The Case For $3,000 Gold 1 1

[World Colonial]

On 3/23/2023 at 11:32 PM, GoldFinger1969 said:

It's at the levels it was at first in 2011-12.  Back then, it was up 6-fold in 10 years -- now THAT was overvalued. 

Basically, we have traded sideways for a decade.  I hardly call that overvalued, though withour ZIRP the opportunity cost has increased.

I would not "load up" on gold or PMs relative to bonds (OK) or stocks (need to go 15% lower) but it's going higher from here over the next 5-7 years. 

The next $1,000 is UP !!! 

Compare it historically versus other commodities, it's not close to cheap. I've told you this before.

I haven't looked in a while, but others have not moved up enough to create "reasonable" relative value, nowhere near it.  I'm not a silver "bug" but gold is expensive vs. silver, even though I explain it by a change in the monetary perception.

No price is "reasonable" in isolation.  That makes no sense at all. 

Median priced home in the US is about 180oz (somewhere around here) now which is "low" vs. 2011 and especially 1980, but housing is in its own unprecedented bubble.  Never been worse in history.  If gold increases 50% to $3000 and housing loses 30% (which it should minimum because it's not even close to affordable except at artificially low rates), that's about 100X ratio, back in nosed bleed territory, again.

Yes, I think it's "breaking out" but for those who want to preserve wealth longer term, nothing is a hold "forever", not gold, not stocks, and not real estate.

I'm expecting gold to lose substantial relative value during my lifetime.  If it happens, that it might not be or probably won't be in fiat currency won't change that those who have a lot of their wealth in it will still be much poorer.

[GoldFinger1969]

On 3/24/2023 at 8:30 AM, World Colonial said:

Compare it historically versus other commodities, it's not close to cheap. I've told you this before.

Which commodities ?  Many are up, too....especially PMs.

On 3/24/2023 at 8:30 AM, World Colonial said:

I'm not a silver "bug" but gold is expensive vs. silver, even though I explain it by a change in the monetary perception.  No price is "reasonable" in isolation.  That makes no sense at all.  Median priced home in the US is about 180oz (somewhere around here) now which is "low" vs. 2011 and especially 1980, but housing is in its own unprecedented bubble.  Never been worse in history.  If gold increases 50% to $3000 and housing loses 30% (which it should minimum because it's not even close to affordable except at artificially low rates), that's about 100X ratio, back in nosed bleed territory, again.

The traditional gold/silver ratio of 16:1 dating back to the 1800's hasn't really worked in decades.  So you can't use it as a rule of relative valuation IMO.

I've never seen a linkage between gold and housing prices.  Might as well compare gasoline, too.  Or large-screen HDTVs.   They are 1/10th the price of 25 years ago.....you just can't compare all kinds of prices.

I think you need to look at gold (and maybe even silver) strictly based on their long-term charts and consider future supply/demand variables.

Do you think it is more likely that in 2030...assuming we are all still here ....that gold is closer to $3,000 or $1,200 ?  I'm pretty sure it will be the former.

JMHO.

[World Colonial]

On 3/24/2023 at 9:49 AM, GoldFinger1969 said:

Which commodities ?  Many are up, too....especially PMs.

Recently, yes.  Not compared to gold's increase since the 60's or 70'.

On 3/24/2023 at 9:49 AM, GoldFinger1969 said:

The traditional gold/silver ratio of 16:1 dating back to the 1800's hasn't really worked in decades.  So you can't use it as a rule of relative valuation IMO.

My comment has nothing to do with that.  The 16:1 ratio was an arbitrary invention of government.  I've made that abundantly clear in my prior posts. 

I've also contradicted silver advocates who use this as a rationalization for silver's underperformance, where it's supposedly manipulated.  My claim is that it's primarily if not entirely due to market perception of silver as a monetary substitute where it is clear it isn't viewed as it was previously.

This "explains" it.  It doesn't change that gold is historically relatively overpriced, as nobody really needs either.  It's not a necessity, like food commodities or energy.

On 3/24/2023 at 9:49 AM, GoldFinger1969 said:

I've never seen a linkage between gold and housing prices.  Might as well compare gasoline, too.  Or large-screen HDTVs.   They are 1/10th the price of 25 years ago.....you just can't compare all kinds of prices.

