Gold hits record high on debt fears and chance of more Fed stimulus

Where did I type that it is not eventually going to fall?

Of course it is (IMO).

But that is probably not going to happen before the Fed and other world central banks and governments start worrying a LOT more about inflation and monetary instability.

And when they do - then I will probably pull out of gold/silver immediately.

And until then, I guarantee you that they will - overall - far outperform the DOW.

 

Commodities, they are easy to understand and predict and generic, copper is copper whereas every copper mining stock is very different. Plus you can leverage, which is the only way to actually make money off of slim margins.

 

Yeah this is all typical of bubbles. 4.2 years ago every realtor in the nation would tell you that as fast as RE prices were rising folks were bidding above asking price anyway just to land a deal.

Then reality bit hard into the ass of the bubble and POP!

Look at Gold in 1980! I mean seriously, LOOK at Gold in 1980!



Look at silver in 1980!



Are you gonna learn from history or repeat past mistakes?

 

Gold and silver rocketed up in basically one year back around '80.

This time, both have been rising very strongly (more or less) for 5 years and counting.

Big difference.

1980 was a bubble.

Today is not - yet.

And when/if it becomes one - I'll sell.

But the reasons gold/silver are rising are still prevalent (inflation/monetary instability).



You say they are over-priced.

I say they aren't.

We shall see who was right.

 

DA60, do you know why gold and silver spiked in 1980? Do you understand the chain of events that caused that to occur, what preceded and followed the spikes in precious metals in 1980?

No matter what the reason is behind today's gold bubble, it is definitely a bubble. Relative Gold prices are far above what other hard commodities are.

Here is oil:

see the bubble that formed and popped between 2001 and June of 2007?

classic bubbles. When everybody starts owning some gold or silver you KNOW that the price is just about to collapse.

And unlike gold, oil actually serves a purpose. It has real value.

 

I have already explained why I do not think gold/silver is in a bubble (yet).

You seem to think the price(s) is(are) going to collapse soon.

You also keep mentioning that they are not used like oil is. That has absolutely nothing to do with why gold/silver goes up.

For the umpteenth time - gold/silver rise due to economic fears and inflation/monetary instabilities (even Bernanke admits that)...NO OTHER PRIMARY REASON.

And those reasons are still very much in play. And as long as they are - gold/silver will continue to (more or less) rise.

You obviously disagree - fine.

I am not interested in debating over and over about this - I have already made my points.

I will let the market prove which of us was right.

 

iow for irrational reasons. Meanwhile all evidence points to a giant bubble in Gold and silver prices.

 

You mean all the evidence you believe in points to a bubble.

All the evidence I believe in does not.

The market will prove which evidence was the correct evidence.

 

DA60, I care about you enough to keep you from getting fleeced.

The deal is that all evidence does point to gold and silver prices as bubbles set to pop.

You think gold and silver are different. OK.

I asked you earlier if you knew what caused the 1980's rally. You didn't answer. In the early 70's the US took the dollar off the gold standard, meaning the dollar was suddenly backed by nothing but debt, confidence or fiat depending on how you look at it. It was worthless paper, whereas weeks earlier it had been backed by gold.

It took a while for that change to manifest itself in new valuations for real assets and commodities but it did. First it was oil, the OPEC nations demanded gold for oil, and they boycotted us twice to drive their point home. They didn't get gold for oil but what they did get was both oil and dollars that were floated on the open market.

Oil prices soared and soon metals followed. The inflation rate was around 13%/year for nearly 4 years in the US.

That was a real currency crisis. Our entire money supply was debased in a day.

Comparitively QEI, II, and III are fairly mild currency debasement schemes offset almost entirely by the debasement of all rival currencies (yen, yuan, Euro). Commodities are definitely reflecting the debasement of currency around the globe. But no other commodities are rising like gold and silver, not even close.

When a few token metals depart so radically from the performance of commodities in general there is either a real change in industrial demand and consumption that is driving the pricing disparity or there is a bubble.

In this case there is a huge bubble. Nobody eats gold or makes essential survival wares of it. You can't use it to run an auto, or turn on the electrical generators.

People are buying gold as a hedge, because they are afraid, or because they want to make a profit off the bubble.

But even those folks who are profiting from the bubble realize it is a bubble and recognize that the time will arrive when they have to switch to short positions.

Which accounts for why so much gold is purchased without ever taking delivery.

 

And I care about you too - .

