Coming soon: the loud thud of a gold bust
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Some time in the future the price of gold will crash and it won’t have a fairy-tale ending for the millions of investors who piled on in recent months.
If I could tell you when gold was going to bust, I’d likely be wrong or bigger than Warren Buffett, so I won’t even try. Just be incredibly cautious now. There are too many signs that gold is frothier than a Starbucks cappuccino.
It’s not that I don’t nod in agreement when gold bugs rant about why their metal holds a special value now. The dollar is in deep trouble as the U.S. sinks deeper into debt. Will Portugal and Spain be the next Ireland on the bailout boulevard? Ben Bernanke may not be able to put a dent in U.S. unemployment or the intractable housing crisis.
And yes, I also know the argument on how gold is nowhere near its inflation-adjusted equivalent of its high in January, 1980. According to the Leuthold Group, gold will have to hit $2,400 an ounce to match the $850 high mark it hit in 1980 in real terms. That doesn’t mean it will, of course.
Yet the back story of the world’s financial insecurity isn’t necessarily about gold being the last or only store of value. It just may be the most popular red herring at the moment.
One flaw in the “gold can still climb to $2,000″ argument is that the last boom was due to the hyperinflation of the 1970s and early ’80s. Everyone who is leery of the U.S. debt flooding the bond market is right to suspect that a new version of stagflation (no growth, higher prices) may be upon us.
Right now, though, we’re in a deflationary mode. This “deleveraging” could go on for some time as demand for credit stays low and foreclosures continue to ravage the housing market. Home prices are still falling in some places and hot money has shifted to stocks and commodities because of record-low yields in Treasury securities and savings vehicles.
I also tend to side with the behavioral view of why gold is so popular. Not only is it a play against the continued pessimism on the dollar, it’s a psychological refuge. People think it’s secure because it’s tangible. There’s still a finite amount of gold in a time when you can still print as many dollars as you want — something the Federal Reserve is doing in the short term.
Then there’s the less-often discussed side of gold. Why are they beginning to sell gold in vending machines? Why is the leading gold exchange-traded fund, the SPDR Gold Trust, up more than 19 percent year-to-date even though inflation is barely 1 percent?
Is there an unholy alliance here between a false threat of inflation and irrational exuberance? I think so. I smell a strong aroma of the dot-com mania.
The real story to me is demand for commodities overall. Every developing country needs copper, tin, coal and a host of minerals to build their infrastructures. So they are bidding up prices from the mines of Chile to the coal pits of Australia. That much makes sense to me and it’s definitely a long-term trend.
So I’m suggesting that you become less of a conquistador obsessed with the sun metal and focus on a broad, long-term (buy and hold) portfolio that includes a basket of commodities. You can protect yourself against inflation and take advantage of commodity-price increases.
My two best suggestions are the PowerShares DB Commodity Index (DBC), which holds a number of leading commodities, and the PIMCO Commodity Real Return Strategy Fund (PCRDX), which holds treasury inflation-protected securities and commodity derivatives. It’s a staple in my individual retirement account to stave off inflation.
As for gold, if you’re a real nervous Nellie, maybe you’ll want to invest directly in the metal through coins (Maple Leafs or Pandas are handsome collectibles that I own) or bullion.
Just keep in mind that gold doesn’t pay any dividends, is not directly linked to corporate earnings and has no intrinsic value. And when the hyperinflation fervor goes away, gold will be about as exciting as its less glamorous cousin: lead.
A man displays gold bars at the Sacombank gold bar factory in Vietnam’s southern Ho Chi Minh city January 22, 2010. REUTERS/Kham
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As long as the country INDIA exist, the Gold will not BUST!
We are at the same stage with the fall of Souvereign debt as when the sub-prime first hit the fan. Than it was talk of Rest of the world being decoupled from the USA and everything will be fine with the world economy. It may not happen but it is possible that the run on Euro is going to be followed by run on the dollar. the Gold is your insurance policy. And the policy is valid only if it is held in physical form.
John:
It is clear that you no almost nothing about the gold and silver market fundamentals. It is also clear that you are serving up propaganda to serve your masters so that they can buy gold and silver at a lower cost and keep the common man out of gold and silver. You are despicable! What a clown! It will be fun to run this article again in one year to see how well your prognostication works out!