Yes, you can.  That's exactly my claim.  The purpose of money isn't to acquire other forms of money, but real goods and services.  It's a storage of purchasing power, not an end in itself.  You are using the same rationalization silver bulls used when its price was in a bubble.  They claimed it wasn't overpriced because it wasn't expensive vs. gold or permanently depreciating fiat currency.

The reason you haven't seen a linkage (except to USD, another FX, or silver) is because practically everyone ignores it.  They commit the same logical fallacy I just described to you.

Claiming otherwise is nonsensical.

On 3/24/2023 at 9:49 AM, GoldFinger1969 said:

Do you think it is more likely that in 2030...assuming we are all still here ....that gold is closer to $3,000 or $1,200 ?  I'm pretty sure it will be the former.

JMHO.

Looks like it's about to break out but no, I don't think this is a repeat of the 70's.  That's what I keep reading in many sources for economic conditions generally.  It's entirely possible for it to hit both prices and end up somewhere else but I don't think it will end up lower than $1200 in 2030, presumably higher.

The problem with the current and recent financial and economic environment is that due to government mismanagement, most everyone is forced to become a speculator to preserve their purchasing power and living standards, whether they want to do this or not.

Guess wrong enough and you lose big.

That's what's in store for most people.  They are going to lose big.

[GoldFinger1969]

Here's what I look at, WC, and it's basically long-term in perspective:

Gold before 1970 was price-controlled for decades.  It never had a true market price.  So once freed in the 1970's, and combined with the chaos of currencies and inflation that decade, you had a 10-20 fold rise in 7 years.  By 1980 gold was CLEARLY overvalued.

For the next 20 years, gold traded about $400 give or take $100.  It did NOTHING.  It basically "based" in trading terms and burned off the excess of the 1970's.  Lots of fits-and-starts but gold pretty much could never get going.  By 2000 or so it was $300.

Then it went up 6-fold in 10 years or so.  Again, gold was overvalued and price predictions ran way ahead of where it would trade.  For a decade we've repeated the 1980-2000 experience:  basing and burning off the excess.

Maybe we are only half-way through this basing and have another decade.  Who knows.  Based on the extent of the move you could make a case that gold shouldn't need 20 years this time but it will do what it wants.  The good news is the base of buyers is MUCH LARGER in the U.S. and globally than it was in 2000 and certainly 1980. 

The big X-Factor:  rising middle-class income standards in previously poor countries (China, India, NICs, etc.) and South/Central America...really all over the world ex-OECD.....that's HUNDREDS of millions of buyers....even if only a few are regular/repeat buyers, you are talking TENS of millions of ounces of new demand at a minimum.  I think this is VERY bullish longer-term.  On the supply-side, you are going to face environmental and cost restrictions.

I really think we will be talking about eclipsing the all-time, 1989 Bubble Highs for MS-65 and MS-66 Double Eagles, WC.

I guess we'll see. 

[GoldFinger1969]

On 3/24/2023 at 10:12 AM, World Colonial said:

Looks like it's about to break out but no, I don't think this is a repeat of the 70's.  That's what I keep reading in many sources for economic conditions generally. 

I have NEVER been a gold bug and these people with outlandish predictions and sky-high prices for gold are clowns, IMO.  I agree completely with you that any refernces to the 1970's for priced predictions OR economic upheaval are misplaced. 

I base my long-term gold projections (which I admit are guestimates) on structural supply and demand issues.  Unless CBs decide to turn into big sellers en masse, I think the arrow points in the UP direction and I wouldn't bet against CBs being net buyers, too.  That would be a game changer though if anything I would think that if CBs decide to buy gold I would want to be a SELLER at that point as they tend to be the "dumb money" and if they are buying even though gold might be gallopping up in price you could hit an air pocket once they stop. 

Only big new negative that I see is the enthusiasm for crypto and BitCoin among the younger generation but these folks didn't buy gold for the most part, either.  Some of the young and new investing class in these other countries are buying crypto/BTC so that bears watching (wish we had some numbers from the World Gold Council or investment trade groups).

