture

LOL, no you can NEVER have enough ammo.

Wed, 08/03/2011 - 10:44 | Link to Comment Silver Dreamer
Silver Dreamer's picture

World war wouldn't make it useless.  In fact it would make large gold reserves extremely valuable.

Wed, 08/03/2011 - 10:03 | Link to Comment living on the edge
living on the edge's picture

Gold will become a bubble some day but not yet. I believe the lunatics running this country will consider taking some obsurd action against gold but it will not be successful and TPTB know this fact. If action is taken against PM's rest assured a black market will develop quickly. 

I take comfort knowing I own gold and silver and have it stored away from the reach of a goverment gone insane. All assets are at risk for attempted confiscation including 401K's and IRA's. Money in the banks are a mere click away from being frozen or stolen for whatever reason deemed by our leaders or justice system without due process.

The next 10-years are going to be very difficult and we all need to prepare for the worst. Gold will provide financial comfort to those smart enough and brave enough to seek it's shelter.

Wed, 08/03/2011 - 09:09 | Link to Comment Version 7
Version 7's picture

Is Gold A Bubble?

Yeah, only it's the last one.

Wed, 08/03/2011 - 10:49 | Link to Comment Silver Dreamer
Silver Dreamer's picture

I guess it depends on the definition of a market then, for I can easily see a food bubble in the future.  You want to eat some of my food?  Well, do you have any gold or silver?!

Wed, 08/03/2011 - 11:08 | Link to Comment JohnG
JohnG's picture

Clean water as well.  Perhaps even moreso.

Wed, 08/03/2011 - 09:10 | Link to Comment eigenvalue
eigenvalue's picture

We are not experiencing a gold bubble. We are experiencing the burst of a fiat money bubble.  The rise of gold is simply its mirror image.

Wed, 08/03/2011 - 09:15 | Link to Comment SheepDog-One
SheepDog-One's picture

And theyre never going to stop printing dollars, so gold here is way undervalued, not a bubble.

Wed, 08/03/2011 - 09:22 | Link to Comment Old. No. 7
Wed, 08/03/2011 - 09:36 | Link to Comment franzpick
franzpick's picture

Think of gold as inversely discounting the value of sovereign bonds; if those bonds are on their way down to 5% of par, then gold may only be taking the first step in the journey of a 1000 miles.

Wed, 08/03/2011 - 09:15 | Link to Comment ak_khanna
ak_khanna's picture

One thing I fail to understand is that why most analysts are recommending the purchase of Gold as a safe investment? The problem today is that the price of Gold is not derived by it's physical demand or supply but more by the speculative positions standing long or short on the commodity exchange like any other traded commodity, stock or currency.

The basic mechanism of price discovery (based on demand and supply for actual use) of anything traded on an exchange has been terminally infected by speculators having access to unlimited funds and super fast computers for trading leading to volatile price swings. This has been made worse by the launch of ETFs for anything and everything under the sun by the financial community.

The price of everything including Gold is likely to suffer when the speculators unwind their positions due to some event that they have not anticipated or foreseen.

http://www.marketoracle.co.uk/Article24581.html

Wed, 08/03/2011 - 09:17 | Link to Comment SheepDog-One
SheepDog-One's picture

No the real danger in calling gold a 'safe haven' investment is most gold buyers will have to defend their gold, and also be felons when its declared illegal by the new Uber Congress.

 

Wed, 08/03/2011 - 09:20 | Link to Comment Version 7
Version 7's picture

IMHO, the move to gold is triggered primarily by a lack of trust in the financial system itself. Secondly, to protect you against the predictable currency devaluation. Note that gold (unlike silver) is traditionally not a speculative metal.

Wed, 08/03/2011 - 12:59 | Link to Comment Smiddywesson
Smiddywesson's picture

AkK,

Your analysis is correct but you fail to recognize two important points.  First, the speculation that has ruined the markets has been used to hold prices down, not inflate gold and silver.  Second, supply and demand argues for higher prices.  The available supply of gold is inadequate to protect a gazillion worth of fiat.  When the economic system breaks down, your economic analysis falls flat on its face.  People will flock to whatever will protect them from the failure of that system, and gold is one of the limited things which fit the bill. 

