Gold gets slaughtered

[CrowEpistemologist]

http://blogs.marketwatch.com/thetell/2013/04/15/amid-gold-slaughter-1300-even-1200-seen-as-lines-in-the-sand/

 

I think Paul Krugman set off the final panic (all of the smart money left a few months ago when Goldman announced their departure from the market):

 

http://krugman.blogs.nytimes.com/2013/04/15/gold-does-not-glitter/

 

Krugman makes the point that I've made here many times: that gold's run-up is based on Fox News-fed irrational and baseless fears of a financial apocalypse ("and now a word our sponsors at the Gold Industry").

 

How much you wanna bet Rupert Murdoch already cashed out three months ago?

 

Rationalism kills.

 

 

[Grames]

Buy the dip.

[Nicky]

Actually, it fell by a few percent, it wasn't slaughtered. Actually nr. 2, it was over news from China, not anything Paul Krugman said.

 

So just calm down with the "I told you so"s. Your "points" are still nonsense.

[softwareNerd]

I think Paul Krugman set off the final panic ...

Rationalism what? Do you seriously think that gold bugs listen to Krugman. Do you seriously think that a significant percentage of other investors who have bought gold over the last few years read what Krugman says as investment advice!

Krugman is primarily a political hack, but that is incidental to the mistake you're making here: he has almost no impact on the typical gold-buyer. I can see people taking Goldman's view into account. Even if they disagree on fundamentals, one has to take Goldman's views into account.

Finally, the idea that "gold is being slaughtered" is analogous the the way AAPL was just slaughtered. Look at a 5 or 10 year chart. Then ask yourself what your time-horizon is. People who predict what the prices of financial assets are going to be within the next year are largely hacks.

[dream_weaver]

Hopefully the shelves are still stocked. Sometimes these type of sales leave some shop-owners passing out rain-checks.

[CrowEpistemologist]

Actually, it fell by a few percent, it wasn't slaughtered. Actually nr. 2, it was over news from China, not anything Paul Krugman said.

 

So just calm down with the "I told you so"s. Your "points" are still nonsense.

 

At the moment gold is down about 8% for the day. This for a commodity that... isn't supposed to be volatile...

 

I'm curious how far down the rat hole your incurable rationalism is going to take you. This might be fun to watch.

[CrowEpistemologist]

Rationalism what? Do you seriously think that gold bugs listen to Krugman. Do you seriously think that a significant percentage of other investors who have bought gold over the last few years read what Krugman says as investment advice!

Krugman is primarily a political hack, but that is incidental to the mistake you're making here: he has almost no impact on the typical gold-buyer. I can see people taking Goldman's view into account. Even if they disagree on fundamentals, one has to take Goldman's views into account.

Finally, the idea that "gold is being slaughtered" is analogous the the way AAPL was just slaughtered. Look at a 5 or 10 year chart. Then ask yourself what your time-horizon is. People who predict what the prices of financial assets are going to be within the next year are largely hacks.

 

 

Um, I think I've made the case here in the past that "investors" have actually listened to Glenn Beck, Fox News, and the TV commercials coinciding with the same. They don't listen to Krugman, no.

 

Goldman just rides waves, which is why they make the big bucks. They got in when they saw that con was on, and got out when they saw it running out of gas. And yes, Goldman is the "smart money", but they don't dictate the world. I imagined that PK might have been the last straw, that's all. It's a theory, obviously, but I think a decent one. When bubbles pop, little things set them off.

 

I agree that it's foolhardy to predict the price of volatile, hype-driven assets. There's a science that tries to beat the odds, and some make a lot of money doing it, but that just means they are right slightly more than they are wrong.

 

The but point in question here is not the prediction being right or wrong, but rather the fact that gold is just another hype-driven asset and not some kind of magic arbiter of absolute intrinsic value. Gold is, in fact, just like AAPL in a lot of ways, although AAPL actually makes things and is useful to the world (not to mention that something like 30% of their stock price is simply their cash) whereas Gold is pure speculation.

 

The bottom line is that gold is not magic, it's just another investment instrument that fluctuates in price and in intrinsic value. Gold going up does not mean dollars are less valuable, nor does it going down mean they are more valuable.

[JASKN]

The bottom line is that gold is not magic, it's just another investment instrument that fluctuates in price and in intrinsic value.

Is this your point? I don't think you'd find many who would disagree.

[softwareNerd]

Um, I think I've made the case here in the past that "investors" have actually listened to Glenn Beck, Fox News, and the TV commercials coinciding with the same.

