The topic of Gold was recently brought up… but mine is a little different…
I’m very new to this aspect of investing, and I was doing some research today on the topics of inflation, gold, and bonds.
I hear many people talk about buying gold to hedge again potential hyperinflation, and we all see the price of Gold consistently rising. But, what’s driving these prices higher? It seems as though it’s partly due to fear (of inflation/economic uncertainty), skeptics, and the media! All 3 are the main ingredients in a bubble.
We know the dollar was taken off the gold standard, and it was then backed by the US Gov. So why are people going back to Gold to protect against inflation, instead of going to the US Gov?
Again, I’m very new to these topics, but I just came across treasuries, such as Inflation-indexed bond, that protect directly against inflation. The principal amount of investment actually increases along with the rate of inflation (downside is that taxes are due on the gains).
So why not invest in treasuries to protect against inflation rather than Gold??
And most importantly, if we do believe that Gold is headed toward a bubble, what investment method/tool is used to bet against Gold and profit once it begins to decrease?
The articulate “Inflation” covers two very contrastive concepts, and it’s copernican to cell them change, writes King Galland for Casey Research.
The original concept is monetary inflation, which is when the provide of money increases faster than the supply of goods and services. The new conception is value inflation, which refers to an amount in the boilersuit state of prices for artifact and services.
I happen to know a few things about gold, take a look back on the years 1977 to 1981, Jimmy Carter was president and interest rates were 16 or 17%.
The unemployment rate was high, gold went from less than $350 in September 1979 to $895 and back below $550 in April 1980.
I love the fact gold has been pushed to the point of a new record, but I believe just like the period of Jimmy Carters presidency that gold will turn back as our congress changes and the Oboma presidency is dismissed by the voting public in 2012. Oboma like Carter is a Lame Duck President!
I believe we will find gold hit it’s peak this winter spring and fall back in relation to a new congress and the vision of changing presidents in 2012 just like it did in 1979 / 80. Jimmy Carter was president from January 1977 through January 1981.
If this proves to be correct I expect gold to correct late next spring back to about 60% of it’s high number, right now the gold industry does not even know what supports the numbers!
This correction could equate to falling back to $835 range from the high we know today!
Take a look at the similairities between Carter and Oboma, they are almost in parity!
In fact I believe gold could fall back to $700 or so by January 2013 as we swear in a new president.
[quote author=Gold River link=topic=47935.msg235183#msg235183 date=1287288831]
Hi,
I happen to know a few things about gold, take a look back on the years 1977 to 1981, Jimmy Carter was president and interest rates were 16 or 17%.
The unemployment rate was high, gold went from less than $350 in September 1979 to $895 and back below $550 in April 1980.
I love the fact gold has been pushed to the point of a new record, but I believe just like the period of Jimmy Carters presidency that gold will turn back as our congress changes and the Oboma presidency is dismissed by the voting public in 2012. Oboma like Carter is a Lame Duck President!
I believe we will find gold hit it’s peak this winter spring and fall back in relation to a new congress and the vision of changing presidents in 2012 just like it did in 1979 / 80. Jimmy Carter was president from January 1977 through January 1981.
If this proves to be correct I expect gold to correct late next spring back to about 60% of it’s high number, right now the gold industry does not even know what supports the numbers!
This correction could equate to falling back to $835 range from the high we know today!
Take a look at the similairities between Carter and Oboma, they are almost in parit
In fact I believe gold could fall back to $700 or so by January 2013 as we swear in a new president.
Our dollar will gain strength as we change congress and move to change presidents much like the election of Reagan in 1980 and inaugeration in January 1981.
And most importantly, if we do believe that Gold is headed toward a bubble, what investment method/tool is used to bet against Gold and profit once it begins to decrease?
note it’s impulsive nature [i]down which carried through for 7 months…
probably won’t see the likes of that for some time to come…with the monetary manipulation/debasement of QE2 being baked in…but who knows…could always get a sharp selloff of everything again…lmao…
in any case…non-leveraged instrument for acting on it:
We know the dollar was taken off the gold standard, and it was then backed by the US Gov. So why are people going back to Gold to protect against inflation, instead of going to the US Gov?
The monetary system we work with now is fiat money. Money backed by nothing other than the full faith and credit of the U.S. government. The reason Gold has been popular as a hedge is because the faith in the U.S. Government has waned thus, increasing the demand and shifting the price of gold upwards. However, on the same token interest rates on new issue U.S. Treasuries has continued to move lower thus, making existing bonds more valuable. Why both of these are happening at the same time is a question for someone much smarter than I.
So why not invest in treasuries to protect against inflation rather than Gold??
The strategy for investing in TIPS is simple. The buyer wants principal & income protection. Many seniors want to protect their principal due to their inability to earn future principal for investment. Gold is a commodity and therefore very volatile. If someone is looking for safety and principal protection gold will move up/down to much and put the principal investment at risk.
Here’s a useful piece of advice for investors: Act like a bloodhound and ignore everything except the evidence that shows up in front of your nose. The economy in the 1930s couldn’t have been worse, but since Coke was very profitable, the stock price rose from $20 in 1932 to $160 in 1937. Imagine making eight times your money when everyone around you was predicting the end of the world.
-Peter Lynch</blockquote>
Gold keeps chugging along…like an overworked freight train: