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Politics : Welcome to Slider's Dugout -- Ignore unavailable to you. Want to Upgrade?

To: Jamey who wrote (1637)	5/18/2006 1:33:46 PM
From: Crimson Ghost	Read Replies (1) \| Respond to of 50501

I don't like the term "gold bug" Suggests kookiness and eccentricity. I prefer "gold bull"

To: Jamey who wrote (1637)	5/18/2006 10:52:57 PM
From: SliderOnTheBlack	Respond to of 50501

re:["in 1980 dollars, taking into account inflation, gold will need to rise to over $2000 to get the same bang for your buck."] You know this premise has been bandied about so long, by virtually everyone -- that I actually started repeating it, until I thought about it...and actually listened to a contrarian viewpoint about the fallacy of gold re-pricing for inflation from "1980 dollars" into -- today's dollars. First and foremost: Gold in and of itself -- is the re-pricing mechanism for inflation. In addition to being moved upward as a re-pricing mechanism for inflation. Gold is also propelled by jewelry and industrial demand and most of all -- speculation. And in going back to the "re-pricing for inflation" thesis: Just where would you begin to re-price it from? From: $40 in 1971 $255 in 1999 $800+ from the top of it's speculative mania in 1980 ? -- now that really makes a lot of sense now doesn't it ? Using that logic – one could then argue for the re-pricing CMGI from $200 back in year 2000 and then adjusting it forward for inflation and then arguing that it should now be worth $246.37 a share. Are we to believe that the Nasdaq is now dirt cheap and under-priced, because if we ”re-priced” it for inflation from it’s 5100 close in 2000 – it should be re-priced at 5900 in 2006? C’mon people… think. The entire thesis for re-pricing Gold from it’s mania peak of $800 in 1980 and then adjusting from that mania peak level for inflation from 1980 to 2006 and extrapolating that the fair value of gold is thus $2000 – is ‘bugs in Wonderland nonsense: "If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn't. And contrary wise, what is, it wouldn't be. And what it wouldn't be, it would. You see?" -- Alice from Lewis Carroll’s “Alice in Wonderland” If you REALLY want to use a realistic 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 inflation and 20 years later – what’s the fair value of Gold ? Maybe $258 ish? …about where Gold bottomed after it’s 20 year bear market correction from the last mania top of 1980: stockcharts.com -- coincidence ? Gold has done exactly what it has always done… it has served as the proverbial Canary in the Coal Mine…and as the ultimate barometer of inflation by central bankers. And as always… when Gold sounds those alarms -- speculators soon follow. Just as they did in 1980. Some things never change…and all speculations end the same. Gold has already re-priced itself for inflation…and gold, as well as other precious metals and virtually the entire commodity complex, has also clearly been pushed above and beyond it’s fair value re-pricing by speculators. When Warren Buffett says commodities have become a speculative bubble… gold bugs should listen. You listened and fastened yourself to his gravitas when he: -- warned of the potential of America becoming a “Sharecropper Society” -- put on his massive US Dollar Short Trade. -- sounded the trumpet on the dangerous explosion in derivatives. -- bought 190 million ounces of physical silver. But now, when he has closed out his US Dollar short, sold all his Silver and said that commodities are in a speculative bubble -- now you don’t want to listen ? Maybe you’ll listen to this… from the 5/13/06 London Telegraph: *********************************************************************************************** By Ambrose Evans-Pritchard (Filed: 13/05/2006) Copper has doubled in price this year even though industrial demand is flat. "This is fairyland," said Richard Elman, head of the Noble Group. "We have never seen such a disconnect between reality and pricing of raw materials. The long-term story is sound but the short-term froth is patently frightening." William Adams, an analyst at BaseMetals.com, said demand for copper tubes was collapsing as producers switched to PVC plastics. The market in Germany has halved from 90,000 to 45,000 tonnes. "There's a very rapid switch from copper. When it turns, copper could easily drop $1,000 a tonne in one day," he said. David Threlkeld, a veteran copper trader, said the market had been "out of control" for months, allowing speculators to run roughshod over industrial producers and users. "The LME has been seduced by hedge funds, [which have] pushed prices to levels unsupported by fundamentals. There's a vacuum below and the crash could set off a chain of margin calls running through the whole commodities sector. We've got a crisis on our hands and it is a lot bigger than copper," he said. ******************************************************************************************** Gold has done everything that it is supposed to do: It has reacted to the reckless inflation of Central Bankers and it has sounded the “canary in the coal mine” alarm for the imbalances in the global financial markets. It has gone from being a portfolio hedge for contrarian investors and a mis-priced discrepancy between price and risk for deep value investors….and now has become the leverage vehicle du-jour of speculators. If that isn’t the time to ring the cash register for gold and other precious metals and get paid for being a contrarian, for being a value investor and for being a true believer in gold and it’s role in the marketplace… then I don’t know what is!?!?! Pigs get Fat, but Hogs get Slaughtered Now, you can hang around with the “late to the party” speculators, or those that have spent the last 6 years scalping nickels in penny stocks at the tables in the casino at last call and hope that there’s yet another parabolic speculative spike yet to come…and you can also hope that you get out before the inevitable “inverted V” corrections that always come… or, you can take the speculators money & say thank you very much…and put it safely in the bank…and then patiently wait for the next discrepancy between price and risk…and do it all over again… Every time a speculation draws investors like gnats to a street lamp….it in turn creates an equal if not greater opportunity – as another play lays hidden and forgotten in the shadows… Over the last Five Years, the HUI Goldbugs Index has outperformed the OSX by a staggering “17 fold” trough to peak (HUI 35 to 401 & OSX 140 to 238). Palladium and Silver recently tripled the return of Gold from September 2005 thru April 2006 and that “swap” out of gold was dismissed at the time as insane, was ridiculed and completely dismissed by the masses….untill….(Palladium exploded from $180 to $410, Silver from $7 to $15 versus the move of Gold from $450 to $600). Don’t follow the gnats….instead, go forward into the darkness and find the hidden gems like Gold instead of Oil in December, 2000…. like Palladium, or Silver instead of Gold in September, 2005.. Another one is out there right now ! Do you want another fish to eat for another day…..or, do you want learn how to fish and feed yourself forever ? Yea as I venture into the Shadows of the Valley of Speculator Death…I Fear No Evil – for I am the Last of the True Contrarians… I remain, SliderOnTheBlack