b_b What do you mean by "overpriced"? MIW There is of course no way to answer that when it comes to a commodity with no fundamentals and no yield.
No way unless you look outside of modern delusion economics.
It is overpriced when it is beyond the point at which people feel comfortable paying for it. That is as as good a measure as any.
Look at the demand for gold when it fell to below $1300 US. Demand was off the charts because people were "very comfortable" paying the lower price. You can pull up any bullshit economic formula you care but just because an economist invented it a decade ago does not make it a valid measure. Cars, Houses, Lamb Chops, Gold coins, they are all the same in this respect and when the price of lamb got too high demand for it dropped. It is classic supply demand that sets the price. All you have to look at then is the timeframe of price change and the bigger the item and the more complex the sale mechanism, the longer the market will take to adjust. Paper Gold trades in minutes, Physical Gold in hours, houses in months and years.
There is nothing special about gold, except in times of massive economic disruption. Then it goes up up up like post GFC. Before the GFC it was simply correcting up from it's 20 year bear.
I agree with you when you say gold was wildly overpriced a few weeks ago before this latest correction, however you need to keep in mind that there were goldbugs here telling us prices would keep rising two years ago when the gold bubble peaked at even higher levels than those wildly overpriced levels seen a few weeks ago.
Are you re-stating your belief for the record here shadow? That gold has had it's bounce and it's all over for the bull? Careful, last time you made a prediction back a couple of hundred an ounce ago you got your arse handed to you.
Shadow was hopelessly wrong about the Gold Bull Market. What else is he wrong about?
Are you re-stating your belief for the record here shadow? That gold has had it's bounce and it's all over for the bull? Careful, last time you made a prediction back a couple of hundred an ounce ago you got your arse handed to you.
The prediction I made for gold was about two years ago, when I said the bubble had peaked.
Gold crashed shortly afterwards, and is still down about 30% in real terms, and still falling (after the recent dead cat bounce).
Apart from that, I haven't made any predictions about gold.
But I'm glad you now agree with me that it was overpriced...
So now it is us$1360 does that mean it was overpriced at us$1400?
I would doubt it. Although as I said above, gold trades in minutes and hours, that is for individual trades. The price action of the past few weeks tells us nothing, that of the past 2 years tells us something, but I don't regard the violent collapse back in April to be associated with normal supply and demand. That has been proven to have been caused by manipulation. And probably why gold rose so sharply afterward. Look at India, the government has had to intervene to curb demand, they have taken extreme measures. You can liken it to the massive taxes on cigarettes that have stifled demand in that market.
At the end of the day you have women wanting gold jewelry, Investors wanting a hedge and central banks wanting to diversify back into gold on the one hand. And on the other hand you have the mine production costs that are fixed to the oil price. But aside for all this you have the oil price by itself and if the gold price correlates to anything that is what it correlates to. Go look at a chart over the past 40 years and see for yourself. For 40 years economic experts have said gold is useless, but I think the events of the GFC and current world debt crises prove that it is the economists that are useless.
Shadow was hopelessly wrong about the Gold Bull Market. What else is he wrong about?
I would doubt it. Although as I said above, gold trades in minutes and hours, that is for individual trades. The price action of the past few weeks tells us nothing, that of the past 2 years tells us something, but I don't regard the violent collapse back in April to be associated with normal supply and demand. That has been proven to have been caused by manipulation. And probably why gold rose so sharply afterward. Look at India, the government has had to intervene to curb demand, they have taken extreme measures. You can liken it to the massive taxes on cigarettes that have stifled demand in that market.
At the end of the day you have women wanting gold jewelry, Investors wanting a hedge and central banks wanting to diversify back into gold on the one hand. And on the other hand you have the mine production costs that are fixed to the oil price. But aside for all this you have the oil price by itself and if the gold price correlates to anything that is what it correlates to. Go look at a chart over the past 40 years and see for yourself. For 40 years economic experts have said gold is useless, but I think the events of the GFC and current world debt crises prove that it is the economists that are useless.
But that is inconsistent with your earlier statement. What then, do you men by overpriced? If it helps, what do you think is golds fair value, and how is it calculated.
But that is inconsistent with your earlier statement. What then, do you men by overpriced? If it helps, what do you think is golds fair value, and how is it calculated.
No, it's in agreement with it. Why do you insist that the price of gold has to have a specific dollar price, and above that it is overpriced, and below it is underpriced? Petrol, lamb chops, houses, these all fluctuate up and down on a weekly or monthly or daily basis. You tell me, what is a fair value for a rack of lamb chops tonight? You can't, yet it is decided by supply and demand isn't it. It is decided someone when they look at a rack of lamb in the butcher and make an instantaneous decision based on how wealthy they feel that day. If enough people over the course of the weeks feel it is over priced then the price is dropped and the signals work their way back to the stockyards where the farmers get less for their lambs.
If you knew early that there was a big mine going in near a small country town, perhaps an officer of the company tipped you off, you would seriously consider buying a property or 3 there wouldn't you? The fair value of those houses is one thing one day and another the day after the mine is anounced and the workers begin to pile into it. Correct?
So you see today that gold is $1400 aud, and you say, that's a reasonable price. But what if you can see that the global monetary system is on the brink of collapse and is only being supported by every nation going into debt with every other nation. Then you might consider that gold's fair price could be much higher in a few years. And if the governments of the world can avoid a monitary crisis, then your gold is still fairly priced. I didn't buy gold at $1800. That wasn't a fair price for the world we lived in. I bought gold around $1000, and that was more than a fair price. The Chinese bought gold at $1800, a lot of gold. But what did they care, they had a trillion dollars or more of US paper and at that price, gold for paper was a fair exchange.
I appreciate these questions, it gives me a chance to re-analyse my position and makes a nice diversion for all the drivel posted about how Australia has a sound property market and overall economy. Even though it is supported by a host of un-sustainable interventions by banks and government, and that half of Australia is on some form of Federal welfare payment with the numbers growing year by year.
Shadow was hopelessly wrong about the Gold Bull Market. What else is he wrong about?
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