$1275 before dropping back to $1270ish. Silver is getting very close to its all time high as well.
In honor of the occasion I'm linking a Patrick thread from June 2006 where is was proposed that a gold price of $675 might be a bubble. ;)
Gold makes a new all time high today
By iwog Follow Tue, 14 Sep 2010, 11:04am 8,505 views 146 comments
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thunderlips11 says
Keiser doesn't call anything. He simply follows the predictions of guys that do make the right calls. I didn't say he was a hack. But if you are going to refer to him for predictions, he's simply ripping off the predictions of most of his guests. I usually like to go to the original source when giving someone credit.
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thunderlips11 says
Monetarists don't preach currency devaluation. They believe that in the end, a nation that devalues their currency through pegging and manipulation will be ultimately force to let the currency rise when inflation kicks in and people vote with their feet. Of course, they are wrong. They never considered the case of the poor 3rd world worker who earns a nickel an hour. These people can hold out for generations before they demand their currency/wages rise. China is going on about 30 years now? According to the Monetarists, this was only supposed to last a few years at most and the Chinese and Mexican workers would be thriving in equality with the American middle class.
The big fans of currency devaluation are Keynesians. They love an engine of government spending (which is what the printing press is) and they believe the benefit is threefold. They believe it is beneficial to wipe out debt through inflation and they also believe that currency devaluation is always the path to recovery because it can allow you to export your problems away by subsidizing your export market. Of course, they are wrong as well. They never considered the case of the poor 3rd world worker who earns a nickel an hour. The Keynesian solution won't work until their actions bring the American worker's wage down to a nickel an hour as well.
These are your university professors and so called experts. They put forth untested theories based on completely false dogma and manipulated statistics. They completely lack common sense. Yet, they are here to stay and indoctrinate future university students teaching them that the solution to the 6 billion body problem involves a total of 4 variables, one of which we can assume to be fixed. How they ever managed to gain any sort of credibility is beyond my ability to comprehend.
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theoakman says
I don't know any Keynesian (including myself) who doesn't strongly advocate that our 200-year tradition of strong tariffs and quotas be PUT BACK THE HELL WHERE THEY WERE BEFORE REAGAN SCREWED WITH THEM.
The United States has more than enough excess demand to make up for the hit on exporters. Opening our economic borders to assault by robber barons was far more destructive to the nation than any specific monetary policy was. Monetary policy is little more than a system of bridges between buyers and sellers and as long as faith is maintained I don't think it really matters.
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iwog says
Off the top of my head, I'll name a few. Paul Krugman, Brad Delong, and Joseph Stiglitz. NAFTA was primarily designed by economists who consider themselves Keynesians. Krugman is actually starting to come around with regard to tariffs. That doesn't excuse the fact that he was a free trade zealot for the past 30 years. Beyond that, he wrote a paper in 1988 that claimed that our trade with Japan would balance itself out by 1990. Every single economist has been anti-tariff since the 90s. If you advocated tariffs, you were tarred and feathered as a "protectionist". Less we forget George Bush, Bill Clinton, and Al Gore dragging Ross Perot's name through the mud while he was trying to save the jobs of America. It has nothing to do with Keynesian thought in and of itself. But that has more to do with the fact that economist who follow Keynesian thought are easily brainwashed and often change their opinion to the flavor of the decade on certain issues.
But beyond that, Keynesians love Y = C + I + G + (X-M). They simply believe that you can increase G and solve problems. When the increase in G is funded through currency depreciation, then you can theoretically increase X as well because your exports become more competitive. Like I said, it never worked with respect to China. In fact, Paul Krugman, Dean Baker, and several others have been outright clamoring for a reduced dollar to drive an export led recovery.
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I think it's pretty hard for us to see the whole picture. The big picture. What if what's best for the year 2150, or 2500, or 3000, isn't what's best for certain groups right now ? Not that anyone is actually looking at that.
And while I don't claim to know the answer, it seems to me that the question of whether globalism is good, or whether we should practice protectionism is actually a long term question.
That is, either a somewhat united world, under a global umbrella government is inevitable or it's not.
For some, I think the idea of Armageddon happening in the next century or two is far more appealing. It makes it easy for them to not even consider such troubling long term questions.
theoakman says
Sure. Like it's possible for several billion to live and consume (long term) the way that we have. Maybe you could show us where Friedman ever said anything so silly. Not that I'm a big fan.
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theoakman says
Ross was a heck of guy! Scared the crap of the dingbats politicans. We could use a guy like that right now.
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theoakman says
Y83.33 says he was right, just early :) trade deficit is 0.3% GDP this year compared to ~1.2% in the late 80s.
We could use a guy like that right now.
Ron Paul is a close facsimile. His son looks a little more squirrelly (less libertarian/more neocon) on the issues tho.
while he was trying to save the jobs of America
one thing that the "All-Devouring Rent" thesis explains is why offshoring labor to China is a bad deal over the long run.
In the short run, we who do not compete with Chinese labor get much cheaper products without any cost to us, thanks to China's monthly wage being our daily wage. Sucks to be the wage earner that competes with that, but oh well.
