what a yawner of a reaction to the "expected" ? 1/4 pt hike by the aussies ? http://2.bp.blogspot.com/_qT-kf8quf0A/SZotpfPkmjI/AAAAAAAABDs/pWDeM14sLLI/s400/baby-yawn.jpg
ok maybe this will go somewhere over time and yes there was a pipper of a pop and drop according to this gent who acts as the repo man down under for those overleveraged in whatever the "bling" http://newyork.grubstreet.com/13_goodhumor_lg.jpg
In the game of economics, its alot like chess. You gotta look 5 moves ahead. It never ceases to amaze me that people look at prices of things today and say "it will never go up that much" In the late 60s my dad bought a new Ford mustang for $2,200 dollars. If someone told him that 40 years from then that a mustang would cost $35,000-$45,000 new, I'm sure he, like most people would say "that will never happen" Nobody will pay $35k for a car unless he is a millionaire. I also had family that thought about buying gold when it was trading at $100. They thought they missed the boat on that one too. Even WITHOUT this economic crisis, just the way normal inflation goes, you can expect that something like a Ford mustang will cost a MINIMUM of $500,000 in 40 years. You can expect that the average house will cost a minimum of 2 million dollars in 40 years. Not to worry though. Min wage will most likely be around $100 bucks per hour and our grandchildren will marvel at how we used to go to mcdonalds and buy a big mac for 5 bucks or a bottle of soda for $1.59 the same way we marvel at how our grandparents bought a burger for 25 cents and a soda for a nickle. If you think Gold will not go up to 10k+ in our lifetime, you are seriously mistaken.
I agree with most of what you are saying PTT. A simplistic way to look at asset returns over 40 years is to do an easy compound growth calculation. For example, 7% compounded over 40 years gives a return of just under 1500%. If we apply that to gold today, 1063 would rise to 15,917 in 40 years.
looks like India has an interest in gold these days according to this http://patdollard.com/wp-content/uploads/sunspots.gif oops ,,, here is the headline -India buys half of IMF's gold for sale-
It was not a price dictated by supply and demand. It was at $35 because the US government kept it there. Thus the analogy of today to the early 70s is not a very good one.
The argument against that would be that the 250$ an ounce price early 2000 (?) was just as artificial and temporary due to massive central bank selling, the enourmous deflationary assistance from cheap labour in Asia, etc you know the rest. And obviously I didn't mean to imply a +2000% rise in precious metals is in the cards from these levels but indeed those of early this decade. Somewhere between 5k and 10k? I guess also that's a level where hardcore goldbulls would consider selling their bullion, except those who never plan to sell but plan on passing their gold on to their children or the Nuclear winter is coming don't sell gold before it is worth 100K goldbugs ofcourse. Still, there would have to be gigantic mania to achieve those levels no doubt about it.
$10k gold until when? 2011 (10 years after the 2001 bottom, parallel to the parabolic 1970-1980 rise) or e.g. 2040? $10k would be an approx. 7% annual nominal appreciation from today until 2040, certainly feasible.
I believe some commodities started moving up in the sixties already and some had their blow of spike during the early eighties as did commodities streched out their run over a decade or 2 between both World Wars. During these cycles each and every commodity reached a new all time high inflation adjusted some claim but I am not aware of the truth in this statement as I have failed to track down several price statistics on various individual commodities. What I did manage to learn was how different commodites can spike on their own momentum regardless of what other commodities perform at that time. People seem to have this idea about inflation as a massive tidal wave pushing up everything at the same time at the same speed but that seems to be hardly the case during the seventies in the commodity area. Also, spikes can be gigantic both on the upside as on the downside. Sugar for instance moved up a 1000% from 1970 to 1974, dropped 80% from 1975 to 1976 to move back up 500% till 1980....to collapse +50% the year after. But anyway, if you would allow history to be any kind of guide one could believe in a +20 years upswing in the commodity cycle and so selling of gold could become the smart thing to do after 2020 or so... Who knows. Ofcourse many things could happen along the way so one shouldnt depend on history solely but then again disregarding it completely doesnt seems like the smartest thing to do either.