Is Gold another bubble?

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mountain's picture
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Is Gold another bubble?

what do you think?

Is Gold and other precious metals like silver just another Bubble

they seem to be on an exponential curve of growth as well

the mantra around them is buy, buy, buy - solid, fail proof investment, etc...

seems similar to housing to me...

any thoughts?

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Re: Is Gold another bubble?

Ask the next ten people you meet today if they are buying gold and silver. They will say no.

 

No, it is not yet in a bubble.

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Re: Is Gold another bubble?

No not a a bubble.  I was in California during the height of the housing bubble.  Everyone was talking about what a great investment owning and/or flipping a house was.  You couldn't talk people out of it.  I still know very few people who actually own precious metals.  Not really even on the radar screen for most.  Everyone owns dollars and a bank account. 

However, if you read Nicole Foss of the Automatic Earth, they have consistently argued that we are headed for a deflationary collapse at some point over the next couple of years and suggest precious metals will be dragged down.  There are some who argue that yes we will have deflation, but precious metals will do well in that environment.

Remember to distinguish paper precious metals from physical bullion.  Most on this website believe that the paper forms of wealth are in a bubble of sorts.

 

Brian

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Re: Is Gold another bubble?

Have an exit strategy. There very well may be a time when PMs hit bubble status and it's time to move the increased value of your PMs to another asset class. Listen to the recent Financial Sense Newshours for a good answer to your OP. A Canadian Perspective on Silver and Oil and Silver Mining Legends: Beaty and Quartermain and FSN Metals Update with David Morgan & Nick Barisheff and Silver Roundtable | Look Back at 2010; What's Ahead for 2011

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Re: Is Gold another bubble?

 

No.

 

1. Borrowed money is not buying Gold.

2. The highest grade and easiest to mine ore bodies have long been extracted.

3. Energy costs have increased mining/refining/shipping expenses.

4. Very few, if any, who own Gold, are selling it (maybe  those desperate as old jewelry they are).

5. Governments are buying.

6. Banks are buying.

7. ETF's are buying.

8. Corporations are buying.

9. Rich people are buying.

10. Miners are holding for a higher price.

 

Those who think Gold is in a bubble now will be the ones who will buy mine at a very unreasonable future price.

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Re: Is Gold another bubble?

Notice: The following commentary is not pro-gold. Please click the ignore user button now! Surprised

If you don't think gold is in a bubble, it's because you're in the bubble. It amazes me that people still fall for this tired Wall Street ploy. You are not buying an asset, you are buying Wall Street marketing. And if you believe it is somehow different with gold, then you deserve to contribute your hard earned cash to the next round of Wall Street bonuses. It's really quite a beautiful set up, you convince investors that they can escape the "game" by investing in this golden asset, but in reality these investors are the game. 

Bubbles are a product of emotion, and the current golden bubble is fed by both greed and fear. You couldn't design a more perfect asset bubble, and it should be a real "gold mine" for the market makers and commercial players. The rest of us should just stretch our hamstrings, so that we can more easily assume the position when this ride is over.

 

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Re: Is Gold another bubble?

Yes, gold is the ultimate bubble. That means it is the only portable asset that will retain its value over the next century or two. 

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Re: Is Gold another bubble?

My short answer is no…Gold is not in a bubble.  The marker I use, and that of Michael Maloney and other PM savvy investors is the ratio of Gold when compared to other assets.  I believe Chris used the example of an acre of useable land to an ounce of Gold (or fairly close).  I like the Dow / Gold ratio myself and think that a 1 to 1 ratio (i.e. one share of the Dow equals 1 ounce of Gold) is going to be one crucial indicator that I use to start moving my money from PM’s and into other asset classes; e.g. real estate, other commodities, etc. 

At the spot price I saw on kitco.com today of $1374.90 per ounce Gold may be out of reach for most people, but I personally would rather have an ounce of gold in my home safe than $1400 in the bank.  Silver, currently at a spot price of around $30.70 is severely undervalued and actually is in a pattern defined as “backwardation”.  Chris nails this in his insider post yesterday titled "Silver Short Looming". 

The hisorical ratio of gold to silver is 16 to 1, which would price Silver at $85.93 using today’s spot price of gold.  Physical Silver has use in industrial applications and is actually much more scarce a metal than physical Gold; which compels some investors to believe the correct Gold to Silver Ratio should truly be 12 or 10 :1 instead of 16 : 1.  Couple that with the short position of huge banks like JP Morgan and Silver gets all the more attractive.  Like Chris has taught us in the Crash Course…patterns such as this are not sustainable forever.  A correction will materialize and I believe you will be happy you had any position in physical Gold and Silver Bullion than none at all.  Just my two coppers….no pun intended.

Thank you for reading my post.

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Re: Is Gold another bubble?

A third of the world's population and their governments (China and India) are buying PMs like hotcakes.  Last I heard (can't find actual authority) less than 1% of Americans own bullion.  That number may not be accurate, but I'm confident the order of magnitude is about right.  No one I have asked actually owns any unless they have a few coins handed down through family.  Meanwhile, actual bullion is getting scarce and the currency is losing value.  How does this not add up to a strong argument to own some?