But the Theory of the All-Devouring Rent posits that this household savings -- on the order of $2000/yr/household -- just ends up in higher rents and mortgage payments as consumers redirect this surplus into our dominant monthly expense, the rent.
Makes sense to me. What was doubly nasty was that China was turning around our trade deficit and loaning us the money back via the GSE MBS. When all that collapsed they called Geithner to Beijing informing him that he WOULD move their dollars out of those MBS, tout suite. Hence the Fed now having $1.1T of MBS on its balance sheet.
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marcus says
In his series, capitalism and freedom, Friedman cited European free trade between countries of wealth disparity raising their standard of living through free trade despite the inequality in wages. Friedman failed to anticipate that the same would not happen between nations where the wealth disparity was more than an order of one magnitude. Friedman claimed even as late as 2005, that China would ultimately be forced to let the yuan rise before anything bad happened. Friedman based his assumptions on the first time Japan was forced to let the Yen rise in the 70s.
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Troy says
20 years early. I should dig up the paper again. I can only access it from the university computers though. It's pretty pathetic. He wrote about how the market would force them to balance trade before the decade turned. This is the supposed "leader in international trade theory". But, regardless of the Yen's value today. Trade deficit still exists, and I'm willing to bet the Japanese go into full fledged currency debasement starting this year. In fact, I've placed quite a few bets on the Japanese destroying the Yen. If that happens, the trade deficit will persist.
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theoakman says
yeah, Japan's prices are still structured at Y150 or so.
Complicating matters is the capital interchange with China and Japan's energy needs from OPEC. This makes my head hurt.
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Gold going wild! Dollar falling into the abyss! Dogs and cats living together!! It's all the worst parts of the bible combined.
:)
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marcus says
By 3000AD Walmart will be purchasing all of its goods from Alpha Centauri - it'll be cheaper to manufacture there and ship through the Stargate.
Perot was victimized by the media for speaking his mind - he didn't get where he was by being dumb or crazy but they sure framed him that way. I saw him speak once and found him quite intelligent and cogent - and as a result I voted for him in 92.
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Nomograph says
Now I do.
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shrekgrinch says
that's . . . productive. For every buyer there's a seller!
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middleman's website
I'm a taxi cab driver and my wife's a waitress in san diego. We heard gold was a good investment....we're thinking about taking all of our tips to Vegas and hitting up the Gold ATM's. Thoughts??
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middleman says
Yeah, don't buy gold from vending machines.
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iwog says
lol, I was just trolling iwog...
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Article and photographs of a gold ATM in Dubai.
http://dailybail.com/home/dad-dont-forget-we-gotta-stop-by-the-atm-and-get-some-gold-b.html
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I have $1,000.00 to invest in gold. Can anyone make any recomendations for gold options?
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$1,000.00 won't get you very much.. Maybe some a few 1/4 ounce coins or some small gram bars.
Check out Apmex.
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The easiest way is to buy the exchange traded fund GLD on the New York stock exchange. $1000 buys 7 shares and the price will track gold fairly closely.
If you meant options as in derivatives to increase your leverage, you can buy options on GLD which will greatly increase your gains but at high risk.
For example a March 2011 call @ 150 currently costs $2.30 per share. if gold reaches $1600 by March 2011, you'll turn the $1000 into $4000. If gold reaches $1700 you make $8000 and so on. If on the other hand gold doesn't exceed $1500 by March, you lose your entire $1000.
Whatever you do, I don't advise holding a gold investment past $2000 an ounce.
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Buying gold in Dubai is supposed to be the best place to buy actually. Low overhead costs and strict rules on quality.
Especially gold jewelry, where you never know what might be in it! The places over there are tightly controlled.
What I found interesting in shopping in those stores over there is that they charge per gram for jewelry. So if you wanted a broach, the price was listed right there. $150/g (or whatever it is now+markup for workmanship), and then it would list how many grams of gold was in the piece. Every piece was charged in this fashion, unlike our jewelers here who charge based on the workmanship put into the pieces.
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How about setting up a gold pawn shop on mall kiosk and collect gold for 15-20% off.
Monthly rent of kiosk: 3K
Estimated margin per oz $200/oz
Salary, overhead, fixed cost 10K
Total fixed Cost 13K
Oz/month to break even. 13,000/200 = 65oz
per day 2.0 - 2.5 oz per day
buy 5 oz a day and you'll be making 15K+ a month in addition to salary draw included in fixed cost. I imagine there will be some people who would sell their jewerly for christmas gifts.
2oz is about 2-3 2mm 16" 24 karat gold necklace
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Actually, I think I was way off. When I saw these jewelery shops it was about $16/gram. Of course gold was only about $400/oz back in 2002 range.
I've seen a few articles on those "gold collectors", where you mail in your "gold" and they send you a check. Apparently they're incredibly sleazy, giving you only a few days to tell them "no" on their offer, they mail it late and of course put up lots of walls to block you. After X days, they melt your product down apparently, so you're stuck with whatever cash they've given you.
