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Strategies & Market Trends : Classic TA Workplace -- Ignore unavailable to you. Want to Upgrade?

To: GraceZ who wrote (78286)	8/4/2003 8:31:26 PM
From: skinowski	Read Replies (1) \| Respond to of 209892

the 1975 $185/oz gold price gets divided by .293 which yields a price of $631 in 2003 dollars. So with a closing price of $346 gold has lost 45% of it's value since 1975. Thank you. Very interesting. So, gold in real terms is down 45% since 1975, while the USD lost over 70%. Not much of a hedge, but better then cash in the mattress. Perhaps It is important to recall that the stock markets bottomed in October of 1974, and then, basically, remained in a bullish mode for over a quarter of a century. Gradually, along the way, inflation was brought under control (slowed down the printing press?) and the interest in gold subsided. As the great Bull evolved, more and more people came to believe that gold was in the process of becoming irrelevant. (As I remember, in the late 90's there was a pandemic of central banks selling off their reserves - roughly around the time when bureaucrats wanted to invest the Social Security money in stocks) It is likely that the presently relatively low price of gold is a natural result of a type of psychology which could be expected after a secular Bear market which lasted for some 2 decades. It is probably no accident that a great bull market in stocks was taking place during the same period. As people become more optimistic and confident about the economy and about the future, naturally, "dead" assets like gold would not look attractive. I think that without inflationary efforts by the Fed we would be by now in the midst of a serious deflationary recession (or worse), with all sorts of (hopefully, creative) destruction raging out there. Cash ($$) would be king and gold would be probably cheap. However, we DO have an inflationary strategy in force. At this point I simply want to figure out some of the "macro" implications for the price of gold. So far, it appears that the Fed was successful - the Bear market in stocks sent huge amounts of money to the "money heaven", and yet, the USD was in a steep decline for much of the time. "Reflation" must have worked. If one's money is on the Fed and the "printers", then gold should look attractive. Possible disruptions in the global picture, like for example, our trading partners developing second thoughts about the USD being the only major global reserve - and maybe even trying to repatriate some of those dollars - these are good reasons for being a gold bull. That said, I still believe in charts and trends more then in my ability to figure out correctly the interplay of the infinite variety of fundementals... -g.