Edited March 24, 2023 by GoldFinger1969

[World Colonial]

On 3/24/2023 at 10:58 AM, GoldFinger1969 said:

Here's what I look at, WC, and it's basically long-term in perspective:

Gold before 1970 was price-controlled for decades.  It never had a true market price.  So once freed in the 1970's, and combined with the chaos of currencies and inflation that decade, you had a 10-20 fold rise in 7 years.  By 1980 gold was CLEARLY overvalued.

For the next 20 years, gold traded about $400 give or take $100.  It did NOTHING.  It basically "based" in trading terms and burned off the excess of the 1970's.  Lots of fits-and-starts but gold pretty much could never get going.  By 2000 or so it was $300.

Then it went up 6-fold in 10 years or so.  Again, gold was overvalued and price predictions ran way ahead of where it would trade.  For a decade we've repeated the 1980-2000 experience:  basing and burning off the excess.

Maybe we are only half-way through this basing and have another decade.  Who knows.  Based on the extent of the move you could make a case that gold shouldn't need 20 years this time but it will do what it wants.  The good news is the base of buyers is MUCH LARGER in the U.S. and globally than it was in 2000 and certainly 1980. 

The price and valuation of anything cannot be evaluated in isolation.  It's irrelevant that the price didn't move for years or longer, except in the context of other prices.  And when I say "other prices", something other than USD.

On 3/24/2023 at 10:58 AM, GoldFinger1969 said:

The big X-Factor:  rising middle-class income standards in previously poor countries (China, India, NICs, etc.) and South/Central America...really all over the world ex-OECD.....that's HUNDREDS of millions of buyers....even if only a few are regular/repeat buyers, you are talking TENS of millions of ounces of new demand at a minimum.  I think this is VERY bullish longer-term.  On the supply-side, you are going to face environmental and cost restrictions.

Same claim has been made for the prices of non-US coins.  It's somewhat more relevant for gold but the better reason for your outcome is loss of global reserve USD currency status.

On 3/24/2023 at 10:58 AM, GoldFinger1969 said:

The good news is the base of buyers is MUCH LARGER in the U.S. and globally than it was in 2000 and certainly 1980. 

You have it backwards.  From the limited evidence we have, it's not good news.  A much higher gold price is bad for the living standards of most people.  Even since 1999/2001 even while gold rose 8X and the economy has supposedly been so good, living standards for the average American have stagnated.  Supposed prosperity has been mostly or entirely from increasing debt and artificially cheap money.

I expect most people to become poorer or a lot poorer, at least in the developed world.  A much higher gold price is consistent with this outcome.

[World Colonial]

On 3/24/2023 at 11:04 AM, GoldFinger1969 said:

Unless CBs decide to turn into big sellers en masse, I think the arrow points in the UP direction and I wouldn't bet against CBs being net buyers, too.

From the limited data I have seen, central banks are a contrary indicator.

On 3/24/2023 at 11:04 AM, GoldFinger1969 said:

Only big new negative that I see is the enthusiasm for crypto and BitCoin among the younger generation but these folks didn't buy gold for the most part, either.  Some of the young and new investing class in these other countries are buying crypto/BTC so that bears watching (wish we had some numbers from the World Gold Council or investment trade groups).

Count me among those who believe that crypto as it exists now is going nowhere.  It's nothing, literally.

Whatever long-term future exists for crypto is central bank digital currencies, which functionally are no different than what we have now.  The "end game" is a global currency replacing all others.

[World Colonial]

On 3/24/2023 at 11:04 AM, GoldFinger1969 said:

I agree completely with you that any refernces to the 1970's for priced predictions OR economic upheaval are misplaced. 

One other comment on this one.  You misunderstood me.  I don't believe gold will increase as it did in the 70's because it's already very relatively overpriced now.  That's the inference when I hear any comparison to the 70's.

As for 70's economic conditions, I must be reading and have lived through alternate version of the one you have in mind.  The 70's economy wasn't that bad.  The primary difference with today is that asset prices are very inflated, credit conditions are much looser, and borrowing a lot cheaper.  

I'm expecting this to change, drastically.

