Gold

[denpal]

This is a chart courtesy of falko on another forum, showing gold on a log scale, hardly a parabola eh skol?

[Skol]

I would say it is, esp. if you put up a chart of the last couple of years.

The dive the POG took 2008 might be the bear trap with the 'greatest fool' parting with his money at $1917.


IMO we're at the return to 'normal', before the rot really sets in.

http://www.steadfastfinances.com/blo...into-the-hype/

This a parabolic chart.

http://goldprice.org/gold-price-hist...ear_gold_price

Check out the colossal volume on the SPDR gold trust chart, the biggest ETF in the world. Tops are often characterized by huge volume.

I notice anxiety setting in on some of the goldbug chatrooms. Chartists are suggesting it's reached a top and the psychology could be infectious, precipitating a fall.

e.g "I wish this thread would end" or "can we change the subject this has been going for a few days now", or "I don't like this negativity".

[CAM]

You seem to be following it rather closely...... eg. goldbug chatrooms etc etc

[Skol]

You seem to be following it rather closely...... eg. goldbug chatrooms etc etc

Yeah, I suppose I do, have a few days free. Not often in your life you get to witness possible real bubble action and psychology.

The goldbugs don't mention psychology, it's all the dollar, the shorters, JP Morgan, the Fed ad infinitum. They'll tell you even now that buying gold or silver, even at these super-elevated levels are merely the proper actions of informed investors.

Contrarians are told to 'get a reality check'.

[BIRMANBOY]

I think you'll find a lot of people are. Its sort of like watching a slow motion train wreck...morbidly fascinating...but thinking glad I'm not on it.

You seem to be following it rather closely...... eg. goldbug chatrooms etc etc

[denpal]

I would say it is, esp. if you put up a chart of the last couple of years.

The dive the POG took 2008 might be the bear trap with the 'greatest fool' parting with his money at $1917.

The log-lin (semi-log) chart is the right one to look at, ie the x-axis is linear (time) and the y-axis is logarithmic.

Quote from www.fool.com:

Log Charts vs. Linear Charts

Why does The Motley Fool prefer log charts over linear charts?

Spend any time looking at charts of stock price movements at Fool.com and you'll be looking at logarithmic charts. That might sound terribly complicated, but the concept behind logarithmic charts is fairly easy to grasp. There are two common kinds of charts used when presenting a graph of something like a stock price over time. One is linear and the other logarithmic.

Remember that with most such charts, the "X axis" (the horizontal measure) reflects time passed. So it might show you days, or weeks, or months, or years. The "Y axis" (the vertical measure) shows you how the stock price has changed over the given time period. Linear and logarithmic charts differ in their treatment of the Y axis. We'll first explain how the charts differ in their structure, and then why it's good to use log charts.

Linear: With a linear chart, the Y axis is structured in such a way that an equal distance along the axis represents an equal absolute change in stock price. (Gee, that wasn't too clear, was it? Let's try an example.) Shifting up three spaces on the vertical axis might represent a change in stock price from $10 to $13. Shifting up another three spaces further up on the axis might represent a change in stock price from $45 to $48. Three spaces, three dollars. Every time.

Logarithmic: With a logarithmic chart, the Y axis is structured in such a way that an equal distance along it represents an equal *percentage* change. So if you move up three spaces on the vertical axis, that might represent an increase of 15% in the stock price (perhaps from $20 to $23). Shifting up another three spaces further up on the axis will represent another 15% change in the stock price, but this time perhaps from $80 to $92. Note that in the first case, the absolute price change was $3. But further up the axis, the three spaces represented an absolute price change of $12.

Now -- why is one kind of chart better than another? Well, imagine a company with a stock price increasing by 15% each year for 20 years. Think about how you'd normally draw a chart of its stock price. You'd probably use a linear chart, as that's what most of us learned to do in school. The graph would show a really curved line, though. It would look like the stock price grew slowly in the first years, and then zoomed up a lot in the last few years.

That's because in the first few years, the change in the stock's price might have been from $10 to $11.50, and later from $25 to $28.75, and later still from $75 to $86.25. So the absolute changes will look small at the beginning, and will look large later on. But it's really just been a steady 15% increase from year to year. (Remember, an investor should be just as happy with a total 50% return from $20 to $30 as from $100 to $150. Investment-wise, percentage-wise, it's the same thing.)

This is why a logarithmic chart is preferable in this situation. If a company is growing at a steady clip, you'll see a fairly straight, upward-sloping line on the graph, not a sharply curving line. If the company's growth is slowing, you'll see the upward slope taper off a bit. If the company keeps growing faster and faster, then you'll see an upward-sloping sharp curve. But this time the dramatic curve will represent dramatic growth.

[Skol]

If gold does take a dive it will be very interesting to compare with other market routs. In 1980, 1987 there was no internet, in 2000, maybe some. There was no trading programmes, few hedge funds, and little electronic trading, mostly open outcry.

What will happen if everyone pushes the sell button at the same time? In 1980 gold fell about 27% in less than 2 weeks. What effect would ETF's unloading hundreds of tonnes of gold have?

[denpal]

If gold does take a dive it will be very interesting to compare with other market routs. In 1980, 1987 there was no internet, in 2000, maybe some. There was no trading programmes, few hedge funds, and little electronic trading, mostly open outcry.

What will happen if everyone pushes the sell button at the same time? In 1980 gold fell about 27% in less than 2 weeks. What effect would ETF's unloading hundreds of tonnes of gold have?

The theory is that there are people and central banks that want hundreds of tonnes, especially at lower prices.

[BIRMANBOY]

Possibly but they are unlikely to buy on the way down are they? They will wait until the bottom appears established before they start buying. Now that is where some serious dosh could be realized.!!!!

The theory is that there are people and central banks that want hundreds of tonnes, especially at lower prices.

[Skol]

The theory is that there are people and central banks that want hundreds of tonnes, especially at lower prices.

Yeah, I'm not sure why central banks have stuck their necks out just recently. The central banks of South Korea, Mexico, Thailand and Russia have bought gold. Why? Because the 'experts' get just as blinded by the mania as everyone else.

Speculative benders are always supported by authoritative opinion and and 'moms and pops' have taken this to mean that they're on the road to riches.

it won't come as any surprise that the purchases were applauded by the World Gold Council, Bullion Management Group, and Strategic Metals Research & Capital.