Doug

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Re: Is Gold another bubble?

thank you

everyone's comments and knowledge are very appreciated

 

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Re: Is Gold another bubble?
Thomas F. wrote:

My short answer is no…Gold is not in a bubble.  The marker I use, and that of Michael Maloney and other PM savvy investors is the ratio of Gold when compared to other assets.  I believe Chris used the example of an acre of useable land to an ounce of Gold (or fairly close).  I like the Dow / Gold ratio myself and think that a 1 to 1 ratio (i.e. one share of the Dow equals 1 ounce of Gold) is going to be one crucial indicator that I use to start moving my money from PM’s and into other asset classes; e.g. real estate, other commodities, etc. 

Thomas F,

One of the problems with that indicator is that everyone else and his uncle who has even a smattering of knowledge of PMs will be using it as well.  I'd respectfully suggest delving a little deeper for suitable sell criteria.  Otherwise you're likely to be a rather unhappy fellow when it comes time to sell and there are few or no buyers to be found. 

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Re: Is Gold another bubble?
JAG wrote:

If you don't think gold is in a bubble, it's because you're in the bubble. It amazes me that people still fall for this tired Wall Street ploy. You are not buying an asset, you are buying Wall Street marketing. And if you believe it is somehow different with gold, then you deserve to contribute your hard earned cash to the next round of Wall Street bonuses. It's really quite a beautiful set up, you convince investors that they can escape the "game" by investing in this golden asset, but in reality these investors are the game. 

Bubbles are a product of emotion, and the current golden bubble is fed by both greed and fear. You couldn't design a more perfect asset bubble, and it should be a real "gold mine" for the market makers and commercial players. The rest of us should just stretch our hamstrings, so that we can more easily assume the position when this ride is over.

Jeff,

I'm just curious.  When do you think gold entered bubble territory?  What price range?

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Re: Is Gold another bubble?
ao wrote:
Thomas F. wrote:

My short answer is no…Gold is not in a bubble.  The marker I use, and that of Michael Maloney and other PM savvy investors is the ratio of Gold when compared to other assets.  I believe Chris used the example of an acre of useable land to an ounce of Gold (or fairly close).  I like the Dow / Gold ratio myself and think that a 1 to 1 ratio (i.e. one share of the Dow equals 1 ounce of Gold) is going to be one crucial indicator that I use to start moving my money from PM’s and into other asset classes; e.g. real estate, other commodities, etc. 

Thomas F,

One of the problems with that indicator is that everyone else and his uncle who has even a smattering of knowledge of PMs will be using it as well.  I'd respectfully suggest delving a little deeper for suitable sell criteria.  Otherwise you're likely to be a rather unhappy fellow when it comes time to sell and there are few or no buyers to be found. 

ao…I appreciate that sentiment.  The Dow / Gold ratio is a crucial indicator, but there are others as well.  Markets tend to overcorrect, and I think there will be plenty of buyers provided those of us invested in precious metals stay current with information and acknowledge that the price of gold will not go up in perpetuity.  Timing will be crucial, but I believe a very nice return will be realized before the price begins it's descent.  And in the case the Dollar is completely destroyed, then the value of PM’s will be truly exponential.  It is going to be very, very interesting, and we have a front row seat.

Also, with respect to silver; I believe the “new normal” will eventually plateau at a price significantly higher than its current price.  That said, I am investing more in Silver because the way I see things, the worst it can do from today’s prices is gain100 – 200 %....minimum.  It's just my informed opinion, and until evidence surfaces to inform me otherwise I am comfortable advocating that position.

Thanks for reading my post.

 

  

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Re: Is Gold another bubble?
Thomas F. wrote:
ao wrote:
Thomas F. wrote:

My short answer is no…Gold is not in a bubble.  The marker I use, and that of Michael Maloney and other PM savvy investors is the ratio of Gold when compared to other assets.  I believe Chris used the example of an acre of useable land to an ounce of Gold (or fairly close).  I like the Dow / Gold ratio myself and think that a 1 to 1 ratio (i.e. one share of the Dow equals 1 ounce of Gold) is going to be one crucial indicator that I use to start moving my money from PM’s and into other asset classes; e.g. real estate, other commodities, etc. 

Thomas F,

One of the problems with that indicator is that everyone else and his uncle who has even a smattering of knowledge of PMs will be using it as well.  I'd respectfully suggest delving a little deeper for suitable sell criteria.  Otherwise you're likely to be a rather unhappy fellow when it comes time to sell and there are few or no buyers to be found. 

ao…I appreciate that sentiment.  The Dow / Gold ratio is a crucial indicator, but there are others as well.  Markets tend to overcorrect, and I think there will be plenty of buyers provided those of us invested in precious metals stay current with information and acknowledge that the price of gold will not go up in perpetuity.  Timing will be crucial, but I believe a very nice return will be realized before the price begins it's descent.  And in the case the Dollar is completely destroyed, then the value of PM’s will be truly exponential.  It is going to be very, very interesting, and we have a front row seat.

Also, with respect to silver; I believe the “new normal” will eventually plateau at a price significantly higher than its current price.  That said, I am investing more in Silver because the way I see things, the worst it can do from today’s prices is gain100 – 200 %....minimum.  It's just my informed opinion, and until evidence surfaces to inform me otherwise I am comfortable advocating that position.

