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The Gold Bubble... Just how badly have the silly goldbugs failed?
Topic Started: 21 Jun 2014, 11:46 AM (27,216 Views)
skamy
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Dr Kinetoscope
18 Mar 2015, 12:19 PM
AUD gold price in 2003 - $550
AUD gold price today - $1507

That's a 174% increase for one ounce of gold.

12 years on and it's gone forwards dramatically in nominal terms and real terms - A very, very good addition to an investment portfolio over the long term.
That was a ponzi market spooked by fearmongering during the GFC. The tide went out for that particular ponzi. Gold is still a bit inflated relative to its long term value with respect to other PMs.

In 1980 it was $700 now 35 years later it is just $1507 - we can all cherry pick data :)

Look what happened after that 1980 bull run ponzi ended. Gold dropped by almost 50%.

Posted Image
Mustapha Mond
18 Mar 2015, 12:47 PM
You have to look at these things over a longer time frame.

Ask yourself one quetion, why do central governments have gold holdings.

Next question is, what percentage of the countries wealth is in gold??
Peter
Yes it is good to look over a longer time frame.

Posted Image

This is inflation adjusted so why do you think the huge price inflation came from? Was there some kind of new demand or lower supply? has the cost of production soared? I do not think so. The gold market since the GFC has been a classic ponzi, people buying it not for utility or long term wealth preserving, but for immediate short term gain.

Historically, these ponzi runs for gold correct sharply and stay corrected for long periods of time.

Gold is heading into a bear market. How long will the GFC gold buyers hold when the stock markets and property markets start giving decent yields again? How long will they remain happy with their zero yield, negative growth investments.
Edited by skamy, 18 Mar 2015, 01:28 PM.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Kuyuss
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Doesn't look like a shit house investment to me. But how can it be a Ponzi? Because of the ETFs? Did the GFC start in 2003?

Secondly, why do you look at the price of gold in single dimensions over the period of 100 years (which I assume is relative to a US dollar)? Is the purchase of gold as speculative instrument confined to systems that only encompass your world?

And what about equity yields? I thought they were doing fantastic in some sectors in some countries. Once again, they may be outside your frame of reference, but it does not mean that they don't exist. Gold, even through the Ponzi ETF, would have been a spectacular investment for Japanese investors over the last 15 years.

It's silly to assume that everyone and everything is a mirror reflection of the life of an average Australian.
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Trollie
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Gossamer
21 Jun 2014, 05:23 PM
People who don't understand why people buy gold clearly don't understand concepts such as risk minimisation.
What risk is it minimising? That you'll make a profit?
Dr Kinetoscope
18 Mar 2015, 12:19 PM
AUD gold price in 2003 - $550
AUD gold price today - $1507

That's a 174% increase for one ounce of gold.

12 years on and it's gone forwards dramatically in nominal terms and real terms - A very, very good addition to an investment portfolio over the long term.
That's a poor return compared to an investment property in Australia over the same period.
Edited by Trollie, 18 Mar 2015, 03:30 PM.
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Jimbo
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skamy
18 Mar 2015, 01:03 PM
This is inflation adjusted so why do you think the huge price inflation came from? Was there some kind of new demand or lower supply? has the cost of production soared? I do not think so.

Nice graph. It ignores the fact that Gold had a fixed price up until the end of Bretton Woods.

Quote:
 
The gold market since the GFC has been a classic ponzi, people buying it not for utility or long term wealth preserving, but for immediate short term gain.
Maybe there are some get rich quick merchants out there, but the physical Gold market is not a get rich quick scheme. You can't leverage into it. Most people own physical Gold as a hedge against currency depreciation and market turmoil. There seems to be a lot of that going on at the moment.

Maybe one day, when you have a million plus in liquid assets and zero debt, you may feel uncomfortable having all of your capital stored as paper promises (stocks, bonds, cash).

But that day is a long way off for people like you.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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Last Resort
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The gold Vs. housing argument is flawed. They are both hard assets regardless how you want to price them. I own both. As a holder of gold I don't hope to be to be right all the time . I just need to be right once if and when there is a problem with the dollar in which case gold will reflect the weakness of the dollar. In terms of gold vs real estate gold has been winning in the past ten to 15 years (http://www.bullionbaron.com/2013/08/australian-houses-priced-in-gold-silver.html). Houses are crashing priced in gold and silver. But unfortunately no bank will give you a million bucks to go buy gold even with the 20% deposit.

Real estate in a scenario of AUD falling relentlessly due to economic headwinds poses the problem of capital flight which requires higher interest rates which coupled with the usually associated high unemployment and shit economy poses problems for housing. I don't want to see any of this happen but I have a 10% allocation to gold just in case. Gold is not an investment gold is money and its not the price of gold that falls and rises its the price of currency that changes.

An ounce of gold is always and ounce of gold and really doesn't need to be approached with so much emotion. Real estate on the other hand has been a good investment that is in not so many words guaranteed by the Australian government never to lose value in AUD terms. As long as the government can stay true to this promise house prices will rise.

But intrinsically real estate is a consumption item that people need. I'm sure if vested interests, the ATO, successive federal, state and municipal governments controlled the supply, and encouraged the hoarding of cars and given investors the capacity to offset their loses on those cars, price gains would be made there as well.
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skamy
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Kuyuss
18 Mar 2015, 01:49 PM
Doesn't look like a shit house investment to me. But how can it be a Ponzi? Because of the ETFs? Did the GFC start in 2003?