Gold has no intrinsic value?
Gold is the most malleable metal.
Gold is the most ductile metal.
Gold is an extremely good conductor of electricity.
Gold is an extremely good conductor of heat.
Gold is extremely resistant to corrosion.
Gold is accepted throughout the world as a store of wealth.
Gold is extremely rare.
If you look at the price of Gold in a currency other than US dollars, for instance Australian dollars, it hasn’t gone up at all over the last few years.
Gold isn’t booming at the moment. The US dollar is crashing.
You think it’s worth a lot of US dollars now? Just wait until QE4 or QE5.
coming soon, the big bust.
In order, the sovereign nations of
Portugal, Spain, Italy, Belgium,
and then the entire European Community,
Japan,
and finally the United States.
All fiat currency is trash, it is only a matter of (a very short) time
before the rest of the ovine figure that out.
Of course, it also means the end of Reuters. (sorry about that!)
Gold, of course, will still retain value,
as it has for untold centuries,
while the bankers have fricked things up over and over and over again.
Golds less glamorous cousin lead is also a good investment.
Lead has doubled in price over the last 5 years and shows no signs of declining.
Gold isn’t used in much of anything except art and…wait for it…printing gold coins and bars.
In other words, gold is largely used to make…money.
It isn’t common enough to be used for its other properties in manufacturing, therefore, gold doesn’t get used up. It sits. Amounts of it accumulate.
I would like to see numbers about how much gold bullion is out there now vs how much was out there in 1980. I would also like to point out that every ounce of gold getting mined out of the earth, which is being done at a blizzard pace, devalues the gold that is already out there.
There is more gold out there now then at any time in history, and more getting pulled out of the ground by miners eager for work, and you expect its value to keep rising?
It will bust just like anything that keeps soaring and people think is safe…like houses. But at least you can live in a house.
The only value to gold derives from being the poster child of the greater fools theory.
Your article lacks objective market understanding. If you are going to write something about markets perhaps you should study how market auctions actually work. Your article is primarily an emotional response to gold prices and is not unlike the emotional reaction from those you call Gold Bugs. No one is running around calling you a “dollar bug” but that is in fact what you are! If you are going to make a statement about market prices in the news media back it up with something substantial.
The Gold isn’t going to “Bust” as long as the dollar declines. The price of gold is just rising against the dollar. THINK about it… If the American FIAT money fails.. YOUR gold will be priceless… That’s what i call return on investment!
Gold is a HORRIBLE long term investment. Notice that even gold bugs have to admit that it hasn’t kept up with inflation.
But it is pretty. And the 2011 bunny rabbit coin from Australia is really cute. It may not make you any money, but it is a fabulous golf ball marker.
Yes “the loud thud” is coming. This is the nature of bubbles.
No, not soon, but eventually. Not at $2000 either, but much higher.
The trigger for gold price reversal has always been high interest rates, not some sudden universal realization that this stuff is pretty but useless.
Like all commodities, the inevitable fall will be sharp and sudden. Look at a chart for any commodity over time.
Commodities have a chart pattern of a “U” at the bottom and an inverted “V” at the “blow-off” top. We are not there yet. Look at the 1979 – 1980 gold price chart to see how the price can double in a very, very short time frame. When THAT happens and interest rates zoom, watch out below.
Keeping Maple Leafs in your vault is a bad speculative strategy because when the fall does come you will be better off getting rid of your horde with a few clicks of the mouse, not a trip to the pawn shop.
Wow, Gold has out performed everything else in the last ten years. For Gold to equal what it was worth, in the 70′s adjusted for inflation, since inflation is up 1000% percent.
Gold would have to hit $8500.00 Since the rest of the world
is dumping the dollar, and buying Gold. when hyper inflation takes off in the next several years, you can expect Gold
prices in american dollar to blow past $10,000 an oz..
I remember the 1980 run in gold. The Hunt brothers attempt to corner precious metals added to the boom as did the Soviet invasion of Afghanistan. I also remember that the DJIA stood at about 800 at the same time. So, one had a choice: buy an ounce of gold or buy a unit of the DJIA portfolio. (It wasn’t as easy to do that in those days before index funds.)
