gold & silver sector
- Thread starter zxcv1fu
- Start date
HUGE move ... but some are calling for the price of gold to hit
$400 before the end of the yr.
I assume there will be dips in the price if there is dollar intervention or at such point in time as the Iraq situation
is resolved ...
I am thinking of daytrading or swing trading more often in the
names in this sector.
I am curious if anyone else has been trading more of this sector
$400 before the end of the yr.
I assume there will be dips in the price if there is dollar intervention or at such point in time as the Iraq situation
is resolved ...
I am thinking of daytrading or swing trading more often in the
names in this sector.
I am curious if anyone else has been trading more of this sector
Anyone feel that Gold is an irrational "investment" and the gold market will drop like a rock once the Iraq picture crystallizes?
To me it looks like the mother of all shorts gearing up.
To me it looks like the mother of all shorts gearing up.
I don't believe so. With not only the global uncertainty to deal with, but the currency wars taking place, gold will continue to rise. Don't forget that gold is the only currency in the history of the world that has survived and retained value. If the dollar's weakness continues, and China decides to learn from our mistakes and stay on the gold standard (which we went off of a few decades ago), look for gold to keep getting stronger.
That said, in the short term I wouldn't be surprised to see it retrace a little bit, but overall gold is in a secular bull market that could eventually take it much higher.
That said, in the short term I wouldn't be surprised to see it retrace a little bit, but overall gold is in a secular bull market that could eventually take it much higher.
You think abandoning the Gold Standard was a mistake????
The far right advocates the gold standard because it gets government out of the business of controlling the money supply. They fear that printing money creates inflation, and retracting money causes recessions. But the opposite is also true: printing money cures recessions, and retracting it cures inflation. Governments in the last 60 years have used these policies with tremendous success. There has not been a single depression or bank panic in any nation anywhere in the world using Keynesian monetary policies. But during the Gilded Age of the late 19th and early 20th centuries, depressions and bank panics were common. The historical record is so strong that mainstream economists reject the gold standard almost universally.
I beg to differ. Alan Greenspan himself admitted in a recent speech that historically there was no inflation UNTIL we went off the gold standard. Why? Quite simply, the true definition of inflation IS an increase in the money supply. Everything else is a consequence of that, including erosion of pricing power. Well, we know that the Fed creating fiat money like madmen the last couple years didn't stop the U.S. from falling into recession. And things are different this time around. With all the trillions in fiat money printed AND 12 rate cuts, the economy is still in the toilet and in all likelihood destined to get much worse. Never before in history has the Fed cut so many times and so aggressively (and inflated the money supply) only to see the markets and economy worse than when they started. We are currently rewriting history.
Ever increasing costs of services such as health care, education, and energy combined with deflationary forces brought on by globalization with respect to manufacturing and goods, and global currency wars are creating an environment where IMHO if the U.S. does not at least attempt to go back to the gold standard, the dollar is destined to go the way of every other currency in world history besides gold, which is dead or close to it (think the Yen and its near worthlessness).
To quote from the following article (http://www.gold-eagle.com/gold_digest_02/stott010402.html):
'Without exception, every "money" which governments have printed, has died. Silver and gold have been the only true, historic money, and they have been manipulated to make the dying monies look alive.
Man has used various things as a medium of exchange. Tree bark, cigarettes, sea shells, and other things, but 99% of the time, it has been pieces of paper, imprimatured with ink. What has given these pieces of paper value, and what has killed them? In 100% of the time, it has been government. When these paper currencies have been backed by gold and silver, or the actual coinage has been silver or gold, this money didn't die, but kept its value. For 150 years in America, prices didn't go up, because the American dollar was backed by, and consisted of, physical gold and silver. Governments pass "legal tender" laws, which force the use of their paper for "money." This column will be read in 174 lands around the world, and all of these nations have some form of paper currency, which goes under various names, such as pesos, francs, pounds, or what have you. All of these currencies are created by government, and none have a single thing to back them, other than the "full faith and credit of theâ¦government." In other words, EVERY SINGLE CURRENCY OR 'MONEY' IN THE WORLD IS VALUELESS. In succeeding columns, I will examine several monies that have died. I will also examine a few of the 100% that are now dyingâ¦perhaps a bit faster than others. ALL THE WORLD'S "MONEY" IS A MATTER OF FAITH, NOT VALUE.'