Thanks for reading my post.  

Thomas F,

Just a few points to clarify.  First, the proper timing will be more difficult to determine than most people suspect.  Second, the largest returns (percentagewise) in PMs have already been obtained.  Third, the price most likely won't descend, it will plummet.  Fourth, the price of PMs may go exponential but the value will essentially stay the same.  Fifth, the "silver as a sure thing" belief was bandied about 3 decades ago and blew up in peoples' faces ... there is no sure thing.  Sixth (and most importantly), don't put too much faith in Mike Maloney's knowledge or spiel.  As I said, delve deeper. 

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Re: Is Gold another bubble?
ao wrote:

Just a few points to clarify.  First, the proper timing will be more difficult to determine than most people suspect.  Second, the largest returns (percentagewise) in PMs have already been obtained.  Third, the price most likely won't descend, it will plummet.  Fourth, the price of PMs may go exponential but the value will essentially stay the same.  Fifth, the "silver as a sure thing" belief was bandied about 3 decades ago and blew up in peoples' faces ... there is no sure thing.  Sixth (and most importantly), don't put too much faith in Mike Maloney's knowledge or spiel.  As I said, delve deeper. 

"Second, the largest returns (percentagewise) in PMs have already been obtained." How do you know?

ao, have you ever bought Gold or silver?   

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Re: Is Gold another bubble?
sevenmmm wrote:

"Second, the largest returns (percentagewise) in PMs have already been obtained." How do you know?

ao, have you ever bought Gold or silver?   

sevenmmm,

If by asking how do I know, you mean how can I be absolutely certain, the answer is, I can't.  But in looking at statistical probability, study the historical precedents, mining figures, demand, etc., and do the math.  I bought the majority of my silver at $4 oz.  For round numbers, let's say it's gone to $30/oz.  So it's gone up over 7.5X.  Do you think it's going to go up more than 7.5X from that figure from here looking forward?  If you think silver, in today's dollars, is going to go to $225/oz., I think you're being a might optimistic.  Of course, it could go to billions an ounce or more like in Weimar Germany but that's price, not value.

A key component in any kind of investing is minimizing downside risk.  You always want to make sure irrational exuberance doesn't turn to ruination.  Think bulls, bears, pigs.

And about buying gold or silver, check the archives.  Yes, I've bought gold, silver, palladium, platinum, productive land, commercial real estate, stocks, bonds, currencies, commodities, food, lead and brass, steel and polymer, yadda, yadda, yadda.  And I've sold most of them as well.  Does your question imply that the simple act of purchasing gold and silver confers knowledge or wisdom on the subject?  Because it doesn't.   

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Re: Is Gold another bubble?
ao wrote:
sevenmmm wrote:

"Second, the largest returns (percentagewise) in PMs have already been obtained." How do you know?

ao, have you ever bought Gold or silver?   

sevenmmm,

If by asking how do I know, you mean how can I be absolutely certain, the answer is, I can't.  But in looking at statistical probability, study the historical precedents, mining figures, demand, etc., and do the math.  I bought the majority of my silver at $4 oz.  For round numbers, let's say it's gone to $30/oz.  So it's gone up over 7.5X.  Do you think it's going to go up more than 7.5X from that figure from here looking forward?  If you think silver, in today's dollars, is going to go to $225/oz., I think you're being a might optimistic.  Of course, it could go to billions an ounce or more like in Weimar Germany but that's price, not value.

A key component in any kind of investing is minimizing downside risk.  You always want to make sure irrational exuberance doesn't turn to ruination.  Think bulls, bears, pigs.

And about buying gold or silver, check the archives.  Yes, I've bought gold, silver, palladium, platinum, productive land, commercial real estate, stocks, bonds, currencies, commodities, food, lead and brass, steel and polymer, yadda, yadda, yadda.  And I've sold most of them as well.  Does your question imply that the simple act of purchasing gold and silver confers knowledge or wisdom on the subject?  Because it doesn't.   

 

I'm not implying anything. I hope you not attempting to create a strawman with that statement. For your gratification, I wanted to determine if you were one of those know-it-alls who never owned Gold. So you did, that is nice.

My bet is the US is going to have to make payments in Gold, or default on the debt, which would also be a sure bet Gold will be bought en masse. Silver and other noble metals are used in industry (of course you know that), so what do you think of this recent story?

 

http://www.reuters.com/article/2011/02/11/silver-backwardation-idUSN1133112820110211

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Re: Is Gold another bubble?

"Thomas F,

Just a few points to clarify.  First, the proper timing will be more difficult to determine than most people suspect.  Second, the largest returns (percentagewise) in PMs have already been obtained.  Third, the price most likely won't descend, it will plummet.  Fourth, the price of PMs may go exponential but the value will essentially stay the same.  Fifth, the "silver as a sure thing" belief was bandied about 3 decades ago and blew up in peoples' faces ... there is no sure thing.  Sixth (and most importantly), don't put too much faith in Mike Maloney's knowledge or spiel.  As I said, delve deeper." 

 

Ao, 

Thank you for your response; allow me to clarify as well, point by point. 