I do hope the nobody here gets advice from Glen Beck, least of all investment advice. Well, perhaps "nobody" is too strong... but you get the point. Edited April 15, 2013 by softwareNerd

[CrowEpistemologist]

I do hope the nobody here gets advice from Glen Beck, least of all investment advice. Well, perhaps "nobody" is too strong... but you get the point.

 

Well you know, we all hope. But it's wishful thinking...

[softwareNerd]

Well you know, we all hope. But it's wishful thinking...

Let's put it this way: there is no evidence that Objectivists on this forum (or elsewhere for that matter) take Glen Beck seriously... particularly not when it comes to investment advice. So, no, it is not wishful thinking on my part... perhaps on yours.

[dream_weaver]

Any of the precious metal sites with contributing commentators have their cut of bull and bear commentators. Many of the hide behind their charts and statistics as their divining rods, and separating the wheat from the chaff takes time and effort. The historians always bring more interesting observations to consider.

 

Beck and Krugman are entertainers. They are paid to keep the audience tuned in to keep the commercial revenue streams flowing.

 

The trend chasers or reactionary traders will weed themselves from any market they are ill-equipped to deal with.

 

It seems that when the occasional ill wind blows, there will always be those who find an opportunity to fly their kites. Pulling on the string to keep the colorful piece of framed paper in the sky will always be more effective than pushing on the string to try the same.

[softwareNerd]

Here's a link to a relevant post that just came through on Gallup's feed. To summarize: for over a year, people polled have chosen gold as "the best long-term investment", but the percentage of such people has been falling. Now, real-estate has overtaken gold once more, and stocks are more in favor too. Broken down by demographic, men and people over 50 still favor gold more than other options. 

Edited April 17, 2013 by softwareNerd

[CrowEpistemologist]

Here's a link to a relevant post that just came through on Gallup's feed. To summarize: for over a year, people polled have chosen gold as "the best long-term investment", but the percentage of such people has been falling. Now, real-estate has overtaken gold once more, and stocks are more in favor too. Broken down by demographic, men and people over 50 still favor gold more than other options. 

 

I think it will fall further still. I see gold going to $600 or so possibly. Most others are saying $1000 at this point but lots of those old white men (coincidentally the exact demographic of Fox News) are going to drop their religion in a hurry and head for greenbacks or stocks or anything else since they have real bills to pay. Moreover, I believe we live in the Age of Bubbles financially (long story), so I think things are going to be a lot more bubbly in the future, with steep curves up and then down. Bubbles require assets with no intrinsic value like .bomb stocks with no revenue or profits in the 1990s or pretty things like tulips in the 1630s.

 

Yes, there are always the Preppers and their ilk who will follow the yellow metal right into the floor, so while you short gold you might consider shorting Smith and Wesson (SWHC) and anything else that outfits today's most fetching bomb shelters.

 

Meanwhile, the US dollar didn't magically get less valuable during gold's run-up, and it won't magically get more valuable during gold's plunge. US dollars, to be sure, are far safer than gold right now...

[happiness]

it'd down to what, it's 2011 low? In a bull market now in its 13th year?

Gold is volatile because the global economy is bad, which is fundamentally good for gold in the long term.

Edited April 18, 2013 by happiness

[Nicky]

I think it will fall further still. I see gold going to $600 or so possibly.

Lol. And you of course base this piece of financial advice on the above described theory, by which FoxNews's viewers are the driving force behind the global gold market.

 

Never mind the fact that China and India are by far the largest consumers of gold, and that the US demand (even taken as a whole, jewelry, technological and investment demand), makes up only a small fraction of the global demand for gold.

 

You do at least realize that the prices of commodities are driven by supply and demand, not FoxNews, right? And that China and India (which have made it clear that they intend to stabilize the price of gold by slowing purchases as necessary, not crash it) can easily offset any kind of rise in supply caused by your imaginary FoxNews watching gold hoarders, simply by buying a little more than normal? 

Edited April 19, 2013 by Nicky

[CrowEpistemologist]

Lol. And you of course base this piece of financial advice on the above described theory, by which FoxNews's viewers are the driving force behind the global gold market.

 

Never mind the fact that China and India are by far the largest consumers of gold, and that the US demand (even taken as a whole, jewelry, technological and investment demand), makes up only a small fraction of the global demand for gold.

 

You do at least realize that the prices of commodities are driven by supply and demand, not FoxNews, right? And that China and India (which have made it clear that they intend to stabilize the price of gold by slowing purchases as necessary, not crash it) can easily offset any kind of rise in supply caused by your imaginary FoxNews watching gold hoarders, simply by buying a little more than normal? 

 

Oh good. You are going to talk to me about financial market dynamics. This should be fun.

