Comments on: GOLD REPRESENTS THE MASSIVE RISKS IN THIS MARKET http://pragcap.com/gold-represents-the-massive-risks-in-this-market Fri, 25 May 2012 10:48:32 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: James MacInnis http://pragcap.com/gold-represents-the-massive-risks-in-this-market/comment-page-1#comment-9854 James MacInnis Mon, 14 Dec 2009 18:35:30 +0000 http://pragcap.com/?p=13585#comment-9854 Roubini is correct. In spite of the increased money supply, because of high unemployment, the money is not reaching consumers. This along with increased savings is keeping inflation at bay. Indeed there is a debate over deflation versus inflation. The low interest rate makes higher risk assets more attractive and I agree with Roubini, this along with fear of inflation has caused a rush from the dollar into gold and other assets. However,the high unemployment rate indicates the price of oil is not being influenced by the law of supply and demand; it is driven by speculation as a result of fear and greed. The recent controvercy in Dubai and Greece are the proof of this, There was a mass exit out of the Euro and into U. S. dollars. Roubini is correct. In spite of the increased money supply, because of high unemployment, the money is not reaching consumers. This along with increased savings is keeping inflation at bay. Indeed there is a debate over deflation versus inflation. The low interest rate makes higher risk assets more attractive and I agree with Roubini, this along with fear of inflation has caused a rush from the dollar into gold and other assets. However,the high unemployment rate indicates the price of oil is not being influenced by the law of supply and demand; it is driven by speculation as a result of fear and greed.
The recent controvercy in Dubai and Greece are the proof of this, There was a mass exit out of the Euro and into U. S. dollars.

]]> By: Frederick http://pragcap.com/gold-represents-the-massive-risks-in-this-market/comment-page-1#comment-9621 Frederick Sun, 06 Dec 2009 00:47:58 +0000 http://pragcap.com/?p=13585#comment-9621 Ken, here is a thought for you, and Soto below: People who own gold are planning on "re-monetizing" their gold...but into a currency that doesn't exist yet. Ken, here is a thought for you, and Soto below: People who own gold are planning on “re-monetizing” their gold…but into a currency that doesn’t exist yet.

]]> By: Ed http://pragcap.com/gold-represents-the-massive-risks-in-this-market/comment-page-1#comment-9557 Ed Fri, 04 Dec 2009 05:58:47 +0000 http://pragcap.com/?p=13585#comment-9557 Agreed with AWF. According to Martin Armstrong, gold is largely misunderstood by the casual observer in the markets. Bazooby raises an interesting point about whether or not gold is a safe haven. In a debt deflation, gold will not perform well, as would not any asset, since all assets are being sold to raise cash to pay off debt. The Dubai default triggered a bit of anxiety that recalled the debt panic around Lehman, when the USD rose and all assets (gold included, but to a lesser degree) fell. In an inflation, gold might do well. But according to Martin Armstrong, gold is not exactly correlated to inflation, since as others have pointed out, inflation would lead to higher interest rates, which would ultimately depress the price of gold (as a non-income generating asset) in favor of recently issued yield bearing instruments. Instead, gold is correlated to a decline in political confidence. So AWF's analysis is closest on point. Agreed with AWF. According to Martin Armstrong, gold is largely misunderstood by the casual observer in the markets. Bazooby raises an interesting point about whether or not gold is a safe haven. In a debt deflation, gold will not perform well, as would not any asset, since all assets are being sold to raise cash to pay off debt. The Dubai default triggered a bit of anxiety that recalled the debt panic around Lehman, when the USD rose and all assets (gold included, but to a lesser degree) fell. In an inflation, gold might do well. But according to Martin Armstrong, gold is not exactly correlated to inflation, since as others have pointed out, inflation would lead to higher interest rates, which would ultimately depress the price of gold (as a non-income generating asset) in favor of recently issued yield bearing instruments. Instead, gold is correlated to a decline in political confidence. So AWF’s analysis is closest on point.

]]> By: AWF http://pragcap.com/gold-represents-the-massive-risks-in-this-market/comment-page-1#comment-9551 AWF Fri, 04 Dec 2009 02:28:45 +0000 http://pragcap.com/?p=13585#comment-9551 Is Gold Overbought----NO Is Gold in a "Bubble"---NO What is it then? If the stockmarket is a voting booth--what is the Gold vote saying? Some say inflation and were going to "Hell in a Hand Basket"-- an emotional response. Consider the Gold Vote as Vote of NO Confidence. No Confidence in the Administration and its "Economic Recovery" policies. No Confidence in The Fed and The Treasury and its "Reflation" policies. No Confidence in The Global Recovery--in general. Can you use Overbought as a description of more buyers saying No Confidence?? Who knows--maybe these buyers want tangilble "Evidence" of Economic Recovery without the govrnmt "medicine" Is Gold Overbought—-NO

Is Gold in a “Bubble”—NO

What is it then?

If the stockmarket is a voting booth–what is the Gold vote saying?

Some say inflation and were going to “Hell in a Hand Basket”– an emotional response.

Consider the Gold Vote as Vote of NO Confidence.

No Confidence in the Administration and its “Economic Recovery” policies.

No Confidence in The Fed and The Treasury and its “Reflation” policies.

No Confidence in The Global Recovery–in general.

Can you use Overbought as a description of more buyers saying No Confidence??

