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Thread: Gold: The Next Bubble

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    Heartless Bastard Indy Coug's Avatar
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    Default Gold: The Next Bubble


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    Senior Member byu71's Avatar
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    Quote Originally Posted by Indy Coug View Post
    I don't know if it is or isn't. However, Glen Beck reminds me of Howard Ruff. Both LDS guys proclaiming the coming "ruff times". Of course Beck has a much bigger following than Ruff.

    I also can't remember if Ruff was political or just calling for financial doom.

    You don't have a chart you can put up that goes back to 1978 do you.

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    Heartless Bastard Indy Coug's Avatar
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    Quote Originally Posted by byu71 View Post
    You don't have a chart you can put up that goes back to 1978 do you.
    You mean back when gold was last around $1,000 an ounce?

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    Senior Member byu71's Avatar
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    Quote Originally Posted by Indy Coug View Post
    You mean back when gold was last around $1,000 an ounce?
    I thought it hit that price around 80-81, maybe even '82. I will go look.

    The only reason I asked to to bring up a chart is because I don't know how to copy and paste one or I would have done it.

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    Heartless Bastard Indy Coug's Avatar
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    I don't know if it is or not, but it seems that every other ad on conservative talk radio, I admit I listen to Bill Bennett in the morning and Michael Medved in the afternoon on my commute, and FOX business seems to be touting Gold. That makes me suspicious

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    Heartless Bastard Indy Coug's Avatar
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    Quote Originally Posted by happyone View Post
    I don't know if it is or not, but it seems that every other ad on conservative talk radio, I admit I listen to Bill Bennett in the morning and Michael Medved in the afternoon on my commute, and FOX business seems to be touting Gold. That makes me suspicious
    Exactly. There are several reasons for a bubble, but one of them undoubtedly is due to speculative pressures and because gold's annual returns are kicking the crap out of the market.

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    Senior Member byu71's Avatar
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    Quote Originally Posted by Indy Coug View Post
    Thanks Indy. One thing about bubbles, they can continue a long time after they should. When the Comp Index hit 4,000 it was probably a bubble, but went on up to 5,000.

    The one thing I have found during a bubble is the saying, "this time it is different". When I was looking up prices on google I hit an article on why this time is different than the gold high in the early 80's.

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    Board eye candy beefytee's Avatar
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    A good article on how valuable gold is currently:
    http://money.cnn.com/2010/01/06/pf/b...ymag/index.htm

    It's not like it is oil or food or something that is in high practical demand. Even silver has more practical industrial use than gold, even though film use has gone down.

    The only thing keeping gold up is its history as a valuable material and a safe investment.

    If you are going for a safe tangible investment, I think oil should be it. It will always have a practical use and it doesn't go bad. i.e. it is fine just siting there for a long time.

    Copper might be another one that seems practical to me.

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    Heartless Bastard Indy Coug's Avatar
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    The dollar has been weak, but what happens if/when the Euro collapses? Does the devaluation of the dollar become muted by the devaluation of other major currencies? If so, does that undercut the increase in gold prices?

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    I'm not sure what to make of gold. It's definitely looking like a bubble, but demand has decreased in Q1 of 2010 from what it was in Q1 2009 and yet the price has increased almost $500 since then. Its fundamentals have been screwy for a long time and it's clear that the market is being driven by emotional factors. Another factor is the weakness of the dollar right now, which again creates an element of fear.

    I think it will come down, not to $400 an ounce, more likely to $600 which would probably be more in line with inflation, but I don't think the bubble is fully inflated yet, mainly because people are very jittery about the market.

    If you're interested in interesting commentary and real time prices look at www.kitco.com and read Jon Nadler's column. He seems to be more rational and cautious when discussing the gold market.

    edit: I just looked at Nadler's column for today. The title is "Baubles Sell, Bubbles Swell." He's always got a catchy title, or at least he tries for them.
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    Board eye candy beefytee's Avatar
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    Quote Originally Posted by Indy Coug View Post
    The dollar has been weak, but what happens if/when the Euro collapses? Does the devaluation of the dollar become muted by the devaluation of other major currencies? If so, does that undercut the increase in gold prices?
    Since no one else has taken a stab, I will venture a guess:

    I think it has very little relation. Sure more people will go with US dollars that may have been Euros before, but if the US looks shaky too, my guess is most of that money goes into commodities or elsewhere.

    Of course I'm no expert.

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    Quote Originally Posted by beefytee View Post
    If you are going for a safe tangible investment, I think oil should be it. It will always have a practical use and it doesn't go bad. i.e. it is fine just siting there for a long time.

    Copper might be another one that seems practical to me.
    And guns.
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    Quote Originally Posted by pellegrino View Post
    I'm not sure what to make of gold. It's definitely looking like a bubble, but demand has decreased in Q1 of 2010 from what it was in Q1 2009 and yet the price has increased almost $500 since then. Its fundamentals have been screwy for a long time and it's clear that the market is being driven by emotional factors. Another factor is the weakness of the dollar right now, which again creates an element of fear.

    I think it will come down, not to $400 an ounce, more likely to $600 which would probably be more in line with inflation, but I don't think the bubble is fully inflated yet, mainly because people are very jittery about the market.

    If you're interested in interesting commentary and real time prices look at www.kitco.com and read Jon Nadler's column. He seems to be more rational and cautious when discussing the gold market.

    edit: I just looked at Nadler's column for today. The title is "Baubles Sell, Bubbles Swell." He's always got a catchy title, or at least he tries for them.
    In my claims, I'm not saying that gold won't go up in the future. I'm just saying I personally don't see the value of gold especially in a tough economy when people are less likely to buy jewelry. It is pretty obvious that most people who currently own gold or are looking to buy it don't have my same opinion.

