Re: [Technical-Investor] GOLD in a Bubble??

For years I have seen the chart of a market in terms of inflation.....I really think that today Brazil, Russia, India and many economies would show very poor net growth in real money terms or in terms of the growth in the index when subtracted for real inflation (not just wholesale inflation, since most consumers do not pay wholesale, they pay retail).  A very poor graphical picture of India's inflation that I found for various categories is as follows.  What I want to show is US inflation has been traditionally in the 1% to 4% range, with an average of approx 3% (going by memory of what I have seen/felt as a consumer).  Therefore, Dow in terms of inflation will be pretty decent.  Dow in terms of Dollar will show a depreciation, but so will many many many other currencies.  As I said, dollar is a cause for concern, and big inflation is coming, but ANY market when ratioed against Gold today will look 'dull'.  Unfortunately, you and I do not have all the data to plot some cool charts, but if we did have Sensex, Gold, Inflation, Dow, Dollar, Rupee, Yen, Nikkie, Bovespa and others that we compare, it will show some really surprising results. 

I am not debating whether to get out of Dow or Dollar, since I am, but I am definitely saying that 'doom is not around the corner', just a 'correction is around the corner' since the 'system is still being pumped and the optimists and people with seemingly deep pockets have not given up'.  With the correlation between US and Indian markets (coupled), we will see the correction worldwide as Dow corrects over the next 6 months, and hence cashing out of both markets (not saying go to 100% cash either) is a good idea.  But, it is NOT a panic sell and run to FDs either!  


Sniper Trader wrote:

 

The key thing you are missing here is - you are looking at Dow in nominal terms. You have to look at dow in Real terms...inflation adjusted and adjusted to the USD index. I dont have the chart with me for the same but it has to be ugly.

What i do have is dow priced in gold. Check it out and form your own views.

Hint - The process is only going to accelerate from here on.

On Fri, Nov 13, 2009 at 5:44 AM, KKP_Investor <kkpatel1924@gmail.com> wrote:

There are a lot of people freaking out about the dollar going down.....We have had lower lows than today last year!!!!!!!!   What happened?   Did the US come crashing down to "0".  No.   We have corrected to this level, and also done a massive reversal on it.  Granted, fundamentals are weaker than last year so we might break down the lower support (see attached), but we are jamming a lot of logic into the downward move of 2009, and forgetting that we have been here before for the DXY. 

Again, I am not supporting the fact that I should move my US$ out into another currency, but am I going to be able to move all of it?  Do I need to move all of it?  The verdict is not out that this is a 'final doomsday' event (2012 is still years away, and that too, it is only a movie!).  

So, if someone is thinking that DXY touching the previous low is a 'crash in the $', then my definition of crash is different than yours.  If you think Dow going back down to 8000-9000 is a crash, then my definition of crash is different than yours, or even if the Sensex goes to 12K is a crash, then again, it is different than yours. 

So, hang in there, and make adjustments to the portfolio as the market tide changes, but do not 'panic' since that time has not come yet.  Going 100% of cash or 100% to short, or even 200% to short is not here yet. 

We have had this debate before, and by this time many said, US will end, or $ will crash to the ground, or markets will get back to 6000-8000 (either US or Sensex), and none of it has happened. 

My Prediction> Markets will do a very efficient and normal correction over the next six months taking it just below the support levels identified by many (too many TAs out there), and then bounce back as the Mar'2010 budget rumors come out, and Obama's next steps are declared.  If the unemployment in the US continues to climb in the 2 digits that it has just shown beyond 12%-14% (official US number), then I would be concerned about Dow going below 8000, but I do not see that happening, since the US companies are beaten down, running very very lean, and at the point where humans cannot keep up even with the insertion of Collaboration / Mobility / Work-any-where.  Gold should correct along with the corrective move in the $ by June'2010, and that will give lots of people to jump into A$ and gold/silver. 

Hope this helps. 

KKP






scot scot wrote:

 

few notes

dollar is in real trobule as countries are moving out of dollar by buying up differnet commodoties. recently india bought gold, china has been diversifing by other commodities. also recently legandary jim sinclair has mentioned that china had only 400 billion dollars remaining as opposed to general perception of 2 trillion dollar. word is still not out there. the whole hope of dollar rally is based upon the argument that china will not like to dollar going down so much. but in reality they have already diversified out of us dollar. jim sinclair is the not the one to be ignored and people with investing interest should know about his reputation. he is aiming that dollor will tocuh down into lower-mid 60's.

 

as i said once before that while talking here about gold. that people will one day woke up embrace their misery. it seems that it is already cooking. we could violent rally upward in gold and violent rally downward in USD anytime soon now. comex going bust is still not out of question and price of gold going upward manicly is most probable now as more and more general public is getting to know about dollar.

