I think the problem most people miss is the fact that the gold argument is fundamentally a political argument. People who think gold will continue to go up forever seem to forget that these people currently printing money are susceptible to changes in the political atmosphere. Paul Volcker comes to mind, but can that happen again? I don't believe so, but with our economy as weak as it is it will not take a significant rise in interest rates to have a similar effect.
@2leet2cheet It's an argument based in political and economic understanding, yes, but I'm not sure who you are referring to as the people who think gold will continue to go up forever. Seems like a straw man to me. Gold will go up as long as governments continue doing the same things over and over. As the political situation is now, politicians and the fed are too vested into current policies to change them over night. America stands before an inevitable fall. The only question is how far.
@2leet2cheet Currently, gold is undervalued compared to the amount of dollars that exist and compared to the state of especially the American economy. When America will fall and investors all over the world see its falling, gold and silver etc will be their safe haven. As everybody rush into precious metals, like so many times before in history, it will rise in value. It won't continue forever. When America stops falling, the world stops panicking, and gold has reached its peak. Who knows when.
@dradeel The political situation is changing faster then you may think, obviously not over night, however Im sure youve seen the recent comments from Richard Fisher among others sounding the interventionist alarm. I dont doubt gold will continue to go up, but the problem I have with gold bugs is they never tell you how fast gold can and will turn around when it does.
@2leet2cheet True. When it changes, it can change fairly quickly. But do you have confidence that the current administration and Fed chairman of America will make this change before next election? Knowing politics for the past several decades, do you have confidence that it will happen at the next election? It might happen, but not likely. If it were to change, the situation in America today is also quite different from what it was in the 70s. This time the ship is in a much worse state.
@dradeel Your absolutely right. I guess we will know the answer to your question(s) come June(but I dont think anyone can say with certainty)…If we get QE3 who knows how high gold could go. If we dont get QE3 the opposite could very well be true.
@2leet2cheet Well I'm a silverbug and I'll tell you that silver and gold can and will turn around and it can be fast. I just don't think that will be any time soon. So there you have it, from a bug. Never say never.
Awesome, thanks. I recently saw a news clip about thousands of Chinese apartments lying vacant and unsold due to an oversupply problem while Chinese workers share slum accomodation (in one case a property valuer was sharing a crummy flat with 9 others and even sharing his bed, while apartments lie unsold to foreigners …crazy!
@MalibuLimo My sister's father-in-law made his fortune off of gold in Aus back then. He immigrated to the States and started up a concrete company in California around that time, and made killing back when all of those rich people were moving into Silicon Valley and needed concrete for all of those homes. This guy has since retired, and has all of his money in Aus bond's now. I keep trying to tell him that the world is different now, but he won't listen. I don't get Aussies.