"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
When you go back to the 1970's when inflation was rampant you find that it became common knowledge among those of us with large disposable incomes that saving in the bank was futile. If you wanted to protect your savings you had to invest for yield. This thinking became entrenched and we went out our separate ways, some to invest in shares, some in property and some of us bought into small business. It didn't matter as long as you had a yield because these were all safe, the economy was stable.
2000 was a shock! How can the market crash like that? Many of us lost a packet then and we thought "Fuck Yield" I want my money to be safe. It was then the big property investment phase kicked off in earnest because everyone believed it was the one asset you could buy that would never go down in price. Gold of course was completely off the radar since everyone still remembered the big blowup in 1980. No one trusted gold.
These perceptions held in the minds of average Australians were shallow to say the least. We looked at history, but only our own personal experience of it, we were learning from our own mistakes (painful) when in fact we should have tried to learn from other people's mistakes. To learn from history, and not the bullshit vested interest version either, the one that uses cherry picked information and outright lies to sell their product. But to do our own unbiased search of the past, to discover what really happened with these investments over time.
Houses have always been a great investment, except when their not. Like the period between 1925 and 1955. They fell in capital value that whole 30 years here and the yield was absolutely woeful. Business likewise was dreadful, you didn't want to own one then. And the stock market after the 1929 and 1933 crashes was a write off for decades. The only asset that counted was cash in the bank or gold in the hand. No yield but that was fine because there was deflation for that whole ugly few decades.
2008 marked the beginning of a new deflation cycle I believe, where we have seen petrol, houses, rents all manner of things beginning a slide backwards in price. Cash in the bank hasn't done very well of late and gold is off it's all time highs but when the global economy really rolls over people will very glad they have such assets. They will be a lot more content then the crowd with their money in stocks or the ones trying to pay back a million dollars worth of property that hardly anyone can afford to buy or rent.
"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
2008 marked the beginning of a new deflation cycle I believe, where we have seen petrol, houses, rents all manner of things beginning a slide backwards in price. Cash in the bank hasn't done very well of late and gold is off it's all time highs but when the global economy really rolls over people will very glad they have such assets. They will be a lot more content then the crowd with their money in stocks or the ones trying to pay back a million dollars worth of property that hardly anyone can afford to buy or rent.
Fiat appears very stable at the moment with a meat pie costing pretty much the same as it did five years ago.
The trouble is, that there is a lot more fiat around now than there was five years ago. Remember, every debt, every unfunded liability, is a unit of fiat that will eventually be released into the market place.
Some fiat is tied up in super, some is tied up in property. We all believe that we have stored fiat waiting to be spent at some time in the future. But the reality is, that todays stored fiat has to be exchanged for real goods and services tomorrow.
But there are not enough goods and services available on the planet to satisfy the level of stored fiat.
So (obviously), something has to give.
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.
Note that Strindberg thinks he knows better than this website (ah the arrogance of the ignorant). He believes the 5 ton dumping on market was done with the objective of maximising their sales proceeds and that an entity with those sort of gold holdings must be a clever market operator.
Lying twat - sneaking in lies in other threads after being exposed as dumb. This is the effing second time you have lied, made up shit, and falsely accused me of posting stuff I never wrote. Unlike you I never professed to know the reason for the dumping (we don't even know the truth of any trading action which was taken) and I never professed like you that I know better how to dump $175 million worth of gold on the market. It's you who are the arrogant Walter Mitty git living in fantasy land imagining you are the worlds greatest gold dealer.
I corrected you the last time you made up this shit (here):
Quote:
I made no such assertion that it "would" maximise proceeds. I actually wrote:
Quote:
If you wish to dump a large holding in a falling market it can be best to do it all at once.
Note the word "can". Too subtle for you? It depends on the buy offers sitting on the market, the price you are wanting, and your price expectations over the immediate future. Those buy offers may disappear or reduce if you wait until after the market discovers your initial sales. Pretending you are better at the game than an outfit with $175 million to play with is fantasy.
jrsnr
24 Jul 2015, 12:52 PM
... could it be possible that the entity dumping the gold had a lot of open shorts and that the loss from shorts could have outweighed the loss of dumping actual held gold onto the market?
..what loss from shorts?
Quote:
with respect to the low price, the Commitment Of Traders information indicates that Large Traders and Hedgers are trading relatively low contract amounts lately, from graphs it does seem that gold price and Hedgers/Traders contract size have some relationship, with contract size low and drop in price it would seem that a possible floor in the price is there or near about
It is true that after a four year more or less continuous crash of 40% it is likely that a floor is nearer than it was.
The adherence of goldbugs to these zerohedge peddled mechanisms is funny.
Unlike you I never professed to know the reason for the dumping (we don't even know the truth of any trading action which was taken) and I never professed like you that I know better how to dump $175 million worth of gold on the market. It's you who are the arrogant Walter Mitty git living in fantasy land imagining you are the worlds greatest gold dealer.
