Gold for $10000/oz; yes or no?

[HauteHippie]

You can be blunt with me anytime, and there wouldn't be a need to apologize. Discussion is discussion.

While obviously you are a student of finance and investment, I was simply speaking from experience. Altho I have never determined if the avatar you use is actually you, I assume it is, and can state that I was about your age when RR was President and it was obvious to me at the time, as it is now, that the (almost) All-Time low for US/Soviet relations he created drove a Global wave of fear and doubt which magnified the price of gold well out of step with reality.

It's my opinion that the current "War" the US, and it's Allies are entangled in with nebulous global terror groups is doing the exact same thing.

Sometimes it's not all the little issues but the major issue which shapes an outcome.

If the oil is low in my car's engine, one of it's tires is a bit over-filled, it hasn't been washed in a week and half a Pop-Tart is on the floor in the back seat, I'm still fairly certain that it's wrecked because I hit a tree at 30MPH ..

The picture is not me. It is Pat Tillman.

Again, rhetoric doesn't cause large market movements. Wars and rhetoric are "the little issues" in the big picture of a global asset market, unless the asset itself (e.g. oil) is the cause of the war, or in other hypothetical scenarios which really don't apply to our situation... But in both cases we've discussed, the issues are as I've described. Rampant 1970's "stagflation" caused a rapid movement into an inflation hedge - in this case gold. And the subsequent aggressive interest rate hikes that stifled inflation in the early 80s caused the rapid decline. And today's gold pricing is a direct result of easy money policies and the resulting global financial and monetary instability, and foreign movements out of the US dollar as a world reserve currency. The IMF has already proposed replacing the dollar with SDRs, but countries like China (the world's largest creditor no less) have been aggressively increasing their gold stockpiles over the last few years instead. So it's quite simply very clear that there is no confidence in the dollar at the sovereign debt level, or even in a basket of unbacked fiat currencies, and why should there be? When it comes right down to it, it's just a matter of fairly simple economics.

[Jkay]

Oh! I know PT's story and it's a tragic one. I just didn't know what he looked like. It's very decent of you to pay tribute by using his photo.

[btocamelo]

Wouldn't gold be maintained artificially high, just like oil...by the monopolies that mine it.....if the price too low (gold/oil)....then the big dogs slow down production....until they reach a production level that just barely satisfies market demand...couple that will increase use of gold in technology products.....then you let speculators cause their usual chaos......not to mention a large country like China stepping in to pull Gold/Oil out of the market and hoarding it....causing scarcity and fear in the market........diamonds are a great example of a product that is maintained artificially high...for decades and decades.

Edited January 22, 2011 by btocamelo

[chronoluvvv]

No market trend can last forever.

Gold is not as high as it is owing to monopolistic mining companies but due to speculation & erosion in the dollar's buying power