Gold kiosk around here would be pretty hard to operate I think. I'm betting there would be quite a few laws in handling and selling gold, especially appraising it.
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Gold is pretty easy to appraise if you treat them like they will be melted. There are equipment to measure the gold unit oz. and equipment to weigh it. The value is strictly gold unit. The markup is simply what the gold pawn is willing to accept. The design of the jewelry is irrelevant. So if you bring something from Tiffany's, it would be appraised the same as a no-name.
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SF ace says
That only works if you know how to correctly identify the purity though, doesn't it? I personally couldn't tell the difference at all between 16 and 24 karat gold, but there's a very real price difference.
With all the gold pushing from Glenn Beck and co., I think the eventual gold crash is going to be epic. I think iwog's 2000 prediction is spot on, though I honestly don't have the confidence to take the bet.
Frankly, I wouldn't be at all surprised if gold goes to $5k and then falls off a cliff, NASDAQ style.
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Iwog,
I'm looking at this graph again and still wonder why gold didn't go parabolic this past summer. Its chart and the oil bubble chart look almost identical. However, I notice some time gaps.
It took oil 5 months to set the bear trap and 15 months to break the $80 mark. 20 months total.
It took gold 8 months to set the bear trap and 19 months to break out above the $1,000 mark. 27 months total. So it seems like it would take gold a little longer to go parabolic. At this point, it looks like gold is heading straight up to $1,450.
Hopefully you will make up the lost on the way down :o)
Disclaimer: I don't own any gold bars or GLD and don't intend to own any. I only love R.E. :o)
Happy Investing!!!!!!!!!
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Yup, investments like that have to be treated like bets in the casino. It might only have a 20% chance of paying off, but the payoff is 30 to 1 and over the long haul it just takes one good strike to make yourself good.
The problem with C not being 'the' bear trap is that we might soon see the REAL bear trap which at this point would send gold to around $1000 an ounce. If that happens, I'll be very optimistic and will probably make another options bet for 18 months after the new and improved point C.
The other possibility is that I'm putting way too much faith in my bubble model, and gold will turn parabolic whenever it feels like it. Since I have no way to time this, I'll just have to wait until it exceeds $2000, cash out, and play the back end.
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On the casino comment - I've dreamed of making that one options play that would make me a 10x return on investment. I've probably had a 20% in-the-money success rate, but overall have come out 2x ahead on investment. Not bad...but it is gambling no doubt.
I am invested in gold, but after reading these comments - am thinking of swapping it for silver. That seems to be the better play.
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globe33 says
If you want to make 10x return on your investment, simply get some good junior mining shares. If gold bubbles, these things will explode through the roof.
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Too many people waiting for it to go "parabolic" for it to do so.
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iwog says
What if serious inflation kicks in?
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RayAmerica says
Then expectations will be met and it isn't going to move the gold market much. Buy the rumor, sell the news.
It has taken me decades to finally "get it" and profit from it. The oil bubble was caused by expectations of peak oil, not peak oil itself. The Nasdaq bubble was caused by expectations of the internet changing everything, not the FACT of the internet changing everything which has mostly occurred over the last 5 years or so.
The gold bubble will be caused by EXPECTATIONS of high inflation, not high inflation itself. It will peak long before inflation becomes a serious crisis.
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Silver has been crushing gold, ratio down to under 58:1 from 66:1 just a few months ago. I'm looking to get out of the silver and into a jr miner or two, any reccomendations?
What's the guy from Western Silver doing these days, thomas patton?
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Wow, it went up over $100/oz since this thread started a month ago. Looking at the graph, it seems like gold typically has a good run between the fall to spring.
What ironic is both the stock market and the gold market are trending higher at the same time. The recent weakness of the USD definitely helped to fuel the gold run-up.
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Iwog .... where do you think silver will top and approximately when?
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RayAmerica says
In 1980, gold was piggybacking silver. Today silver is piggybacking gold.
Silver will top when gold tops at between $2000 and $2500 IMO. That might be $35 or it might be more or less. I'm not going to try and call a top for silver because I'm much more confident on the top for gold.
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RayAmerica says
The old saving is buy gold when there is uncertainty and buy copper when the economy is growing and buy silver if you're unsure. From that perspective, silver should perform somewhere between gold and copper.
Kiddings aside, I think there is more value in buying silver currently.
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iwog says
It's not an entirely fair comparison; the Hunt brothers aren't pulling any shenanigans these days.
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Nomograph says
That's true, but back in 1980 it was silver in the news everyday and silver breaking all the records first. Gold increased primarily because silver was going crazy.
Today it's gold making the news and gold breaking all the records first. I expect that silver WILL outperform gold in the long run, but the actual bubble hype is going to be gold. That makes a price model possible for gold which is why I'm guessing $2000-$2500 will be the range.
Silver will top out at the same time, but I have no idea at what price and can't even guess. The 5-year 500% rule has already been broken for silver but not for gold. (in 1980 silver was 5 year, 1000%)