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GOLD- timing the cycles
Posted by admin on January 30th, 2010 filed in Gold Stock
Is gold a store of value, no matter when you buy it?
The data suggests that timing counts just as much in gold investment as it does in any other sector.
I remain bullish on gold, but felt that this ‘challenging’ viewpoint was under-represented on youtube. “What use is a debate with everyone on one side of the stage?”
Sources….
Average income data
http://www.census.gov/hhes/www/income/histinc/h06ar.html
Gold price history
http://www.goldprice.org/spot-gold.html
Duration : 0:5:34
January 30th, 2010 at 10:15 am
Hi freedominsomalia …
Hi freedominsomalia.
An hour of work is an hour of work to the person doing the work. It is that effort which the gold-owner wishes to preserve, I suggest.
The amount of production in an hour has advanced, yes, but I think the point is that gold remains gold – and an hour’s working time remains an hour of time – so comparison is valid.
I think my vid shows that the relationship is volatile – more volatile than I expected – and that is the interesting point I hoped to pass on.
best wishes.
January 30th, 2010 at 10:15 am
an hour of work way …
an hour of work way back doesnt produce as much goods as an hour could today. i shoulnt have given you 5 stars because that is an epic economic fallacy u held/hold/promoted
January 30th, 2010 at 10:15 am
An interesting and …
An interesting and lucid presentation – thank you.
At the end you contend that residential property and money are equally valid stores of wealth compared to gold.
In terms of fluctuation you are correct, however do bear in mind:
1) property can be painfully illiquid at times – it is only a good store of value if you can retrieve that value in a timely manner.
2) fiat money occasionally goes to a zero worth; remember the dollar is not the first such currency even within the USA.
January 30th, 2010 at 10:15 am
I hope you post a …
I hope you post a video when you are thinking of selling or just when you sell. I have to sell some of mine if I can pick the top in this cycle. I am not a trader and got lucky buying close to the 2008 low. I hope I can time the top over the next few months.
January 30th, 2010 at 10:15 am
Sorry – I meant in …
Sorry – I meant in this cycle. Probably shouldn’t have mentioned a number, but I worked out that the 1980 top – shown in that gold/hours chart I made – would equate to about $1,750 today. Just my own guess, and I might change my opinion at some point.
A lot can change, of course. I’m happily hanging on to my gold for the time being.
I have a tendency to sell things too soon.
January 30th, 2010 at 10:15 am
>>but not over $2K …
>>but not over $2K
Ever?
On a large enough time line I expect the upside to go to infinite
January 30th, 2010 at 10:15 am
Hi again.
Yes, I …
Hi again.
Yes, I read the GATA stuff, but I haven’t included it in my videos, so far, as I feel it is well covered on youtube.
I don’t worry too much about manipulation of gold by banks – look a how miserably they are failing to suppress it these days.
I do, however, feel it unwise to assume that gold ’should’ be $3000+ on the grounds that banks are holding it down.
There are other fundamentals to consider, as I hoped to demonstrate in the video.
I expect more upside, but not over $2K
January 30th, 2010 at 10:15 am
Have you ever read …
Have you ever read any of the research at Gata(dot)Org?
It is quite convincing, though I am not expert. Apparently there is a huge amount of naked short selling done by 2 or 3 major players in both the silver and gold markets. If this is new info for you, you may find it interesting since you obviously have thought a lot about the gold market.
I have really enjoyed your videos by the way!
January 30th, 2010 at 10:15 am
Hi magic.
I agree …
Hi magic.
I agree that there is interference with the gold market, but I suspect that it comes more from having a system including cash settlement contracts than it does from actual manipulation by the banks. Result is the same, but the conspiracy element is less involved. (However, you are right to assume the worst – I’m sure the banks do poke their nose into the gold market deliberately too).
January 30th, 2010 at 10:15 am
Hey flaskofcoffee,
…
Hey flaskofcoffee,
Yes, this is indeed surprising and interesting. My point is really just how I make sense of it as, researching a little the price suppression schemes from articles and such at GATA, it all seems to make sense and actually complements what you present. There is no guarantee that the price suppression game won’t continue to disrupt gold’s potential as a store of wealth… but I’m all in at this point in hopes that it will fall apart and gold will sore
January 30th, 2010 at 10:15 am
Gold and silver are …
Gold and silver are not a rational topics of discussion for many people.
