Shorting the US dollar

[imported_bingobazza]

dont buy Euros - the constitution has just failed in its bid to be ratified by teh member states - Euros will probably suffer a similar fate to the dollar.

As for trading currencies, the pros wait until the trend has started. If you are buying on large leverage, that might be a good idea. But the US is enjoying an interest rate differentail that is likely to get wider in the coming months against many currencies. Dont forget that you have to pick another currency to trade the dollar against. Who is to say that they wont all go down as people realise that fiat currencies ARE worth the paper they are printed on?

If you want safety and security, the inflation linked bonds might be a good idea, but then again, the Fed sets the inflation rate through their manipulation of the CPI. You could actually get delation of a point or two a year
without realising it.

All that glitters is commodities in my book, and the loss of faith in fiat currencies around the world may just set of huge bull run in gold...some argue we are past the first leg already.



Bingo

[Bet_to_Nguyen]

Seems like a good time to buy gold would have been around 2000 when it was trading at a very low price relative to its historical trading value. Considering where gold is at now, what is the likelihood of it continuing to increase much more? From what I understand it is one of the first moves investors make when inflation is on the horizon, so hasn't it done about all it's gonna do if everyone's already made this move?

[imported_bingobazza]

If you had thought than in the 1970s, you would have missed a 1000% move. Gold is still cheap historically....really cheap. Its about 7 times cheaper than stocks compared to the late 70s. A 60% move in a gold bull market, or most other bull markets, is nothing....just the beginning.

Bingo

[Bet_to_Nguyen]

Gold wasn't in the middle of a huge upwards price swing in the 70s until about 1978. So when the huge upward swing started then it only lasted about 3 years. Morever, the only gold bull markets that I can find appear to be approximately 3 year periods of significant increase followed by it falling at nearly the same pace. Gold has been steadily increasing since 2001. What factors will continue to drive it higher? Maybe this will be a good lesson for me on why historical trends aren't always reliable for making investment decisions.

[imported_bingobazza]

I dont really want to hijack this thread, as I think there will be some interesting discussions from it...and inflation and the dollar are very good topics to talk about right now, but it is hard to talk about them without talking about gold as well.

[ QUOTE ]
Gold wasn't in the middle of a huge upwards price swing in the 70s until about 1978. So when the huge upward swing started then it only lasted about 3 years.

[/ QUOTE ]

Im not sure I see your point here....but gold was up about 60% from its '76 lows by Jan 1978. Are you saying that if a bull market happens fast that thats a bad thing? Are you saying that if it collapses fast that thats a bad thing? Think of traders who were long on the way up and short on the way down.

[ QUOTE ]
Gold has been steadily increasing since 2001. What factors will continue to drive it higher?

[/ QUOTE ]

Consumer Price inflation
Oil price instability
Global political instability
Global recession brough on by bird flu, wars, oil, infaltion or deflation etc.
Loss of faith in dollars and other major currencies
Gold Supply and demand imbalances
Rising global savings rates
Defaltion in asset prices
Slowing central bank gold sales
Continuing consumption increases in Emerging markets like China, Russia and India.
Foreign central banks conversions of declining dollar reserves to hard assets like gold.
Growing popularity of gold ETFs and investor demand for the yellow metal.

Maybe a better question is what can stop gold? Central banks are already selling gold, some argue in an effort to stop its rise...if this is true, it doesnt seem to be working too well right now.

There isnt too much bad news out there for gold right now that I can see...but my ears are always open to hear any that you may have.

Bingo

[Bet_to_Nguyen]

"Im not sure I see your point here....but gold was up about 60% from its '76 lows by Jan 1978. Are you saying that if a bull market happens fast that thats a bad thing? Are you saying that if it collapses fast that thats a bad thing? Think of traders who were long on the way up and short on the way down."

I don't think that gold going up or down fast is necessarily a good or bad thing, what I stated was more or less an observation of the yearly average prices. From the data I have gathered the gold market in the 70s started shooting up rapidly beginning in 1977 and peaking around mid 1980.

I've been meaning to delve deeper into the statistics I've gathered so that I can get a clearer picture. Right now I'm only looking at the yearly averages. (I've been meaning to get into the monthly changes over the past couple of decades but I've been really busy doing engineering work) Either way, from the data I've gathered so far it seems that when the gold starts to take off it can only sustain the huge upswing for about 3-5 years and then falls back down over about the same time period.

As of now, we haven't seen the +100% upswing it had back in the day. Do you think it hasn't really taken off yet and we could see the price hit 700 by 2008?

[imported_bingobazza]

I do think we could see a big price spike...when and how far are anyones guess, but Im in gold...ya know...just in case. To catch up with its REAL upper and lower trading range in the 80s after the last bull run, where it was stuck for almost 20 years, it would need to move to $900 and $580 respectively in inflation adjusted dollars.

I think 20 years of base building is pretty solid.

Bingo