Edited March 24, 2023 by World Colonial

[zadok]

On 3/24/2023 at 11:53 AM, World Colonial said:

One other comment on this one.  You misunderstood me.  I don't believe gold will increase as it did in the 70's because it's already very relatively overpriced now.  That's the inference when I hear any comparison to the 70's.

As for 70's economic conditions, I must be reading and have lived through alternate version of the one you have in mind.  The 70's economy wasn't that bad.  The primary difference with today is that asset prices are very inflated, credit conditions are much looser, and borrowing a lot cheaper.  

I'm expecting this to change, drastically.

...in order for the banks to get federal backing n assurances they will have to agree to loose possibly looser credit conditions at least until the 2024 election...u dont have to start worrying until u have to trade blood for milk...n the credit card companies will follow suit as well...

[World Colonial]

On 3/24/2023 at 5:07 PM, zadok said:

...in order for the banks to get federal backing n assurances they will have to agree to loose possibly looser credit conditions at least until the 2024 election...u dont have to start worrying until u have to trade blood for milk...n the credit card companies will follow suit as well...

Tightening in credit conditions is mostly visible in the financial markets, not bank credit standards.  That's where most of the borrowing occurs, measured by dollar volume.  I consider credit conditions in the public markets very loose, but it's not nearly as loose for the weakest borrowers as it was 12-24 months ago.

Sure, US Treasury might want banks to go somewhat easy on borrowers, but that doesn't mean the bank supervision function at the FDIC, FRB, and OCC will go along with it.  No different between FRB monetary policy and its own bank regulators.  Regulatory oversight failed with SVB, but there is serious personal career risk in being a political lapdog for the field examiner who actually downgrades loans, and they aren't going to do it voluntarily.

Banks have presumably already tightened lending standards for commercial property (especially office buildings) and shared national credits.  I've read anecdotal reports of banks taking losses on some of the latter.

Credit for consumers by my standards have been very loose since at least 1995.  Mortage credit is stricter than HB1 but still pathetically lax and with most mortgages federally guaranteed, no incentive to tighten there.  Consumer credit quality remains at sub-basement level.  Practically anyone who breathes can get an auto loan or credit card.  It's going to take noticeable tightening in all three before the average person really feels it.  Even during the worst of the GFC, it was still easy to borrow for anyone who had a decent credit score and a job.

[GoldFinger1969]

On 3/24/2023 at 11:18 AM, World Colonial said:

The price and valuation of anything cannot be evaluated in isolation.  It's irrelevant that the price didn't move for years or longer, except in the context of other prices.  And when I say "other prices", something other than USD.

From a technical perspective, it bases for years (decades ?) and the price no longer appears as high to new or repeat buyers.  It's about the psychology of buying and not chasing.

From a fundamental perspective, if the price is flat for a decade and incomes go up 6-8% a year, then the price is HALVED as real incomes double and you can buy twice as much.

Gold was flat for years at $35/oz.....then about $400/oz......then about $1,200/oz.....I think we have another run higher.  It might take until closer to 2030, who knows.  I'm happy to just keep buying Double Eagles and moderns for however they trade in the $1,500 to $2,000 range.   

Edited March 26, 2023 by GoldFinger1969

[Henri Charriere]

On 3/24/2023 at 11:21 AM, World Colonial said:

.... The "end game" is a global currency replacing all others.

and a requirement all users speak Esperanto. 🤣

[World Colonial]

On 3/26/2023 at 3:15 AM, GoldFinger1969 said:

From a technical perspective, it bases for years (decades ?) and the price no longer appears as high to new or repeat buyers.  It's about the psychology of buying and not chasing.

From a fundamental perspective, if the price is flat for a decade and incomes go up 6-8% a year, then the price is HALVED as real incomes double and you can buy twice as much.

Gold was flat for years at $35/oz.....then about $400/oz......then about $1,200/oz.....I think we have another run higher.  It might take until closer to 2030, who knows.  I'm happy to just keep buying Double Eagles and moderns for however they trade in the $1,500 to $2,000 range.

I don't disagree with you that it's going up.  I'm telling you two things. 

One, it isn't relatively cheap versus at least most physical goods. That's a fact which anyone can confirm by looking at the data.  There are supposed "reasons" for it to go up anyway which are ALL ultimately psychological, but nothing can be called "undervalued", "fairly valued" or "overvalued" except RELATIVE to something else.

