Gold/silver strength vs currency weakness
johnnyb
Posts: 60 ✭✭✭
The recent run-up in PMs is remarkable and strong. How much do people think is due to real strength in the PM versus weakness in the currencies (inflation spending, etc). I think it’s both but mainly strength for PMs, but curious to hear other takes. It’s cheap to issue more virtual currency or government debt, but physical metal has real value / cost.
Junk silver is 30x face. Gold went from $50/ounce to $500/ounce over 25-30 years, and is well on track to go from $500 to $5,000 over the subsequent 25-30 years. Some of this is inflation, but some seems likely to be real baseline demand for PMs.
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I completely agree with what you have typed.....although, there is massive political soap opera/theatre at play.. I used to think $5K was a pipe dream but now appears to be an almost certainty....Heck why not $50K???
I got excited thinking about Quadrupling my investment, although my girls certainly did not. 6 eggs from 12 hens today. Thinking about changing my handle to 50%.
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Wooooha! Did someone just say it's officially "TACO™" Tuesday????
gold is simply a reflection of faith in the currency.
Foreign Central Banks Now Own More Gold Than USD
No Way Out: Stimulus and Money Printing Are the Only Path Left
Blitz.... sounds like you been skimping on the chicken feed so you can buy more silver!! the girls are protesting!
These days, the rise in Gold is nothing more than dollar weakness.
Silver too, but Industrial purchasing has also been a huge factor.
Keep stacking as the US dollar keeps nose diving.
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The issuance of debt has the majority latching on like more is better.
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The current regime has bankrupted everything he's ever touched. Not sure why we would expect anything different with the finances of our country. Stable business guru. LuLZ!
I can't and won't ever pay more than $40 for an ounce gutter so I am sure that is not the problem. Besides this time of year, the girls are mostly free ranging so feed costs are at an absolute minimum. More likely they are protesting the stench of what this once great nation is quickly becoming. RGDS!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
Wooooha! Did someone just say it's officially "TACO™" Tuesday????
More likely they are protesting the stench of what this once great nation is quickly becoming. RGDS!
Reported.
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Edit: LOL you are reporting my supposed protesting chickens??? Cancel culture at its most bizarre. THKS for the laughs. RGDS!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
Wooooha! Did someone just say it's officially "TACO™" Tuesday????
Sorry for my delay. I think PMs are just getting started, especially with all of the inflation coming from virtual currencies and debt management.
And I have no hen in this fight, but I had scrambled eggs for breakfast and chicken for dinner. PMs and agriculture have been a safe play since the beginning of time.
From my observation, inflation is definitely a factor, but I think it’s more demand running up the price than anything.
It’s kind of nice to see $40 although it sucks when you’re still buying!
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While a "weak" dollar has been a supportive factor for rising gold and PM prices...it is NOT a direct 1-to-1 relationship. Gold can rise with a falling dollar based on supply and demand factors.
Anybody convinced the dollar is going to hell -- I am NOT one of them -- can buy much better hedges than gold.
We have had free-trading gold for only 50 years in the United States, a period of time DWARFED by fixed prices of $35 and $20.67. So we really don't have lots of data points, especially in an era of floating currencies.
PMs were just getting started everytime a new stacker entered the arena.
No Way Out: Stimulus and Money Printing Are the Only Path Left
There are two completely different measures of a weak dollar: It's purchasing power at home and it's purchasing power abroad. Inflation is the measure of dollar weakness at home. The Dollar Index, a comparison with other major currencies, is a measure of purchasing power abroad. 99.999% of Americans could care less about dollar strength abroad. They care what their hard earned dollar will buy in their hometown. Dollar index is irrelevant to most Americans.
Dollar Index and gold tend to have an inverse relationship.
Inflation and gold tend to have a direct relationship.
Dollar has been going to hell (loss of purchasing power) since the Federal Reserve Bank took control of pulling its strings in 1913. Gold is the least risky of dollar hedges. This is why central banks have been recently stuffing their vaults with gold.
How's this for no "data points" when answering the OP's "Gold/silver strength vs currency weakness" question? Note the sudden change to an inverse relationship in 2008 and then again in 2023. Was the 2023 failure of Silicon Valley Bank, SignatureBank and First Republic the beginning of the next financial crisis that has been temporarily postponed? The continued inverse relationship between gold and our currency might be telling us this is the case.
No Way Out: Stimulus and Money Printing Are the Only Path Left
The change in correlation since 2008 is partially due to the US government CPI report being manipulated to show lower inflation than the real cost or higher prices of goods or assets for both political and economic reasons.
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GM, I'm unaware of any change in CPI calculations at that time. The major change was in the early-1980's when an imputed "cost to rent" was used in the Housing component. Hedonics -- taking into account better products for less $$$ (i.e., PC's and semiconductor chips/smartphones) -- has long been debated but is also well-known.
I wouldn't even call previous changes manipulation. They are well-vetted changes....they go through a multi-year peer review process.....and they are based on facts. If they weren't, the bond market and investors would revolt against the use of the information if it weren't valid. You see these doubts with economic statistics in many of the BRIC countries that some here love....also, Argentina pre-Milei.
The "some" here don't love BRICS+ nor do they love China, they are simply smart enough to foresee the danger/affect that they have and will have on king dollar's role on the international stage. It's already happening unless you are in denial.