The price of a lifejacket on the Titanic remained constant during most of the voyage.  It's irrelevant if the passengers were gambling on the price of life jackets prior to hitting the iceberg.  Once the water starts pouring in, supply and demand always takes over because there is panic.  Central banks are quietly buying gold right now, and the ship is sinking.  This is definitely not a speculative driven bubble, but even if it was, panic trumps speculation every time. 

Wed, 08/03/2011 - 09:17 | Link to Comment GeorgeHayduke
GeorgeHayduke's picture

If gold is in a bubble, it's the bubble that has had the fewest participants and least overall money invested in it of all the bubbles in the past few decades..

I'll go along with Jim Willie on this one and say Treasuries and the dollar are in a bubble, not gold and silver.

Wed, 08/03/2011 - 09:16 | Link to Comment nontaxpayer
nontaxpayer's picture

People please just read the Erste bank gold report 2011 - no need to wonder is it or is it not a bubble.

Wed, 08/03/2011 - 09:16 | Link to Comment KIPPY KAPPSLOCK
KIPPY KAPPSLOCK's picture

Let the bubble talk contuinue, Who gives a toss?   Roubini....What a lop!  Do they even roll that tool out anymore?  

Wed, 08/03/2011 - 14:30 | Link to Comment akak
akak's picture

Fuck that central bankers' pet Count Chocula, and the horse he rode in on.

His credibility, at least regarding gold, has been totally shot.
He is now a member in good standing in the "Gold Hall of Shame", along with Jon Nadler, Robert Prechter and Ned Schmidt.

Wed, 08/03/2011 - 09:20 | Link to Comment oobrien
oobrien's picture

The final word on gold!

It's a threat to the very foundation of state capitalism.

That's why the powers-that-be will eventually destroy it for the average citizen.

If it gets too valuable, it'll be confiscated.

It's happened before; it'll happen again.

But what do I know?

http://geraldcelente.proboards.com

Wed, 08/03/2011 - 09:41 | Link to Comment mayhem_korner
mayhem_korner's picture

You shill - you're marketing Celente here?  He's a big boy.  Don't be bush league.

Wed, 08/03/2011 - 10:01 | Link to Comment Clay Hill
Clay Hill's picture

Give me a fucking break, oobrien. How will will it be destroyed? Toss it all into the Marianas Trench? Illegalise ownership of picks and shovels? If the Federales can't keep 20 million Mestizos from crossing the border, how can they stop me getting a few Oz's of shiny out? Answer: they can't. Ass.

Wed, 08/03/2011 - 14:32 | Link to Comment akak
akak's picture

The final word on gold!

It's a threat to the very foundation of state capitalism.

That's why the powers-that-be will eventually destroy it for the average citizen.

If it gets too valuable, it'll be confiscated.

It's happened before; it'll happen again.

But what do I know?

Apparently, very little monetary history.

Wed, 08/03/2011 - 09:20 | Link to Comment monopoly
monopoly's picture

There is no way gold is in a bubble. I have been adding to my holdings consistently and will continue to do so until there is dramatic and structural change in the way this Ponzi country is run. May need to rest for a while here but "the top is in". Not from my perch. Long a bunch.

Wed, 08/03/2011 - 09:27 | Link to Comment DaBernank
DaBernank's picture

I've been buying steadily since 2007, sleeping well!

Wed, 08/03/2011 - 10:22 | Link to Comment Clay Hill
Clay Hill's picture

The CB's are the bubble. Governments are transitory. Gold, Silver, and Farmland Bitchezzz.

Wed, 08/03/2011 - 09:24 | Link to Comment DaBernank
DaBernank's picture

Compared to USD monetary aggregates, Gold is certainly neither over-valued nor over-owned. When the price of something goes up, it is not always in a bubble. A 'bubble' is a mass psychosis for owning/buying/trading something and only really identifiable post-mortem (see Tulips, 90s internet, etc.). Another characteristic of a bubble is that it centers on an item/investment that has little 'actual' value or value far below its current price. This is where Gold causes trouble for investors, how does one 'value' Gold? What is the EBITDA? Gold has no inherent value minus its well-balanced properties of scarcity and durability, exactly the kind of properties to ride out equity, sovereign debt, and currency difficulties.

