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Who's Buying Gold

Discussion in 'Speaker's Corner' started by fester, Feb 4, 2009.

  1. silversurfer

    Capodecina

    Joined: Jul 13, 2004

    Posts: 18,756

    Location: Stanley Hotel, Colorado

    Exchanges are only relevant to convenience, the main question is the protocol itself able to avoid corruption

    [​IMG]
     
  2. Dave1240

    Gangster

    Joined: Sep 21, 2012

    Posts: 297

    Are you still buying gold bullion bars?. I have made my 1st purchase of gold and silver and used these www.thegoldbullion.co.uk. I am new onto the scene :).
     
  3. muon

    Capodecina

    Joined: Nov 8, 2006

    Posts: 18,122

    Location: London

    It is funny how if you play or played mmorpg games, you see dozens of similar bubbles occur within a game and the burst. The economies within these games follow natural market forces but happen much faster and dramatically.

    In a game I played when I was younger, some severe restrictions in the use of in game money and trading meant that a pseudo currency was almost necessary.

    The result? Low supply items were turned into pseudo currency by those who cumulatively had the wealth to do so. They bought up most of the existing supply and said (supported by market forces) it was worth $x in in game currency. You don't sell for less and magically it is now worth that much.

    The supply of that item was so slow that it wasn't enough to pop the bubble, and it's popularity as a pseudo currency meant that demand was rising far more quickly than supply. The result was the price kept rising as more speculators entered the market.

    This happened with many items once wealthy players (and collections of players) realised they could do this an potentially make ridiculous amounts of in game money from doing so.

    Ultimately what happened was that the game creators had to intervene and remove the severe restrictions in currency and trading which created this scenario. There was then no need for the wealthiest players in the game to create an artificial currency.

    Why am I saying this?

    Bitcoins are high because the supply is so low and it develops into a pseudo currency.

    The thing going for bitcoins is that the difficulty of mining bitcoins is getting progressively harder. Also the overall wealth in the global economy as a ratio to current market capitalisation of the bitcoin market is still far lower than what happened in these mmorpg games.

    I wouldn't be surprised if 90% of the bitcoin market is owned by a very small percentage of the total number of owners.

    People like this http://www.cnbc.com/id/101190181
     
    Last edited: Nov 17, 2013
  4. Zethor

    Mobster

    Joined: Nov 13, 2013

    Posts: 4,294

    ;)

    Gold is a bad bet until the next bubble burst.
     
  5. muon

    Capodecina

    Joined: Nov 8, 2006

    Posts: 18,122

    Location: London

    That's probably the largest one there is and was what I was talking about but you do see it in other virtual economies as well.

    It's remarkable how what Keynes would call "Animal Spirits" is actually visible within such games with very close parallels to the real world.
     
  6. Zethor

    Mobster

    Joined: Nov 13, 2013

    Posts: 4,294

    There are papers written on the subject in major scientific journals. Problem is, the deluded economists who dream about the "free market" don't bother reading them.
     
  7. muon

    Capodecina

    Joined: Nov 8, 2006

    Posts: 18,122

    Location: London

    I think even the most ardent free market economist would find it difficult to argue that bubbles don't exist.
     
  8. El Capitano

    Mobster

    Joined: Oct 18, 2002

    Posts: 2,577

  9. silversurfer

    Capodecina

    Joined: Jul 13, 2004

    Posts: 18,756

    Location: Stanley Hotel, Colorado

    Humans are herd like quite often, bubbles are natural like any trend but what is strange is when it continues for years when clearly the values are wrong.

    Many think this of bitcoin, I read many articles from 1996 onwards calling the tech bubble incorrect and it took ages to actually fall over. I think its inverse to Fed policy personally


    Free money
    http://www.coinflation.com/coins/silver_coin_calculator.html
     
  10. silversurfer

    Capodecina

    Joined: Jul 13, 2004

    Posts: 18,756

    Location: Stanley Hotel, Colorado

    Drew up a chart for gold in March 2013. It showed gold had retouched the previous uptrend and fallen, should have taken more caution as it was then negative enough to fall through 1600 consistently

    [​IMG]
    [​IMG]
    Now it appears to have broken its downtrend, going sideways. I think 1413 is the price to beat to recover back to 1600 initially.

