Next Door neighbour - Worst trader ever?

[barjon]

fine but it still has no fundamental value, it's value remains only what some sucker will pay

nothing about it intrinsically makes it an inflation hedge

You could say the same thing about a £50 note It's just a piece of paper after all.

 

[arabianights]

This banging on about history completely misses the point. I have never said that it has not historically been seen as a source of value.... nor have I said it won't be in the future.

That doesn't stop it from being utterly irrational - and things could change, incidentally...

P.S. Jon that's the entire point of fiat currency... and precisely why cash is a terrible investment long term. It's there as a medium of exchange, nothing else.

P.P.S. And that's about the best you can say for gold, incidentally.

 

[Atilla]

This banging on about history completely misses the point. I have never said that it has not historically been seen as a source of value.... nor have I said it won't be in the future.

That doesn't stop it from being utterly irrational - and things could change, incidentally...

P.S. Jon that's the entire point of fiat currency... and precisely why cash is a terrible investment long term. It's there as a medium of exchange, nothing else.

P.P.S. And that's about the best you can say for gold, incidentally.

You missed out;

speculative
used in industrial production
decorative
soft industructable metal
people will kill for it
SAS carry it in their boots as spare change on mission
store of wealth (boring)
you can bury it, be buried with it or in it (make life difficult for the worms )
like polishing pebbles - some people just simply like the stuff

sexy is about the best you can say for it really - especially when ladies wear those gold chains around their ankles. I find that a real turn on. :cheesy:

 

[barjon]

T................ It's there as a medium of exchange, nothing else.

P.P.S. And that's about the best you can say for gold, incidentally...........

Yes, exactly, and gold is one of the truly international mediums of exchange (along with some others - Old Master paintings for example). Doesn't stop it going up and down though!

jon

 

[arabianights]

sure, but those reasons with the exception of the speculative and store of wealth part make it worth about $50

and my point is, the store of wealth is inherently speculative. It has always held in the past, I agree, and a rational inductive case can be made that it will always hold in the future... but there is nothing that makes it have to be so.

(of course it will not hold in the very long term. Either we become an inter stellar species in which case we'll have as much gold as we want... or we die out when the sun starts becoming a red giant and all the gold in the world won't help. so there is that. at least coca cola shares could conceivably appreciate in the former case)

 

[Chartsy]

sure, but those reasons with the exception of the speculative and store of wealth part make it worth about $50

and my point is, the store of wealth is inherently speculative. It has always held in the past, I agree, and a rational inductive case can be made that it will always hold in the future... but there is nothing that makes it have to be so.

(of course it will not hold in the very long term. Either we become an inter stellar species in which case we'll have as much gold as we want... or we die out when the sun starts becoming a red giant and all the gold in the world won't help. so there is that. at least coca cola shares could conceivably appreciate in the former case)

or if beetle juice explodes, which can happen at any time now

 

[cr6196]

barryb - i don't get what context your talking about those things. you make the point perfectly why it is a bad idea. the trend was up for internet stocks or the nifty fifty, it didn't change their value. its just people feeling comfortable being wrong with the crowd. in addition, economic history is my day job so i'm pretty familiar with it. unfortunately, your misinterpreting much of what economic historians say about the relation between the past and the future.

jrp - right your statement is a perfect example of justifying a price move. and no i wouldn't buy it speculatively to make money (i'll presume its made you lots of cash). my point though was that price doesn't change value. so just cos other people are buying it doesn't mean you should too. when other people are making decisions for you, they are usually bad unless you really know what your doing...which most don't.

atilla - why would you buy something if you thought its value wasn't higher than what you were buying it for? thats the core of investing...so someone may diversify but they still are buying something below its percieved value. In addition, i'll trust the logic of someone who has worked in the markets for over 30 years, runs one of the world's most successful money managers and who is widely respected by his peers over you...seems obvious don't it...

 

[new_trader]

sure, but those reasons with the exception of the speculative and store of wealth part make it worth about $50

and my point is, the store of wealth is inherently speculative. It has always held in the past, I agree, and a rational inductive case can be made that it will always hold in the future... but there is nothing that makes it have to be so.

(of course it will not hold in the very long term. Either we become an inter stellar species in which case we'll have as much gold as we want... or we die out when the sun starts becoming a red giant and all the gold in the world won't help. so there is that. at least coca cola shares could conceivably appreciate in the former case)

That made me laugh. What is the difference between a £50 note and a £500 note? One '0'! We aren't an inter stellar species yet but we possess the technology to create limitless amounts of fiat currency right now and governments around the world have already proven that they aren't afraid to use it.