Does this mean you feel the hurricane forecasters at the weather channel "love" hurricanes? LOL
No Way Out: Stimulus and Money Printing Are the Only Path Left
I heard the same Doom-and-Gloom stuff regarding Japan in the 1980's.....Germany in the 1990's....China in the 2000's and 2010's. All turned out to be as disastrous as Y2K.
Our financial markets are the most transparent, deepest, biggest on Planet Earth. If the anti-dollar, pro-silver crowd wants to publish their track record going back decades betting against U.S. financial assets, I am all for it.
Gloom and doom. LOL Are those hurricane warnings also gloom and doom?
Unfortunately that has not been enough to keep the currency strong at home. It's decline in purchasing power bears witness to its weakening. Pro-silver doesn't not equal anti-dollar. My desire for a strong dollar (I too am forced to use them) is not enough to prevent its decline. Like others my PMs are the least risky hedge. Unfortunately "Go America" will not save its currency.
No Way Out: Stimulus and Money Printing Are the Only Path Left
Derry, hurricanes show up in size every year. Just the size and quantity is in doubt.
The financial crashes you are predicting, the Black Swan events, are non-existent. They are UNIVESTABLE events like investing based on a coming asteroid crash into Earth.
That is why your gurus have no investment performance worth advertising. I know, I've followed many of them for close to 50 years.
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In case you hadn't noticed - there is already a "revolt" of sorts against the official numbers and against the fiat currency.
I take great exception to your statement that some people here "love" BRICS.
No one has ever stated anything of the sort (except for making the claim against others, as you have done).
Commenting about a world development is not an endorsement of it.
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Since 1971 when removed from a gold link the dollar has seen approximately 4% per year currency debasement vs so-called 2%-3% Fed or government CPI numbers. Call it due to hedonics, housing cost to rent type revisions, or whatever you prefer, to me it is manipulation. I see more inflation in real life than the official numbers. Current stock prices and other assets like housing are examples of inflation well above the CPI%.
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.> @GoldFinger1969 said:
The only thing I have been predicting/preaching on this forum is the slow decline in the dollar's purchasing power at home and it's slow demise on the world stage, even explaining the causes and the reasons. Tell me I have been wrong.
Yet my gurus' result was gold outperforming your gurus' SP500 for the past 25 years. Go figure.
No Way Out: Stimulus and Money Printing Are the Only Path Left
@derryb: That chart doesn't include the past 2 years, which would show an even greater outperformance by gold.
I knew it would happen.
Just imagine when these foreign holdings get back to the levels of the late 70's and early 80's.
Anyone who may be Implying the BRICS, and the dozens of other countries who are fed up with our recent US tariffs, sanctions, and basic bullying, are "fake news" and not meaningful to the discussion of future PM pricing, may have a bias towards the US banks, financial markets, and the Treasury.
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The CPI is most certainly doctored to hide what the real rate of inflation is and it started with Arthur Burns, the Federal Reserve chairman during Nixon's presidency. Burns demanded changes in the construction of the CPI because it exposed the real inflation that he and his Fed cronies insisted was not that high. History, of course, has shown that Burns was full of excrement.
https://www.project-syndicate.org/commentary/fed-sanguine-inflation-view-recalls-arthur-burns-by-stephen-s-roach-2021-05
But it does show the massive underperformance over the last 15.
Knowledge is the enemy of fear
yet gold still outperformed since 2000. LOL
No Way Out: Stimulus and Money Printing Are the Only Path Left
And under performed since 2005 when you joined the forum. Lol
Knowledge is the enemy of fear
The Guru likes to cherry pick his dates. I love me Au but there is no dispute that my stocks have FAR outperformed The Metal of Kings. RGDS!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
Wooooha! Did someone just say it's officially "TACO™" Tuesday????
Also, with the S&P you’d either be getting dividends or dividend reinvestment. With that included the comparison isn’t particularly close. It also sets the starting point at a high point of the S&P before a large decline.
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Maybe that is the setup right now ?
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Certainly possible re: the S&P. In 1999 gold was at a multi-decade low, down more than 50% since 1980. That chart is just the most opportune time period and not factoring that the S&P spins off dividends.
That's how the GuRu's aka metal pumpers/salesmen like to roll. RGDS!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
Wooooha! Did someone just say it's officially "TACO™" Tuesday????
That's how the GuRu's aka metal pumpers/salesmen like to roll. RGDS!
If you really feel that way, why do you hold any gold?
Have you ever considered that the paper pushers of bonds, etfs, and every other dollar-denominated asset want to keep the wool over your eyes while the dollars that those assets are convertible into drop like a rock? Good luck with that.
You denigrate silver and yet you buy the paper version. What's that all about? Do you really think that you can out-maneuver JPM in SLV with your push-button strategy? Good luck with that as well.
Maybe you should be buying 30 year Treasuries from coho. After all, they will provide you with a guaranteed 4.5% return after 30 years. Or maybe you should pile into the time-honored 60/40 portfolio recommended by certified financial planners for the past 45 years.
How about stablecoin? After all, they will be "backed" by US Government Treasuries. What could be better? Do it, man! What's holding you back? Don't you trust the paper pushers at gov.com?
I knew it would happen.
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That is how Mr. SLV pumper/salesman likes to roll.
SLV has a NEGATIVE 0.5% per year "dividend" (fee).
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