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Platinum NO RATINGS 
We agree.
The politicians can say whatever they want, their friends in the media can make up all manner of strange ideas - its all just noise. As long as we have wages are growing slower than inflation, our economny stinks. And yes, as long as that's true, commodities includign Gold will be good investments. PC  User Rank
Platinum NO RATINGS
@PC, haven't wages been stagnant since Reagan? So has the economy stunk since then? It really has been terrible for the middle and working classes since the 80s when the economy has been split in two: fun and games for the 1%, and a struggle for everyone else. You chose to blame a "media conspiracy"....
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Blogger NO RATINGS
Let's try to find out. We can start by going back to 2000, based on data from SentierResearch.com.
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Blogger NO RATINGS
Going all the way back to 1980, you can see there was basically only a few years when wages increased more than inflation (and that's using the Fed definition of inflation).
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Iron NO RATINGS
That is not a very uplifting graph. But it explains the feeling of running in place.
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Iron NO RATINGS
One step forward, two steps back. Something has to give.
 User Rank
Platinum NO RATINGS
The fact that wages have failed to keep up with true costs of living explains the malaise and frustration so many people seem to feel. What's the solution?
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Platinum NO RATINGS
From a practical perspective, how do we respond to this information and protect ourselves? Obviously include some gold in the portfolio. But what other strategies are worth considering given the state of things?
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Platinum NO RATINGS
I'm leaning toward natural resources -- Energy, Agriculture and Minerals -- as well as the gold we've already mentioned.
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Iron NO RATINGS
There's a good argument to be made for natural resources. Apple can make more iPads but there is a finite amount of commodities like oil.
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Platinum NO RATINGS
If you look at CNBC or most of the mainstream investment periodicals, you'll see all kinds of comments about the happy-go-lucky bull market
@Broadway - I wouldn't call this a "media conspiracy". It's just that many of the people talking about markets in the media have a lot of time to fill. And it seems to me, they are often still talking after they've reached the point where they don't really have anything more to say. This doesn't mean there is a conspiracy, but it does mean that we're wise not to put too much stock in someone on TV saying things like "we've talked the Greek debt crisis to death, its time to move on." PC  User Rank
Blogger NO RATINGS
The gold trade is pretty simple: Do you think they will stop quantitative easing and other inflationary programs and let the markets settle where they should? Or will they continue to reflate on any market weakness.
It seems to me given the actions and words from central bankers around the world that the answer is that latter. That will be good for gold.  User Rank
Platinum NO RATINGS
Scott- I agree for the forseeable future. At some point , however, this madness will stop.
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Platinum NO RATINGS
When? An estimate will suffice, because my crystal ball is totally useless!
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Blogger NO RATINGS
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! User Rank
Blogger NO RATINGS
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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Blogger NO RATINGS
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.  User Rank
Iron NO RATINGS
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.
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Blogger NO RATINGS
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 User Rank
Platinum NO RATINGS
Right, Scott. But is there something concrete in that correlation between gold and monetary policy or simply buyers perception and fear?
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Blogger NO RATINGS
Yes, there is something concrete. Gold is a store of value. When paper currencies are devalued it retains its value.
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Platinum NO RATINGS
Ah, yea, @Scott, haven't you been explaining that for months?
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Blogger NO RATINGS
Sure. But it's not like you have to preach to me.
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Platinum NO RATINGS
@Scott
Some of us read a lot of the content on IU. We understand your well-supported explanation of how printing more and more money means that prices for gold will continue their upward trend in the most-likely scenarios. User Rank
Blogger NO RATINGS
@PredictableChaos
Thanks. I understand that you understand. I guess I'm just more concerned that I get a lot of puzzled feedback on why gold would be related to currency values. I wonder why that it isn't common sense to people. If you have a lump of coal and a paper currency sitting on your desk next to each other and suddenly the paper currency is devalued by 50%, that means the lump of coal will be worth twice as much in that currency (because you suddenly need twice as much money to buy it in the new currency). It's the magic of hard assets and it makes sense to me. Maybe other people don't see it that way. I continue to believe that hard assets including gold need to be a big part of investment portfolios because of the extreme risk in global currency devaluations. User Rank
Platinum NO RATINGS
You've thought about these issues a whole lot more than most people, Scott. And because of that, you've got some ideas that don't always follow the mainstream thinking people are getting from lots of other sources.
For decades, people have heard "backed by the full faith and credit of the US Government" and imagined that it means more than it does. I think you're exactly right about the debt, but political debates about the deficit - Is a deficit good for the economy? have been around a long time. Many people don't fully understand that the US deficit is now 9% of GDP. Economic arguments in favor of growing the deficit - just aren't relevant anymroe. Think of it this way - when the Gold bubble peaks ($3,000?) most IU readers will be selling their last bits or already on the sidelines. If someone who's ever been to IU is still buying at that point, well - you can lead a horse to water...but you can't make them drink. PC User Rank
Blogger NO RATINGS
@Heinrich
Not really understanding your point. Gold is a currency. The difference between gold and U.S. Dollars is that its supply cannot be manipulated easily because gold consumption, production, and supply numbers are rather steady. Dollars, however, can be printed with the press of a computer button. Gold has been rising faster and faster, in fact, because the computer buttons have been pressed faster and faster. I would also point out that this is not just about dollars, as gold has been rising against every currency on earth. As far as who holds gold, it constitutes less than 3% of the monetary assets in the financial markets so it is not yet over-owned. User Rank
Platinum NO RATINGS
It seems pretty simple. As long as the fed believes liquidity is the answer and keeps pumping more money into the financial system then we can only see further weakening of the dollar and further strengthening of gold.
Taken to an extreme...if the whole financial system falls apart. dollars will be good for, well, campfires. But gold will still have intrinsic value. User Rank
Blogger NO RATINGS
@AskAsa
That's exactly right. People have a hard time grasping the scale of things because the numbers are so large. But when you talk about world indebtedness it is trillions of dollars, in excess of the GDP of many countries. One of my trading gurus over time has been Jim Sinclair. For a few years I was trading gold for my own account, he was my go-to expert. His analysis has been spot on. He says there are only two solutions to the world debt crisis 1) Let stuff collapse, fall into depression or 2) print, print, print. Not surprisingly he believes world governments will take option 2. "Austerity" will not work as a solution because it is too late. It's like locking up your stable after the horses have gotten out. Take a look at this reference which kind of puts things in perspective: http://www.jsmineset.com/2012/04/24/jims-mailbox-915/  User Rank
Iron NO RATINGS
@Scott,
Nice reference. Looks like Jim Sinclair is good at charts. One of them is quite interesting. Unemployment rate and Nazi votes. Hmmm, scary... User Rank
Blogger NO RATINGS
Yes, exactly.
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Iron NO RATINGS Lenore thanks for bringing the point home. For those on the recovery band wagon they are not viewing the complete picture. We are far from recovery and I am not selling my gold. The world macro factors are still perilous and that will continue to drive the value of gold. I am all in. The blogs and comments posted on Investor Uprising do not reflect the views of Investor Uprising, PRNewswire, or its sponsors. Investor Uprising, PRNewswire, and its sponsors do not assume responsibility for any comments, claims, or opinions made by authors and bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose. |
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