If you chose gold, you would now have $1,800 or so before storage costs. if you chose the Dow, you would have $11,000 plus dividends. Inert holdings, like gold or artworks, may earn a rent for the holder, but they don’t really generate a continuing flow of income. I believe that is what makes the latter investments rather than holdings.
Well, bigturkey, I agree, excepting that in this case the “greater fools theory” is in the hands of those who hold dollars.
The writer is correct and there will come a time when gold falls, but when.
Things are very, very different today then they were in ’79. Then it was grab onto gold/silver to protect from the ravages of 15-18% annual inflation. Today, it is simple fear that our dollar is about (and has been) falling in value significantly.
If inflation rears its ugly head (or rather when people realize that it already is) there will be two factors. Fear of inflation, and fear of US$ devaluation. Put the two together, even without hyperinflation and gold and silver will soar. Why? Because there is not enough to go around.
We are riding a roller coaster called the dollar and off in the distance economic shifts are setting the stage for a financial earthquake that will measure 9.5 on the Richter scale. Gold is nothing more than a perceived lifeboat and when the Tsunami becomes reality we are in for quite the ride.
Yes, gold will crash–probably just about when the “New Dollar” comes into circulation, just as it did in German Mark terms after the ravages of the hyperinflation of the Weimar Republic.
Want to see gold in action right now? Do a bit of research on Vietnam and gold; read about inflation and their currency crisis and the problems of illegal smuggling of gold as Vietnam tries to stabilize itself. There you will see a glimpse of true fear.
Think there is some way we can elegantly work “out of this dilemma?” Think again. Look at usdebtclock.org: Assets per citizen = $223,562; US unfunded liability per citizen: $1,010,138. Got a mil to spare brother?
I love all these gloom and doom freaks. Folks, you really need to realize that the reality of things is that there is NO-WAY-IN-HELL that China allows the dollar to collapse in any real sense. They would completely destroy their export driven economy(as well as wipe out TRILLIONS in their reserves) if they did.
It won’t happen, gold is being driven up by paranoid people who will eventually be “tapped out”. As soon as Rush Limbaugh, Glenn Beck, and the other “BUY GOLD!” cheerleaders can no longer convince their gullible followers to help them build value in their own assets(at the later buyers’ expense), the bubble will burst.
You want to put money into a safe commodity? Buy things that are actually useful. Tin, copper, lead, etc…these things have actual utility.
Im really not getting this article at all. Hyperinflation is almost a certainty for as long as the US and Fed Reserve continues its course. The dollar cannot be sustained. Gold will hold its own come hither or tither. I would still invest in it as a cushion. Russia and China just dumped the dollar last week, which was not publicized as much as it should or could have been. Gold will hold its own, not paper money.
This is the dumbest thing I ever heard. Europe is about to suffer widespread sovereign insolvencies resulting from soaring bond yields. Because they have nationalized their banks this will also produce insolvencies there and banks runs. The europeans will put their money in gold and silver because it is easiest and because everyone knows the US can only handle its own debts by monetizing them. A big GLD selloff could send the price down fast, and if the banks and the government can do it, they will. Gold coins were selling for $1500 in Greece when the spot price was $1000 on Comex. Bet those Greeks will be loving it when their banks fold. I think you could see a $200/ounce price on a COMEX which can’t deliver physical and coins selling on Ebay for multiples of today’s spot price. What happens to GLD and SLV will depend on whether investors believe they have all the physical they claim, unencumbered, without exposure to the solvency of HSBC and JP Morgan. So yeah, you could see $1/ounce paper gold, and if you call that a crash, put your money in bonds instead and see what happens.
1. What many seem to fail to realize is the concept of value. Gold retains value. It is not and should not be an “investment”. It should be held (physically) to stabilize your personal wealth. After all, if Buffett only owns the USD, and it crashes tomorrow, he’s as broke as the rest of us. You will want to hold things of value outside the dollar as a safety net. To only own the dollar is a gamble, and frankly, not a good bet. The cost of gold to the dollar is relative. The more the gov. inflates, the higher the amount for gold. This is not because gold is worth any more, it’s because the dollar is worth that much less and it takes more to buy it! On the other end of the spectrum, if gold was $1oz, that would mean that your money has a lot of purchasing power. Owning gold and silver is win/win, because if the cost of gold/silver crashed, the dollar (and economy) would be strong!