January 30th, 2010 at 10:15 am
which means that …
which means that Gold has been undervalued…Other factors were stronger than the gold in the past 30 years: “the trust on the dollars and the markets”; however, that is gone today. It will be a paradime shift in the near future.
January 30th, 2010 at 10:15 am
Flask,
Excellent …
Flask,
Excellent video I like your hours/gold comparison idea.
January 30th, 2010 at 10:15 am
U wouldn’t want to …
U wouldn’t want to pay the same amount to the guy, who produces 10 hats per hour and the guy, who produces 1000 hats per hour with the same quality. Since 1975 The Supply of gold has increased roughly by 1% per year, while the World GDP by 3-4%. It is natural to be able to buy more goods and services with 1 oz of gold today. I agree that the price of gold is changing in cycle. Money printing (easy access to cheap credit) has always resulted in a bubble, but u can’t easily increase gold’s supply
January 30th, 2010 at 10:15 am
Hi malivo.
1 hour …
Hi malivo.
1 hour of time is the same now as it was at any time in the past. Of course, one man’s hour may produce less than another man’s hour, but over time a comparable hour (average earnings of the day) is the value we hope to protect, imo.
I’d like to be able to pay someone like me for an hour’s work with the same gold it took me an hour to earn many years ago – that would truly be storing my value.
Thanks for the comments.
January 30th, 2010 at 10:15 am
If do use data …
If do use data going back a couple hundred years then you find that Gold now is extreemly cheap for the amount of labor put in. However 3 things to consider going forward.1 that we now have cheap Oil and massive 400 ton machines to do the digging of gold for us instead of by hand with picks, shovels, buckets and sifting pans. 2 population growth is keeping the demand high despite new supply. 3 that as the cheap Oil runs out NEW gold will be ever more costly in labor terms.
January 30th, 2010 at 10:15 am
Two words : Gold …
Two words : Gold manipulation.
Nice video though.
January 30th, 2010 at 10:15 am
It is natural for …
It is natural for the price of gold (measured in goods and services) to rise. This is why politicians and economists don’t like gold as an official currency. It would limit the supply of currency, which is a recipe for long deflations.
January 30th, 2010 at 10:15 am
You forgot to take …
You forgot to take into account the increase in productivity that has happened over the last 30 years. Why would you want to compare 20 working hours in 1975 with 20 working hours in 2009. It is obvious that due to the advancement in technology, today one man is able to produce in one hour hundreds of times more than than he was able to produce for the same time in 1975. 1 labor h today probably equals 50 from 1975.you could buy much more today with 1 oz of gold than you were able in the past.
January 30th, 2010 at 10:15 am
Hi Pardon.
For …
Hi Pardon.
For sure, my ‘hours/gold’ comparison is just one way to look at value, but I felt it worth presenting.
I was intrigued to see the volatility in hours/gold and how important timing is. 1980 and 2000 were clearly extremes, of course.
I also worked out that a price of $1,750/oz for gold would be about the equal to that 1980 peak of 70 x hours, using $50k average salary.
I am looking further into this model to see how it ties in with other indicators.
January 30th, 2010 at 10:15 am
Insightful video …
Insightful video Flask, thank you.
January 30th, 2010 at 10:15 am
Thank you for your …
Thank you for your time, input and deliberation.
And as ever.. always entertaining to say the least!
January 30th, 2010 at 10:15 am
Flask,
You chart …
Flask,
You chart is so correct, gold’s value is not less volatile than its value against the the dollar, dowjones and housing. which means that the gold will go up as the dollars, housing and dowjones are in the down due the simple reason that the trust for the dollar, housin and markets has been lost. The policies that protected the dollar and guarantee of our commerce has been destroyed. I believe we are going back to the basis and I see high demand on commodities and real raw assets again.
January 30th, 2010 at 10:15 am
interesting
interesting
January 30th, 2010 at 10:15 am
Yes, however they …
Yes, however they prefer to have gold than paper. Another thing, they don’t want to give it away to cheap. The pressure is that other countries are buying the USA gold in a very low price. They are winning and the central bank is losing.
January 31st, 2010 at 6:49 am
Good information, thanks for the post.
February 17th, 2010 at 10:18 am
I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Alisha
http://pay-dayadvance.net