On your 1st and 3rd points…By “timing”, I am not insinuating that anyone much less myself is capable of “timing” any market in the world.  That is not a game I care to play.  I am more concerned with timing with respect to my position in PM’s, everyone’s position is unique.  That’s why I advocate moving to another asset class “before” the descent begins.  If investors stay informed, I think that will be easier to spot than you suggest.  This has happened with every other bubble in the history of man whether we are talking about the stock market, tech stocks, housing or even tulips.  

On your 2nd point…You may be 100% correct that the largest percentage gains in PM’s have already been realized, but that does not mean they will not continue to outperform other investment options percentagewise.  As with any investment at any given point in time it’s more about where it is going as opposed to where it is at, and I think gold and silver have plenty of upside potential. 

On your fourth assertion….Your contention that PM’s may go exponential while their “value” remains the same is perplexing.  For that to be true every other asset class compared to PM’s would have to rise in value proportionally.  That’s the same as saying there will be zero market change, I don’t get it. 

On your fifth point…You compare today’s silver market to that of 30 years ago.  Again, I have to disagree.  You are comparing apples and oranges in my opinion, and I can give you several Billion reasons why.

On your 6th point…Mike Maloney is “one” source I consult, not “the only” source; and I would hesitate to characterize his opinions regarding gold and silver as a “spiel”.  Could you venture to guess how many people refer to the Crash Course as “Chris Martenson’s spiel”?  

You close your comments with “delve deeper”.  Perhaps a sincere attempt on your part urging me to find some hidden truth about gold and silver but in all honesty it smacks of pure condescension.  I have elected to join this community because I have been compelled by Dr. Martenson’s work in the Crash Course and I wish to accelerate the process of reaching that tipping point of awareness in the world about what the Crash Course teaches.  I am here to surround myself with like minded people in an attempt to find the answers I believe we all need to survive whatever future lays ahead.  If you have some expertise on the subject matter that would better inform our community as to what actions we should take, I would love to hear it.    

Thanks for reading my post 

 

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Re: Is Gold another bubble?
sevenmmm wrote:

 Silver and other noble metals are used in industry (of course you know that), so what do you think of this recent story?

http://www.reuters.com/article/2011/02/11/silver-backwardation-idUSN1133112820110211

I think it merits considering this article.

http://news.silverseek.com/TedButler/1147188385.php

Even the big guys can get smoked by silver.

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Re: Is Gold another bubble?
Thomas F. wrote:

"Thomas F,

Just a few points to clarify.  First, the proper timing will be more difficult to determine than most people suspect.  Second, the largest returns (percentagewise) in PMs have already been obtained.  Third, the price most likely won't descend, it will plummet.  Fourth, the price of PMs may go exponential but the value will essentially stay the same.  Fifth, the "silver as a sure thing" belief was bandied about 3 decades ago and blew up in peoples' faces ... there is no sure thing.  Sixth (and most importantly), don't put too much faith in Mike Maloney's knowledge or spiel.  As I said, delve deeper." 

 

Ao, 

Thank you for your response; allow me to clarify as well, point by point. 

On your 1st and 3rd points…By “timing”, I am not insinuating that anyone much less myself is capable of “timing” any market in the world.  That is not a game I care to play.  I am more concerned with timing with respect to my position in PM’s, everyone’s position is unique.  That’s why I advocate moving to another asset class “before” the descent begins.  If investors stay informed, I think that will be easier to spot than you suggest.  This has happened with every other bubble in the history of man whether we are talking about the stock market, tech stocks, housing or even tulips.  

On your 2nd point…You may be 100% correct that the largest percentage gains in PM’s have already been realized, but that does not mean they will not continue to outperform other investment options percentagewise.  As with any investment at any given point in time it’s more about where it is going as opposed to where it is at, and I think gold and silver have plenty of upside potential. 

On your fourth assertion….Your contention that PM’s may go exponential while their “value” remains the same is perplexing.  For that to be true every other asset class compared to PM’s would have to rise in value proportionally.  That’s the same as saying there will be zero market change, I don’t get it. 

On your fifth point…You compare today’s silver market to that of 30 years ago.  Again, I have to disagree.  You are comparing apples and oranges in my opinion, and I can give you several Billion reasons why.

On your 6th point…Mike Maloney is “one” source I consult, not “the only” source; and I would hesitate to characterize his opinions regarding gold and silver as a “spiel”.  Could you venture to guess how many people refer to the Crash Course as “Chris Martenson’s spiel”?  

You close your comments with “delve deeper”.  Perhaps a sincere attempt on your part urging me to find some hidden truth about gold and silver but in all honesty it smacks of pure condescension.  I have elected to join this community because I have been compelled by Dr. Martenson’s work in the Crash Course and I wish to accelerate the process of reaching that tipping point of awareness in the world about what the Crash Course teaches.  I am here to surround myself with like minded people in an attempt to find the answers I believe we all need to survive whatever future lays ahead.  If you have some expertise on the subject matter that would better inform our community as to what actions we should take, I would love to hear it.    

