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CrowEpistemologist
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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.

 

Maybe I'm being a bit obtuse. I was responding to the statement:

 

> "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." <

 

I find it akin to certain religious structures in making bad investment decisions and suffering for a long time while one waits for one's ideal state to materialize--and state, in particular, that one cannot possibly have any control over.

 

Saying if effect, "I'm going to live poorer because I believe in the gold standard", sounds... religious to me...

 

Or to put it still another way, making investment decisions based on what you hope might happen is foolhardy... You are reversing the law of cause and effect. What you hope for is not going move the market.

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Maybe I'm being a bit obtuse. I was responding to the statement:

 

> "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." <

 

I find it akin to certain religious structures in making bad investment decisions and suffering for a long time while one waits for one's ideal state to materialize--and state, in particular, that one cannot possibly have any control over.

 

Saying if effect, "I'm going to live poorer because I believe in the gold standard", sounds... religious to me...

 

Or to put it still another way, making investment decisions based on what you hope might happen is foolhardy... You are reversing the law of cause and effect. What you hope for is not going move the market.

Right. But all this only makes sense if we first accept as fact your theory that FoxNews drives global gold prices.

Oh yeah. We also need to accept as fact that gold got slaughtered, and will soon dip bellow $600.

Edited by Nicky
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Which part is a lie? 

 

Is it this?

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

 

Or is it this?

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

If you're gonna troll, come up with a better shtick than just saying dumb things and denying to have said them a week later. This is boring. Edited by Nicky
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  • 3 weeks later...

Update: whereas 6 weeks ago when gold went from ~1600 to ~1300, many of us saw the popping of an asset bubble.

 

Many here saw a great chance to buy since they knew, just knew, that this amazing asset was impervious to speculation and its rise in the popular market meant that all of their theories about governments and economics must be true.

 

Sure enough, Gold climbed back to ~1450 and change. Smart investors, right?

 

On Wall Street they call this a "dead cat bounce". It's a very typical pattern when the smart investors all get out, but the less sophisticated investors see a bargain, not seeing the bigger picture (or unwilling to do so, in this case).

 

Now gold is right back to where it was after the initial slide...

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Anyone buying gold, stocks, bonds etc. with the view to sell in 6 weeks or even 6 months better understand the element of gambling in such a decision.

 

All investments have a lesser or greater degree of risk, and the time frame is orthogonal to that risk. A long-term investment can go south just as easily as a short-term investment.

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A long-term investment can go south just as easily as a short-term investment.

Well, that's an orthogonal response to my remark if I've seen one.

Paraphrasing James Grant: The elegant women of Boston don't buy hats, they have them; and so it is with gold. [One orthogonal response deserves another, no?]

Edited by softwareNerd
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Well, that's an orthogonal response to my remark if I've seen one.

Paraphrasing James Grant: The elegant women of Boston don't buy hats, they have them; and so it is with gold. [One orthogonal response deserves another, no?]

 

Um, you said, "Anyone buying gold, stocks, bonds etc. with the view to sell in 6 weeks or even 6 months better understand the element of gambling in such a decision.". I took that to mean that you view short term investments as more risky than long-term investments. Did I get that wrong?

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I wonder if the farmer who plants his crops in the spring to harvest them from 6 weeks to 6 months later considers that a short term investment and the farm itself a long term investment - and which he might consider being the riskier investment.

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I wonder if the farmer who plants his crops in the spring to harvest them from 6 weeks to 6 months later considers that a short term investment and the farm itself a long term investment - and which he might consider being the riskier investment.

 

Farming, from what I can tell, is a pretty darn risky investment activity. Weather, bugs, etc. It recently occurred to me that one could probably write a very interesting PHD thesis on how farmers tend to believe in God more because they have less under their own control over their financial lives and city folk do. As a farmer you are at the mercy of "acts of God" e.g. the whether a lot more. I bet this makes God a slightly more appealing idea to them. Or at least this would be fun to research...

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  • 4 months later...

If you had invested in gold 10 years ago, you'd have a return of 230 percent today. Not bad, I'd say. And I'm in the camp that believes it's going to keep going way up.

 

Why do you believe this? Is this based on your hope that we might one day return to the gold standard?

 

Here's a short list of other investments that have had way higher returns in a 10 year period*:

CMI -- +1290%

JOYG -- + 1440%

CTSH -- + 2300%

 

Oh, and my favorite...

AAPL -- + 4900%

 

* http://money.msn.com/investing/top-stocks-of-the-past-10-years <-- 10 seconds on Google to find this

 

Science trumps feelings and rationalism.

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6 months later...the price of gold is roughly the same as it was when this post was made...care to put an expiration date on your prediction? When is gold going to reach $600?

 

Yeah, roughly. I mean, it's off 3.77% since that date. I guess for you that's not a lot though. Maybe 30 bucks?

 

For others, who have watched the S&P 500 index go up by 7.9% in the same period, that's a lot of money.

 

I cannot predict exactly when the bubble will pop, and for that matter the Republicans are going to give the Preppers a reason to freak out in the next 2-4 months so it might even be a short-term buy for all I know (it's off 5.6% in the last 30 days so maybe the madness is already priced in though).

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Why do you believe this? Is this based on your hope that we might one day return to the gold standard?

 

No. I have no "feeling" or preference for gold as a standard as a means for exchange over anything else. You're making a false assumption about what my "hope" and feelings are. And since you made a false assumption about me (not based on a rational assessment of what I said, by the way), then your ending remark about "science trumps feelings and rationalism" is an empty attack against me. 

