Re: Inflation/Deflation trade
cat tail
4/24/2012 10:08:07 AM
Ah, yea, @Scott, haven't you been explaining that for months?
Yes, there is something concrete. Gold is a store of value. When paper currencies are devalued it retains its value.
Re: Inflation/Deflation trade
Broadway
4/23/2012 10:29:00 PM
Right, Scott. But is there something concrete in that correlation between gold and monetary policy or simply buyers perception and fear?
Well, I could buy your argument, if you provided some proof or empirical evidence.
Like I said I studied this for years and wrote a huge report on it and came to the opposite conclusion -- gold is 80% correlated with the moneys supply.
http://www.investoruprising.com/document.asp?doc_id=232695
My thinking was that the current price is a distorted representation of its value. We're looking at a premium created by the fear of dysfunction in the monetary system. Then again, price is price, and what you say is true as long as perceptions hold.
Heinrich?
Seems like you have the tail wagging the dog. The gold price influences the profit margin of gold miners, but my research shows that industrial demand and production has had little effect on the gold price in recent years -- it's almost all driven by monetary factors these days.
Gold and other assets will fall until the Fed starts buying assets again. When will they do that? It depends on how fast asset prices fall and how quickly things get bad. Given this morning's rate of decline, they could telegraph a move at their meeting this week.
Remember in the past the fed has stuck to a pattern -- letting the asset-purchasing program expire, watching markets fall, telegraphing a new program, and then starting the new program.
This has been basically going on for 3 years!
Re: Inflation/Deflation trade
AskAsa
4/23/2012 9:32:12 AM
When? An estimate will suffice, because my crystal ball is totally useless!
Re: Inflation/Deflation trade
tokyogai
4/23/2012 9:29:29 AM
Scott- I agree for the forseeable future. At some point , however, this madness will stop.
Traders are hoping for at least a 25% jump in gold buying tomorrow as consumers head to the shops on Akshaya Tritiya, considered one of the most auspicious days to buy the precious metal. Gold bought and worn on the day is believed to bring never-diminishing good fortune.
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