    Im not sure where the source of a move upwards would come except 2014 is the year FED is to stop its increase of QE. If they fail to stay on course it could mean new directions
     
  11. player

    Wise Guy

    Joined: Sep 18, 2003

    Posts: 2,351

    I've been reading up a little on economies, currency, gold etc these past few months. Something that hasn't really interested myself in the past.

    My personal opinion is that Gold will continue it's upward trend.

    It seems that here and in particularly the USA governments haven't addressed much since the 'financial crash' and we are heading for a period of stagflation.
     
  12. RDM

    Capodecina

    Joined: Feb 1, 2007

    Posts: 20,178

    Not entirely sure that losing nearly $500 an ounce over the last couple of years is really an upward trend?
     
  13. player

    Wise Guy

    Joined: Sep 18, 2003

    Posts: 2,351

    It depends how far you want to look back.

    I would say a 300% increase in a decade is an 'upward trend'
     
  14. silversurfer

    Capodecina

    Joined: Jul 13, 2004

    Posts: 18,756

    Location: Stanley Hotel, Colorado

    Depends on your time frame, a couple of years is a short time for any investment. Five years is considered more reasonable

    I'd frame it like buying a house, if you bought somewhere to live and it fell over two years would it mean it was a mistake overall. I agree that speculatively it would likely have been better to rent in that time but Im not sure it must be a mistake as two years is just a brief time for that type of holding

    Gold certainly lost its trend since the 2008 series of bank failures. Its probably in line to rise on the larger but slower rise since 2000, but I need a bigger chart :p
    For example an average 85 months shows gold still rising above that trend. If its taken as a token of weakness then gold below 1260 has lost that longer term trend
     
    Last edited: Aug 13, 2014
  15. RDM

    Capodecina

    Joined: Feb 1, 2007

    Posts: 20,178

    And the 10 years before that it was flat. But if you are investing now and it is on a downward trend it could be quite a while before you make your money back. The price is back to where it was in 2011, it may continue to fall.
     
  16. silversurfer

    Capodecina

    Joined: Jul 13, 2004

    Posts: 18,756

    Location: Stanley Hotel, Colorado

    QE3 ends, update

    [​IMG]

    :0 lets hope this is a common opinion and a contrarian signal. QE doesnt force anything to be true but I still think various failures are more likely

    Never happened.

    1260 was the recent high and another canny reason to sell apparently. If we continue on as negative as it is now then a fair target is $978 for gold to start 2015. Optimism for above 1196
     
    Last edited: Oct 31, 2014
  17. aardvark

    Sgarrista

    Joined: Jan 2, 2005

    Posts: 7,886

    Location: leeds

    i think the software for tracking the gold price has broken!

    edit: fixed now, weird glitch, never seen anything like it.
     
    Last edited: Nov 25, 2014
  18. Jimbo Mahoney

    Soldato

    Joined: Oct 18, 2002

    Posts: 6,142

    Location: Belfast

    I'll continue to buy as and when gold forms less than 20% of my savings.

    i.e. If the gold price falls, I'll buy more and if my cash / stocks / bonds go up, I'll rebalance.

    Permanent Portfolio for the win!

    I'll only sell if I need to liquidate for some reason (e.g. buying a house, drawdown in retirement).
     
  19. Azza

    Caporegime

    Joined: Dec 6, 2005

    Posts: 34,610

    Location: Birmingham

    Is right Jimbo. This is a great blog & book for all things Permanent - http://www.crawlingroad.com/blog/
     
  20. silversurfer

    Capodecina

    Joined: Jul 13, 2004

    Posts: 18,756

    Location: Stanley Hotel, Colorado