Wed, 08/03/2011 - 09:25 | Link to Comment Long-John-Silver
Long-John-Silver's picture

Gold is not the bubble. The bubble are all the fiat currency’s it is valued in.

Wed, 08/03/2011 - 09:42 | Link to Comment AmazingLarry
AmazingLarry's picture

 

Took the words right out my pie hole.

Just bought five $5 AGE's for under spot. Mainly cause they're cute, but mostly because if I carry one around with me and show it to people, NO ONE WILL HAVE A CLUE what it a) is or b) how much it's worth.

We've all seen Mark Dice try to sell a 1 oz Maple on the street for $50 when spot was at $1100, haven't we? People are fucking clueless, absolutely clueless about real money..http://www.youtube.com/watch?v=Gk5aRIz17fk

 

Wed, 08/03/2011 - 10:15 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

"People are fucking clueless, absolutely clueless about real money"

Only those in the Western World... Those in the East know what money is... perhaps one of them will tell Ben?

Wed, 08/03/2011 - 09:46 | Link to Comment High Plains Drifter
High Plains Drifter's picture

do you think oil is in a bubble.  i noticed gas prices are remaining at about 3.50 /gallon or more.........

Wed, 08/03/2011 - 09:26 | Link to Comment SheepDog-One
SheepDog-One's picture

Gold- The tiniest microbubble in world history, if a bubble at all which I dont believe it is, while naval gazers write entire articles on 'Gold...Bubble?' hey why dont you brainiacs start writing some articles on massive fraudulent bond bubbles or REIT bubbles you assclowns!

Wed, 08/03/2011 - 13:05 | Link to Comment Smiddywesson
Smiddywesson's picture

Go doggie go, sic em.

Wed, 08/03/2011 - 09:26 | Link to Comment Dr. Gonzo
Dr. Gonzo's picture

Trying to make evaluations of the number one unchallenged internationally accepted form of money with 6000 years of "tradition" while comparing it to a benchmark of fleeting and failing paper currencies that have not been convertible in that very form of specie for almost 40 years and are ultimately irredeemable and backed by governments who are in the process of defaulting is futile. You may as well ask if air and water are in a bubble unless you just don't care and want to run or live in an impoverished police/welfare Central Planned State. Then gold would be in a bubble. If you want to live in a free prosperous and functional society then it's not in a bubble.

Wed, 08/03/2011 - 09:43 | Link to Comment aerojet
aerojet's picture

I highly doubt that owning gold or not owning gold is going to make you free or indentured because any good police state can take everything you have, including gold.

Wed, 08/03/2011 - 09:47 | Link to Comment High Plains Drifter
High Plains Drifter's picture

yeh jet, but just how much gold do the silly amerikans own anyway ?  and would it be worth the trouble and expense to run around doing that stuff?

Wed, 08/03/2011 - 09:26 | Link to Comment chistletoe
chistletoe's picture

wow.

 

In the last couple of years, the Ethiopian currency, the birre,

has appreciated against the US dollar, form 8 to the dollar to 6 to the dollar.

 

I have a few of them at home so I can appreciate that the following is true:

they can and ARE being duplicated on ordinary HP inkjet printers

which are coming into the country.

 

So what does that tell you about the US dollar ......

Wed, 08/03/2011 - 09:27 | Link to Comment Dr.Evil
Dr.Evil's picture

Yes it is a bubble, like all other assets runs in cycles. However we are not even in the beginning of the cycle. It will run over it's real value which should be around $8000. Than we can start to talk about a bubble!

Wed, 08/03/2011 - 09:28 | Link to Comment au_bayitch
au_bayitch's picture

The US dollar and all other fiat currencies are not money. Gold is money, stored wealth, a measure of stored labor. These gov't issued pieces of paper are an easy exchangeable substitute. These charts of 'money' supply should be renamed.

Is gold in a bubble? Anything is only worth want someone is willing to exchange currency for it. But how many people do you personally know that have physical PM's? How many equities? What is the currency ratio of the totals?

Wed, 08/03/2011 - 09:31 | Link to Comment aerojet
aerojet's picture

Gold has all the signs of a bubble, actually:

 

An exponential price rise--check.  Won't go on forever, doesn't matter what you think you know about currencies or whatever, it will blow off and crater a lot of hopes and dreams in the process.