Thanks for reading my post 

 

Thomas f

Thanks for your reply.  Your statement about moving to another asset class requires timing.  To say otherwise is disingenuous.  If timing bubbles was so easy, you wouldn't see so many investors getting burned.  I didn't deny there is upside potential in gold and silver.  In fact, I'm counting on it.  But the upside potential remaining is smaller than if you got onboard at a more fortuitous time than the present one.  If the difference between price and value isn't clear, think of gold's fundamental exchange value for food and clothing, for example.  It stays essentially the same ... preservation of wealth and all that.  And if you read carefully what I wrote, I didn't compare today's silver market with the one 30 years ago.  I'm well aware of the differences.  What I compared was the high probability of many investors having their silver blow up in their faces just like it did 30 years ago.  And sorry, but Mike Maloney is talking his book and it is a spiel, true or exaggerated.  Chris doesn't stand to profit directly from his statements.  Mike Maloney, on the other hand, does.  Sorry if you felt my remarks were condescending.  I tend to be blunt.  What I'm saying is, what you stated was obvious and widely known and you may want to dig deeper to keep yourself safe.  Am I going to educate you about what to do?  Sorry but no.  I've neither the time nor the inclination.  I've worked hard to acquire that information and I'm not about to give it away for reasons that should be obvious to any savvy investor.

 

 

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Re: Is Gold another bubble?
sevenmmm wrote:

ao, have you ever bought Gold or silver?   

Hmmmm....you must be new around here if your asking that...

ao wrote:

Jeff,

I'm just curious.  When do you think gold entered bubble territory?  What price range?

I'm not sure the dollar value of gold at the time, but when silver finally went ballistic and confirmed the move in gold, I figured the transfer of "the bag" had begun; as its hard for the retail investor to ignore such seductive price action. 

ao wrote:

First, the proper timing will be more difficult to determine than most people suspect.  Second, the largest returns (percentagewise) in PMs have already been obtained.  Third, the price most likely won't descend, it will plummet.  Fourth, the price of PMs may go exponential but the value will essentially stay the same.  Fifth, the "silver as a sure thing" belief was bandied about 3 decades ago and blew up in peoples' faces ... there is no sure thing.  Sixth (and most importantly), don't put too much faith in Mike Maloney's knowledge or spiel.  As I said, delve deeper.

That's the best market perspective I've read in this forum since the days of Machinehead. Thank you.

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Re: Is Gold another bubble?

AO said,  "What I compared was the high probability of many investors having their silver blow up in their faces just like it did 30 years ago."

I would be interested to know why you think there is a high probability of this happening?  We all know that the PM's blew up because Volcker manned up and saved the dollar by dramatically raising interest and killing the bond market.  We all know this would be virtually impossible today given our debt situation.  

I see little possibility of the dollar being defended, and tremendous fundamentals in terms of limited physical supply, on top of a context where I firmly believe the price has been artificially suppressed for some time by continuously feeding unbacked paper shorts into the market. 

I research this everyday, and don't see any better investment right now.  If there is a parabolic blow off I might change my mind.. but it is not here yet.  

 

 

 

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Re: Is Gold another bubble?
JAG wrote:

That's the best market perspective I've read in this forum since the days of Machinehead. Thank you.

I've been wondering lately whatever happened to Machinehead. His posts were truly awesome.

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Re: Is Gold another bubble?
ao wrote:
Thomas F. wrote:

"Thomas F,

Just a few points to clarify.  First, the proper timing will be more difficult to determine than most people suspect.  Second, the largest returns (percentagewise) in PMs have already been obtained.  Third, the price most likely won't descend, it will plummet.  Fourth, the price of PMs may go exponential but the value will essentially stay the same.  Fifth, the "silver as a sure thing" belief was bandied about 3 decades ago and blew up in peoples' faces ... there is no sure thing.  Sixth (and most importantly), don't put too much faith in Mike Maloney's knowledge or spiel.  As I said, delve deeper." 

 

Ao, 

Thank you for your response; allow me to clarify as well, point by point. 

On your 1st and 3rd points…By “timing”, I am not insinuating that anyone much less myself is capable of “timing” any market in the world.  That is not a game I care to play.  I am more concerned with timing with respect to my position in PM’s, everyone’s position is unique.  That’s why I advocate moving to another asset class “before” the descent begins.  If investors stay informed, I think that will be easier to spot than you suggest.  This has happened with every other bubble in the history of man whether we are talking about the stock market, tech stocks, housing or even tulips.  

On your 2nd point…You may be 100% correct that the largest percentage gains in PM’s have already been realized, but that does not mean they will not continue to outperform other investment options percentagewise.  As with any investment at any given point in time it’s more about where it is going as opposed to where it is at, and I think gold and silver have plenty of upside potential. 

On your fourth assertion….Your contention that PM’s may go exponential while their “value” remains the same is perplexing.  For that to be true every other asset class compared to PM’s would have to rise in value proportionally.  That’s the same as saying there will be zero market change, I don’t get it. 

On your fifth point…You compare today’s silver market to that of 30 years ago.  Again, I have to disagree.  You are comparing apples and oranges in my opinion, and I can give you several Billion reasons why.

On your 6th point…Mike Maloney is “one” source I consult, not “the only” source; and I would hesitate to characterize his opinions regarding gold and silver as a “spiel”.  Could you venture to guess how many people refer to the Crash Course as “Chris Martenson’s spiel”?  

