We are now bombarded with ‘sell your gold’ advertising. Bung your bling in an envelope and stick it in the letter box to us and we’ll send you cash they proclaim.
So while people who are strapped for cash sell their gold there are others desperate to buy the stuff. It now stands at just under $1,100 an ounce. It had previously been at a record high of $1,225 an ounce last month and 40% higher than a year earlier.
Gold in some quarters is seen as an inflation hedge, a sort of wealth preserver and starts to look attractive when other investments such as equities and government debt begin to look shaky. Especially if there are fears of a large rise in inflation. According to the World Gold Council, the relative ‘buying power, of gold is at a peak since about the year 1560 having only been beaten in the 1970s.
At the annual meeting of the World Economic Forum in Davos, Switzerland, (usually just called ‘Davos’) the subject of bubbles arose. When asked about asset bubbles Soros replied “The ultimate asset bubble is Gold.” This has been interpreted in some quarters as a declaration that it is time to get out of gold. But it could just as easily have been an observation on the nature and usefulness of gold compared to the price it always commands.
George Soros went on to say that reducing or stopping stimulus packages too early may threaten to send the world in to the second phase of a double dip recession. He was comfortable with the current levels of national debts and said there was probably lots of room for more in developed countries. This will come as some comfort to the UK Labour party, which plans to go to the country in the next general election on the pledge of maintaining support for as long as it is needed.
Post Gold For Cash
He also seemed comfortable with UK and US debts too! But I personally don't like the thought of being enslaved to debt for decades to come.
Soros works for the "**** Guy". Do the opposite and you will be fine.
*COMMENT CENSORED DUE TO WHAT COULD BE CONSTRUED AS RACIST INFLECTIONS*
… of course “The ultimate asset bubble is Gold.†It is the ultimate wealth preserver. It's still there when all colorful paper money has long gone.
This being said by somebody belonging to the circle of "Bilderberger", like Trichet, Barosso, Strauss-Kahn, Brodi, ….. Trying to put the world on chains!
I think what Soros says makes alot of sense. We have seen gold futures contract volumes increase massively. Now with the volatility in the price the next thing we are going to see is the brokers changing the margin requirements. here is where the bubble is ,the futures market. current margin allow speculators to gear up 20X. Since 2009 gold price have surged 25% while jewellery demand, accounts for 70% of golds real demand, in Q3 2009 fell 30% YoY.
The bidding for physical gold is about to begin. Many investors have one hand under the table offering to sell paper gold, while the other hand is above the table searching to buy the real stuff. When the real stuff is all bought, and it is realized that there is still forty times more paper seeking to make the conversion…… well…….. we do have a situation. First come… fist served….. very well.
Any bets that Soros is a buyer of physical? I see a forked tongue.
Mr. Soros is very astute, it is difficult to bet against him. Having said that, the industry (Gold and Silver miners) may well become the new banks and strategic lenders of the future. Whether physical gold and silver are in a bubble or not time will provide kinder to those who possess it than those that sell it for paper.
The speculation of gold and silver in instrument form, derivatives,ETF's that can not be validated as to whether they are being used for leverage or not. Remember, when Mutual funds would quietly leak the results to friends and institutions, for those last minute trades at the expense of the unknowing consumer. These are the things of bubbles. Working outside regulations is also a bubble that is likely to burst.
If a person looks at the second chapter of the book of Genesis, in the Bible, one finds the first mention of gold. It has carried intrinsic value through out those centuries and will continue to be of future value, whether a bubble or not.
If as the article states gold was at its highest, in buying power, in the 1970s and gold is now about 3 hundred dollars higher in price then the dollar has lost about 40% of its buying power since then. To put it another way inflation has gone up considerably since the late seventies. !964 mustang sold for 2460.00 and a new one is 30+ Gs!
The real question that needs answering is who benefits from inflation? Certainly the average working stiff doesn't, he pays the "bill" for inflation. Factually big bankers are the only real benificiaries of inflation. George Soros is one of these "big bankers". He should be satisfied with the debt level as he is one of those collecting the interest on the debt.
BUT more appropriately he is one of the people that find a collapse like this a buying opportunity. These kinds of collapses are created. By rapidly and broadly expanding credit past the point of any economy being able to absorb AND repay the credit. Thus smaller banks fold as their loans are not repaid.Chase bought Wamu and I am certain they did not pay retail. He who receives the money from the government FIRST benefits most from the credit expansion. The last "person" pays the bill.
Bakns, big insurance companies and finally large corporations were given mountains of cash. GM execs were given caps to their salaries. Were bank execs treated the same. NFW! If you are not familiar with the abreviation No F&&^(*& Way! Smaller banks are still being taken over as their loans default and asset values fall. Huge credit bubbles are created by government edict. Bush and his friends created alot of paper thin dollars. Obama is doing in a year what took Bush 4 years. Wonder what act 2 will be??? What will the next crash look like.
My only real objection to all this BS is that these scenes usually end in war. The bigger the crash the bigger the war usually! Who will benefit from that?
we are seeing demand destruction is gold!
A bubble in, say, shares, stocks or commodities happens when people believe it will "go up and up" (and is, as a rule, as with housing recently and "tech" stocks at the beginning of the millenium, again mainly driven by money inflation). Gold in contrast is a hedge against inflation and against looming sovereign defaults. Inflation by definition is the increase in money supply. There's no doubt that this has happened several fold in only two years. So there is inflation. Hence there is no gold bubble, as gold has not appreciated by a tenth even of what the monetary base has expanded!