Posted by: lll_lll July 16, 2011
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As you go back and re-read by post, I have in no way said that gold does not have intrinsic value. I have merely said that the intrinsic value of gold is very hard to determine in terms of dollars. The key words are: Very hard and in terms of dollars.
So, what is going to happen after debt ceiling is increased? Especially if it succeeds to include the debt reduction methods? I believe the dollar is going to go up? no?
Dollar is going to fall against itself does not have any meaning. What is it going to fall in relation to is the big question. As Einstien has pointed out a decade ago, nothing can exist in isolation. As long as dollar is better investment than anything around it, there will and always be a flight to dollar, it does not matter if dollar is worth a crap, it will still be the best crap around.
No, we do not know how much inflation expectation is baked into the gold but we do not know either how much actual inflation is going to occur. We use the best model we have to predict with the given level of money supply. The importance here is not the specific but the way things are priced in the market.
I will be the first one to agree that we do not know multitudes of things. We make decisions based on incomplete information. Who know what the real level of inflation is going to be? Who knows what the European debt crisis outcome is? Who know if George Soros Or John Paulson is adding to or selling like crazy the gold protfolios they have. As I said, I made my personal decision based on the timing and amount of investment I had. Maybe gold will skyrocket and be around $3,000 dollar a year hence. I have made a decision that I think is rational with the amount of information I have. I you believe this is wrong, you can and should invest more in gold. This is what makes markets function. Good luck investing in Gold!
So, what is going to happen after debt ceiling is increased? Especially if it succeeds to include the debt reduction methods? I believe the dollar is going to go up? no?
Dollar is going to fall against itself does not have any meaning. What is it going to fall in relation to is the big question. As Einstien has pointed out a decade ago, nothing can exist in isolation. As long as dollar is better investment than anything around it, there will and always be a flight to dollar, it does not matter if dollar is worth a crap, it will still be the best crap around.
No, we do not know how much inflation expectation is baked into the gold but we do not know either how much actual inflation is going to occur. We use the best model we have to predict with the given level of money supply. The importance here is not the specific but the way things are priced in the market.
I will be the first one to agree that we do not know multitudes of things. We make decisions based on incomplete information. Who know what the real level of inflation is going to be? Who knows what the European debt crisis outcome is? Who know if George Soros Or John Paulson is adding to or selling like crazy the gold protfolios they have. As I said, I made my personal decision based on the timing and amount of investment I had. Maybe gold will skyrocket and be around $3,000 dollar a year hence. I have made a decision that I think is rational with the amount of information I have. I you believe this is wrong, you can and should invest more in gold. This is what makes markets function. Good luck investing in Gold!