Heading into one of the largest asset bubbles of recent centuries

SilverPete said:
willrocks said:
Everything's in a bubble except the metals!!!
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Focusing on gold, one reason could be that large investors consider gold not so much as an investment asset but as a zero-yield store of value. And it's all about yield.

Additionally, it has been claimed that the gold price is negatively correlated with investor confidence in future economic performance and political/social stability. Overall, investor confidence is very high at the moment which diverts money out of gold and into stocks, real estate, etc.
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Precisely Gunga Din!
 
Old Codger said:
#8,

I forgot one small "bubble", and that was Poseidon Nickel. Went from a couple of bucks to $280 in a matter on months, if not less.

I had a workmate that had recently paid off his house. Re-mortgaged it and put the lot on at the very top. Cost him his marriage.

OC
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I remember it well. Uncle got in at around 5 on a tip and sold at around 80 from memory. Then had the nerve to be grumpy when it went mad!

Hope it doesn't run in the family lol
 
"around 5 on a tip and sold at around 80 from memory"

Reminds me of the "Peoples Bank".

ONYA Paul!



OC
 
A student from my school, bought Poseidon at $0.04 and sold at $0.06 and thought he did well.

Then the boom hit a few months later...... He was not a happy chappy!
 
SilverPete said:
willrocks said:
Everything's in a bubble except the metals!!!
Click to expand...
Focusing on gold, one reason could be that large investors consider gold not so much as an investment asset but as a zero-yield store of value. And it's all about yield.

Additionally, it has been claimed that the gold price is negatively correlated with investor confidence in future economic performance and political/social stability. Overall, investor confidence is very high at the moment which diverts money out of gold and into stocks, real estate, etc.
Click to expand...

I never got that. What's the point of having a zero-yield store of value? Why not just keep cash?

Moreover, gold (as any other thing) varies in value. I guess it was nice to tell that little lie until 2011 ("oh, it's just a store of value... that is accidentally rising sharply") but now how many of them still claim to use it as such?

Regarding the investor's confidence, how do you know it is very high at the moment? I'm not sure about that. Stocks have been rising because of QE and gold has been falling because of ETF price manipulation and eventually speculation withdrawal. This is what I find most likely to be the truth although I can't be sure. Hence I'm curious to know your perspective.
 
Phransisku said:
...
Regarding the investor's confidence, how do you know it is very high at the moment? I'm not sure about that. Stocks have been rising because of QE and gold has been falling because of ETF price manipulation and eventually speculation withdrawal. This is what I find most likely to be the truth although I can't be sure. Hence I'm curious to know your perspective.
Click to expand...

You could be right. The QE impact on asset prices is one of the key points in the original post and, as mentioned below it influences investor confidence: "a willingness on the part of monetary authorities to maintain liquidity has been positive for risk appetite"

Providing a precise, objective measure of investor confidence is tricky. Here's State Street's attempt at a confidence index:

The Investor Confidence Index ... measures investor confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.
...
It is believed that this approach is more accurate than data collected from surveys of investors and money managers. Using modern portfolio theory to analyze actual portfolios of investors is a more direct approach to analyzing confidence in the financial markets. As investors tend towards riskier assets in their portfolios, it can be assumed that confidence is increasing.
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Here's the historical data up to June 2014: http://statestreetglobalmarkets.com/research/pdf/historicaldata.pdf

The press release on the June 2014 update states:

The Global ICI increased to 119.5 in June, up 0.9 points from May's revised reading of 118.6. Investors in both North America and Europe were more upbeat, with the North American ICI rising 2.5 points to 116.4, and the European ICI
rising by 2.6 points to reach 113.6. Asian investors, however, displayed more pessimism, and the Asian ICI retreated by 7.9 points to finish at 96.5

"Developed economies have entered summer with strong momentum, and this coupled with a willingness on the part of monetary authorities to maintain liquidity has been positive for risk appetite," said O'Connell. "However, investor sentiment is below its February high, and remains vulnerable to signs of deflation in developed markets, and structural slowdown in emerging markets."

"Asian investor confidence saw its second consecutive meaningful decline, leaving it some 18.5 points below its March high," added Mike Metcalfe, senior vice president and head of multi-asset strategy at State Street Global Markets. "The sensitivity in the region to Chinese growth prospects and policy remains pronounced. The recent improvement in indices of leading indicators, together with the quasi-easing brought about by the widening of the yuan's trading band, may provide some support to risk sentiment going forward."
http://www.statestreetglobalmarkets.com/research/pdf/pr.pdf
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Copied from: http://www.statestreetglobalmarkets.com/research/investorconfidenceindex/index.html
 
Nothing wrong with stacking some cash, but it will never appreciate against itself, whereas PMs can appreciate. That's why we stack, as a hedge against inflation, store of value, economic insurance, savings.
 
SilverPete said:
Phransisku said:
...
Regarding the investor's confidence, how do you know it is very high at the moment? I'm not sure about that. Stocks have been rising because of QE and gold has been falling because of ETF price manipulation and eventually speculation withdrawal. This is what I find most likely to be the truth although I can't be sure. Hence I'm curious to know your perspective.
Click to expand...

