lol What I was trying to say was: Was it a good thing to own sugar, coffee, silver or gold during the seventies? It depends. Do 100%, 200% or 400% rises in a certain asset class mean there is very little upside potential left? Not nessesarily. One could also look at the USD as a pivotal player in the future of gold. In Euro's for instance gold isnt even up 200% in a decade. Not bad ofcourse but I would expect a true top in gold to be accompanied by a true breakout in all currencies not the USD alone.
The problem with all these 400% and 1000% predictions is: when do you fold your hand and accept you're wrong? I appears to me many just have upside targets but no exit strategy for the adverse scenario. When do you sell gold? When it drops to $900? $800? $700? When do you know you're wrong. I'll go short at $990 (if it ever gets there) and if it turns back up I'll take the loss and simply go long again.
Silly argument. How much could you buy a car for in 1970? What was the average salary? The average cost of a home? If I could buy a car for $2000 in 1970, and today the average price of a car is $30000, does that mean I should invest in cars because that represents a 1500% gain? Gold bugs do this all the time. They'll say it was only $35 for an ounce of gold in 1970 - but what is that $35 worth in today's money?
It isn't a stellar argument, for sure. You have to admit, though, Ivan, that gold doesn't depreciate the way a car does...
All I know is that gold is almost $1,100.00USD/oz. right now and all the media cares about is the Buffet deal with BN. WTF! Akuma
Interesting point makloda. I'm concerned that the deflationary storm could result in the USD price of gold falling, just like it did in the second half of 2008. So that's why I've gone with a long gold / short equities pair. So if gold falls as a result of risk aversion, then it follows that equities would likely fall as well. I'm merely playing the outperformance of gold versus equities.
Gold bugs treat the metal like a parent does kids. There is no exit strategy, you just hold and love them forever. 10k or 100..the price is irrelevent. GC could go to 100,000 usd...debt defaulted on...country in revolution...world collapsing, and they would still never part with it. Whats the point?
Most goldbugs distinguish basically 4 factors as the main driver behind this bullmarket in gold and those of the past. 1: Geopolitical/economic dislocations. 2: Negative real intrest rates. 3: The Dow Gold ratio as a measuring instrument on paper VS hard asset cycles. 4: Investor Mania as a signal of possible bubble forming. If and when one or more of these factors were to come under pressure that would obviously influence the attractiveness of remaining long for the levelheaded gold investor.