This is why I am telling you that at some future date, it's going to lose noticeable purchasing power, whether it's fiat currency price declines or not.  As the world or certain areas become poorer, the prices of necessities or useful things are going to increase (substantially) versus gold.

Gold is a better long-term hold than fiat currency, but due to the amounts they can buy, most people would probably be better off pre-paying things they will need later at today's prices.  Yes, it's hoarding which would make inflation worse, but you can thank the government for debasing the currency for this motivation.

Two, the vast majority who want it to go higher are almost certainly going to be worse off anyway.  It's better to own than not own it obviously as it rises, but the amount they own is overwhelmingly insignificant where it won't make any meaningful difference.  This to me is a contradiction, people wishing they become poorer out of ignorance.

[GoldFinger1969]

On 3/26/2023 at 8:31 AM, World Colonial said:

I don't disagree with you that it's going up.  I'm telling you two things.  One, it isn't relatively cheap versus at least most physical goods. That's a fact which anyone can confirm by looking at the data.  There are supposed "reasons" for it to go up anyway which are ALL ultimately psychological, but nothing can be called "undervalued", "fairly valued" or "overvalued" except RELATIVE to something else.  This is why I am telling you that at some future date, it's going to lose noticeable purchasing power, whether it's fiat currency price declines or not.  As the world or certain areas become poorer, the prices of necessities or useful things are going to increase (substantially) versus gold. Gold is a better long-term hold than fiat currency, but due to the amounts they can buy, most people would probably be better off pre-paying things they will need later at today's prices.  Yes, it's hoarding which would make inflation worse, but you can thank the government for debasing the c urrency for this motivation. Two, the vast majority who want it to go higher are almost certainly going to be worse off anyway.  It's better to own than not own it obviously as it rises, but the amount they own is overwhelmingly insignificant where it won't make any meaningful difference.  This to me is a contradiction, people wishing they become poorer out of ignorance.

Forget fiat currencies, relative prices, poverty, etc......just based on supply and demand, couldn't gold move up at a slow pace over a longer period of time ?  It went up $1,500 an ounce from 2002-2011.....a 6-fold increase...if it went up the same amount from today's level, it would not even be a double.

I'm not saying to go out and buy bullion as an investment.  I'm just saying you can make a case that the price in nominal dollars will be much higher in 5-10 years and if you want to buy any bullion, doesn't pay to NOT buy some now. 

And coins which obviously trade off bullion -- like Saint and Liberty Head DEs -- would automatically go up for reasons having nothing to do with their particular coin lineage so if you were looking to buy some of those for numismatic reasons, all the more reason to move sooner rather than later.

Edited March 26, 2023 by GoldFinger1969

[World Colonial]

On 3/26/2023 at 10:24 AM, GoldFinger1969 said:

Forget fiat currencies, relative prices, poverty, etc......just based on supply and demand, couldn't gold move up at a slow pace over a longer period of time ?  It went up $1,500 an ounce from 2002-2011.....a 6-fold increase...if it went up the same amount from today's level, it would not even be a double.

Well, there isn't any physical law preventing it.  So, sure it can happen.

On 3/26/2023 at 10:24 AM, GoldFinger1969 said:

I'm not saying to go out and buy bullion as an investment.  I'm just saying you can make a case that the price in nominal dollars will be much higher in 5-10 years and if you want to buy any bullion, doesn't pay to NOT buy some now. 

Since I agree with you that it looks like it's breaking out, yes.  But I also think any buyer will need to time their sales if they are using it to improve their financial position for the reason I give.

I agree that everyone who can afford to do so should own some metals.  Just buy it as a long-term hold and forget about it.  Most (not all) "metal bugs" (not you) imply that they hold a high pct. of their net worth and won't sell.  Gold is a lot more liquid than silver but buying and selling the physical metal results in noticeable "slippage" because it isn't as liquid as most who advocate it imply.  This is evident in the buy-sell spreads.  Silver's liquidity has been terrible since COVID.