2. This article states that we are in a deflationary period. Too many associate inflation/deflation with prices which is not accurate. Prices are a result. We are in a period of extreme inflation, and the effect is and will be increasing prices. The increase of food prices in the past two years is significant! Home prices have only reduced to correct from being over-valued. They are not coming down because of deflation, they are coming down because they are not and were not worth what they were going for.
I encourage you all to read “Economics in One Lesson by Henry Hazlitt, or What Ever Happened to Penny Candy by Richard Maybury. These will help illustrate the value of money and the effects money supply manipulation.
@RandomName2nd: your claim is quite false, unless you consider the difference between 20% and 17% the difference between crashing and “nothing at all.” When you say “nothing at all” I expect less than 5%, not 17%. Quit misleading people and propagating a bubble.
… and with regard to REDruin’s comments that gold is being “mined at a blizzard’s pace”. Really? More so than the Federal Reserve is printing money? More so than their is the ability to make paper from trees?
The dollar is nothing more than the equivalent of the gov declaring that all post-it notes now have monetary value. That’s why they call it Fiat…
You need to be corrected on a couple of things here:
– Canadian Maple Leaf Coins ARE Bullion. They are not “collector’s coiins”
– Like gold, the paper money in your wallet has no intrinsic value and does not pay dividends. Since this seems to make it worthless in your eyes, please send all your federal reserve notes to me.
“Dot Com Mania” comparisons. Yes, perhaps, but not yet. Maybe when it’s $3,000.
For Americans who can buy goods in $, bare gold is something to consider. However, in hyperinflationary times, you own your gold, but I doubt you can buy anything with it.
For anybody else who’s not buying her or his food in $, there’s the FX treshold. When the $ is weak against the Euro f.i., you have less return, because gold is priced in $.
I should never buy some “paper” gold. There are rumours gold is at least 100fold more traded right now then there is bare gold on earth. So when you decide to buy gold, buy the coins.
We’re saying it for a while now… so it must be as interesting as watching German belt within Allen belt.
You want to buy something useful, buy storable food, because you sure can’t eat gold and if we fall into a great depression it will be worthless. How are you going to go to a grocery store and trade a bar of gold for food?
When anything superior gradually converts to that of mediocrity and the slide is not reined in, markets react. So with the dollar and eventually the euro. Basic mechanisms of protection erupt. Gold buying is and will most likely continue a popular path …. in the old financial markets in America and Europe.
This is basic market knowledge while it appears that Wasik’s post is not quite up to scratch about old market behavior.
Further, his negligence of the buying power, savings trends and asset allocation in the emerging world including India and China is a surprise. You should spend a couple of weeks in Singapore as well as in Malaysia, Thailand and Hong Kong and you might appreciate the change in world order over the last 10 years. You don’t have to visit China.
As there is no replacement for the dollar in sight the continuing government and central bank attack on monetary decency and growth creation in tangible assets in America will show up some day. When is everybody’s guess, but look at the real unemployment numbers around 17 per cent indicating that the Roman-styled-circus of handing bread to the masses may not be agreeable to basic American initiatives of survival.
In the meantime, precious metals, uranium along with sought after non-renewable commodities would power ahead. Corrections? Yes of course, this is market economy and even China, India and Russia have joined the bandwagon….. while Washington appears to have seen the light from a traveller in time where central planning was the poster boy in Eastern Europe, South America and major parts of Asia.
God bless America.
Ladies & Gentlemen,
These are markets and markets fluctuate…
As of now is seems to be fluctuating upwards
every time Euro & worldwide debts problem stories make
news..Oh well ..I wonder when that will stop..
Krypton
anyone read buyology? this article is written to boost gold sales. like warnings on tobacco packages increased cigarettes sales. duh…
@willbradley – Here’s a chart of the gold price in Australian dollars…
http://goldprice.org/charts/history/gold _10_year_o_aud.png
It’s currently about $150/ounce less than it’s early 2009 price.