 

[Atilla]

barryb - i don't get what context your talking about those things. you make the point perfectly why it is a bad idea. the trend was up for internet stocks or the nifty fifty, it didn't change their value. its just people feeling comfortable being wrong with the crowd. in addition, economic history is my day job so i'm pretty familiar with it. unfortunately, your misinterpreting much of what economic historians say about the relation between the past and the future.

jrp - right your statement is a perfect example of justifying a price move. and no i wouldn't buy it speculatively to make money (i'll presume its made you lots of cash). my point though was that price doesn't change value. so just cos other people are buying it doesn't mean you should too. when other people are making decisions for you, they are usually bad unless you really know what your doing...which most don't.

atilla - why would you buy something if you thought its value wasn't higher than what you were buying it for? thats the core of investing...so someone may diversify but they still are buying something below its percieved value. In addition, i'll trust the logic of someone who has worked in the markets for over 30 years, runs one of the world's most successful money managers and who is widely respected by his peers over you...

Hedge :whistling

Not asking you to trust me. I'm just pointing out your logic of 'must be's are not logic at all. Pure deduction based on flawed incorrect assumptions. You determine if your assumptions are reasonable or not. If you are happy with them knock your self out and burst the bubble and sell sell sell.

It's like expectations theory...

Student: "Oh look sir, there is a £10 note on the floor somebody must have dropped it!"

Expectations Theory Professor: "Don't be foolish lad. If it was a £10 note somebody would have already picked it up..."

You can quote some mumbo jumbo and build it into what ever you want. People do not always buy gold because they perceive it to be under priced! You are hard work. No two "must be" about it. :cheesy:

I speak to gold bullion traders too and the word is nobody knows. Dropping fancy names means you've lost the plot and just another sheep. You gather the info and you determine outcome based on your own logic and intelligence. Be a tiger

To see where gold is going you need to look at governments and what they are doing. Japan has been injecting money into the markets. Now the G7 have been helping out the Yen. US is considering extending facilities to pump more money in.

Middle East is an unknown quantity. Oil about to double. Dollars will be much in demand and gold will errmmm ???

When oil runs out and US interests peter out dolar will be worth jack. In the absence of an international currency???

AND your logical fund manager is expecting gold bubble to burst and drop. Right on... :whistling


I'm delighted to hear you day job entails economic history. Great stuff. I say that sincerely as economics and current affairs have always been my interest and hobby too. .


Let's reverse the logic.

"Why did gold rise from $250 to $1400? How can you account for it using some economic history?"

 

[Splitlink]

Gold will increase in value simply because there is not much of it and someone, somewhere, wants it.

Old masters, to me, have no value except for one thing. Someone, somewhere, wants it and there is only one.

There are people who would kill for these things. That is why the value must increase.

There is still a lot of oil around which is why it is only $100 per barrel. One day, it will become a collectors item.

 

[new_trader]

Gold will increase in value simply because there is not much of it and someone, somewhere, wants it.

Old masters, to me, have no value except for one thing. Someone, somewhere, wants it and there is only one.

There are people who would kill for these things. That is why the value must increase.

There is still a lot of oil around which is why it is only $100 per barrel. One day, it will become a collectors item.

Exactly.

What makes a piece of paper 'worth' £50? - The law.

What makes gold currently 'worth' around £900oz? - DEMAND!

 

[cr6196]

Hedge :whistling

Not asking you to trust me. I'm just pointing out your logic of 'must be's are not logic at all. Pure deduction based on flawed incorrect assumptions. You determine if your assumptions are reasonable or not. If you are happy with them knock your self out and burst the bubble and sell sell sell.

It's like expectations theory...

Student: "Oh look sir, there is a £10 note on the floor somebody must have dropped it!"

Expectations Theory Professor: "Don't be foolish lad. If it was a £10 note somebody would have already picked it up..."

You can quote some mumbo jumbo and build it into what ever you want. People do not always buy gold because they perceive it to be under priced! You are hard work. No two "must be" about it. :cheesy:

I speak to gold bullion traders too and the word is nobody knows. Dropping fancy names means you've lost the plot and just another sheep. You gather the info and you determine outcome based on your own logic and intelligence. Be a tiger

To see where gold is going you need to look at governments and what they are doing. Japan has been injecting money into the markets. Now the G7 have been helping out the Yen. US is considering extending facilities to pump more money in.

Middle East is an unknown quantity. Oil about to double. Dollars will be much in demand and gold will errmmm ???

When oil runs out and US interests peter out dolar will be worth jack. In the absence of an international currency???

AND your logical fund manager is expecting gold bubble to burst and drop. Right on... :whistling


I'm delighted to hear you day job entails economic history. Great stuff. I say that sincerely as economics and current affairs have always been my interest and hobby too. .