On 3/26/2023 at 10:24 AM, GoldFinger1969 said:

And coins which obviously trade off bullion -- like Saint and Liberty Head DEs -- would automatically go up for reasons having nothing to do with their particular coin lineage so if you were looking to buy some of those for numismatic reasons, all the more reason to move sooner rather than later.

You're more familiar with the premiums to spot over time.  That's my only qualification to buying it.  Not low to my knowledge and I don't expect it to increase over time either.  Maybe temporarily.

I've thought about this topic quite a bit, so it's not like I'm hearing anything new.  Gold vs. silver; bullion vs. numismatic coins; bars vs. bullion coins; specific name brands of coins and bars; paper vs. physical; US vs. foreign storage; home storage vs. SDB vs. bullion depository; dollar cost average vs. bulk purchase; portfolio allocation.

Yes, I've thought about it.

[Coinbuf]

2K has provided a very strong resistance point so far, gold spot has been at or slightly above that a few times recently and always backed off to below 2K just as it now sits under the 2K level.   It will not be a breakout until the price can move above 2K and then bounce off 2K and move higher, that will be a breakout.

[GoldFinger1969]

On 3/26/2023 at 1:47 PM, Coinbuf said:

2K has provided a very strong resistance point so far, gold spot has been at or slightly above that a few times recently and always backed off to below 2K just as it now sits under the 2K level.   It will not be a breakout until the price can move above 2K and then bounce off 2K and move higher, that will be a breakout.

Definitely agree, CB....like $200, $800, and $1,000 have been in the past.  Strong resistance points of the past.

Gold has some work to do.  It may take a few months...may even take a few years. 

But I have no doubt I'll be posting here telling folks in the Newcomer section to not chase common Saints or other gold coins at close to 2x today's levels. 

[zadok]

On 3/26/2023 at 4:02 PM, GoldFinger1969 said:

Definitely agree, CB....like $200, $800, and $1,000 have been in the past.  Strong resistance points of the past.

Gold has some work to do.  It may take a few months...may even take a few years. 

But I have no doubt I'll be posting here telling folks in the Newcomer section to not chase common Saints or other gold coins at close to 2x today's levels. 

...maybe u should track price of gold as it gets closer to the 2024 election....

[GoldFinger1969]

Gold will go up as rising demand outstrips supply (new + existing stocks). Keep an eye on Indian demand, as millions of Indians go from poverty incomes to middle-class incomes every year for the next decade.

They will not put the 10-fold rise in incomes into more food, it will be used for consumption and savings (gold).

Here's annual Indian gold consumption over the decades:

• Pre-Independence (1947).....    ~ 30 tons per year
• 1950's-1960's......................      ~ 90 tons per year
• 1980's................................      ~ 150 tons per year
• 1990's.................................     ~ 375 tons per year
• Today..................................     ~ 700 tons per year

If by 2030 India is taking in 1,500 tons of gold per year, that is a big drawdown combined with more rising Chinese/Asian, African, South/Central American demand, plus Europe/North America.

Gold today is where it was in the early-1960's....you KNEW the price was going alot higher, you just didn't know WHEN.  

[Henri Charriere]

Not sure if this may be a factor to consider, but India, and not China, is now the world's most populous nation.

[GoldFinger1969]

On 4/26/2023 at 9:52 PM, Henri Charriere said:

Not sure if this may be a factor to consider, but India, and not China, is now the world's most populous nation.

Yes, very true.  India is all set now to replicate what China did growth-wise from 1990-2020.  They have a young, growing population...increasing labor supply (China is now LOSING workers each year).  If India doesn't screw it up -- a big IF, based on past mistakes -- there is no reason their economy can't grow 5-7% a year for the next 10-15 years.

China's population will shrink to about 750 million from 1.2 billion in the next 25 years.

It's not only India's population, it's the per-capita GDP/income that the growing population will have access to.  Plus, Indian culture incorporates gold ownership as does China's.

A stronger, more active Indian Central Bank could also have a few thousand metric tons of gold.  Right now, they have about 800 tons; larger economies have a few thousand (the U.S. has over 8K tons).

