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    So looking at the charts gold is taking one hell of a nose dive recently, my question to anyone who is remotely aware of the subject is how long do you think the bear market on this will last before it returns to a bull one? Id rather not be one of the unfortunate people who buys thinking that the market has hit its plateau before its meant to rise when infact it takes a nose dive off of a cliff...
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    I think gold is still ludicrously overpriced by any objective criteria. The gold bubble was an irrational response to fear in the markets. Investors were scared of equities and bonds so they invested in gold, regardless of the price. People have begun to accept that the bull-market of the 2000s is over and "fear indexes" have dropped back to normal levels. Personally I see gold falling not rising.

    What Warren Buffet said:

    I will say this about gold, if you took all of the gold in the world it would roughly make a cube 67 feet on a side. So if you took all the gold in the world, we could have a cube that went down there 67 feet high and that would be the whole thing. Now for that same cube of gold it would be worth at today’s market prices about $7 trillion. That’s probably about a third of the value of all the stocks in the United States.

    So you could have a choice of owning a third of all the stocks in the United States or you could have a choice of owning that little block of gold, which can’t do anything but kind of shine there and make you feel like Midas or Croesus or something of the sort.

    Now, for $7 trillion, there are roughly a billion of farm— acres of farmland in the United States. They’re valued at about $2 1/2 trillion. It’s about half the continental United States, this farmland. You could have all the farmland in the United States, you could have about seven ExxonMobiles, and you could have $1 trillion of walking around money.
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    Agree with the above (soz couldn't rep you again.

    Lets put it this way, the last major gold bear market continued for 18 years... then went on a 12 year bull market.

    I'm not a fan of the stuff, no fundamentals and negative yield are not things I'd usually seek out.
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    First, I would say that no-one knows, the price of gold is driven by investment demand and the recent decline has been driven, one would guess, by an increase in the relative attractiveness of other investments (perhaps an more optimistic opinions on economic growth).

    Gold didn't behave this way in the past. Equities and bonds went up at the same time as gold. The reason was monetary policy; the aim of which is to increase inflation, decrease the value of cash, and increase asset prices. As a result, the demand for gold was driven by increased inflation expectations (a stated aim of QE everywhere) rather than fear.

    The only way to reconcile the current movement is if people are starting to think that QE might end which seems unlikely or it was really a case of a technical bubble. However, it still never makes sense to say that gold is "overpriced" as it is driven completely by sentiment...you can't value something which has no value...that is the point. Gold is worth whatever people pay, and it will increase in price when the value of what your selling goes down (i.e. currency).

    A lot of smart people own gold, a lot of dumb people own gold...but the key point is still QE. It always makes more sense to own equities but this isn't a choice for everyone (Buffett be damned, and despite my username)...given that the most threatening days of QE are past (although not everywhere), gold doesn't make as much sense anymore. It makes more sense if your selling £ than $ but still...not great. It is worth remembering that the £ has lost a huge amounts of value since '08 (although the Euro blowup helped things considerably) so gold was a very smart choice but other currencies will probably hold value better in the future. Just my 2 pence.
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    Thank you for the answers, so in essence it would be unwise to load up on gold in the short term whilst everyone is bearish on it and hope to turn a profit if or when peoples sentiment returns to bullish?
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    (Original post by webuffett)
    First, I would say that no-one knows, the price of gold is driven by investment demand and the recent decline has been driven, one would guess, by an increase in the relative attractiveness of other investments (perhaps an more optimistic opinions on economic growth).

    Gold didn't behave this way in the past. Equities and bonds went up at the same time as gold. The reason was monetary policy; the aim of which is to increase inflation, decrease the value of cash, and increase asset prices. As a result, the demand for gold was driven by increased inflation expectations (a stated aim of QE everywhere) rather than fear.

    The only way to reconcile the current movement is if people are starting to think that QE might end which seems unlikely or it was really a case of a technical bubble. However, it still never makes sense to say that gold is "overpriced" as it is driven completely by sentiment...you can't value something which has no value...that is the point. Gold is worth whatever people pay, and it will increase in price when the value of what your selling goes down (i.e. currency).

    A lot of smart people own gold, a lot of dumb people own gold...but the key point is still QE. It always makes more sense to own equities but this isn't a choice for everyone (Buffett be damned, and despite my username)...given that the most threatening days of QE are past (although not everywhere), gold doesn't make as much sense anymore. It makes more sense if your selling £ than $ but still...not great. It is worth remembering that the £ has lost a huge amounts of value since '08 (although the Euro blowup helped things considerably) so gold was a very smart choice but other currencies will probably hold value better in the future. Just my 2 pence.
    This is a bit of a mess.

    Bonds and equities traditionally move in opposite directions, for the reason you outline, as cash (bonds) become more valuable people are getting out of risky equities.

    Bonds have fallen as the risk perception of equities has reduced, so gold has fallen with bonds.
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    I'd be avoiding gold personally.

    The US picture looks better, the EU picture has (Cyprus aside) seen an improvement and so whilst risk is still present it's not to the same degree of 08-11. If i knew what financial product to use i'd be half tempted to suggest Gold under 1350 by the end of 2014.
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    My knowledge of commodities is shaky, but I've run a mock investment portfolio for 2 months now and im up 15%. Personally I've not found the stock market to be too bad. (NASDAQ)
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    (Original post by cl_steele)
    Thank you for the answers, so in essence it would be unwise to load up on gold in the short term whilst everyone is bearish on it and hope to turn a profit if or when peoples sentiment returns to bullish?
    I think so. Generally it is good to invest when everyone is scared, and bad to invest when everyone else is greedy.