Secondly, why do you look at the price of gold in single dimensions over the period of 100 years (which I assume is relative to a US dollar)? Is the purchase of gold as speculative instrument confined to systems that only encompass your world?

And what about equity yields? I thought they were doing fantastic in some sectors in some countries. Once again, they may be outside your frame of reference, but it does not mean that they don't exist. Gold, even through the Ponzi ETF, would have been a spectacular investment for Japanese investors over the last 15 years.

It's silly to assume that everyone and everything is a mirror reflection of the life of an average Australian.
Any market becomes ponzi-like when people buy in with only the expectations that others will buy in for more money. The GFC gold market was exactly that.
No-one had anywhere to put their wealth to work for decent yields.
Money went into gold as people sought a safe wealth storage, then money went into gold because prices were rising.
This continued until it stopped as most ponzis do eventually.
Once the confidence is lost people start to look at fundamentals and they are not good for gold. There are a lot of gold investors that want out and into higher yielding investments. The writing is on the wall, just as it has always been for gold when the bull runs end.

Gold is at the moment a huge gamble, it is already at inflated prices relative to its long term value and there is now real money to be made in the real economy.
Jimbo
18 Mar 2015, 03:49 PM
Nice graph. It ignores the fact that Gold had a fixed price up until the end of Bretton Woods.


Maybe there are some get rich quick merchants out there, but the physical Gold market is not a get rich quick scheme. You can't leverage into it. Most people own physical Gold as a hedge against currency depreciation and market turmoil. There seems to be a lot of that going on at the moment.

Maybe one day, when you have a million plus in liquid assets and zero debt, you may feel uncomfortable having all of your capital stored as paper promises (stocks, bonds, cash).

But that day is a long way off for people like you.
Jimbo show me evidence people are buying gold - they are heading for the doors.

If you are long term sure hold onto some physical gold as part of a portfolio--but it is not currency and never will again be currency. Physical gold costs to buy and to sell - it makes no income and it costs to insure and store.

People think it is a hedge but there are only one or two times in a persons lifetime that it will preserve wealth better than a property. The price paid for that is no yields and much lower long term capital gains.

Unscrupulous people spruik gold at the end of bull runs as it allows them to get out with lower losses, don't listen to them Jimbo.
Edited by skamy, 18 Mar 2015, 04:19 PM.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Jimbo
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skamy
18 Mar 2015, 04:07 PM
Once the confidence is lost people start to look at fundamentals and they are not good for gold.

What are the fundamentals?

Quote:
 
There are a lot of gold investors that want out and into higher yielding investments. The writing is on the wall, just as it has always been for gold when the bull runs end.
Really? Then why are they not "out"? Gold can be liquidated into cash very easily. If people want out, they can get out right now.

Quote:
 
Gold is at the moment a huge gamble, it is already at inflated prices relative to its long term value and there is now real money to be made in the real economy.
What is the long term value of Gold? If you are suggesting that it should be its pre 1999 level, could I not argue that houses are also inflated compared to their long term value?

Quote:
 
Jimbo show me evidence people are buying gold - they are heading for the doors.
If people want to head for the door, it is very close. Like I said before, selling gold is very easy. Nobody is trapped. It's not like you have to put up a for sale board and hope that someone comes along and happens to like your particular piece of Gold. It is a very liquid market.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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The Whole Truth
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Gold was $20/ounce in 1929 and as the stock markets collapsed it remained so.
Then in 1933 when the second leg down crushed the banks and economy in general, (big deflation) gold was revalued 50% higher!

It went to $35/oz, and you were allowed to own it, just not hoard it. Now we've had the big first leg down, and we all agree (unless we're asleep) that the global economy is a lot worse. In other words were on the cusp of the second leg down just like 1933.

Should you own gold as a part of your portfolio, as a hedge, just in case the obvious happens?
Not according to all the property speculators who are in debt to the tune of hundreds of thousands of dollars and can't afford gold anyway :lol :lol
Edited by The Whole Truth, 18 Mar 2015, 04:52 PM.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
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Sydneyite
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Jimbo
18 Mar 2015, 03:49 PM
Maybe there are some get rich quick merchants out there, but the physical Gold market is not a get rich quick scheme. You can't leverage into it.
Rubbish! Of course you can leverage into the physical gold market. Just borrow money (maybe against your house if you have one?) to buy your gold bullion instead of using existing cash held - not rocket science.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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Kuyuss
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Jimbo
18 Mar 2015, 04:44 PM
What are the fundamentals?


It's a good question. I don't know. Do you? You can knock out a explanation pretty quickly if you want. You can do the same about any asset. People do it all the time, even with rental properties.

Back to gold though. What are the chances that the gold price is driven by a "ponzi"? Pretty good from what you can read all over the internet. Does it stop investment banks and individuals from involvement? No. I wonder what the likelihood that a Australian suburbanite had dabbled in gold speculation. Pretty low I would think.

Did people who bought gold before the GFC have a premonition? What made them buy? What if they bought a 2-bedder or 2 and gold? And sold their FMG equities?

The best thing about question is that they demand thinking in many cases.
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