I doubt that central banks (thinking mainly Asian central banks) are "loading up". They probably have the majority of their reserves in USD, and are merely increasing their allocation to gold from a low amount to a figure closer to 10%. If anything, I think it's irresponsible for them to hold a massive allocation of treasuries, and that's why in recent years they've been gradually diversifying out of USD and into other currencies, including gold.
I hope you are right. Worth pointing out that the US is a trading partner with those countries where as gold is metal.
------------------------------------------------------------------------------- Cutten, is your thinking this is safer to pay the premium of the put (limit on loss) compare to the short position?
As long as rates in the US remain below 1.5%, gold will rise. Unless central banks decide to sell to pay debts.
Very true. I find the entire idea of 'parking cash' very awkward. I'd never park cash in any trading instrument assuming it's 'safe'. For instance I own a truck load of bonds of all maturities and it's been a great ride for the last couple weeks. I don't consider myself parking my money in bonds. I am merely speculating on further price appreciation. Reminds me of... doesn't it all boil down to just one question: 'At the end of the day, your job is to buy what goes up and to sell what goes down.' -- Paul Tudor Jones
Agree. Gold is not "safe" as such, but if real interest rates are negative, then over a period of months or years, it's likely it will go up.
So funny. Same story different bubble. Always talk of why (Insert financial instrument here) investment is sound and the merits of "ownership." I remember when the RE market was topping and how people couldn't get enough. It's always the same. Have we seen the blow-off top in AU yet. I don't know but when it happens it will be the same. Another bubble popped.
Just like dot com and real estate. As long as "X" happens, the price will keep going up! As though no one would sell for another reason, such as profit taking, or just good old fashioned speculation that we are nearing the top so they get out before the top presents itself, thus causing a self-fulfilling top to form. Or exhaustion. People just stop buying the asset because they already have all the want of it (ie, houses). Or they come to reality, such at dot coms - and let me know if this sounds familiar - "Hey, these things don't really make anything for profit". The argument that gold is a hedge against inflation is a joke. What other prices of goods people buy and actually use have gone up 500% in the last 10 years? $1 cheeseburgers are still $1. Honda Civics don't cost $100k.
This is mostly wrong because where the hell are they going to put their money? In risky assets? BAC or Wells Fargo? Gold can pull back, but get liquidated? Why? Just because it will? Just because the CHF goes up and down 8% doesn't mean it bores a hole through the earth when it comes back down. Volatility is here, but that is separate issue from whether the price goes higher.
Might as well buy some shit you like. Do you have a Springfield Armory XD(m) 13+1 .45 ACP? Or some Federal Guard Dog self-defense ammo in same? Lead has always been a safe store of wealth. Or if you absolutely must remain in the market, try a fallen high-flier like DNDN. I'll sell you mine after I finish averaging down.