 

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From: Sniper Trader <snipertrader@gmail.com>
To: Technical-Investor@yahoogroups.com
Sent: Thu, November 12, 2009 1:32:20 PM
Subject: Re: [Technical-Investor] GOLD in a Bubble??

 

How Can You Tell When Gold Is In a Bubble?

When the junior miners start showing these kinds of returns, you might be in a bubble.

We're nowhere near that point yet.

Gold is not in a bubble.  If you actually took the time to review the charts and study the fundamentals, you would understand that the price of gold is acting exactly as it should.  And if you in fact do take time to study the charts, notice that gold has been rising in a slow steady grind, hitting new highs and then plateauing.  You have bubble shock, which is understandable after the past several years.  Not everything you observe is a bubble.  Fundamentals matter.  Data matters.  Study it.

On Thu, Nov 12, 2009 at 6:38 PM, BALAJI Jayaraman <bctbalaji@gmail. com> wrote:

Friends,

Since last few days, I am slightly inclined to think, if there's a Big Bubble being created in Precious Metal "Gold". I know not many investors think of the move in gold as a bubble, but that’s really what’s going on...

The US dollar relationship with gold has become questionable… For someone tracking the US Dollex closely would have also felt the same way; the US Dollex was up slightly yesterday, along with gold & silver. Gold seems to be moving in its own fashion the way it wants (read irrational exuberance). ..and it seems to be now moving in sync with US Dollex - Quite Strange !!!!

But every significant move for gold over the last 20-30 years was a bubble-type of move & its currently continuing a long term secular trend since 2002-03...So, is it a bad idea to participate in this Gold bubble?? Not sure... In the words of John M Keynes â€" “ markets can remain irrational longer than you can remain solvent.â€

I am skeptical to participate in Gold rally at current juncture...I am definitely staying away from it for sure until there's clarity...

One thing is for sure, Fed has expressed Dovish comments on rates & the interest rates aren’t going anywhere soon...That can only keep the US Dollex alive for a short while; Cheap money will keep chasing other asset classes.

Anyone with similar thoughts or on the contrary?

Rgds/Balaji

Disclosure: No position in Gold.

--  Plan Your Work and Work Your Plan to Get Ahead in 2009-2012.....  KKP Investor ------------ ------------ Bull Markets are Born on Pessimism,  Bull Markets Grow on Skepticism,  They Mature on Optimism, and  Die on Euphoria - Sir John Templeton ------------------------------------ Bear Markets are Born on Recessionism,  Snowball on Momentum & Technical-Breakdowns,  Mature on Eco-Political-Nightmare Talks, and  Die on World-Is-Coming-To-An-End Euphoria - KKP  -----------------------------------------------  >BUFFET: My rule is to be fearful when others are greedy,and be greedy when  others are fearful. All day you wait for the pitch you like, then when  the fielders are asleep, you step up and hit it. Stay dispassionate and  be patient. First the crowd is boozy on optimism and buying every new  issue in sight. The next moment it is boozy on pessimism, buying gold  bars and predicting another Great Depression. Most people get interested  in stocks when everyone else is jumping in. The time to get interested  is when no one else is interested. You can't buy what is popular and  expect to do well.   ABOVE ALL: Whatever God Does, Accept that as Good; Leave Behind ALL Other Judgements/Justifications. ----------------------------------------------------------------------------------------------------     Disclaimer> Do you homework for your ownself and then invest.  My ideas are not advice.           

--  Plan Your Work and Work Your Plan to Get Ahead in 2009-2012.....  KKP Investor ------------ ------------ Bull Markets are Born on Pessimism,  Bull Markets Grow on Skepticism,  They Mature on Optimism, and  Die on Euphoria - Sir John Templeton ------------------------------------ Bear Markets are Born on Recessionism,  Snowball on Momentum & Technical-Breakdowns,  Mature on Eco-Political-Nightmare Talks, and  Die on World-Is-Coming-To-An-End Euphoria - KKP  -----------------------------------------------  >BUFFET: My rule is to be fearful when others are greedy,and be greedy when  others are fearful. All day you wait for the pitch you like, then when  the fielders are asleep, you step up and hit it. Stay dispassionate and  be patient. First the crowd is boozy on optimism and buying every new  issue in sight. The next moment it is boozy on pessimism, buying gold  bars and predicting another Great Depression. Most people get interested  in stocks when everyone else is jumping in. The time to get interested  is when no one else is interested. You can't buy what is popular and  expect to do well.   ABOVE ALL: Whatever God Does, Accept that as Good; Leave Behind ALL Other Judgements/Justifications. ----------------------------------------------------------------------------------------------------     Disclaimer> Do you homework for your ownself and then invest.  My ideas are not advice.