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    Board eye candy beefytee's Avatar
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    Quote Originally Posted by Ted Nugent View Post
    I have a co-worker you likes to say "Invest in Guns and ammo."

    He is half-joking.

    I guess it is the ultimate hedge.

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    Quote Originally Posted by beefytee View Post
    In my claims, I'm not saying that gold won't go up in the future. I'm just saying I personally don't see the value of gold especially in a tough economy when people are less likely to buy jewelry. It is pretty obvious that most people who currently own gold or are looking to buy it don't have my same opinion.
    Oh, I agree with you. Gold was a good buy in August and early September of 2008 and then again for a brief window in November 2008, since then it's been overvalued. I think it will come down, it's just a matter of how high it gets before it does.
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    So how much is my high school class ring worth?

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    Quote Originally Posted by beefytee View Post
    I have a co-worker you likes to say "Invest in Guns and ammo."

    He is half-joking.

    I guess it is the ultimate hedge.
    So that's what you meant by copper.
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    Quote Originally Posted by Indy Coug View Post
    Is this adjusted for inflation. It looks like gold was around $200 per ounce back in the mid 70s before inflation really hit and the spike occurred. The price looks like it went back down to around $400 and stayed steady for the next 22-24 years and then spiked again. Gold was a great investment in 2006, it's not a great investment now. Like oil, it will settle a lot higher than the steady price it previously had. Oil was something like $30 per barrel for years before 2004. In 2008 it got up to $148. Now it fluctuates between $60 and $80 and those prices seem to be here to stay.

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    Senior Member byu71's Avatar
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    [QUOTE=pellegrino;359928]I'm not sure what to make of gold. It's definitely looking like a bubble, but demand has decreased in Q1 of 2010 from what it was in Q1 2009 and yet the price has increased almost $500 since then. QUOTE]


    I am sure you know this, but I will say it for a few on here who don't realize this. Prices can go up due to a lack of supply as well as increasing demand. It could be more people want to hold onto their gold.

    I read somewhere that the Chinese were buying Gold and Oil and the sense was that forecasts higher prices. Why would anyone assume the Chinese were doing it for anything except perhaps balancing out what they are holding. It may be entirely for purposes related to their economy and not a forecast of doom ahead.

    Even if they were forecasting something, why would one necessarily think they will be right.

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    Here's the inflation adjusted price for gold through October 2009. The current price is around $1200, or $150 more than the peak price through last October.


  22. #22
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    Quote Originally Posted by byu71 View Post
    I read somewhere that the Chinese were buying Gold and Oil and the sense was that forecasts higher prices. Why would anyone assume the Chinese were doing it for anything except perhaps balancing out what they are holding. It may be entirely for purposes related to their economy and not a forecast of doom ahead..
    Not only has the Chinese government been buying gold but they are urging their citizens to buy gold. Maybe they will also be installing these gold vending machines.
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    Senior Member byu71's Avatar
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    Quote Originally Posted by Ted Nugent View Post
    Not only has the Chinese government been buying gold but they are urging their citizens to buy gold. Maybe they will also be installing these gold vending machines.
    Have they been encouraging them to buy gold through Goldline. Maybe congressmen Weiney will be going after the Chinese government next.

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    Rabblerouser statman's Avatar
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    Quote Originally Posted by Indy Coug View Post
    The dollar has been weak, but what happens if/when the Euro collapses? Does the devaluation of the dollar become muted by the devaluation of other major currencies? If so, does that undercut the increase in gold prices?
    I doubt it. The euro weakening doesn't necessarily strengthen the dollar in real terms (v gold or other commodities). The real value of the dollar could strengthen a bit - it's always been the "safe-haven" currency - but the fact that our debt is out of control and that the Fed & Treasury created a couple trillion dollars by fiat, doesn't help the real value of our currency v gold, regardless of how worthless the Euro is...

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    Rabblerouser statman's Avatar
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    Quote Originally Posted by beefytee View Post
    I have a co-worker you likes to say "Invest in Guns and ammo."

    He is half-joking.

    I guess it is the ultimate hedge.
    Add food to the mix, and I'm right there with him.

    half-joking, of course...

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    One man.....one pie Moliere's Avatar
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    Here's a question that I've been wondering. If you buy gold from Goldline (or some other dealer whether endorsed by Bro. Beck or not) are you really buying a piece of gold or are you buying some quasi-security that is tied to the price of gold?

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    Rabblerouser statman's Avatar
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    Quote Originally Posted by Eddie Jones View Post
    Here's a question that I've been wondering. If you buy gold from Goldline (or some other dealer whether endorsed by Bro. Beck or not) are you really buying a piece of gold or are you buying some quasi-security that is tied to the price of gold?
    Pretty sure goldline is actual gold - "the ultimate hedge."

    As a hedge, in a diversified portfolio, I'd agree with them - there is a place for gold. As a long-term stand-alone investment, gold sucks...

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    Senior Member SteelBlue's Avatar
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    Thought this was a good read.

    http://online.wsj.com/article/SB1000...477689760.html

    It's a currency "substitute," but it's useless. In prison, at least, they use cigarettes: If all else fails, they can smoke them. Imagine a bunch of health nuts in a nonsmoking "facility" still trying to settle their debts with cigarettes. That's gold. It doesn't make sense.

    As for being a "store of value," anyone who bought gold in the late 1970s and held on lost nearly all their purchasing power over the next 20 years.

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    Those Hoffman's are going to be pissed.
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    Quote Originally Posted by Uncle Ted View Post
    So when they start coming for your guns, do they go up in value due to scarcity, or down because they're no longer legal?

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