Gold

[Daytr]

1969 wow! That was the year I was born! haha. Nice one Skol, you have obviously lived a colourful life!

[Skol]

Attachment 4535

Abemama, 1971, long before the great gold debate. lol

[Daytr]

Wow! Very cool!

[Skol]

http://www.cnbc.com/id/100756275

Just what I reckon, the goldbugs have got it all wrong, there will be no hyperinflation, Zimbabwe or Weimar republic.

[Huang Chung]

Thanks for the info Daytr.

Skol....I'll catch you on Flightradar24.com. You'll have to wave though, so I'll know it's you :-)

[Daytr]

Hi Skol, that piece by cnbc is absolute rubbish. 'Bank reserves are in effect embryonic money that hasn't been born yet. The bank can give birth to new money based on those reserves, using the fractional reserve system to create money and lend it out. But until those loans have been made and the new money born, reserves are just potential money sitting in the central bank's womb. ' Have you ever heard of any rubbish like that. Embryonic money, give me a break. That's right up there with some of the gold bug rubbish that's spouted. There has been rampant inflation for the about 10 years give or take when the oil price went through the roof & with it copper & health insurance costs etc. Somehow this doesn't translate to official inflation! Now as oil & the like are coming off we are likely to enter a period of deflation but perhaps the only thing countering that is QE, printing money to offset the deflation in commodities & the like. I'm not sure if we see hyper inflation, we might, but what we are & will carry on seeing is devaluing of currencies that are being impacted by QE which is the same in my book. Devaluing purchasing power has the same effect as inflation so in effect that's exactly what it is.

[Halebop]

Assume QE causes high inflation. New Zealand so far has avoided QE. So if QE causes inflation and NZ doesn't do QE - the NZ$ Price of Gold might not generate a lot of excitement.

The problem with CPI is that nobody buys an average baskest of goods. I'd like to see representative samples to reflect different stages of life and economic situations (Like CPI for the under-employed, Young Adult, Young Family, Middle Aged Family, Retirees etc). I'm sure political operators could find lots of reactive material in such a toolset as well. In any case liberalised trade has mitigated a lot of inflation over the last 20 years (High health insurance and milk etc inflation has been offset by gadgets and clothes etc deflating).

Where I do think QE (with some help from demographics) has created inflation is investments - bonds, property, shares... ehem, maybe even gold. The extra liquidity isn't necessarily being consumed but it has to be invested somewhere ...and somewhere has gone up. Instead of CPI, if we contrived a purchasing power index for retirees it would have to be impacted by lower yields on one hand but higher capital values on the other. Too bad if you nervously sat on cash through the GFC and now want to switch to income in retirement...

Now if Bill Gross is right and the very long Bond bull market is done, we will see rising interest rates. This would likely lead to a solid correction on asset price valuations (I think this or next year). ...and still CPI may well be below 3%.

[Skol]

Daytr

"There has been rampant inflation for the about 10 years give or take when the oil price went through the roof & with it copper & health insurance costs etc. Somehow this doesn't translate to official inflation!"

You have been reading KWN and Zerohedge, they perpetrate the nonsense that the official figures are incorrect, you are a conspiracy theorist after all.
Gold down $50, looks like this could be the beginning of round 2.

[Skol]

Thanks for the info Daytr.

Skol....I'll catch you on Flightradar24.com. You'll have to wave though, so I'll know it's you :-)

HC
I'll have a look at it, working in a couple of days.

[Skol]

SKOL I try to keep up with your trumpeting ( which has been dribbling on for about 4 years).
In that time you have been beating a drum about the gold price is going to crash.
You seem very quick to pat yourself on the back if gold moves down but since you have been scorning gold it is up 45% and has been up as high as 90%.

SURELY YOUR DRUM MUST BE WEARING OUT BY NOW.

Aaaah, no, I got into the debate when gold was $1100, so it's up 22%, not 45%.
Gold has been a suckers bubble, now deflating, and in fact it crashed about a month ago, but the crash isn't over yet, last time there was a major gold crash it declined for 20 years, probably going to be the same this time.

I have been warning for years about the danger of over-allocation to a useless yellow metal, and this is the consequence for one institution. I remember when they bought.

http://online.wsj.com/article/SB1000...trending_now_5

US$300,000,000 - ouch. Such idiots should get the sack!