Source: Yahoo Finance

Category: Gold & Precious Metals, Media, Video

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

10 Responses to “Video: The Lessons of Gold’s Collapse”

  1. ch says:

    I agree with most of what you said, but your presentation said over-leverage contributed to the fall of gold prices, yet the COMEX data suggest that the price of gold only really started to collapse in April when the gold derivative leverage turned sharply higher from 20x in April to 93x now (38-year highs).

    http://jessescrossroadscafe.blogspot.com/2014/01/comex-warehouse-registered-gold.html

    Why did an unprecedented rise in gold derivative leverage coincide with an unprecedented drop in gold’s price?

    • catclub says:

      The learning experience for me, in reading all the ‘Diagnosing a Bubble’ posts, has been that bubbles collapse not because prices are high, but because borrowing gets very high. You just made that point again.

  2. Willy2 says:

    I am a gold bug but not a hardcore (Hyper-)inflationista and a “Dollar Collapse” man. The sign of a US collapse in the next is a USD going through the roof. And in spite of all the doom & gloom I know what I should be looking for in the next months. And that WILL be VERY encouraging for gold miners.

    Gold does well in an environment with negative REAL interest rates. During 2013 rates (e.g. $TYX) went higher and the $CRB index went lower, indicating that REAL interest rates went higher and therefore gold had to come down.

    See what happened with the $CRB:$TYX ratio since say early 2010. It’s NOT a perfect match but this ratio follows the price of gold remarkebly well.

  3. johnwsimpson says:

    If you’re speaking to the crowd that hopped into gold stocks and ETFs within the last two years to make a quick buck, I think you’re spot on.

    However…when faced with current domestic monetary policy, the veins of the stock market being injected with cash, moving goal-post announcements from The Fed, “alleged” price-rigging shenanigans from multinational banks, and parabolic demand for physical metal in the Far East, I find it hard to tag those who have invested in PM’s for their historic store-of-value in the face of currency debasement with being suckered by a “failed narrative”. Indeed, rather than a “failed narrative”, these investors would argue that the elite continue to to ham fist additional pages into the final chapter with masking tape and glue.

    If instead of your favorite goldbug proclaiming “I would never sell my gold”, they replied with “I’ll sell my gold when I can be assured the purchasing power of my currency, along with truly free-market prices for my physical metal”, how would you reply?

    Keep up the good work, your writing is always a pleasure to read.
    -John

  4. A says:

    Your article was an excellent read. Highly educational.
    Too bad about ignorance and herd behavior.

    Thanks Barry.

  5. johnwsimpson says:

    If you’re speaking to the crowd that hopped into gold stocks and ETFs within the last two years to make a quick buck, I think you’re spot on.

    However…when faced with current domestic monetary policy, the veins of the stock market being injected with cash, moving goal-post announcements from The Fed, “alleged” price-rigging shenanigans from multinational banks, and parabolic demand for physical metal in the Far East, I find it hard to tag those who have invested in PM’s for their historic store-of-value in the face of currency debasement with being suckered by a “failed narrative”. Indeed, rather than a “failed narrative”, these investors would argue that the elite continue to to ham fist additional pages into the final chapter with masking tape and glue.

    If instead of your favorite goldbug proclaiming “I would never sell my gold”, they replied with “I’ll sell my gold when I can be assured the purchasing power of my currency, along with truly free-market prices for my physical metal”, how would you reply?

    • What you are describing is the Narrative — here is why I own gold. It diesnt matter if its 2 years or 20, its still a story driven investment

      • ElSid says:

        So presumably ANY narrative is “the narrative”? And that’s because gold has gone down. So probably anything you could say to make a case for it would confidently be dismissed as “the narrative”?

        So, let’s go crazy here and say that because gold has gone down, by definition that means there’s probably NO “narrative” in which this entire experiment (the great Abenomics/Yellen/Draghi triumvirate, for instance) goes South because gold, by its price action, has already proven that can’t happen.

  6. Eric Original says:

    The line in the sand was 1530 from the prior summer. The goldbug, permabull, never-changing- narrative crowd’s analysis was that of course that was solid support. Just buy with both hands at 1530 and your children and grandchildren will keep a candle-lit shrine to you on account of how smart you were and the legacy/fortune you left behind.

    The only problem was that much, Much, MUCH bigger money was looking at the same chart and saying “if it doesn’t hold 1530, I’m outta here, and in fact I’ll pile on some shorts”. When April 2013 came along, and 1530 didn’t hold, it was over, and the goldbuggerers went to the woodshed. No candle-lit shrine for you. More like a dartboard with your picture on it. It’s always about fear and greed. Every. Single. Time.

    Question for today: Is 1180 the new 1530?

  7. intlacct says:

    It’s called MVO for a reason. In a portfolio, a small allocation to gold can be mighty handy. Just remember to trim the sails periodically.