Don’t get me wrong, it’s been tracking upwards for the last decade, but if you look the the two previous decades before that it was completely flat.
The point is, if you graph the price of just about any commodity in US dollars over the last 10 years, the graph will look very similar to the gold chart. IE. the price of everything is going up due to the US dollar losing value.
When Ben Bernanke gives the banks 600 billion dollars for QE2, that expands out to more than 6 trillion dollars due to fractional reserve lending. QE1 was even bigger.
Who knows how big QE3 will be.
People aren’t buying gold to get rich. They’re buying it and other commodities in an attempt to hold on to some of their wealth.
If you’re comfortable keeping your wealth in US dollars then good luck to you my friend.
The production of more gold has soared. Is it growing faster then we’re printing dollars is not the question. Is it growing faster then population world-wide?
There isn’t enough gold in the world to form the foundation of a viable currency, even with the millions of ounces being mined today. Gold is only a store of value if people believe it is. You can’t eat it, it’s not used in making useful things (jewelry and art are not essential items), and holding onto gold is only valuable if the other person you’re going to trade it to (not pay them) considers it valuable.
We use money for a variety of reasons. We don’t use gold for a lot more.
Trusting in gold to go up vs the dollar is exactly like trusting in the value of a home to keep going up in dollars, and look where that got people? At least you can live in your house, still.
The common thread I see here is more psychological and less monetary and economic. As with dot.com stocks, the herd mentality rules here. That’s why I’m sounding the alarm.
This author is nothing more than a paid shill for the govt, trying to drive down the price of gold and say that all is well, folks, don;t worry about the trillions in debt that we can never repay, nor the hyperinflation coming, nor the expected replacement of the dollar as the reserve currency of the world, nor the expected banning of the petrodollar.
All is well, folks; Big Brother loves you and knows what is besrt for you!
A lot of people play down the idea of gold as “just” something that people believe to have value in. And most argue it has no intrinsic value. Well yes this is correct BUT this is the whole point!! Gold is GOOD money (when Gov frivolously prints fiat money!) Food is perishable and cannot hold value for a long time. Buckets of oil is not mobile and be carried around. Gold is scarce, durable, divisible, mobile and a historically/culturally/universally accepted, and therefore it does not need to be anything else but act as money.
If I’m a “paid shill” for the government, then where’s my generous health care and pension package? In no way do I endorse the government’s debt-making machine, nor do I think that inflation is vanquished. I’m merely commenting on the psychological reaction to buying gold and the chance that it may reflect much more than economic realities, in which case those who bought the metal should be extremely cautious.
People never seem to have noticed that there are NO articles anywhere at all that view the dollar favourably. It’s always gold, gold, gold or tin and other stuff.
The fact is, ‘currency’ is actually the most valuable thing in the world that people everywhere are willing to die for.
The fact that you keep having to pay more dollars for the same gold, shows how much the dollar is being wanted by the party that’s selling you the gold.
The secret that govts everywhere don’t want you to know is they don’t want gold, they want your dollars. A man with less dollars and more gold is a weak man brother.
As always, life always hides things of value behind seemingly useless exteriors as in this case, paper being more valuable than the shiny gold. The secret to knowing the truth about any matter is to reflect on the thing everyone is calling bad, in this case dollars. Is it really bad ? If it is, why don’t the mining companies hold on to their gold and not sell it.
Btw, has anyone actually seen China buying its gold ? Has anyone ? seen loads of gold being unloaded at the port or the airport ?
John – of course you are not a paid shill, but you are just a columnist. In the hedge fund world, some of the smartest investors are investing in gold not because they are playing a game of who can get out just before the bust comes, but because they see a real possibility of a global currency crisis. They also see the central banks behaving as if they see the same risks. They would be foolish not to allocate some of their personal and client capital to one asset class that may protect against that. Sure, individual investors should act with caution – but that’s always true.
“…even though inflation is barely 1 percent…”
Year-over-year to October 31, the U.S. producer price index was up 4.3%.
GOLD wont drop long term until the fed hikes rates.
“Some time in the future the price of gold will crash and it won’t have a fairy-tale ending for the millions of investors who piled on in recent months.”