You could be right. The QE impact on asset prices is one of the key points in the original post and, as mentioned below it influences investor confidence: "a willingness on the part of monetary authorities to maintain liquidity has been positive for risk appetite"

Providing a precise, objective measure of investor confidence is tricky. Here's State Street's attempt at a confidence index:

Here's the historical data up to June 2014: http://statestreetglobalmarkets.com/research/pdf/historicaldata.pdf

The press release on the June 2014 update states:

Copied from: http://www.statestreetglobalmarkets.com/research/investorconfidenceindex/index.html
Click to expand...

That data is very interesting, thanks for sharing! The average appears to be below 100 since the crisis of 2008 and only this year we have been having consistently positive results. However, as already mentioned by me and you, QE is doing the trick (I have no idea of how it would be if there wasn't any of it).

Moreover, that kind of data can only capture the investor that deals with securities and index funds. Normal citizens that put their money on a savings account are out of the analysis (and I assure you people have been starting to lose confidence on banks but they are too ignorant to take any action yet). I also believe PM stackers have been emerging but the ETF fraud disguises that phenomenon. For example, looking at how low the price of silver is compared to the 2011's peak, one may wonder about where all that silver (available for sale and that made the price to drop) is.

Therefore, I think that your initial statement ("Overall, investor confidence is very high at the moment which diverts money out of gold and into stocks, real estate, etc.") is a big challenge for you to stand for and I would like to know your reasons and arguments to come to such conclusion.
 
sammysilver said:
Nothing wrong with stacking some cash, but it will never appreciate against itself, whereas PMs can appreciate. That's why we stack, as a hedge against inflation, store of value, economic insurance, savings.
Click to expand...

Then cash is a hedge against deflation. And when PMs are down, one can say cash is appreciating against itself.

I still don't understand why security investors (who don't necessarily believe on the currency collapse) use gold as a zero-yield store of value.
 
Phransisku said:
sammysilver said:
Nothing wrong with stacking some cash, but it will never appreciate against itself, whereas PMs can appreciate. That's why we stack, as a hedge against inflation, store of value, economic insurance, savings.
Click to expand...

Then cash is a hedge against deflation. And when PMs are down, one can say cash is appreciating against itself.

I still don't understand why security investors (who don't necessarily believe on the currency collapse) use gold as a zero-yield store of value.
Click to expand...

Because at the very end of the trail gold is universally accepted, fungible and worth a loaf of bread if there's not just one left - and often then as well.

Also because we like to think we're outriders with a true point of view.

Which we are.

:D
 
JulieW said:
Phransisku said:
sammysilver said:
Nothing wrong with stacking some cash, but it will never appreciate against itself, whereas PMs can appreciate. That's why we stack, as a hedge against inflation, store of value, economic insurance, savings.
Click to expand...

Then cash is a hedge against deflation. And when PMs are down, one can say cash is appreciating against itself.

I still don't understand why security investors (who don't necessarily believe on the currency collapse) use gold as a zero-yield store of value.
Click to expand...

Because at the very end of the trail gold is universally accepted, fungible and worth a loaf of bread if there's not just one left - and often then as well.

Also because we like to think we're outriders with a true point of view.

Which we are.

:D
Click to expand...

That is a different point already. We're talking about the investor that uses gold as a financial instrument to cushion his/her portfolio.
 
SS,

I keep enough cash to go on one last BIG shopping trip to Woolies, and pay any due bills immediately.

OC
 
Old Codger said:
SS,

I keep enough cash to go on one last BIG shopping trip to Woolies, and pay any due bills immediately.

OC
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Agree. My rule of thumb, as I live in an apartment, is 2 months cash, 2 months food & water, an always full tank of petrol, some silver, and a happy disposition.
 
SS,

I have stopped worrying too much about water, apart from a full bath and laundry trough.

I cannot imagine any major city not having enough power generation to run the pumps, total chaos would follow if the water does not flow. The ADF would have enough I am sure.

If I was forced to have silver in ONE only form it would be ASEs - LOTS!

As for food, I am a total pessimist, and acting accordingly.

JMO

OC
 
The Bubble will imploded when this Ukraine, Russian War starts and there is a run for the exit and the bank runs may begin.
 
People do not usually pick a fight with a bloke that is certain to knock his head off.

Or where the fight will go 15 rounds and end up with both as a bloody mess.

I will go right out on a limb and say that there will be NO major war in Ukraine, NO World War 3, NO US /China War, NO NATO move east.

JMO



OC
 
Old Codger said:
SS,

I have stopped worrying too much about water, apart from a full bath and laundry trough.

I cannot imagine any major city not having enough power generation to run the pumps, total chaos would follow if the water does not flow. The ADF would have enough I am sure.

If I was forced to have silver in ONE only form it would be ASEs - LOTS!

As for food, I am a total pessimist, and acting accordingly.

JMO

OC
Click to expand...

Ha HAhAHHAHAHHAHHAHAHHAHA. NO
 
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