You close your comments with “delve deeper”.  Perhaps a sincere attempt on your part urging me to find some hidden truth about gold and silver but in all honesty it smacks of pure condescension.  I have elected to join this community because I have been compelled by Dr. Martenson’s work in the Crash Course and I wish to accelerate the process of reaching that tipping point of awareness in the world about what the Crash Course teaches.  I am here to surround myself with like minded people in an attempt to find the answers I believe we all need to survive whatever future lays ahead.  If you have some expertise on the subject matter that would better inform our community as to what actions we should take, I would love to hear it.    

Thanks for reading my post

 

Thomas f

Thanks for your reply.  Your statement about moving to another asset class requires timing.  To say otherwise is disingenuous.  If timing bubbles was so easy, you wouldn't see so many investors getting burned.  I didn't deny there is upside potential in gold and silver.  In fact, I'm counting on it.  But the upside potential remaining is smaller than if you got onboard at a more fortuitous time than the present one.  If the difference between price and value isn't clear, think of gold's fundamental exchange value for food and clothing, for example.  It stays essentially the same ... preservation of wealth and all that.  And if you read carefully what I wrote, I didn't compare today's silver market with the one 30 years ago.  I'm well aware of the differences.  What I compared was the high probability of many investors having their silver blow up in their faces just like it did 30 years ago.  And sorry, but Mike Maloney is talking his book and it is a spiel, true or exaggerated.  Chris doesn't stand to profit directly from his statements.  Mike Maloney, on the other hand, does.  Sorry if you felt my remarks were condescending.  I tend to be blunt.  What I'm saying is, what you stated was obvious and widely known and you may want to dig deeper to keep yourself safe.  Am I going to educate you about what to do?  Sorry but no.  I've neither the time nor the inclination.  I've worked hard to acquire that information and I'm not about to give it away for reasons that should be obvious to any savvy investor. 

ao, 

Thanks for your reply.  Pardon me, but did I join a community of savvy investors?  Really?  I thought I was joining a community of like minded people that believed in the power of community and shared knowledge, and applying that knowledge in a changing world.  Plenty of people can yell form the stands, but unless they are in the game it’s all empty chatter.  I never asked for you to educate me, I asked you to grab a glove and get in the game.  Having information you are unwilling to share is the same as having nothing to share.  Ironically, you sure spent a lot of time to conclude that you have “neither the time nor the inclination” to share anything we could actually use.  I don’t mean to be blunt either, but you could have accomplished that without saying anything.  

Thanks for reading my post.

Denny Johnson's picture
Denny Johnson
Status: Gold Member (Offline)
Joined: Aug 13 2008
Posts: 348
Re: Is Gold another bubble?

Wish I could find the quote as it was said more cleverly, but it went something like:

"If an asset is trending up, and you own it, it's in a bull market.

If an asset is trending up and you don't own it, it's in a bubble."

The gold bull market folks are still buying pistachios.

sevenmmm's picture
sevenmmm
Status: Silver Member (Offline)
Joined: Jan 19 2011
Posts: 108
Re: Is Gold another bubble?
ao wrote:

And about buying gold or silver, check the archives.  Yes, I've bought gold, silver, palladium, platinum, productive land, commercial real estate, stocks, bonds, currencies, commodities, food, lead and brass, steel and polymer, yadda, yadda, yadda.  And I've sold most of them as well.  Does your question imply that the simple act of purchasing gold and silver confers knowledge or wisdom on the subject?  Because it doesn't.   

Ok, a few more questions. In what quantities did you buy all these items and where did you store them? I have really been interested in brass lately and have been piling it up in the form of candle holders, and other heavier than normal trinkets found at thrift shops and yard sales - bought for pennies of course. What do think of that as an investment? What form did you get your brass in and how much did you pay? And have you sold it or still holding? I also am accumulating lead, steel and aluminum, and have a good store of these.  Should I sell these too? That polymer and yada yada yada has me spinning, can you explain how and at what price you bought polymer? And I really want to know about the yadda items, never know, you might give me some ideas. What are you actually buying right now?

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
Re: Is Gold another bubble?
Thomas F. wrote:
ao wrote:
Thomas F. wrote:

"Thomas F,

Just a few points to clarify.  First, the proper timing will be more difficult to determine than most people suspect.  Second, the largest returns (percentagewise) in PMs have already been obtained.  Third, the price most likely won't descend, it will plummet.  Fourth, the price of PMs may go exponential but the value will essentially stay the same.  Fifth, the "silver as a sure thing" belief was bandied about 3 decades ago and blew up in peoples' faces ... there is no sure thing.  Sixth (and most importantly), don't put too much faith in Mike Maloney's knowledge or spiel.  As I said, delve deeper." 

 

Ao, 

Thank you for your response; allow me to clarify as well, point by point. 

On your 1st and 3rd points…By “timing”, I am not insinuating that anyone much less myself is capable of “timing” any market in the world.  That is not a game I care to play.  I am more concerned with timing with respect to my position in PM’s, everyone’s position is unique.  That’s why I advocate moving to another asset class “before” the descent begins.  If investors stay informed, I think that will be easier to spot than you suggest.  This has happened with every other bubble in the history of man whether we are talking about the stock market, tech stocks, housing or even tulips.  

