Saturday, May 21, 2011

Gold: The "Ultimate Bubble" v.3


Click to enlarge.

Not a bubble.


Click to enlarge.

Bubble.

This should not be taken as advice to short precious metals. I'm not. I'm just watching from the sidelines.

I can say this though. I have absolutely no desire to buy that precious metal coin. If I was tempted to buy a "hard asset" coin because I was confident that inflation was headed our way, then it would definitely be the base metal one.

See Also:

Gold: "The Ultimate Bubble" v.2
Gold: "The Ultimate Bubble"

Source Data:
USGS: Historical Mineral Statistics
Kitco: Precious Metals
Kitco: Base Metals
BLS: CPI

14 comments:

CP said...

OK, you are right about the paper towels. The ones with half-size sheets end up saving in the end.

Stagflationary Mark said...

Productivity miracle! ;)

Stagflationary Mark said...

Here's a link to the paper towel post for those just tuning in.

Stagflationary Mark said...

I said that the base metal coin is not in a bubble. Over the ultra long-term I think that is probably true. However, that does not mean that it can't be overpriced in the medium-term if the Chinese economic miracle falls apart.

Stagflationary Mark said...

In a related story, Happy Post-Rapture Day! ;)

Perhaps not surprisingly, atheists and other non-believers used the opportunity as a way to mock the religious.

I'm just euphoric that we didn't euthanize our pets. It would have been cruel to leave them behind as we were transported safely off of this "death trap" planet.

Fortunately, we knew we had sinned enough to not be transported. Therefore, our pets (God's creatures) would have someone left behind to feed them.

Mr Slippery said...

Count me in both camps. I am hoarding base metal coins and precious metal coins. My credit union is now ordering $100 nickel boxes for me and brings them out right from the vault. Very convenient for storage.

I think gold is a little overpriced right now, but it should come down a bit after the end of QE2. When QE3 starts, the upward trend should resume. I will surf the bubble until I see signs that the new money system is being put into place. Despite my spirit guide, Soros, having already sold out. You gotta bet big to win big, right?

Mr Slippery said...

BTW, I don't use margin or borrow to buy any precious metals. I have used everage via an ETF to short silver a few times (ZSL), but that was a rare event.

Stagflationary Mark said...

Mr Slippery,

BTW, I don't use margin or borrow to buy any precious metals.

I have never used margin to buy stocks. Unfortunately, too many others did in the late 1990s and I should have factored that in. Fortunately, my nest egg fully recovered by 2004 (and then some).

My house was fully paid off during the housing crash. Unfortunately, too many others borrowed too much. It would not surprise me if my house ultimately reaches the price I paid for it in 1997.

I think the point I am trying to make here is that the market doesn't care if we take on debt or not. Prices are set at the "margins". Sigh.

dearieme said...

Ok, so I won't put all my pension money into Silver. But I will do that with my wife's pension momey - she'll live longer and so have more time to recover if it all goes wrong.

Stagflationary Mark said...

dearieme,

You could buy her some silver jewelry. You could easily get to $50 an ounce in sentimental value alone. I'm serious.

When silver was under $10, I gave my girlfriend a silver necklace ($50). It was later stolen from her at a doctor's office. Hundreds of dollars of sentimental value were lost that day. No joke.

The problem of course is that the sentimental value tends to drop on higher volumes. Give her 1,000 identical necklaces and you'd probably be back down to spot prices. She might even slap you if they appear on the credit card bills. ;)

getyourselfconnected said...

Margin is a killer, never use it myself. Margerine is better anyway!

Stagflationary Mark said...

GYSC,

We have a margarine economy!

I can't believe it's not better!

dearieme said...

You remind me: my wife used to do some silversmithing. I wonder whether we've any bits-and-bobs left somewhere.

Stagflationary Mark said...

dearieme,

Be careful! Beachcombing can be dangerous work, lol.