GaryD

Is Gold A Sucker's Bet?

Why do you start your graphs at the end of 1978? Any analysis of gold price over time should start in 1972. That was when the modern monetary system was established. The runup in gold is much more severe when you look at it like that. You look like a nice young man. If you are going to be an analyst, you need to learn to control your own biases and look at data objectively and ask the right questions.

That being said, I just sold all my gold since I am guessing that we are in a deflationary period right now. Historically, the first thing that happens in a deflation is that money "disappears" (ie is horded). I believe that this is what is happening at the retail level with gold and at the banking level with US dollars.

The growth in the money supply is massive right now. It is not leading to rises in consumer prices because the banks are hoarding money. If Paulson and company don't have a plan to get all that money back we could be in for a severe inflationary shock once money gets flowing again.

If I don't see the monetary base dropping when credit starts flowing again I'll be back into gold all the way.

Who Is Really Printing Money?

Yup. The fed seems to have escaped the banking crisis without inflating the money supply. Indian demand is also way down (56% yoy). This has resulted in very low (or even negative) gold lease rates. All of this is bearish for gold. My guess is that gold is done for a while.

The Myth of Gold as an Inflation Hedge

Why do you inflation adjust the price of gold, but you don't inflation-adjust the price of money? Your analysis makes no sense. Why do you start in 1980 when gold prices had spiked? The proper starting point for the analysis is 1971, when the US was taken off a gold standard. You have chosen a starting point in your analysis that leads to the conclusion that you set out to prove. My friend calls this "the completion backwards principle". It's a telltale sign of a dishonest analyst.

Is it Finally Time to Sell Gold and Related Mining Stocks?

Anyone know why gold lease rates have collapsed?

www.kitco.com/lease.ch...

Is it Finally Time to Sell Gold and Related Mining Stocks?

D Johnson has it right. Nice and simple plan based on solid monetary reasoning.

A Warning for U.S. Dollar Bears and Commodity Bulls

My two cents: When the price of a single commodity goes up, it is probably due to supply/demand issues or speculation. When the price of almost all commodities go up simultaneously, it is more likely due to excessive monetary creation.

Yes, gold might correct, but there are fundamental questions that one can ask that would lead a person to buy gold and other commodites right now (for example; what if the federal reserve needs to monetize the debt or what if they are already monetizing the debt?). Until those questions go away, I suspect that people will go on accumulating gold.

Buy Gold on Emotion, Not Fundamentals!

Emotion drives the fundamentals??? No Richard, an incompetent Federal reserve drives the fundamentals by pumping up the money supply faster than the economy can absorb it. I hate owning gold (boring, no return, no story, no nothing), but I do because I think that the US dollar is being undermined by a bunch of retards who have somehow taken over the Federal Reserve and Congress.

A Closer Look At the Gold Price Chart

Tim's pretty good. Humility is never a bad characteristic in a commentator, unless one is from the rhetoric school. The above comments are simplistic attacks on the writer's character and contain little-to-no useful insight.

One thing to look at is the gold lease rates at Kitco. Every time the price of gold starts to move the lease rates go down. This is *probably* because the central banks are flooding the market with gold by lending it out at-below market rates. This causes the price of gold to turn back down. The failure of gold to rally then causes retail investors to get very frustrated and, seemingly from the posts, angry.

In my opinion, there are three scenarios that will cause the price of gold to move much higher:

1. The central bankers reach zero hour, in which additional monetary priming does not lead to increased aconomic demand (ie they print money but no-one can use it for anything). The people who are first in line to receive the newly minted money, who aren't stupid, will buy gold at that point.

2. The central bankers run out of gold. This is a long way off.

3. A commodity-producing nation or group of nations decides that accepting rapidly-devaluing digital bits (ie "money") for their valuable oil is not a fair trade and decide that they want something more tangible. That something could be gold or oil.

Also, gold should be considered either a speculative play or an insurance policy on wealth. It is not an investment in that it does not generate future cash flow.

One last point: Most of the formally trained investment advisors that I have dealt with are idiots who are only in the field because their dads got them into it. They have little interest in current event, cannot read a financial statement, have absolutely no knowledge of history, and typically beleive whatever the editorial page of the WSJ tell them to believe. I'd take someone like Tim any day.

Going for Gold? It's Overrated

Gold is not an investment, it is a hedge (insurance policy) against inflation. A well run gold miner with low extraction costs and high cash flow is an investment. As an insurance policy, it is pretty good since it's value does not go to zero at the end of the term.

Goldman's Golden Message: Time to Short the Shiny Stuff

I agree that GS makes a habit of putting out misleading reports. Their SIV dealing would be criminal if they weren't so well connected. I'm still worried about gold, though. The central bankers and affiliated banks like GS have a vested interest in manipulating gold's price. It wouldn't surprise me to see them drive gold down by, for example, dropping the lease rates on gold. They did this in October and November. I firmly believe that gold is an excellent long-term insurance policy on my money.

Goldman's Golden Message: Time to Short the Shiny Stuff

I agree that GS makes a habit of putting out misleading reports. Their SIV dealing would be criminal if they weren't so well connected. I'm still worried about gold, though. The central bankers and affiliated banks like GS have a vested interest in manipulating gold's price. It wouldn't surprise me to see them drive gold down by, for example, dropping the lease rates on gold. They did this in October and November. I firmly believe that gold is an excellent long-term insurance policy on my money.