Who knows–maybe these buyers want tangilble “Evidence” of Economic Recovery without the govrnmt “medicine”

]]> By: Soto http://pragcap.com/gold-represents-the-massive-risks-in-this-market/comment-page-1#comment-9519 Soto Thu, 03 Dec 2009 18:04:22 +0000 http://pragcap.com/?p=13585#comment-9519 You think in a "total collapse" environment that gold will be worth something? Rice, cheese, and gas, yes, gold... no. Gold has limited value as a commodity in manufacturing, and is a big commodity in the luxury (jewelry) market. But in a "total collapse" environment believe me the bottom will drop out of the luxury market (who wants gold necklaces when they can't afford rice?), and the manufacuring uses of gold (electrical connectors, etc.) do not have nearly enough volume to support its current price. The major driving force of gold is as a monetary, speculative value. When people get hungry because their dollars are worthless they will dump the gold for rice. The price of gold is dicated mostly for its 1) monetary usefulness (goldbugs, speculation), 2) jewelry, and 3) manufacture. In a total "collapse environment" #1 and #2 will be greatly diminished, as will the value of gold. You think in a “total collapse” environment that gold will be worth something? Rice, cheese, and gas, yes, gold… no.
Gold has limited value as a commodity in manufacturing, and is a big commodity in the luxury (jewelry) market. But in a “total collapse” environment believe me the bottom will drop out of the luxury market (who wants gold necklaces when they can’t afford rice?), and the manufacuring uses of gold (electrical connectors, etc.) do not have nearly enough volume to support its current price. The major driving force of gold is as a monetary, speculative value. When people get hungry because their dollars are worthless they will dump the gold for rice. The price of gold is dicated mostly for its 1) monetary usefulness (goldbugs, speculation), 2) jewelry, and 3) manufacture. In a total “collapse environment” #1 and #2 will be greatly diminished, as will the value of gold.

]]> By: John http://pragcap.com/gold-represents-the-massive-risks-in-this-market/comment-page-1#comment-9518 John Thu, 03 Dec 2009 18:02:04 +0000 http://pragcap.com/?p=13585#comment-9518 I suspect those Vietnamese might loose some of that happiness as they see the things they can buy with those dollar are getting easier to carry too. I suspect those Vietnamese might loose some of that happiness as they see the things they can buy with those dollar are getting easier to carry too.

]]> By: Ken http://pragcap.com/gold-represents-the-massive-risks-in-this-market/comment-page-1#comment-9514 Ken Thu, 03 Dec 2009 17:22:20 +0000 http://pragcap.com/?p=13585#comment-9514 "gold may be the only thing worth anything" this doesn't wash because you would have to "monetize" your gold in a currency that is declining in value. This is not the 70's, its worse. “gold may be the only thing worth anything”

this doesn’t wash because you would have to “monetize” your gold in a currency that is declining in value. This is not the 70′s, its worse.

]]> By: Anonymous http://pragcap.com/gold-represents-the-massive-risks-in-this-market/comment-page-1#comment-9513 Anonymous Thu, 03 Dec 2009 16:52:20 +0000 http://pragcap.com/?p=13585#comment-9513 Today and the '70s are totally different worlds. The difference in gold and inflation today is that it is not just reacting to U.S. dollar inflation but world currency devaluation. While the dollar may not be making huge moves compared to other currencies, currencies as a whole are being extremely devalued by printing presses. Gold can't go straight up like it has, but I'm extremely bullish long-term. Today and the ’70s are totally different worlds. The difference in gold and inflation today is that it is not just reacting to U.S. dollar inflation but world currency devaluation. While the dollar may not be making huge moves compared to other currencies, currencies as a whole are being extremely devalued by printing presses. Gold can’t go straight up like it has, but I’m extremely bullish long-term.

]]> By: Jessica6 http://pragcap.com/gold-represents-the-massive-risks-in-this-market/comment-page-1#comment-9508 Jessica6 Thu, 03 Dec 2009 14:52:50 +0000 http://pragcap.com/?p=13585#comment-9508 If the NK government figured a lot of citizens had gold they'd have seized it long ago. And I'm sure the Vietnamese would be just as happy holding US dollar bills as they would gold - in fact happier since it's a lot easier to carry. If the NK government figured a lot of citizens had gold they’d have seized it long ago.
And I’m sure the Vietnamese would be just as happy holding US dollar bills as they would gold – in fact happier since it’s a lot easier to carry.

]]> By: Kbob http://pragcap.com/gold-represents-the-massive-risks-in-this-market/comment-page-1#comment-9496 Kbob Thu, 03 Dec 2009 05:17:01 +0000 http://pragcap.com/?p=13585#comment-9496 Hank, it's funny you asked because I just read an article from Iacono Research that discredits the notion that this is a bubble in gold, precisely because this current upmove has been repeated many times in the course of the 10 year bull market that begain at $250- and each time people have called it a bubble...only to see it move to new highs year after year. See the following link and notice the charts: http://www.iaconoresearch.com/PublicArticles/public_articles.html Hank, it’s funny you asked because I just read an article from Iacono Research that discredits the notion that this is a bubble in gold, precisely because this current upmove has been repeated many times in the course of the 10 year bull market that begain at $250- and each time people have called it a bubble…only to see it move to new highs year after year.

See the following link and notice the charts:

http://www.iaconoresearch.com/PublicArticles/public_articles.html

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