There are all kinds of "buy gold" and "sell your gold" messages in the media, so there's a definite attempt here to draw in Joe Sixpack, the absolute #1 key ingredient of any good bubble--having the bagholders showing up in droves (see: real estate).

A good indicator of a bubble--naive first-time buyers showing up in coin shops and purchasing physical quantities online from places like Tulving.  Give me a break.  How is any of that informed buying?  It's not!

Before you pooh-pooh me, think  about it.  Every bubble lasts just a little bit longer than anyone thinks it can so that the greatest number of suckers can be drawn in before the trap snaps shut.  Beware!

 

Wed, 08/03/2011 - 09:50 | Link to Comment trav7777
trav7777's picture

can't agree here...gold is far too expensive for an ordinary person to be able to plunk down anything.

WTF, you think J6P's woman is going to go into a coin shop and drop $200 for a coin the size of a freakin DIME?  Try it sometime- take a sheeple into a coin store with you.  I did one time and she was derisive about "how much he spent" on bags of junk silver.  Like that guy just spent $4800 (or whatever) on those coins.  Like it was a foolish expenditure of money.  And if I bought a Krug or something, same attitude.  Tell her to save her money and she retorts oh well YOU just spent freaking $1x00 on a stupid coin!

The naivete class is a net SELLER of gold.  This is how C4Gs are everywhere and it's such a growth business.  The sheeps are desperate for cash to fund merchandise purchases and for entertainment. 

Wed, 08/03/2011 - 10:24 | Link to Comment SheepDog-One
SheepDog-One's picture

I went to the farmers market with silver dimes to see what people knew about PM's, no one there would sell me 4 peaches for $1 with a $3 dime...shows what the avg american knows about real money.

Wed, 08/03/2011 - 10:57 | Link to Comment Silver Dreamer
Silver Dreamer's picture

It is ignorance none the less, but I blame this mostly on human psychology.  People do not look at currency as a store of wealth anymore.  They look at it from the perspective of what they can turn immediately around and purchase with it.  They see a silver coin and think, "What the hell will I be able to buy with that?"  We are hard wired to spend, spend, and spend some more.  Save?  What the hell is that.  You must be paranoid!  ;-)

Wed, 08/03/2011 - 09:51 | Link to Comment mayhem_korner
mayhem_korner's picture

Disagree.

Look at past bubbles.  Tech stocks, housing, etc.  The telltale sign of a bubble is on the sell side, not the buy side.  Over supply of tech stocks - boom!  Oversupply of housing - boom!  When "naive" first-time buyers are showing up and prices are at all time (nominal) highs, that is not the sign of a bubble.  If those same persons were panning for gold to sell, that would be a better indicator.

Gold has a scarcity attribute that many other (paper) asset classes do not.

Wed, 08/03/2011 - 09:52 | Link to Comment High Plains Drifter
High Plains Drifter's picture

do you understand commodity bull markets?   also, can you tell me one reason why any investment that most americans are in these days can be truely trusted?  also, do you think the government and the central banks are ever going to do the right thing?  something to consider, no?

Wed, 08/03/2011 - 10:18 | Link to Comment Roger Knights
Roger Knights's picture

"An exponential price rise--check."

Uncheck. It's been a steady 22% or so per year.

"A good indicator of a bubble--naive first-time buyers showing up in coin shops and purchasing physical quantities online from places like Tulving.  Give me a break.  How is any of that informed buying?"

So where are the informed physical gold buyers to buy from? The mint?

"There are all kinds of "buy gold" and "sell your gold" messages in the media, so there's a definite attempt here to draw in Joe Sixpack, …"

The second message counteracts the first. And there are few "buy gold" messages in the media, except for a few outliers like the Glenn Beck show. Only that NYT/Nobel economist believes that's been driving the price of gold.

"… the absolute #1 key ingredient of any good bubble"

Gold's rise doesn't need them. It's being driven now primarily by Asian buying and by the buying of prudent, wealthy westerners. (Read the article.) Not by any mass mania. and not by highly leveraged speculation on futures markets, but much more by the less leveraged buying of gold ETFs.

If gold were in a bubble, miners would be skyrocketing, as they have during prior peaks. Instead, they’re lagging, in large part because traditional speculators don’t believe the rise in gold’s price is sustainable.