The original point made (by me) was that dumping a whole heap of anything onto any market will depreciate prices. That is how markets work.
The reasons for the "dump", are unclear.
Maybe a spooked holder decided to get out quick?
Maybe it was a play to force out shorts in the paper market?
Maybe it was a whip to drive Chinese investors back into stocks?
Who knows?
What I do know, is that if I had 10,000 blocks of land and wanted to make as much money as possible, I wouldn't sell them all at once.
That would be fucking silly.
Strindberg
25 Jul 2015, 07:26 PM
It is true that after a four year more or less continuous crash of 40% it is likely that a floor is nearer than it was.
All commodities and stock markets have peaks and troughs.
You deride "goldbugs" for buying at the peak and selling in the trough.
But Goldbugs don't do that.
Just the same as Sydney property investors didn't all buy their houses at the peak and flog them when they were at their cheapest.
Price action is not a straight line on a graph. Those little peaks and troughs are where the real money is made.
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.
But there are not enough goods and services available on the planet to satisfy the level of stored fiat.
So (obviously), something has to give.
The only net stored fiat on the planet is that existing as paper and coin currency (outside the CBs) and the Exchange Settlement Accounts/ Federal Reserve Accounts of banks held at CBs. The rest (all bank deposits) consists entirely of commercial bank IOUs for fiat - not fiat itself.
I'm not sure anything has to give. The butcher can get $50 for his meat which then buys the butcher a couple of bottles of red wine which then buys the bottle shop owner a month of gigabytes etc etc. There is no necessity for a one to one relationship between the quantity of fiat and the quantity of goods and services.
The only net stored fiat on the planet is that existing as paper and coin currency (outside the CBs) and the Exchange Settlement Accounts/ Federal Reserve Accounts of banks held at CBs. The rest (all bank deposits) consists entirely of commercial bank IOUs for fiat - not fiat itself.
No disrespect or anything, but I think you need to get you calculator out.
Have you counted the unfunded promises, sovereign debt, personal debt?
Break it down into a household. Could every family on earth afford to spend 10% more than it earns every year, forever?
Not likely.
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.
We all believe that we have stored fiat waiting to be spent at some time in the future. But the reality is, that todays stored fiat has to be exchanged for real goods and services tomorrow.
But there are not enough goods and services available on the planet to satisfy the level of stored fiat.
So (obviously), something has to give.
>>We all believe that we have stored fiat waiting to be spent at some time in the future. But the reality is, that todays stored fiat has to be exchanged for real goods and services tomorrow.
I am assuming you did not mean to write that so it was read literally?
All stored fiat has to be spent tomorrow?? Obviously not.
The original point made (by me) was that dumping a whole heap of anything onto any market will depreciate prices. That is how markets work.
The reasons for the "dump", are unclear.
Maybe a spooked holder decided to get out quick?
Maybe it was a play to force out shorts in the paper market?
Maybe it was a whip to drive Chinese investors back into stocks?
Who knows?
What I do know, is that if I had 10,000 blocks of land and wanted to make as much money as possible, I wouldn't sell them all at once.
That would be fucking silly.
Fair enough but the analogy with 10,000 blocks of land doesn't really hold. Commodity and share markets contain detailed open bids and offers. If the bids exist at prices close to current (and within what you want) and you are expecting prices to fall it may pay to accept those bids. If you trickle feed your actions may be noticed and the market gets alerted and the bid prices may fall or be removed entirely. I was misrepresented. In fact, the analogy may hold with the blocks of land. You may get an offer from an outfit with a different view to yourself on the future and they may offer you a price for the whole lot which you, with your different view, find more attractive than drip feeding over a long time with an uncertain future. Such things happen and they are not always "silly". It all depends.
Quote:
You deride "goldbugs" for buying at the peak and selling in the trough.
But Goldbugs don't do that.
I agree that goldbugs don't do that. The standard goldbug spiel is that it's value is independent of fiat and they hold forever. I don't think you are a goldbug in that sense. Seems you treat gold like any other investment. Fine.
I find true goldbugs funny. Whatever the gold market is doing it is always a time to buy and never a time to sell. Zerohedge provides them with loads of invented conspiracy theories to keep the punters on board the sinking ship. Bullion Baron filled his site with to the moon articles even when gold was AU$1800 four years ago. Hilarious.
Jimbo
25 Jul 2015, 07:56 PM
No disrespect or anything, but I think you need to get you calculator out.
Have you counted the unfunded promises, sovereign debt, personal debt?
Break it down into a household. Could every family on earth afford to spend 10% more than it earns every year, forever?
Not likely.
We only need fiat as a means of exchange for the times we wish to trade. The world never needs enough fiat to trade all its goods and services on the same day.
The other two purposes of money (unit of account and store of value) are not relevant to the issue you raised.
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