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  • Bullish Momentum Building In Gold And Silver  [View article]
    And what is the production cost of $. The FED just ''produced'' $600 bio doing QE2 at 0 cost. Where should that be trading? My target for gold of around 5000 by 2015 is 10 times higher than yours. QE3 is definitely going to help and it is coming soon,
    Oct 31, 2011. 09:49 PM | 2 Likes Like |Link to Comment
  • Is Gold Overvalued?  [View article]
    I've been thinking about all that and this is my opinion.

    1, For food, medical care, education, oil and commodities I would look at graphs with several starting points: 1950. 1960, 1970, 1975 and 1980, 1981 and 1990. Having different starting points would allow the readers to make up their own mind and decide. I did a simple calculation using the cost of studying at Harvard since 1975 to now. It turned out that gold had gone up in price more but not by much.
    The other thing to do is to understand what you really mean by food, medical care, etc CPI. Current government calculations show very low inflation due to changes in the CPI basket. To really compare gold to food, I would choose a fixed basket. There is a website called that discusses this in detail. Since gold doesn't change over time, I believe that it should be compared to a basket that doesn't change.

    2. To compare gold to housing, one needs to carefully consider what housing means and what is the unit in housing. Obviously houses have changed over time and I don't know how one can compare housing to gold. One way is to look at the average price of single family houses.

    3. Another important indicator would be M0 - base money or the size of the FED's balance sheet. This is probably the best monetary indicator because it shows how much of the currency in circulation is backed by gold. I think that it currently shows that gold is roughly fairly valued but further money printing, aka QE, would make gold cheap.

    I think that the article makes a very good point in terms of showing that in some ways gold is expensive and in others it is cheap. Gold behaves like a currency and anticipates what is going to happen to inflation over time. Basically, gold looks at the amount of debt out there and thinks that money printing is the only way out. Inflation is not the most important variable when determining the price of gold but money printing / currency debasement is even more important.I personally think that gold is still cheap. The future of gold can be seen in the debt that is out there. When unfunded or partially funded liabilities like social security are included, the DEBT / GDP ration is more than 600% (some calculations value it at 1000%). This shows that many a QE will be needed in the not so distant future.
    Oct 31, 2011. 03:11 PM | 1 Like Like |Link to Comment
  • China's True Plans For The Yuan And Gold  [View article]
    I doubt too many Chinese would move to other currency but they buy gold, this is for sure. Of course, gold is not that cheap so only the ones that have more money can buy it.
    Oct 31, 2011. 10:32 AM | Likes Like |Link to Comment
  • The Path To QE3 Is Lined In Silver  [View article]
    I have looked into this superficially but to be honest, GLD and SLV look ok. I don't know if they have all the gold and silver they claim to have but I think that they probably have it. This is just my guess.
    The one thing that looks more suspicious to me is the gold reserves allegedly owned by the various central banks. Do they have it or not? I personally think not, which is why there is such big resistance to auditing Fort Knox.
    Oct 31, 2011. 10:28 AM | Likes Like |Link to Comment
  • The Path To QE3 Is Lined In Silver  [View article]
    I think that you are right. There is a lot more gold above ground than silver. The reason for this is simply that silver is being consumed and is too cheap to be recycled. Silver is definitely cheap and it will go up but timing is uncertain. I think we get to 150-200 by 2015.
    Oct 31, 2011. 10:22 AM | Likes Like |Link to Comment
  • The Path To QE3 Is Lined In Silver  [View article]
    This is very logical. There has been a lot of talk about silver shortage. Due to silver's industrial use, there is precious little silver left for investors and the above ground supplies are low. The fact is that 1 single very rich person can buy the entire silver mined in the world in a year. This shows how cheap silver really is. I am convinced that once people start buying silver seriously, it will just fly. The timing of that is uncertain but by 2015 we are likely to see 150-200 price. This is my opinion.
    Oct 30, 2011. 05:11 AM | 4 Likes Like |Link to Comment
  • Inflation Likely: Bullish For Gold And Silver  [View article]
    well, maybe you can make money but my opinion is that next year gold is going to 2500.
    Oct 29, 2011. 07:09 PM | Likes Like |Link to Comment
  • The Gold Vs. Silver Dilemma  [View article]
    If you believe in silver, my suggestion (but you make your own decisions) is that you should go for coins or ETF's but avoid options. Coins are good but SLV is also ok. I don't like options as they have a maturity date and the silver market is totally crazy and manipulated. You need staying power and should be prepared to hold silver for at least 2 years and not take a very short term view. Of course, you may get lucky with options but it is a lottery ticket, just my view.
    Oct 29, 2011. 07:02 PM | 1 Like Like |Link to Comment
  • China's True Plans For The Yuan And Gold  [View article]
    China is a much more serious competitor. It has huge territory while Japan is small.
    Oct 29, 2011. 02:44 PM | Likes Like |Link to Comment
  • The Good Old Days Of Gold  [View article]
    If you have a real gold standard, you don't need a central bank. You may have an authority dealing with money but it will simply keep the money supply fixed to the amount of gold the country has.
    Mark Faber was right when he answered the following question ''What would you do if you were at the FED'?'' with ''Resign''. Basically the whole mess was caused to a large extent by this clown Greenspan who by keeping money too easy caused way to many bubbles to develop and burst.
    Oct 28, 2011. 08:30 PM | Likes Like |Link to Comment
  • Time, Once Again, To Go For The Gold  [View article]
    I don't think the FED can avoid QE3. Treasury yields are going up and somebody needs to buy 700-800 billion or more new issuance over the next year or so. Foreign demand has been weak lately and the FED may need to buy.
    Oct 28, 2011. 08:24 PM | 1 Like Like |Link to Comment
  • China's True Plans For The Yuan And Gold  [View article]
    I am ashamed to contradict these geniuses could I? They must know better than me how to print money.
    Oct 28, 2011. 05:06 PM | 2 Likes Like |Link to Comment
  • PIIGS At The Trough  [View article]
    I have two comments here. The first is that the work on Greece is half done (assuming that Greece somehow get the 50% haircut). The other half will be done when Greece gets another haircut for the other 50%. Greece has no plans and will never pay a penny back. They'll just keep coming back and asking for more money and never pay a dime.
    The second comment is on the EUR. Again, this assumes that the EFSF arrangements + Greek haircuts are implemented. I interpret this solution as bullish for the EUR. The reason is that for now the solution doesn't involve the ECB printing money. Eventually the ECB may have to print money but for now they will not participate in a big way in the bailout. I think that the main thing to move currency these days is money printing aka QE. The FED is likely to do more QE and if the ECB stays put and keeps rates higher than $ rates, we are likely to see stronger EUR.
    Oct 28, 2011. 07:22 AM | 2 Likes Like |Link to Comment
  • China's True Plans For The Yuan And Gold  [View article]
    The point is that this would also hurt the US unfortunately.
    Oct 28, 2011. 03:05 AM | Likes Like |Link to Comment
  • The Gold Vs. Silver Dilemma  [View article]
    I think you need both. I think that long term silver will do better but it is also a lot more volatile. You need both and perhaps a bit more gold than silver as in silver you can easily have 20% moves in one or two days.
    Oct 27, 2011. 08:03 PM | 1 Like Like |Link to Comment