 

First, as far as I know only a small amount of the total gold is "consumed" and even that is generally "consumed" by jewelery, which certainly doesn't make it disappear like, say, oil. There are some industrial uses which aren't recycled generally, but those are pretty small. Generally it's not a good idea to think of gold as "consumed".

 

And mean while, they keep digging for the stuff--and finding more--year after year.

 

To say that my argument that Fox News viewers is a straw man, and my point was that it's a bubble, and bubbles must have a good supply of morons. This was true in the .com bubble when day trading became an everyman sport, and in the housing bubble when they were giving our $1m liar loans to strawberry pickers. Today we have Fox News viewers being convinced that run-away inflation is right around the corner because we have a democrat in the white house.

 

All commodity prices are driven by supply and demand. Demand can be rational as well as irrational. Not sure what the point of that was.

 

As for China and India secretly acting together and being able to corner the market and manipulate the price of gold, well, I suppose its possible. There's no evidence this is happening but people do love their mysterious conspiracy theories.

 

Of course the last thing one would want to do in that case is base a currency on said easily manipulated commodity...

[Nicky]

Oh good. You are going to talk to me

No, I'm not.

[softwareNerd]

... a few months ago when Goldman announced their departure from the market):

Goldman says that while it still thinks a further decline in gold is likely, it is no longer recommending it as a short.

[CrowEpistemologist]

Goldman says that while it still thinks a further decline in gold is likely, it is no longer recommending it as a short.

They probably just banked about two zillion dollars on their recent short. Keep in mind they are, um, selfish... They may (or may not) be expecting another big decline but they won't tell us muppets about it until they lock in another round of gains. They certainly keep their gig going by letting some followers share in the booty, but we just get sloppy seconds (stop me before I mix my metaphors again).

Anyhow, as investment advice I think it's wise to get the hell out of gold right now. As economic policy advice I think it's wise to never imagine that a "gold standard" is anything but retarded. As philosophical advice I think it's important for philosophy to steer well clear of business decisions. As Objectivist movement strategy advise I think the movement should not associate itself with such low-life as bomb-shelter-building gun-loving gold-hording Apocalypse-expecting nimrods, and be highly suspicious of any sort of stance that puts them in consistent solidarity with same.

Edited April 29, 2013 by CrowEpistemologist

[softwareNerd]

... but they won't tell us muppets about it until they lock in another round of gains.

Ah! So, you mentioned their advice in the OP because that too was for muppets to ignore!

As Objectivist movement strategy advise I think the movement should not associate itself with such low-life as bomb-shelter-building gun-loving gold-hording Apocalypse-expecting nimrods, and be highly suspicious of any sort of stance that puts them in consistent solidarity with same.

I strongly adivse you to come back to this dimension. I know crows love to shit on straw-men, but there's reality on this side of the veil.

[brian0918]

I just tested mine and it still weighs the same.

 

If you're using gold as an investment tool, or paying attention to its fluctuating price in dollars, then you see dollars as money, not gold. Plenty of goldbugs do that. They want a "return" on gold - in dollars. They want gold to go up in price, because they intend to convert that gold to dollars and spend the money. If you want a return to a free market in money, then you would not intend to part with any gold until such time as that free market returns. At that time, the "gold price" will make as much sense as the "dollar price" does now.

[CrowEpistemologist]

Ah! So, you mentioned their advice in the OP because that too was for muppets to ignore!I strongly adivse you to come back to this dimension. I know crows love to shit on straw-men, but there's reality on this side of the veil.

 

"because that too was for muppets to ignore" ? I can't parse this statement... Actually I'm having trouble parsing the whole thing...

[CrowEpistemologist]

I just tested mine and it still weighs the same.

 

If you're using gold as an investment tool, or paying attention to its fluctuating price in dollars, then you see dollars as money, not gold. Plenty of goldbugs do that. They want a "return" on gold - in dollars. They want gold to go up in price, because they intend to convert that gold to dollars and spend the money. If you want a return to a free market in money, then you would not intend to part with any gold until such time as that free market returns. At that time, the "gold price" will make as much sense as the "dollar price" does now.

 

Exactly. So you intend to martyr yourself waiting for the day the US returns to the gold standard. Yes, in the mean time others will have a lot more "money" than you, spending it on "things that improve their lives" here on Earth, but you will have the comfort of knowing that when the Rapture the Gold Standard comes, you will be prepared. Others will pay for their lives of happiness and "sin" on that day, but you will be prepared.

 

(I'm a second-generation Objectivist... every bit of religious thought patterns has been bred out of me, I think...).

[brian0918]

Where are you getting all this from? Did you mean to quote me, because you seem to be responding to statements I didn't make.