What is the price of gold when there are no problems?

Discussion in 'Gold' started by reflection, Jan 20, 2011.

  1. reflection

    reflection New Member

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    At first this question seemed simple. So I had a look at the gold chart and saw the peaks and dips and decided that the correct price of gold without the hype and with the problems was roughly the dips. Then I decided to draw ugly lines all over it and colour the various problems differently. I found the chart very interesting. Especially how some lines can be very straight over a number of years. Some of the lines make sense, like the subprime/GFC is ongoing and so it makes sense it would set a solid base. Other I dont understand, why should peaks care about lines? Or is it just an illusion, us finding straight lines in randomness.

    The chart is a mess because I was not intending to show it publicly but it turned out rather interesting...

    [​IMG]
    from: 24hgold.com

    So the dramatic change seemed to start when there were concerns with Iran and nukes. This concern started to wane when the US subprime crisis started. For this reason I can't determine what the gold price would have returned to if the nuclear concern was removed. The subprime/banking/GFC crisis led to large bubbles and falls back to a rather regular baseline. Later the Europe sovereign crisis seemed to add to the price a small amount but not really change the angle of the price increase.

    I would appreciate criticism, I am sure I am making unfounded assumptions somewhere.
     
  2. JulieW

    JulieW Well-Known Member Silver Stacker

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    Have a listen to this:

    http://www.abc.net.au/rn/bigideas/stories/2010/3027363.htm
    (was replayed last night on Radio Natonal).

    and then plot against events from 2001 to now.

    "Loretta Napoleoni traces the link between the finances of the war on terror and the global economic crisis, finding connections from Dubai to London to Las Vegas that politicians and the media have at best ignored. Terrorists, she says, spend their days searching for money because terrorism is a very expensive business. The decisions and the political and ideological lines are decided by a very small group of people, and these are the leaders. All the rest are like soldiers, they do exactly what they're told to do."

    Interesting point made in her talk, that after 9/11 the Homeland Security Act moved money laundering to Europe and Islamic funds away from the prying eyes of the American.

    Estimates were a trillion dollars or more moved to the dirty banks in Europe and the Islamic banks (who incidentally did not feel the GFC because of adherence to Islamic law on Usury - that on which the Western economy thrives.
     
  3. Clawhammer

    Clawhammer Well-Known Member Silver Stacker

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    I'm in no way saying you're wrong... but maybe it could be purely coincidental?
    Didn't the real kick in gold start after 9/11? Others have argued the invasion of Afgahnistan was the cause of gold's spike.

    Population growth, rising affluence, rapidly rising fuel and food prices, poor economic practises, 2005 was around the time people started saying US real estate was in a bubble.

    Rather than just Iran in isolation...it could well be a number of factors all coinciding to send gold higher...but throwing them onto the graph would make it even messier.

    Regardless...the trend is clear. good effort
     
  4. reflection

    reflection New Member

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    The lower left grey graph shows no major price changes before 2006 relative to after 2006. While pre-2006 events may have been big, they pale to the effects of events after 2006.

    I went looking for big news stories on the dates which coincided with these major changes. Whilst other things would have had an effect, some would be short lived (less than a year) or not widely concerning or both.

    I had totally forgotten about the Iranian nukes. But just think if the GFC did not happen we would be instead concerned about Iran and North Korean nukes.

    When we look at news stories day to day we get a distorted picture or what is important. Too much minutiae. It makes sense that Iranian nukes in the Middle East should be a huge global concern, far more than inflating prices.
     
  5. Clawhammer

    Clawhammer Well-Known Member Silver Stacker

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    Fair enough... boy it really shows up that Lehman Bros spike... what a doozy! They really screwed the pooch!

    I like visiting these types of graphs.. they're showing that gold really is underperforming against most other commoditites..meaning it still has to catch up!
    http://money.cnn.com/data/commodities/
     
  6. hawkeye

    hawkeye New Member Silver Stacker

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    I'll have to have a listen to that. I think all these global links to terrorists will surprise a lot of people. They are not fringe groups unconnected to people in the West. It's fascinating stuff. As always, follow the money. Drugs are another one, although a lot of that is known now with Iran-Contra etc...

    Pirates had links to powerful people in centuries past, I see no reason that there wouldn't be similar links to terrorists today. Everything is connected in this world.

    And then there's 911....
     

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