    Also remember to assess the investment by objective criteria - mass market sentiment is usually wrong but sometimes it is right. I guess it is very difficult to assess gold objectively, but personally I think it has a long way to fall before it is sensibly priced compared to other assets.
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    (Original post by cl_steele)
    So looking at the charts gold is taking one hell of a nose dive recently, my question to anyone who is remotely aware of the subject is how long do you think the bear market on this will last before it returns to a bull one? Id rather not be one of the unfortunate people who buys thinking that the market has hit its plateau before its meant to rise when in-fact it takes a nose dive off of a cliff...
    Gold hit it's two year low today, people have been selling off for a while (I know in the ME people stopped before others in the West did). I personally feel that it can go lower and it most likely will go lower, there is a global slowdown coming once more, China is showing less than impressive numbers and will continue to do so until they rebalance their economy for a domestic market, Russia are lowering their projections, the US had less than stellar job numbers recently and lest we forget the failure that is Eurozone, yes there are improvements but the Eurozone has a long way to go and cannot sort itself out by itself, needs international growth which looks increasingly unlikely.

    I personally side with people that think gold will hit sub-$1,000 ($700-900, $700 is pushing it though I think, $800-$900 more likely), in my opinion now is not the time to touch gold, it is up to you at the end of the day but if I were you, I wouldn't.
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    Yesterday gold had its biggest one-day drop for 33 years, according to Bloomberg.

    I feel this might be a short-term over reaction, so I can see some recovery in the short-term. Long-term I think gold is massively overvalued, it is unlikely to experience sudden drops but I think its real value adjusted for inflation will drop over time. Just my opinion obviously.
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    I think that owning gold is a smart idea, as well as owning other precious metals as an investment. Now that the price is dropped would be a good time to buy real, physical gold

    However, If I had lots of money to invest, I would invest it in some fertile farmland far away from big cities. After all, they aren't making any more of it. After that, I would invest in long term stored food, as well as traditional farming implements and the skills required to use them.

    Any money I had left over would go into silver / gold.
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    (Original post by cl_steele)
    So looking at the charts gold is taking one hell of a nose dive recently, my question to anyone who is remotely aware of the subject is how long do you think the bear market on this will last before it returns to a bull one? Id rather not be one of the unfortunate people who buys thinking that the market has hit its plateau before its meant to rise when infact it takes a nose dive off of a cliff...
    I'm going for a few years, until the next stoking of the derivative-driven madness starts to bite. Give it 4 years. :rolleyes:
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    (Original post by Tibbs735)
    I think that owning gold is a smart idea, as well as owning other precious metals as an investment. Now that the price is dropped would be a good time to buy real, physical gold

    However, If I had lots of money to invest, I would invest it in some fertile farmland far away from big cities. After all, they aren't making any more of it. After that, I would invest in long term stored food, as well as traditional farming implements and the skills required to use them.

    Any money I had left over would go into silver / gold.
    All good investments but land on the edge of a city is probably more valuable as developers will want it.
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    (Original post by cl_steele)
    So looking at the charts gold is taking one hell of a nose dive recently, my question to anyone who is remotely aware of the subject is how long do you think the bear market on this will last before it returns to a bull one? Id rather not be one of the unfortunate people who buys thinking that the market has hit its plateau before its meant to rise when infact it takes a nose dive off of a cliff...
    Where you thinking of buying from?
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    (Original post by Rakas21)
    All good investments but land on the edge of a city is probably more valuable as developers will want it.
    This is indeed true, I know a couple of property developers down in the South and they are trying to get their hands on as much land as they can near the cities and big towns in order to build, they haven't paid much attention to the more rural areas although saying that I know of one that builds luxury houses out in the middle of nowhere so he may be lucky
    (Original post by aranexus)
    Where you thinking of buying from?
    You know any good broker will be able to buy you commodities, right? even the online brokers can sort it for you however I would not buy now, gold still has a fair bit to fall.
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    When I was saying that fertile farmland was valuable, I wasn't talking about resale value. I was talking about how the ability to grow and raise food will always be valuable, and is an investment you can hand down to your children. If other assets lost their value due to hyperinflation or some other event, your land will still be useful because of what it is.
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    (Original post by Fullofsurprises)
    I'm going for a few years, until the next stoking of the derivative-driven madness starts to bite. Give it 4 years. :rolleyes:
    It isn't madness.
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    If you have money lying around don't buy gold ( obviously). Trade elsewhere and wait until the crash ends, people usually panic and the price will be undervalued, so you can correct this and make some money when it bumps back up for a short while, don't be risky, don't buy unless you are 90% sure the crash has ended.
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    You can do a fundamental analysis on what the price should be if the world ever decides to return to the gold standard. If you take the M2 money supply of around £1.3 trillion and divide it by the number of uk gold reserves in ounces (about 10,945,500 oz) you get £122,500/oz. So if the UK ever switched back to a currency 100% backed by gold that is the sort of price you'd be looking at provided of course that gold reserves aren't increased or more money isn't printed. If you do the same for the US you get around $7000/oz which is where a lot of these predictions come from.
 
 
 
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