 

Wed, 08/03/2011 - 10:40 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

I strongly disagree...

58% of all physical PM sales are being made in 2 countries... China and India. Another huge percentage is going to Viet Nam, Indonesia, other SE Asian countries and the Mid Easterners.

The very small quantity of physical PMs being sold in the US or even in the Western Economies is nothing in comparision.

In the East PMs have always been valued above paper... that has not changed.

Wed, 08/03/2011 - 13:19 | Link to Comment Smiddywesson
Smiddywesson's picture

Aeorjet,

You forgot that bubbles are fueled by the greater fool principal, that the price is only justified because it is assume a greater fool will show up to pay for it.  Unfortunately, sooner or later, you run out of buyers.

Contrast that with the gold trade.  The greater fool principal is almost non existent.  The public has not caught gold fever yet, and the higher prices are easily explainable by the economic situation.   More importantly, I challenge the concept of higher prices.  If the yardstick that is used to measure price is being shrunken, which is what we are doing in debasing the currency, how can we say we have reached excessive prices?

You have a confirmation bias against gold.  You are desperately searching for a bubble.  The price action is not characteristic of a bubble.  Prices have steadily marched up over the last decade, central banks are buying mass quantities, and the global economy is in ruins.  If you think that resembles a tullip bubble, good luck.

Wed, 08/03/2011 - 09:33 | Link to Comment Dangertime
Dangertime's picture

Not a bubble, yet.

Give it three years or so when the cab drivers are telling you which gold exploration companies will provide the best returns.  Only then will the end be upon us.

Wed, 08/03/2011 - 09:54 | Link to Comment High Plains Drifter
High Plains Drifter's picture

heck , most americans think that gold is overpriced right now. what will they do when it is even more expensive?  the fact is, imho, most americans have missed this move and the gold train left the station and most of them are not on it and never will be on it...........

Wed, 08/03/2011 - 10:03 | Link to Comment Dangertime
Dangertime's picture

The funny thing about asset prices.....the more they move up, the more desperate people get to buy it.

Tech stocks, housing, gold in the 80's, silver this last april even........

We will have a bubble, and the people will participate.  Whether it is from fear of their dollar falling to $0.00 or greed at seeing gold hit the moon and thinking it will never end.

The bubble will make an appearance at some point.

 

Wed, 08/03/2011 - 10:14 | Link to Comment High Plains Drifter
High Plains Drifter's picture

yes , and then one must bring the "industrial "  metal into the discussion now.  when gold gets more and more expensive , the sheep will attempt to get on the metal train. they will think that gold is too exensive, so they will start buying  silver bullion.........no?    silver is the key here.............gold is just window dressing..........silver has always been the key because it is the poor man's gold.......and is money..........real money.............

Wed, 08/03/2011 - 10:21 | Link to Comment Dangertime
Dangertime's picture

Exactly.  When gold is too high, then comes silver.  Perhaps that is why silver's moves are so volcanic?  Because that's where the common herd stampedes?

Wed, 08/03/2011 - 10:30 | Link to Comment High Plains Drifter
High Plains Drifter's picture

extreme volatility is indigenous to the silver market. mainly becasue it is even thinner that the gold market. therefore it is easier to manipulate, thanks to JPM and HSBC etc  they jack with silver to affect gold prices........since these two are brothers, when you mess with one, you affect the other . 

Wed, 08/03/2011 - 10:42 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

'the train has left the station' ... Yes, it has... and it's loaded with PMs that are bound for the Far East and Mid East.

Wed, 08/03/2011 - 13:29 | Link to Comment Smiddywesson
Smiddywesson's picture

Most missed the move to date, which I believe will be dwarfed by the move to come. 

Bubble people:  Are rare earth elements in a bubble?  There has been speculation there too and the price has risen.  There has been advertsing for rare earth element companies, does that make a bubble?  Or is it that the supply is too thin for the demand?  Is the supply of gold likely to increase?  Is the demand likely to decrease in this abortion of a global economy?  Good luck with that bubble thesis. 

Wed, 08/03/2011 - 09:36 | Link to Comment warchopper
warchopper's picture

when people start digging up granny for her gold. that will be when gold is in a bubble.

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