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Politics : Welcome to Slider's Dugout
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To: SliderOnTheBlack who wrote (2108)7/30/2006 2:20:21 PM
From: Cactus Jack  Read Replies (1) of 50181
 
Today gold and commodities dominate the daily news and the market headlines

I think the opposite. I rarely see gold and commodities in the "market headlines" at all, let alone dominating them.

If you REALLY wanted to use a fair and honest re-pricing for inflation for gold… let’s use this formula:
-- Nixon closed the gold window on August 15th, 1971.
-- 5 years later (certainly enough time for gold to rise to “fair value”) the average closing price on the London PM Fix in US Dollars was -- $124.84 for the year 1976.
Now adjust that for the 116.79% inflation that occurred over the 23 years from 1976 to 1999 and what’s was the fair value of Gold in 1999 ?
$124.84 x 116.79% = $270.64
…about where Gold bottomed after it’s 20 year bear market correction from the last mania top of 1980 – a coincidence?

That analysis strikes me as equally random in comparison to your strawman argument that the "fair value" of gold would be adjusting for inflation to the 1980 blowoff top price. Why is five years "certainly enough time" for gold to adjust to a free market "fair value" price after years of artificially capped pricing?

When Warren Buffett says commodities have become a speculative bubble… gold bugs should listen

I haven't seen Buffett proclaim commodities to be a "speculative bubble". On the other hand, Jim Rogers has pounded the table on a commodities bull that he expects (with some nasty interim corrections) to last at least another decade based on historical norms. Rogers is no gold bug; in fact, he expects gold to be among the least rising (on a percentage basis) of the commodities.

SOTB, I don't profess to have your training, experience or dramatic flair, but you appear from here to be hellbent on trashing gold on a fundamental basis to support your past arguments that other PMs have at times offered a better risk/reward on a comparative basis. The HUI stocks are another matter altogether from gold itself, based on a variety of factors that affect the value of a gold mining company (and share price) above and beyond the price of the metal.

FWIW,

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