Notice the slant–gold is portrayed as a fairy tale instead of what it has always been: Sane money.
“If I could tell you when gold was going to bust, I’d likely be wrong or bigger than Warren Buffett, so I won’t even try. Just be incredibly cautious now. There are too many signs that gold is frothier than a Starbucks cappuccino.”
More hyperbole designed to lessen buying pressure on gold and scare the weak minded.
“It’s not that I don’t nod in agreement when gold bugs rant about why their metal holds a special value now. The dollar is in deep trouble as the U.S. sinks deeper into debt. Will Portugal and Spain be the next Ireland on the bailout boulevard? Ben Bernanke may not be able to put a dent in U.S. unemployment or the intractable housing crisis.”
They never miss a chance to call gold buyers as ‘bugs,’ i.e., nuts. Notice how they mention the case for gold to make it seem like they are rational. Yet they don’t and can’t refute the case for gold.
“And yes, I also know the argument on how gold is nowhere near its inflation-adjusted equivalent of its high in January, 1980. According to the Leuthold Group, gold will have to hit $2,400 an ounce to match the $850 high mark it hit in 1980 in real terms. That doesn’t mean it will, of course.”
Oh, of course! Of course it doesn’t mean it will. But it will.
“Yet the back story of the world’s financial insecurity isn’t necessarily about gold being the last or only store of value. It just may be the most popular red herring at the moment.
One flaw in the “gold can still climb to $2,000? argument is that the last boom was due to the hyperinflation of the 1970s and early ’80s. Everyone who is leery of the U.S. debt flooding the bond market is right to suspect that a new version of stagflation (no growth, higher prices) may be upon us.”
Red herring argument? How is it a red herring argument? How is the fact that gold is the best store of value a red herring? It isn’t and he can’t prove that it is. A red herring argument attempts to divert the debate to something else in order to win the argument. Clearly that’s not the case here and just because they toss out ‘red herring’ doesn’t mean that it is. In fact, their claim of a ‘red herring’ argument is in itself a red herring argument!
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“Is there an unholy alliance here between a false threat of inflation and irrational exuberance? I think so. I smell a strong aroma of the dot-com mania.”
LMAO! False threat of inflation? How is it false if they’re printing up trillions and trillions in Monopoly® money? The writer can’t prove it’s false. He just says it is in the hopes that the reader will nod his head in agreement. Gold is compared with just another mania like the dot-coms. Well, lessee…the internet bubble lasted a decade or so. Gold has been the last, best store of value nearly since human civilization began. Yeah, gold is just a current fashion trend is all…lol. I’m smelling a strong aroma too and it’s coming directly from this article.
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“As for gold, if you’re a real nervous Nellie, maybe you’ll want to invest directly in the metal through coins (Maple Leafs or Pandas are handsome collectibles that I own) or bullion.
Just keep in mind that gold doesn’t pay any dividends, is not directly linked to corporate earnings and has no intrinsic value. And when the hyperinflation fervor goes away, gold will be about as exciting as its less glamorous cousin: lead.”
How many times have I heard CNBC (mouthpiece for GE and the banksters) chastise their few viewers who own gold as being ” ‘fraidy cats” or “fear mongers?” Somehow if you don’t agree with Fed policy or the fiat debt Keynesian system that has gone mad, you’re a tin-foil hat wearing, gun-toting, bomb shelter-living Chicken Little. And they’re right to an extent. The end of fiat debt currency won’t be easy or pretty.
How many times have we heard ‘gold doesn’t pay dividends’ or ‘gold is just another commodity like lead.’ They ALWAYS trot out these tired argumentative chestnuts. Gold is not an investment per se. It’s a STORE OF VALUE. ‘Investments’ can go to zero. Gold never has and never will be zero. Gold is not a commodity. It has very little industrial uses (unlike silver). Gold is money. REAL MONEY that can’t be printed out of thin air!
Ok, first of all let me respond to the commentary about the only use of gold is in the making of “money.” Quite the contrary. The main use of gold is actually in manufacturing and the obvious, jewlery. So, think of it in terms of simple supply and demand. Demand continues to increase as more and more individuals seek to protect themselves agains the devaluation of the American Dollar. Manufacturing still requires this medal. What uses you ask; solid state electronics, cell phones, computers, aerospace and new emerging technologies as well as certain uses in the medical arena.