On your 2nd point…You may be 100% correct that the largest percentage gains in PM’s have already been realized, but that does not mean they will not continue to outperform other investment options percentagewise.  As with any investment at any given point in time it’s more about where it is going as opposed to where it is at, and I think gold and silver have plenty of upside potential. 

On your fourth assertion….Your contention that PM’s may go exponential while their “value” remains the same is perplexing.  For that to be true every other asset class compared to PM’s would have to rise in value proportionally.  That’s the same as saying there will be zero market change, I don’t get it. 

On your fifth point…You compare today’s silver market to that of 30 years ago.  Again, I have to disagree.  You are comparing apples and oranges in my opinion, and I can give you several Billion reasons why.

On your 6th point…Mike Maloney is “one” source I consult, not “the only” source; and I would hesitate to characterize his opinions regarding gold and silver as a “spiel”.  Could you venture to guess how many people refer to the Crash Course as “Chris Martenson’s spiel”?  

You close your comments with “delve deeper”.  Perhaps a sincere attempt on your part urging me to find some hidden truth about gold and silver but in all honesty it smacks of pure condescension.  I have elected to join this community because I have been compelled by Dr. Martenson’s work in the Crash Course and I wish to accelerate the process of reaching that tipping point of awareness in the world about what the Crash Course teaches.  I am here to surround myself with like minded people in an attempt to find the answers I believe we all need to survive whatever future lays ahead.  If you have some expertise on the subject matter that would better inform our community as to what actions we should take, I would love to hear it.    

Thanks for reading my post

 

Thomas f

Thanks for your reply.  Your statement about moving to another asset class requires timing.  To say otherwise is disingenuous.  If timing bubbles was so easy, you wouldn't see so many investors getting burned.  I didn't deny there is upside potential in gold and silver.  In fact, I'm counting on it.  But the upside potential remaining is smaller than if you got onboard at a more fortuitous time than the present one.  If the difference between price and value isn't clear, think of gold's fundamental exchange value for food and clothing, for example.  It stays essentially the same ... preservation of wealth and all that.  And if you read carefully what I wrote, I didn't compare today's silver market with the one 30 years ago.  I'm well aware of the differences.  What I compared was the high probability of many investors having their silver blow up in their faces just like it did 30 years ago.  And sorry, but Mike Maloney is talking his book and it is a spiel, true or exaggerated.  Chris doesn't stand to profit directly from his statements.  Mike Maloney, on the other hand, does.  Sorry if you felt my remarks were condescending.  I tend to be blunt.  What I'm saying is, what you stated was obvious and widely known and you may want to dig deeper to keep yourself safe.  Am I going to educate you about what to do?  Sorry but no.  I've neither the time nor the inclination.  I've worked hard to acquire that information and I'm not about to give it away for reasons that should be obvious to any savvy investor. 

ao, 

Thanks for your reply.  Pardon me, but did I join a community of savvy investors?  Really?  I thought I was joining a community of like minded people that believed in the power of community and shared knowledge, and applying that knowledge in a changing world.  Plenty of people can yell form the stands, but unless they are in the game it’s all empty chatter.  I never asked for you to educate me, I asked you to grab a glove and get in the game.  Having information you are unwilling to share is the same as having nothing to share.  Ironically, you sure spent a lot of time to conclude that you have “neither the time nor the inclination” to share anything we could actually use.  I don’t mean to be blunt either, but you could have accomplished that without saying anything.  

Thanks for reading my post.

I can see where this is going and realize my initial impressions were correct.  Thanks but no thanks.

Thomas F.'s picture
Thomas F.
Status: Member (Offline)
Joined: Jan 29 2011
Posts: 12
Re: Is Gold another bubble?

“I can see where this is going and realize my initial impressions were correct.  Thanks but no thanks.” –ao 

Nice talking to you.

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
Re: Is Gold another bubble?
sevenmmm wrote:
ao wrote:

And about buying gold or silver, check the archives.  Yes, I've bought gold, silver, palladium, platinum, productive land, commercial real estate, stocks, bonds, currencies, commodities, food, lead and brass, steel and polymer, yadda, yadda, yadda.  And I've sold most of them as well.  Does your question imply that the simple act of purchasing gold and silver confers knowledge or wisdom on the subject?  Because it doesn't.   

Ok, a few more questions. In what quantities did you buy all these items and where did you store them? I have really been interested in brass lately and have been piling it up in the form of candle holders, and other heavier than normal trinkets found at thrift shops and yard sales - bought for pennies of course. What do think of that as an investment? What form did you get your brass in and how much did you pay? And have you sold it or still holding? I also am accumulating lead, steel and aluminum, and have a good store of these.  Should I sell these too? That polymer and yada yada yada has me spinning, can you explain how and at what price you bought polymer? And I really want to know about the yadda items, never know, you might give me some ideas. What are you actually buying right now?

sevenmmm,

Honestly, would you answer questions like these in a public forum?  The lead and brass and the steel and polymer statement was tongue-in-cheek, I hope you realized.  But I will tell you that right now, I'm loading up on cigarettes and whiskey.;-) 

sevenmmm's picture
sevenmmm
Status: Silver Member (Offline)
Joined: Jan 19 2011
Posts: 108
Re: Is Gold another bubble?
ao wrote:

sevenmmm,

Honestly, would you answer questions like these in a public forum?  The lead and brass and the steel and polymer statement was tongue-in-cheek, I hope you realized.  But I will tell you that right now, I'm loading up on cigarettes and whiskey.;-) 

 Ok, then I won't ask how you bought steel. Money mouth

I don't know about hoarding that, wouldn't want those types showing up on my doorstep! Bibles with GOLD & SILVER crucifix' would be a better choice...Tongue out

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
Re: Is Gold another bubble?
Jim Hannah wrote:

AO said,  "What I compared was the high probability of many investors having their silver blow up in their faces just like it did 30 years ago."