Let's reverse the logic.

"Why did gold rise from $250 to $1400? How can you account for it using some economic history?"

what would gold be a hedge against? anything you hedge it against your relying on correlation, not actual hedge quality. there would be a massive amount of basis risk. i mean you may hedge it against another metal...but it wouldn't make sense.

and if you read my earlier posts, i'm not saying it will fall and the fund manger isn't shorting it either. its a pretty obvious point that just because something is overvalued doesn't mean you should short it. having respect for someones view doesn't mean i'm a sheep either. if your such a "tiger" why are you giving all these justifications and why do you need to talk to traders?

it rose because people bought it, its value didn't change...complicated isn't it. i don't know why you bring up EMT...surely my point is that markets aren't efficient if the difference between price and value are large. in fact, your argument is based on coming up with spurious justifications for why the current price is right and has been going up (indeed, your statment oil about double suggests all your doing is using the past to extrapolate the future, i bet you have a really big position in oil )...either way, gold is the most uncontraian position out there. it makes perfect sense, if you wouldn't buy gold if the price was at $5000 then your fooling yourself.

its also funny that we now have about 4 or 5 completely different justifications for why the current price of gold is right.

 

[new_trader]

or if beetle juice explodes, which can happen at any time now

Given that it takes a Supernova to create gold in the first place I would say that gold is scarce throughout the Universe. The cost of mining it in space if and when we are an interstellar species would be as expensive as it is today in relative terms. The only thing that would really devalue gold is an unlimited source of cheap (and convenient!) energy. That is what gold bugs need to fear.

 

[Splitlink]

what would gold be a hedge against? anything you hedge it against your relying on correlation, not actual hedge quality. there would be a massive amount of basis risk. i mean you may hedge it against another metal...but it wouldn't make sense.

and if you read my earlier posts, i'm not saying it will fall and the fund manger isn't shorting it either. its a pretty obvious point that just because something is overvalued doesn't mean you should short it. having respect for someones view doesn't mean i'm a sheep either. if your such a "tiger" why are you giving all these justifications and why do you need to talk to traders?

it rose because people bought it, its value didn't change...complicated isn't it. i don't know why you bring up EMT...surely my point is that markets aren't efficient if the difference between price and value are large. in fact, your argument is based on coming up with spurious justifications for why the current price is right and has been going up (indeed, your statment oil about double suggests all your doing is using the past to extrapolate the future, i bet you have a really big position in oil )...either way, gold is the most uncontraian position out there. it makes perfect sense, if you wouldn't buy gold if the price was at $5000 then your fooling yourself.

its also funny that we now have about 4 or 5 completely different justifications for why the current price of gold is right.

I don't think that the price will ever be right. It depends on who wants it and whether there is enough to go around.

 

[megamuel]

So, to summaries, is the argument - cr6196 and arabian are saying "gold has no real value, its just a lump of metal, people are only buying it to sell at a later date to a greater fool" and everyone else is saying that the value comes from supply and demand... Low supply and high demand = rise in value...

 

[barryb]

barryb - i don't get what context your talking about those things. you make the point perfectly why it is a bad idea. the trend was up for internet stocks or the nifty fifty, it didn't change their value. its just people feeling comfortable being wrong with the crowd. in addition, economic history is my day job so i'm pretty familiar with it. unfortunately, your misinterpreting much of what economic historians say about the relation between the past and the future.
.

I trade for my living...reality is my arbiter.

 

[Atilla]

So, to summaries, is the argument - cr6196 and arabian are saying "gold has no real value, its just a lump of metal, people are only buying it to sell at a later date to a greater fool" and everyone else is saying that the value comes from supply and demand... Low supply and high demand = rise in value...

I notice your avatar has a certain shine to it...

I like it.

 

[megamuel]

I like shiny things too Also, anything with blue L.E.D.'s in it. Can I invest in blue L.E.D.'s?!

 

[Atilla]

I like shiny things too Also, anything with blue L.E.D.'s in it. Can I invest in blue L.E.D.'s?!

OMG - really?

I didn't realise my brother has a twin. Honestly my brother is also crazy about lights especially blue ones.

Our budgie is into shiny things too. True story guys - I've taken out the platter from an old hard disk and it is about as a shiny reflective surface as you can find. Tied it from a piece of string and hang it in the cage. He absolutely loves sitting next to it, pecking it and watching it spin.

There is something in shiny things.

http://www.funtim.com/check-out-the-amazing-gold-cated-car-mercedes-c63-amg.html

 

[megamuel]

I 'came accross' some other shiny things http://www.luxemix.com/liquid-leggings-aka-slick-or-shiny-leggings/