Thanks for the explanation but I stand behind what I typed before - gold/silver will continue to rise as long as there is monetary/inflation instability.

That is not just me saying it. That is Marc Faber, Jim Rogers, Peter Schiff and many other 'economists' who were right about the housing bust (unlike most 'economists') and who properly understand the economic and inflationary mess that the West is embarking upon (even though most 'economists' don't -apparently).

There is no point in debating this further - my mind is made up.

I will let the markets decide who was right.

 

Would you be saying this same thing in 1978 and 1979? That is, people's economic fears and inflation/monetary instabilities were causing gold prices to rise, and they were still in play, so they should continue to rise until those things stopped?

http://goldprice.org/30-year-gold-price-history.html

 

If you look at the Prime rate back then:

http://www.wsjprimerate.us/wall_street_journal_prime_rate_history.htm

http://www.usinflationcalculator.com/inflation/historical-inflation-rates/

In early November, the inflation rate dipped slightly in October and the Fed backed off it's high interest rate policy...and gold/silver prices went nuts (not that this was the only reason).

Inflation shot up again and the Fed finally said 'enough is enough' and started raising rates again.
Not long after that, gold/silver plummeted (silver greatly aided on it''s roller coaster by the Hunt brothers, apparently).

As soon as the Fed started raising rates again, everyone should have immediately left gold/silver...and most did.

What is going on here in that the government/Fed is generating these large monetary instabilities and are driving up inflation (real inflation; not the ridiculous CPI the Fed uses).

As soon as they come out and say 'enough is enough' and start fighting inflation and stop printing money...I will be out of silver/gold.

But until then, barring some huge war or some other thing that drives people to the dollar out of pure panic (assuming it still is worth driving to by then), gold and silver will undoubtedly continue to rise - off and on; but mostly on.

And as I keep saying - I will let gold/silver prices prove who is right and who is wrong.

 

they already have, but you keep dismissing the evidence.

Gold is certainly no better a hedge against inflation and currency debasement than oil and food are. And yet gold is charting a bubbly ascent that no other commodity save silver can follow.

Obviously this is irrational market theory writ large, or a CLASSIC BUBBLE!

 

We shall see.

 

Can't stop this Loving feeling, can't stop this loving feeling.

 

BTW - I assume gold/silver will (temproarily) correct once Washington hammers out an agreement on the budget.

That is assuming the deal they come up with looks remotely okay to most of the economic ignoramuses that seem to call themselves 'economists' these days.

If the deal looks bad to everyone, then the rally might continue.

But I am assuming the former.

 

People are worried the US dollar will collapse or drop significantly in value.

While gold might be slightly over-valued (I don't know), it's not a situation where it's about to pop and become worthless. When the Continental Bills of Credit defaulted, we went back to Trade and Barter with gold as an excepted medium of exchange. We then used gold until the civil war and the greenbacks. The price of gold also spiked when we broke the gold-link under Nixon, but when gold readjusted it didn't drop below previous levels. It then climbed steadily ever since. The trend has been basically upward for thirty years.

 

What I love is how Tea Party "economists" engage in mind reading. It's a gift.

What "people" are worried the US dollar will collapse? What's your evidence of that?

Oh, the stupid gold bugs maybe. If the US defaults, US dollars will RISE in value, not fall, since dollars are the second safest investment on the planet after T-bills. If T-bills lose value, everybody will be hording dollars.

Jesus. Nothing like voodoo Tea Party economics.

 

It's actually historical fact that we used gold as currency prior to Bills of Credit.

The first US Government issued Continental Bills of Credit which it defaulted on.

People went back to Bartering and using Gold as the currency up until the civil war.

It's not mind reading, it's the predictable behavior of market economics.

Sorry if that is too informative for you.

 

LOL

Yeah, like imagining the top 10% income earners in America can support 90% of the income tax revenues? That kind of voodoo?

 

Progressives don't need math or logistics, they have blind faith to impractical ideology.

 

That's why since this default talk has started the dollar index has dropped from about 76 to 73, gold is setting new record highs almost daily and silver has jumped 20% since July 1...because people are about to run to the greenback?

Riiiiight.

 

Actually they can given the vast amount of wealth inequality, but fortunately nobody is proposing that, so you seem confused.

 

You claimed you knew what investors around the world are "worried" about.

Are you clairvoyant or do they send you radio transmission to a reciever in your butt?

I asked for some evidence of your claim. You responded with this. You've been owned man.

 

When have you EVER given unbiased evidence to ANY claim you have made on here?