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Why Gold Is No Longer An Effective USD Hedge

derrybderryb Posts: 36,793 ✭✭✭✭✭
in Precious Metals
This oughta get the bees buzzing:

Why Gold Is No Longer An Effective USD Hedge

"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey

Comments

  • percybpercyb Posts: 3,324 ✭✭✭✭
    Funny you should post this article. I was just talking to someone who is sceptical of the advance in gold and silver and thinks it's too late to buy into the PMs. I like to hear the skeptics because it reinforces the idea to me that prices will continue to head higher until we have a blow-off top. I remain bullish.
    "Poets are the unacknowledged legislators of the world." PBShelley
  • OverdateOverdate Posts: 7,007 ✭✭✭✭✭
    If the price of gold and the value of the U.S. dollar are both manipulated, there's no particular reason why they should be correlated in the short run.

    In the long run, however, I expect the dollar to go way down, and gold to go way up. All manipulations fail at some point, and I would rather own the asset whose price is being suppressed than the asset whose price is being propped up.

    My Adolph A. Weinman signature :)

  • BigEBigE Posts: 6,949 ✭✭✭
    The chart shows the opposite, the flight to gold and the dollar occur at the same time in the charts as a sporadic safety hedge, overall the decline in the dollar still shows gold going higher--------BigE
    I'm glad I am a Tree
  • jmski52jmski52 Posts: 22,824 ✭✭✭✭✭
    Martin Armstrong just talked about this relationship being in transition. Gold is transitioning from a dollar hedge into a sovereign debt default hedge. The difference between the two is critical to where gold goes from here. I remain bullish on gold, much to my chagrin. On the other hand, I am trying very hard not to be some big bank's roadkill.
    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • percybpercyb Posts: 3,324 ✭✭✭✭


    << <i> I am trying very hard not to be some big bank's roadkill. >>

    I have a queasy feeling about this same issue.
    "Poets are the unacknowledged legislators of the world." PBShelley
  • 57loaded57loaded Posts: 4,967 ✭✭✭
    it is very possible that we could see gold move below it's 200dma
    but most of us here would not become roadkill if that happened, right?
  • derrybderryb Posts: 36,793 ✭✭✭✭✭


    << <i>it is very possible that we could see gold move below it's 200dma
    but most of us here would not become roadkill if that happened, right? >>


    I'm good on any gold correction that doesn't exceed 50%. With silver I'm safe all the way down to 60%. After that it's "I shoulda sold."

    "Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey

  • yellowkidyellowkid Posts: 5,486 ✭
    If you put all your bankroll on the head of one nag, you better hope he finishes first.image
  • cohodkcohodk Posts: 19,102 ✭✭✭✭✭


    << <i>

    << <i>it is very possible that we could see gold move below it's 200dma
    but most of us here would not become roadkill if that happened, right? >>


    I'm good on any gold correction that doesn't exceed 50%. With silver I'm safe all the way down to 60%. After that it's "I shoulda sold." >>




    What do you mean by "safe"? Im assuming these are the levels at which you would not be "losing money" as this is your cost basis? But wouldnt a 50% drop be the same as losing money?

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • sumrtymsumrtym Posts: 394 ✭✭✭


    << <i>What do you mean by "safe"? Im assuming these are the levels at which you would not be "losing money" as this is your cost basis? But wouldnt a 50% drop be the same as losing money? >>


    No, you haven't made anything to you've sold above what you bought it for, the rest is just a theoretical gain. Those that hang on all the way down saying "I could have got...." trying to catch the top are what we call oinkers, or victims of the little piggy syndrome.
  • fishcookerfishcooker Posts: 3,446 ✭✭
    Does the opposite apply - when an investment declines, you haven't lost if you haven't sold?
  • 57loaded57loaded Posts: 4,967 ✭✭✭
    the article reads about shorting the USD vs going long in gold as a better play but neither is considered an "investment". i guess one can say you invest in a hedge fund, but doing one or the other in the scenario above imo is not investing.

  • OverdateOverdate Posts: 7,007 ✭✭✭✭✭


    << <i>If you put all your bankroll on the head of one nag, you better hope he finishes first.image >>


    Unless you bet him to show. image

    My Adolph A. Weinman signature :)

  • jmski52jmski52 Posts: 22,824 ✭✭✭✭✭
    No, you haven't made anything to you've sold above what you bought it for, the rest is just a theoretical gain.

    Yes, you have an unrealized gain and that gain is just as real whether you account for it, or not. I prefer to keep track of my net position and I am just as willing to sell an asset that shows up on my books as a gain as I am to sell a different asset that shows up on my books as a loss.

    The best reason I can think of to keep track of your gain/loss position on different assets is to minimize your tax liability when it does come time to sell. When you sell a real winner, you should also dig around to find enough of your dog investments to be able to offset your gain with an equal amount of dog losses.

    Then, you end up with more play money, less tax to pay, and fewer dogs to contend with down the road.

    Excel can be a really cool thing.
    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
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