Gold is up about 16% over the last 12 months. Why am I impressed?
Posted on 12/09/2005 6:01:51 AM PST by DebtAndDelusion
The price of gold has continued to rise in Asian trading, climbing to its highest level since 1981. Gains came despite concerns that the market may be set for a correction and some analysts are now predicting that prices have even higher to go.
Precious metals have been given a boost as investors look to protect themselves against higher inflation and weakening currencies such as the Japanese yen.
Gold climbed as high as $522.70 an ounce, before falling back.
It was hovering around the $521 mark during afternoon trading in Asia.
'Dizzy high'
"There's some profit-taking now, but look at where we are," said Darren Heathcote of NM Rothschild.
"It's broken $520, the target we had yesterday... and it looks like $525 is the next target."
One broker in Tokyo said that: "Gold has been drawing very strong interest from Japanese investors, and I don't think this boom will subside in the near term."
There are a number of factors pushing the price of gold higher.
Gold is seen as a haven from inflation and weakening currencies, although historically, once inflation is taken into account, gold has not proven to be a good investment.
There is also speculation that Asian and European central banks may cut US dollar holdings in favour of gold.
There also is the year-end increase in demand for jewellery, analysts said.
The price of gold has climbed almost 19% this year and has nearly doubled during the past five.
"It's a dizzy high," said Rothschild's Mr Heathcote, but warned that "we are looking at a very overbought market".
"We're looking for a correction. It has to come at some point," he said.
You forgot where he started: He put $60,000 down on his original purchase and after 10 years he paid down $45,000 of the $240,000 mortgage. The proper question is should he have gotten poor just for owning a home?
Houses are nothing more than a durable consumer good. They build new ones every day
Do you really think that new houses will be built every day in a deflationary environment?
Under your desired inflationary model, Americans now have the lowest home equity in history (55%).
Don't worry, under your desired deflationary model that 55% home equity will get lower every year.
Savings slows the economy? The Chinese have the highest savings rate in the world
The Japanese have a very high savings rate as well. How much has their economy grown in the last 16 years?
You have a very unique and wrong headed view of deflation.
Every price? Not the average price level for the hypothetical average Joe? If Picassos appreciate while all commodities depreciate is that deflation?
If home values and the stock market decline while hard asset prices rise is that deflation?
Owning a home? He's third in line.
The proper question is: Does the government have any business rigging the real estate market for Joe Homeowner? And if we grant them the power to do so, will this power be used predominantly for the public good rather than the centralization of economic and political power?
Surely this is all for Joe's benefit. Surely the GSEs aren't bankrolling half of Congress's re-election efforts. Surely they're just in it for the children. When's the last time they stated their books again? Surely a multi-trillion dollar entity with Joe Taypayer on the hook can state their books, right?
How do you measure money and credit? Sir Greenie admits he can't do it. M3 is no longer worth reporting to the public.
that results in a general decline in prices
How do you measure a general price level. How do you determine causality between unmeasured money and credit and prices?
Carefully. How much did the money supply fluctuate under the gold standard?
I'm not advocating a gold standard.
You might be able to get a rough number for the supply of gold throughout human history but that is entirely different than the "money supply". Given the tangled web that is the history of global finance, I'm skeptical that you can really nail down the quantity of money-like instruments with any great precision.
Then why are you busting balls about M3 reporting?
"that gold will ultimately demonstrate that it's not a safe haven either."
I agree. The world central banks hold about 1 billion ounces of gold and could collapse the price in an instant should they elect to sell-off a tiny fraction of their reserves.
$534
You seem to think that deflation only occurs when money supply shrinks. I believe that if money supply grows more slowly than output grows you have deflation. Like I said, you have a unique and wrong headed view.
He didn't get poor for owning a home. He lost money from buying a home on credit and then selling it. But how much did he really lose? He had 105,000 into it and walked away with 15,000 so that leaves his loss at 90,000. Divide by 120 months and you get 750 bucks. Darn cheap rent for a 300,000 dollar house in the burbs. People pay 1,800-2,000 a month on 280,000 dollar townhouses in Buffalo Grove, IL.
He lost $90,000 of equity. That doesn't include the interest he paid. But he's none the worse. LOL!!
Real wages haven't gone up since 1975.
That's funny, you have a source for this silly assertion? And while we're at it, you have any scholarly studies that agree with your assertion that deflation is no big deal?
Besides didn't you ask earlier what would happen if the economy grew 4% and the money supply didn't. According to you, there couldn't possibly be economic growth without a commensurate money supply growth so you contradict yourself with the question.
I claimed no such thing. Of course there can be economic growth while the money supply stays constant. Prices will drop and employment will eventually suffer. Debtors will default and anyone who holds hard assets will suffer. Business will reduce rather than increase production but that is not a problem according to you.
$536
Gold is up about 16% over the last 12 months. Why am I impressed?
Fraud and corruption!
Housing bubble. Over.
Oil bubble. Almost over.
Gold bubble. Soon to burst.
The manipulators are busy, busy.
Interest rates up another quarter-point next week. Take advantage of that interest income!
.
You think they're gonna hike rates again?
This is shaping up to be brutal in the housing sector.
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