Doesn’t Gold look like a bubble?
One thing, however is certain, the longer it takes for the bubble to burst, the more painful it will be.
Kind of like a pimple? Geez.. why is it so hard for me to just jump off the fence?
Haven’t I read in several places that the United States Federal Reserve confiscated everyone’s gold in 1931? In view of this, I would not buy more gold here in the UK, and would be similarly reluctant in Canada.
I don’t think gold is in a bubble, but I also wouldn’t be surprised if it went back to $700-$800 before rising back well over $1,000.
My reasoning is this: we are in a deflationary environment for the moment. Almost all prices are down relative to last year (or even 6 months ago). Simply put, dollars today are worth more than dollars 6 months ago. The US savings rate is not only positive for one of the only times in 20 years, it’s actually up to 5%! That means people aren’t spending (which I’m sure is not news to anyone not living under a rock), but more importantly, it means there is less money trading hands, chasing goods. Traditionally, deflation works against gold just like it works against anything else.
However, the government’s debasement of the currency will eventually come back to haunt us all, with a vengeance. How is it that they’ve pumpued the greatest amoun tof newly created money in history into the system without any inflation taking place yet? I’ll let someone else answer that. All I know is you cannot put the toothpaste back in the tube, and when inflation returns, it’s going to get really ugly.
Gold was confiscated in 1933. We were on a quasi gold standard then. It also was a way for FDR to devalue the dollar by like 60%, so more dollars meant less debt.
Silver was not taken.
Greenspan on gold in the 1960s (he recently autograhped this article for Ron Paul and told him he still beilieves in what he wrote then) http://www.scribd.com/doc/192230/GOLD-AND-ECONOMIC-FREEDOM-Alan-Greenspan
FDR’s siezure PDF: http://www.wellsfargonevadagold.com/confiscation-order.pdf
And indepth from Brooklyn law prof. http://users.rcn.com/mgfree/Economics/goldHistory.html
Unless we go to a gold standard again I wouln’d’t worry too much about it. I think that they’d do this only if they were dragged kicking and screaming (i.e. the countries with the gas said no cash gold or nothing—and I think they’d pay with bombs not gold even then).
don’t forget silver. Silver’s a far better bet I think than gold. Most people by no real fault of their own tend to be too gold-centric. [/quote]
MCC, I’ve seen this said before on this site and it always puzzled me. *Why* is silver a much better bet? the reason I haven’t bought any is the markup I see on it at the site where I buy gold is double the gold markup — 11 percent markup vs. 5 percent. Do you just think silver is somehow undervalued compared to gold?
A good site to read daily is:
Jim Sinclair and his team are bullish gold and have been since Y2K. For example, today’s article starts out with a question from a reader:
Some say the biggest gold short or manipulator in the world is none other than the Federal Reserve. The Fed is not part of the government and is not really a reserve. It simply is a subcontractor for monetary policy in the United States. Can you please tell us why the Fed will ultimately fail in suppressing gold and for that matter silver? Just to get your creative juices flowing here is a little exchange the took place in Congress recently between Fed Chief Ben Bernanke and US Senator Bernie Sanders from Vermont.
“’My question to you is, will you tell the American people to whom you lent $2.2 trillion of their dollars? Sanders asked, referring to the size of the Fed’s balance sheet.
…The central bank chairman replied,"NO."
Bernanke said the Fed’s lending programs were not gifts or subsidies but rather over-collateralized loans.
"We have never lost a penny doing it," he said."
–U.S. Senator Bernie Sanders (I – VT) and Fed Chairman Ben Bernanke (Reuters, March 3, 2009)
Senator Sanders is introducing legislation demanding the Federal Reserve disclose who it is giving taxpayer dollars to. I, as many, appreciate all you do to protect wealth.
If you want some good insight and analysis of the gold markets, I would read this site on a regular basis.
Thanks Davos, for the silver link. I wish theinterviewer would have let the author talk about the history of silver and its value. I’m going to have to poke around his site a bit and see if I can find more on that…
Hi Sue (and all)
I dont have much time right this second, but silver historically has been valued at roughly 12-15/1 with gold. From my readings primarily based on the fact (back then) that there was 12-15 times more silver around than gold…this is not the case now.
Silver last I checked was roughly 65/1, still grossly undervalued, especially when you consider the fact that it is used industrially as well as real money. There is also only a fraction of silver mined right now compared to say 1980 (around 90% less, someone feel free to put closer stats up for now….Ill do it later tonight if no one else gets a chance.)
What else would you like to know sue?
A good book to read on the subject of Gold and Silver is from Kiyosaki’s Rich Dad Advisor series- "Guide to Investing in Gold and Silver". Its a fast and easy read and gives a really good overview on the history, why to buy and how to buy. Silver is shown to have much more upside potential than Gold in a hyperinflationary economy. For what its worth, it seems that Kiyosaki (Rich Dad) has been investing in Gold and Silver for some time as he too believes that cash will soon be trash.