OMG - Do you really think that way? Sound like sales BS from a gold hawking web site. Yiikes!!! Here - don't thank me - this is from a friend's work:
http://home.att.net/~Resurgence/L-gold.htm
Myth: The gold standard is a better monetary system.
Fact: The gold standard causes deflation and depressions.
{edited for length}
Modern arguments on the gold standard
Gold bugs cite two reasons in particular for returning to the gold standard. The first is that it prevents nations from an irresponsible expansion in the money supply to pay its debts. This is what happened to Argentina. After printing too much money and suffering disastrous inflation, Argentina passed a law tying its currency to the U.S. dollar. This may not be the optimal strategy for Argentina, but it's far better than what it was doing. Likewise, Italy has sought a measure of monetary responsibility by tying its currency to the German mark. So the gold bugs do have a few case histories to point to.
Even so, this reason is weak. Argentina did not need a gold standard to tie its currency to a more responsible country and solve its problems. Furthermore, a monetary policy that's right for one country might be completely wrong for another. For example, in the early 1990s, Europe tried to unify its currency by tying it to the German mark. But subsequently the German economy boomed while the rest of Europe became mired in double-digit unemployment. And following Germany's anti-inflationary monetary policy only made things worse, because it was exactly the opposite policy they should have been following. Finally, many countries have established long and sound reputations with fiat money -- Switzerland, Japan and the U.S., for example.
The second reason cited for a gold standard is because it creates certainty in international trade by providing a fixed pattern of exchange rates. The current system contains a degree of uncertainty -- in the last five years, the dollar has swung between 80 and 120 yen. This tends to make economic analysis and planning difficult for international traders. The costs of such uncertainty are difficult to determine, but they are expected to be significant. However, trade comprises only 10 percent of the U.S. economy, and compared to the enormous benefits of fiat money, these costs are minuscule by comparison.
What are the benefits of the current system? The most important has already been mentioned: the elimination of depressions. Being able to expand the money supply in times of unemployment and recession is a critical tool for government. Before World War II, eight U.S. recessions worsened into depressions (as happened in 1807, 1837, 1873, 1882, 1893, 1920, 1933, and 1937). Since World War II, under Keynesian monetary policies, there have been nine recessions (1945-46, 1949, 1954, 1956, 1960-61, 1970, 1973-75, 1980-83, 1990-92 ), and not one has turned into a depression. In fact, no nation in the world has suffered a depression under Keynesian policies.
The current monetary system also gives us protection from less scrupulous or unfortunate countries. A bank run that starts in Europe is not going to end up in America, thanks to the flexibility and autonomy of the Federal Reserve Board.
And fiat money also gives economists a chance to tie the appropriate size of the money supply to what's actually happening in the economy. In the end, the amount of gold a nation has is completely irrelevant to its level of economic activity. Gold is a commodity that experiences price swings. A change in dentistry or electronics is enough to change the entire market. To see how unrelated it is, consider the following trends. Since the U.S. dropped the gold standard in 1971, the price of gold has risen tenfold. But consumer prices have risen only two and a half times. If the U.S. had instituted a full gold standard in 1971, the result would have been the worst deflation since the Great Depression. And considering that widespread unemployment is usually the result, not deflation, it is easy to see the why such a policy would increase the risk of a depression.
Gold bugs also face an enormously challenging question: what kind of gold standard would they like to create? One based on fractional reserves? But that led to countless bank runs. Furthermore, as a practical matter, it doesn't stop banks or governments from changing the money supply, simply by changing the amount of fiduciary notes.
So the only purist alternative is a return to commodity money, where a bill is backed 100 percent by gold. But there is no longer enough gold in the modern world to cover the needed economic activity. We have already mined all the major deposits, and without new discoveries to match the growing economy, a pure gold standard would see a troublesome fall in commodity prices. Even worse, industry is also increasing its demand on the gold store. In past centuries gold had very little secondary use, so it proved useful as money. Today, modern technology has found a growing number of applications, and industry is consuming more and more of it. In response to all this, a monetary authority could periodically reduce the amount of gold defined as the dollar, but this is no different from the floating, fiat money that the gold bugs so bitterly criticize.
So the gold bugs would have to resolve historical and theoretical challenges of King-Midas proportions before they could ever reinstate the gold standard. But if a workable gold standard requires a tremendous amount of design, effort, regulation and safeguards, we might as well use fiat money, which is already simple and enjoys a successful track record.