As many have said, even on Wall Street, "it is different this time" and it certainly is. The US$ index may totally change direction but as a trend follower I am not convinced till I see it. So I will stay long gold.
It's different this time!! I have heard that before:-
-the commodities bull of the 70's
-the crash of 87,
-the the dot com crash of 2000
- and I read it was said in the late 1920's
ALL OF THEM ENDED IN BUST
There is nothing different this time
The that hath been, it is that which shall be; and that which is done is that which shall be done; and there is no new thing under the sun.
Good Luck
Can someone please disproove some very simple theory I stated earlier:
If inflation in the US keeps soaring, what will happen to the USD? Based on PPP?
USD cannot keep rising, no? Or arbitrage will exist?
And I would say there is a new paradigm shift in the global economy, how history can remain the same (at least the last 100 years + of stockmarket data) is beyond me! Similarities, but a very different landscape.
As for comparison between the dot.com bubble and the commodity bubble, you cannot be serious? My last paragraph is exactly what I am talking about, unless China/India start to really struggle and growth flatten out, we will not see a "pop" so to speak of this commodity bubble. It is not a dot.com 1000x P/E ratio based on an "idea" of where the gobal marketplace is heading, rather more a prooven idea on where the global marketplace is heading. Commodities are also not tulips if you know what I mean
Disclaimer: I currently hold practically no commodities in my portfolio.
There is a view, expressed on Bloomberg TV, that the US Dollar is expected to appreciate in the second quarter of 2008 and the gold move may have something to do with this.
Now for PPP and if inflation keeps rising, how the USD will rise?
You cannot be serious?
Why would they rise rates in the short-term, after they have just been slashing them.
Remember, most effects of a rate cut (or rise) dont filter into the economy until 1+ years.
Talk about the Fed and contradition, even Ben is not that dumb!
I have no doubt growth will slow down in China/India, but that dramatic so as to cause a "pop" of this "bubble"? First of all, I guess we have to define what constitutes a bubble and what constitutes a pop.
I beleive there is further to fall (perhaps quiet a lot), however there is still some great strength for commodities over the longer term. Unlike the dot.com or tulip bubbles, which were more of an "idea" than a "reality".
I will not be convinced of a trend change until I see it. Hence, I am out of commodities! I dont see a point of predicting, when you can wait and have it confirmed for you by price action.
What fundamentals have changed in the commodity sector? I agree growth will slow, pushing prices down, at least the speculation bubble in itself has popped with a transfer of assets and safer margins (which I have done myself), but like I say above, unless China and India experience a dramatic impact from the US then commodities will come back to the forefront of many investments.
Now for PPP and if inflation keeps rising, how the USD will rise?
You cannot be serious?
Why would they rise rates in the short-term, after they have just been slashing them.
Remember, most effects of a rate cut (or rise) dont filter into the economy until 1+ years.
Talk about the Fed and contradition, even Ben is not that dumb!
Good question. My expected bottom is either $900-905 (in that case already in. Next strong support is $880-890, with very strong support from $850-875.Out of curiosity, at what price would some gold devout-believers be convinced of a trend change? Hypothetically (not saying it would happen!), would some true believers follow the price all the way down to $700?
Fed could raise interest rates. That in itself could help the economy along ... as perhaps may are waiting on the sidelines for this apparent 0% that may arise. Shock of reality might suddenly spur them in.
Many are stashing their cash in hedges against inflation as well; such as commodities. This isn't beneficial to the economy either ... I honestly believe rates won't go below 1.5; or perhaps even what they're at now.
Tell me, what would an unexpected rate rise would do to the price of gold? Off a cliff:
The Fed will drop rates at the short end, the market will raise them at the long end. The Fed follows the market, the Fed will start raising when inflation is so evident even through their distorted, massaged and manipulated figures, and then it will raise them begrudingly and behind the true rate of inflation (already double digit if the same calculations used as was used to calculate inflation in the 70s).
If interest rates stay behind the real rate of inflation even if they rise, gold rises too. Look at charts from the 70s, gold didn't stop rising til they hit 17%. Both rose together in tandem.
That's a drop of more than 50% from the recent high.I think it would be under $500USD before I'd really seriously question whether I had everything wrong.
Both are used as currency, their only real value being in the promise that they can be exchanged for goods and services. Unlike the USD though, gold cannot be inflated away by large increases in supply. That helps maintain confidence, and thus demand, for gold as a form of currency that will hold its value.USD is backed by nothing? What is gold backed by?
Yes, but it's all speculation; we can only guess what / when they'll do certain things.
You would really hold on to hold to $500? Surely you'd be selling / re buying ... sure, gold is perhaps great for a trader, but not so much for a medium term investor imo.
I guess I just don't believe gold to be as sure-a-thing as many seem to think. Surely, if it were such an easy bet; it would already be priced to reflect all of these "guarantees" - the collapse of the USD, & all the other "facts".
Why aren't all managed funds pouring their money into Gold EFTs? Why does GS have short positions (do they still?) on gold?
Frankly, by the charts - depending on the year you begin from ... Gold has been a piss-poor performer! In 78'-80 it was 750 ... and it's only just hit that price range again! 30 years ... that is disgraceful. If you had bought in at 300 back in 79, & held with a long term, bottom-draw plan ... your money would not have made any gains if you sold up in 03. Wouldn't have even matched inflation.
All I'm saying is; it plummeted then, & it may eventually plummet again.
If this "secret, inside, select few, special" knowledge that seems to be possessed by many gold bugs doesn't ever become known / believed by the general public, gold simply won't budge.
Furthermore, gold is a metal. A precious, useless, shiny commodity; which merely has the perception of being something special: But, I accept that - for the time being, & probably for a long while yet ... it is just that. Something special.
In the eventual-long-term (not in our generation) I do see gold completely collapsing. People argue that once there's none left to mine, prices will rocket ... I disagree. Prices could plummet! If there's no longer any work-value placed on gold (the effort in getting it), & no more can be made / found ... and as population grows / it's only held by a few, who the hell would buy the archaic relic? Perhaps collectors? I know I sure wouldn't:
Here's something philosophical to ponder over; USD is backed by nothing? What is gold backed by?...
Gee Explod, you're starting to sound like Chicken.If you did that you would be purchasing all the gold you could get your hands on and dont' take my word for it read the thread and see for yourself.
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