Next issue or perhaps better states, next question; Why then is China selling off massive amounts of it US Dollar holdings and stock piling gold? Just do a simple internet search for proof of this comment. and I quote directly from another Reuters article;
Alfred Cang and Tom Miles, Reuters · Friday, Apr. 24, 2009
SHANGHAI/BEIJING — China revealed on Friday that it had secretly raised its gold reserves by three-quarters since 2003, increasing its holdings to 1,054 tonnes — or a pot worth about US$30.9-billion — and confirming years of speculation it had been buying.
Read more: http://www.financialpost.com/news-sector s/story.html?id=1530063#ixzz17CJAVTEB
Now that was in 2009 and any research shows that they have continued this trend. Perhaps, just maybee, they know something you dont; like the fact that they do not intend to buy anymore US Debt or perhaps only enough to sustain its export market?
As a former financial advisor for over 10 years I have to tell you that some of this drivel is just that…drivel. Do your own research people. Don’t take anything that anyone has to say as gospel.
In my humble opinion, when I tell my clients to diversify, I dont mean to spread their money across multiple index or stock based investment vehicles. I mean to diversify across multiple types of investments and holdings. PRECIOUS METALS always beign a corner stone along and depending on risk tolerences; REITS, Municipal bonds, foreign currency ETF’s etc. and the more protected or sheltered from the taxes you are the better. Oh yheah, that reminds me, thank you Mr. Obama and administratino for attemting to raise the taxes on my dividends by 15%. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013. Whats a man to do?
Read more: http://www.atr.org/six-months-untilbr-la rgest-tax-hikes-a5171#ixzz17CLBucXa
Dont want to buy into the Gold craze? Do what I did, I bought into companies that mine the gold and other precious medals. Just a thought.
Well, enough of my diatribe. Hope you found some useful information in it.
Zul
So, the author thinks that “inflation protected” US treasury securities are safer than gold? I guess I would feel the same way if I didn’t think the US government will treat its bondholders the same way Ireland and Greece will soon be treating theirs.
I don’t claim to be a financial expert, but when the government starts printing money to buy its own debt, I don’t think there’s going to be much of a safe haven for anyone who trusts the promises of the government.
For all the defenders of gold, I ask the simple question? How many of you have sold and realized a gain approaching market value?
I’ve had plenty of instances where I have sold currency and commodities for market value. I’ve yet to meet a person who has done anything but bought gold and held it in fear of some future cataclysm.
“Why is the leading gold exchange-traded fund, the SPDR Gold Trust, up more than 19 percent year-to-date even though inflation is barely 1 percent?”
The U.S. Producer Price Index (PPI) program measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services.”
“On an unadjusted basis, prices for finished goods advanced 4.3 percent for the 12 months ended October 2010, their largest year-over-year gain since a 5.1-
percent rise in May 2010. (See table A.)
http://www.bls.gov/news.release/ppi.nr0. htm
You sir (author), are full of it. We are not in a “deflationary” mode and everytime people say that they are refering to housing, which is not part of the CPI. CPI is what judges inflation/deflation. You just get paid more to write irresponsible, sensationalist crap so you get a lot of clicks and additional internet advertising dollars.
Posted by REDruin “Gold isn’t used in much of anything except art and…wait for it…printing gold coins and bars.”
Really? So I guess you’ve never seen gold jewelry before? Dumbest remark of the day.
John, I don’t know about gold, but the discussion here has certainly made me a convert to prevailing theories on Behavioral Finance.
A few notes:
A FIAT currency is one where it is the only currency in the system, and is not convertible to others. The dollar is fully convertible.
Hyper-Inflation is inflation measured in the 100s to 1,000s percent range, and thus the 14.7% inflation peak of 1984 would not qualify. By the way, it’s pretty much always associated with a weak central bank.
The current catastrophic reasoning is somewhat discouraging in its lack of scope. After Y2K I was able to pick up dehydrated food at tremendous discounts. Ten years of camping trips have worked down the supply, but there seems no relief in sight, yet. Generator is still holding up well though.