 

(And explain how "science trumps rationalism." Your statement seems nonsensical.) 

 

The reason why I think the value of gold will increase has nothing to do with "feelings" and "hopes." I think it will go up because I think we are in a credit bubble that will eventually burst, and that recent rising home values are simply a re-inflation of the housing bubble because of the $85 billion in bonds the Fed is buying per month, which includes mortgage-backed securities. When those bubbles burst, and when the bond-buying program ends or is forced to end, and when inflation rises more, I think that investors will flock to gold and silver (among other things such as stable foreign currencies). 

 

And to your list of stocks, you again are not reading my post in a rational way. I didn't make this argument: "No other commodity or stock has done better than gold over the last 10 years." If I had made that statement, then your list of stock examples would have made sense. But since I didn't say anything like that at all, you providing that list doesn't make sense one bit. Again, you're going on assumptions to erect strawmen to attack.

 

What I said was, "Gold had a return of 230 percent over 10 years, and that's not bad." Do you want to find fault with what I actually said instead of what you assumed I said?

Edited by secondhander
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No. I have no "feeling" or preference for gold as a standard as a means for exchange over anything else. You're making a false assumption about what my "hope" and feelings are. And since you made a false assumption about me (not based on a rational assessment of what I said, by the way), then your ending remark about "science trumps feelings and rationalism" is an empty attack against me. 

 

(And explain how "science trumps rationalism." Your statement seems nonsensical.) 

 

The reason why I think the value of gold will increase has nothing to do with "feelings" and "hopes." I think it will go up because I think we are in a credit bubble that will eventually burst, and that recent rising home values are simply a re-inflation of the housing bubble because of the $85 billion in bonds the Fed is buying per month, which includes mortgage-backed securities. When those bubbles burst, and when the bond-buying program ends or is forced to end, and when inflation rises more, I think that investors will flock to gold and silver (among other things such as stable foreign currencies). 

 

And to your list of stocks, you again are not reading my post in a rational way. I didn't make this argument: "No other commodity or stock has done better than gold over the last 10 years." If I had made that statement, then your list of stock examples would have made sense. But since I didn't say anything like that at all, you providing that list doesn't make sense one bit. Again, you're going on assumptions to erect strawmen to attack.

 

What I said was, "Gold had a return of 230 percent over 10 years, and that's not bad." Do you want to find fault with what I actually said instead of what you assumed I said?

 

Well okay, I stand corrected. I lumped you in with... others. My bad.

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Ok, you don't have to be exact. Give an interval.

 

In the next 5 years.

 

In the spirit of SH above, let me give you my rationale.

 

I think we're headed for a period of prolonged deflation, which may be offset somewhat or perhaps slightly canceled out by continued Fed intervention. I think our model here is Japan but with no pathway out of it.

 

A major factor here is the technology cycle: new technologies are providing small, concentrated wealth. They are not employing millions of people like previous revolutions did. Combine that with the effects of globalization, which I think will only increase, due in large part to technology as well. (Apple here is an example of this: the Next Big Thing, but massive profits for a relatively small number of Americans and virtually all jobs being everywhere but the US). Besides offshore globalization, we may start to witness (depending on how the immigration debate goes) a new phenomenon of "inshore globalization" where American jobs are kept here but filled by lower-wage immigrants. I think the current political winds are blowing in a direction consistently in favor of the new oligarchs as well, so the government will do little to stop globalization and may even accelerate it in the coming years. If the globalization debate goes the other way (or if the Silly Valley folks get their way and only allow college grads in) that will cause a different drag on our economy: population deflation. Our current population growth is at zero when you take away immigration and bringing in a bunch of eggheads isn't going to put a dent in the overall numbers. Meanwhile, like the rest of the developed world, we're having less and less babies and we appear to be only a few decades behind other bastions of the apocalypse like S. Korea and Holland. Less population means lower real estate prices, and, ultimately, deflation.

 

So while globalization portends a much bigger chunk of the Forbes 500 being Americans, it also portends a massive collapse of the American middle class. Again, in aggregate (so yes, try to be smart and don't let yourself be caught up in this!).

 

As such, the US will be, in aggregate, in a slump (with little bright spots here and there but nowhere near enough to inflate the economy).

 

So in short, I think the Fed will keep the pedal to the metal, but it won't do anything.

 

As for gold, it's overvalued based on the "Toyota Camry test" by about 300-400% right now. At some point the inflation scare mongers are finally going to give up (although it's been 5 years and they still insist its just around the corner so who knows how long it will take). The fact that it's spent a year sliding sideways is going to get old. All of this congressional unreason will start to wane in its effect--I don't think the Republicans currently strapping bombs to their chests are going to pull the trigger, and the current market reaction is an indication that this stunt is almost out of gas.

 

My own "30k foot level" investment strategy is to invest in the oligarchs and bright spots, but not on macro trends connected to the US economy. The developing world can probably be great too if you spent the time to understand it (which I personally don't).

 

Anyhow, that's my rationale. I'm always testing it, always watching for new information which might contradict it, etc...

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I don't care about your rationale. I just want to point and laugh in five years. I'll set my clock I guess. Wish you were a little braver though. Where do you think gold will be in one year?

 

If I'm wrong in 5 years my reason-based rationale will still be better than your rationalized hopes. Nostradamus was occasionally right as well. Your philosophy is the same as his.

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