The Gold Frenzy: Why Investors Should Resist

Discussion in 'Economics' started by Debaser82, May 16, 2010.

  1. That's what they said 3 years ago.
     
    #11     May 16, 2010
  2. How come in 2001 for example I never heard the world "Gold" on the TV or radio or from joe six packs and soccer moms etc.. when gold was trading under 300s ?


    Now you hear all the time "GOLD" on every corner.

    Just like you heard "House,property" on every corner during the housing bubble.
     
    #12     May 16, 2010
  3. George Soros on Bubbles:

    'When I see a bubble forming I rush in to buy, adding fuel to the fire.'

    http://blogs.ft.com/money-supply/2009/11/02/introducing-the-theory-of-reflexivity/
     
    #13     May 16, 2010
  4. gkishot

    gkishot

    How come you dub yourself 'king of shorts' and you don't realize the importance of the gold investment now? One does not call himself 'king of shorts' for nothing.
     
    #14     May 16, 2010

  5. Are you a broker or something? Gold hasn't even given the parabolic signal yet and public participation is still miniscule. What about the dashed hopes of investors since 2000? A repeat of 1980s and 1990s look like a pipe dream at this juncture.
     
    #15     May 16, 2010
  6. businessstaxes

    businessstaxes Guest

    people are buying gold to preserve wealth or capital..gold is as good as cash. people would take gold coins for payment if you want to buy a new car with gold.

     
    #16     May 16, 2010
  7. Even if you were the 1 guy that bought gold at $850 in 1980 and you sold at the absolute lowest price gold hit the very next year, you only lost about 50% of your investment. In reality, those people who bought in the first half of 1979 (when gold was trading under $300 per oz) most were still sitting pretty by the end of 1982 when gold was trading at $450 per oz.) 50% return over 3 years is hardly losing your shirt.

    Yeah, in the 1980s might have been a good time to invest in those safe companies, like WorldCom/MCI, Enron, Global Crossing, Adelphia, Tyco, Bear Sterns, GM, Washinton Mutual, Refco, Delta airlines...you know...the big, SAFE, diversified investments. How much those guys paying today?

    Also...there are not many average people buying gold. They are SELLING old gold jewelry to these "We buy Gold" corporations.

    But even if they are buying gold, you know when else people were buying gold? During the fall of the wiemer republic. Those few people that bought gold did pretty good. Another time gold came in handy was during Vietnam. I met a woman who had to pay in gold to get herself smuggled out of the country. Same in cambodia. If you wanted out of there when the SHTF, you had better have some gold. Same with the Jews. The ones that had some gold were spared from the death camps as they could pay to get themselves smuggled out. There are many other examples, but you get the point.

    I'm not saying dump your whole portfolio in gold & silver (unless you only have under $10k or so), but its better to have the gold and not need it, than to need it and not have it.

    If you have $100k to invest, whats wrong with buying $25k in physical PMs and $75k in stocks? I mean if the worst happens with gold and we have a repeat of 1980, you lost what? $10-15k total? You still have your $75k in stocks so you only lost 10-15%. If the worst happens and its total collapse, you at least have a way to survive, get out of the country, hire people to protect you, get food, start a business in your new country, ect.
     
    #17     May 16, 2010
  8. Illum

    Illum

    Pretty bearish action two days in a row for gold.
     
    #18     May 16, 2010
  9. Yeah, only $13 off its record high, as I write this. ($1,237) Pretty bearish to me!
     
    #19     May 16, 2010
  10. afto

    afto

    Possible scenario. Gold continues higher,
    much higher. Joe 6 pack joins the buying
    frenzy.
    Geo political uncertainty, the specter
    of rampant inflation,Piigs, major
    municipal failures, fill-in-the-blank
    disasters that hardly anyone
    realized at the time but seem eerily
    obvious in hindsight, throw in a spot
    of international - and home grown -
    terrorism. The list goes on.
    Rumors of a serious International
    collaboration to incorporate Gold
    into some sort of Global monetary
    mechanism makes headroads.
    Gold heads higher...and higher.
    It's now a bona fida bubble but,as with
    the RE implosion, it seems that
    everyone is too busyraking it in to
    notice. The bubble
    continues to expand. Gold hits $2k
    Hollywood stars demand payment
    in gold bullion.
    The rumors of a new World currency
    standard are given further impetus
    through planned leaks which are hastily
    denied.
    Eventually a lesser head of State blurts
    out that there is some validity to the
    rumors. Then a European leader
    goes on record stating that a
    World currency is inevitable.
    A few months later all the G8 ministers
    gather in Switzerland and the plan
    is unveiled with great pomp.
    B.O. waxes lyrical about this
    being a truly defining moment in
    history, that a new era of transparency
    has dawned.
    His re-election assured, the details
    eventually dribble out.The free markets of the
    World will determine the benchmark
    price of Gold.
    B.O.is nominated for a Nobel peace prize
    and is re elected in a landslide.
    All is going so well and then the
    inexplicable happens.
    The price of Gold drops sharply and
    unexpectedly.
    Market experts, pundits and
    assorted talking heads are quick
    to reassure the good old general
    public that this is no cause for alarm.
    In actual fact this is clearly the buying
    opportunity of a lifetime.
    Sure enough price spikes up again
    but only makes a lower high.
    Still the concensus is overwhelmingly
    bullish.
    However, price starts to crater.
    The Central banks,after having
    significantly reduced their
    inventory of bullion at artificially
    inflated prices
    are now set on another major kill.
    Obviously they (we might say the
    House) have absolutely no need
    for Gold over $2k. The decline is
    horrific. Only the most well capitalized
    of the players survive the fearful
    swings in price. A fortunate few make
    a fortune but at the expense
    of the many.
    A year later Gold is trading at less than
    $500 per ounce.
    Another burst bubble.....and the
    show goes on.
    JMO
     
    #20     May 16, 2010