20 Sep 10
Originally posted by KazetNagorraWhat do you mean by "over valued"? What is the true value of gold? What is the true value of the US dollar?
There is never a "guarantee" that bubbles burst. Also, bubbles may burst quite slowly if the commodity is only moderately overvalued.
By your definition of "Bubble" surely any product with significant investment is permanently in a "Bubble". Or am I misunderstanding?
20 Sep 10
Originally posted by twhiteheadThe "true value" of gold depends on its practical applications in industry and for jewellery, and depends on the degree people can change their currency back to gold (I'm not aware of any currency which still uses a gold standard though). The value of gold is largely determined by speculators so you could indeed say that there is often a bubble in gold, however for practical purposes you can regard a relatively low amount of speculators, compared to historical trends, as the absence of a gold bubble.
What do you mean by "over valued"? What is the true value of gold? What is the true value of the US dollar?
By your definition of "Bubble" surely any product with significant investment is permanently in a "Bubble". Or am I misunderstanding?
I don't know what the "official" definition of a bubble is (or whether there is one at all), so feel free to ignore this.
20 Sep 10
Originally posted by twhiteheadWe wont truly know if its a bubble or not until it bursts.
What do you mean by "over valued"? What is the true value of gold? What is the true value of the US dollar?
By your definition of "Bubble" surely any product with significant investment is permanently in a "Bubble". Or am I misunderstanding?
But it has the hallmarks of one, namely high volume trading and rapidly increasing price. The problem is that bubbles are fuelled to the most powerful force known to Man: GREED
20 Sep 10
For gold to reach it's inflation adjusted high it must go up to nearly $2300.00 an ounce.
That is another $1000.00 higher.
That is based on the assumption that our government has been reporting the CPI accurately. It has been suggested that our government has been less than honest with those numbers.
If Krugman is right and we are headed for a third depression gold could go much higher. If the economy improves gold could go lower, but I don't see that happening anytime soon.
20 Sep 10
Originally posted by KazetNagorraIn tame economic times what you say is true. However, the rise in gold price is not because of greater demand for rings, bracelets and gold plated electrical contacts. The current rise in price is caused by desire to protect wealth from precipitous drops in currency value. It will continue to be used as a safe harbour until nations regain a rational debt to GDP ratio.
The "true value" of gold depends on its practical applications in industry and for jewellery, and depends on the degree people can change their currency back to gold (I'm not aware of any currency which still uses a gold standard though). The value of gold is largely determined by speculators so you could indeed say that there is often a bubble in gold, ...[text shortened]... " definition of a bubble is (or whether there is one at all), so feel free to ignore this.
20 Sep 10
Originally posted by MacSwainWhich is pretty awesome, because that currency needs to circulate, and gold is not something most people really need. If printing currency gets the rich to start spending money buying shiny metal it's a good idea.
In tame economic times what you say is true. However, the rise in gold price is not because of greater demand for rings, bracelets and gold plated electrical contacts. The current rise in price is caused by desire to protect wealth from precipitous drops in currency value. It will continue to be used as a safe harbour until nations regain a rational debt to GDP ratio.
21 Sep 10
Originally posted by KazetNagorraBut gold jewellery too is often seen as an investment and so a large proportion of that must also be removed.
The "true value" of gold depends on its practical applications in industry and for jewellery,
I think you would find that gold is so plentiful that if it stopped being used as an investment its price would drop to a tiny fraction of what it is now. Of course industry would probably start using it a lot more if it was cheaper as it is a remarkably useful element.
21 Sep 10
Originally posted by Metal BrainFor the Nikkei to reach its high it must go up by about 300%. Get those Sony shares now!
For gold to reach it's inflation adjusted high it must go up to nearly $2300.00 an ounce.
That is another $1000.00 higher.
That is based on the assumption that our government has been reporting the CPI accurately. It has been suggested that our government has been less than honest with those numbers.
If Krugman is right and we are headed for a thi ...[text shortened]... her. If the economy improves gold could go lower, but I don't see that happening anytime soon.