I would be interested to know why you think there is a high probability of this happening?  We all know that the PM's blew up because Volcker manned up and saved the dollar by dramatically raising interest and killing the bond market.  We all know this would be virtually impossible today given our debt situation.  

I see little possibility of the dollar being defended, and tremendous fundamentals in terms of limited physical supply, on top of a context where I firmly believe the price has been artificially suppressed for some time by continuously feeding unbacked paper shorts into the market. 

I research this everyday, and don't see any better investment right now.  If there is a parabolic blow off I might change my mind.. but it is not here yet.  

Jim,

The situation with silver 30 years ago was a bit more involved than just Volcker's actions.  The point to be learned from the Hunter brothers' situation, for me, is that if the situation in PMs weighs too heavily against the government, the rules will be changed, and quickly, and the entire market can come apart in a flash.

The violence with which a bubble bursts is directly proportional to the confidence and exuberance displayed during its creation.  If you notice, silver is widely being touted as a "can't miss" investment.  From the top dogs in the silver world down to working class Joes, silver is being ballyhooed as one of the best investments on the planet.  Doesn't that make you nervous?  It does me!  Markets have to do with techicals and fundamentals, yes, but they have more to do with emotions.

Do I like gold and silver?  Yes I do.  Am I heavily invested in it?  Yes I am, for now.  Do I think I can unload at the fortuitous point where I can reap big profits but still beat the mad rush for the exits?  That I'm not quite so sure of.  I know I'll exit earlier than I'd like to but better safe than sorry.  When the time comes to depart the market, it'll most likely be like the Cocoanut Grove fire.  One small little unforeseen mistake and you'll wind up a crispy corpse, piled up with all the other bodies at the door.  It's not going to be near as easy as Thomas F would seem to believe.  Have you established your exit criteria and tested your exit strategies?  Here're some observations that may give you pause. 

I recently encouraged my daughter to open her first IRA at age 21.  I was planning on having her invest in SIVR.  I encouraged her to do it as quickly as possible as I saw a market opportunity emerging.  She opened it and on a Monday and tried to do a wire transfer of the funds into the account.  A simple wire transfer that should have taken minutes was fumbled by an inept bank employee who screwed things up so much it took FIVE DAYS (with my wife and I spending almost 3 hours on the phone to get things straightened out)!.  My daughter he missed out on getting in on silver at 26.80 and with me not wanting buy in a rising market, she's missed out on adding about $1K to her $5K account. 

Now if a simple wire transfer can wind up taking that long during a relatively quiet time in the financial world, what do you think might happen when all hell is breaking loose?  And if those types of complications can be encountered with paper PMs, what type of problems do you think you might encounter with the more awkward to handle physical PMs?

If you have $100K of silver, for example, in your personal possession, you'll have to make 4 separate shipments back to a dealer to be covered with the $25K insurance.  Don't forget the time it takes to wrap all that silver up with brown paper and take it to the post office.  At $50/oz. let's say, you'll be having to manage 125 lbs. of silver and also be concerned about security.  Then you're looking at shipping time.  Then you're looking at the time for the dealer to process your order.  That's a lot of time.  Especially if dealers are suddenly getting flooded with buy-back requests and orders.  The silver market came completely apart in 4 days last time.  Furthermore, it's highly probable that the size of the bid/ask spread will grow considerably, to your profound disadvantage.

Let's say you decide instead to unload your silver to a local shop.  Do you really think a local dealer is going to write you out a check for $100K at your convenience when the crunch is coming on?  On the other hand, let's say you're going to sell off your silver in small lots (like most people buy it).  Do you realize how many transactions that is and how much time they will take?  How do you plan to line up that many buyers in a short period of time?  You're going to have to take the time to do all the paperwork as well because if you sell to just one disgruntled buyer, don't do the paperwork, and they report you, you will have some serious explaining to do to the IRS.

Furthermore, if silver was as good as many people here think, don't you think smart money would be making bigger moves in that direction?  As far as smart money buying gold (Paulson, Soros, and so on), most of their purchases have been paper that they can exit from quickly leaving the schmucks holding the bag.  With large capital outlays such as theirs, they will make the market ... and break it ... and their convenience and to their benefit, not yours.  Think about what Soros did with the pound and ask yourself if you want to be swimming in the same water with a shark like him. 

As the saying goes, markets can stay irrational far longer than you can remain solvent.  I've done investments where 99 of the factors looked to be in my favor and 1 looked against and that one turned around and nipped my butt.  So I'm always looking out for the black swan.  I'd recommend you do too. 

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