[zadok]

On 4/27/2023 at 12:49 AM, GoldFinger1969 said:

Yes, very true.  India is all set now to replicate what China did growth-wise from 1990-2020.  They have a young, growing population...increasing labor supply (China is now LOSING workers each year).  If India doesn't screw it up -- a big IF, based on past mistakes -- there is no reason their economy can't grow 5-7% a year for the next 10-15 years.

China's population will shrink to about 750 million from 1.2 billion in the next 25 years.

It's not only India's population, it's the per-capita GDP/income that the growing population will have access to.  Plus, Indian culture incorporates gold ownership as does China's.

A stronger, more active Indian Central Bank could also have a few thousand metric tons of gold.  Right now, they have about 800 tons; larger economies have a few thousand (the U.S. has over 8K tons).

...does that include my 2K metric tons?....

[World Colonial]

On 4/27/2023 at 12:49 AM, GoldFinger1969 said:

Yes, very true.  India is all set now to replicate what China did growth-wise from 1990-2020.  They have a young, growing population...increasing labor supply (China is now LOSING workers each year).  If India doesn't screw it up -- a big IF, based on past mistakes -- there is no reason their economy can't grow 5-7% a year for the next 10-15 years.

Good luck with that.  Totally different culture.  Culture is the primary driver of economic performance, not the claptrap published in economic textbooks or financial media.  This is self-evident in the visible prosperity between countries and regions within countries now.

Lack of supposed affluence doesn't explain the price of gold or anything else.  It's simply another rationalization, whether the price increases or not.  It's not like there aren't plenty of people who can't buy more gold now.  It's the same type of argument I read decades ago why silver should increase due to a production shortage.  It's also the same rationalization behind the belief of so many US based collectors why world coin prices are supposedly set to explode, only at a smaller scale.

P.S.: Yes, per my prior post, still agree gold looks like it is about to "break out".

[GoldFinger1969]

On 4/27/2023 at 6:45 PM, World Colonial said:

Good luck with that.  Totally different culture.  Culture is the primary driver of economic performance, not the claptrap published in economic textbooks or financial media.  This is self-evident in the visible prosperity between countries and regions within countries now.

I don't doubt the importance of culture, and a 1-party state in China has an advantage over a corrupt, multi-layered democracy.  But I didn't say they would grow 8-10% a year, but 5-7%.   BIG difference and much more achievable.  With labor supply increasing, with British rule of law in India, with suppliers diversifying out of China....they have some tailwinds.

On 4/27/2023 at 6:45 PM, World Colonial said:

Lack of supposed affluence doesn't explain the price of gold or anything else.  It's simply another rationalization, whether the price increases or not.  It's not like there aren't plenty of people who can't buy more gold now.  It's the same type of argument I read decades ago why silver should increase due to a production shortage.  It's also the same rationalization behind the belief of so many US based collectors why world coin prices are supposedly set to explode, only at a smaller scale.

This is a shift in demand and it's potentially big.  When central banks stopped selling in the early-2000's, gold went up 6-fold in 11 years.

It's NOT the same argument as silver (which I haven't heard) because a key silver demand issue went KAPUT (photographic silver demand).   People who are at subsistence income levels do not spend $$$ on cell phones, HDTVs, or gold coins/bars.  Let their incomes go up 10-15% for 2 decades and they will spend it on such stuff.  

Edited April 28, 2023 by GoldFinger1969

[Henri Charriere]

On 4/28/2023 at 12:47 AM, GoldFinger1969 said:

....People who are at subsistence income levels do not spend $$$ on cell phones, HDTVs, or gold coins/bars....

It is not that they do not. They can but if they do, it is at a cost: loss of SSI, disability, Medicaid and SNAP, subsidized housing, each agency of which has its own income, assets, and resource  requirements.

[World Colonial]

On 4/28/2023 at 12:47 AM, GoldFinger1969 said:

I don't doubt the importance of culture, and a 1-party state in China has an advantage over a corrupt, multi-layered democracy.  But I didn't say they would grow 8-10% a year, but 5-7%.   BIG difference and much more achievable.  With labor supply increasing, with British rule of law in India, with suppliers diversifying out of China....they have some tailwinds.

Culture is more important than every single factor believed by conventional thinkers.  This is completely obvious.  This is why the US is heading in the wrong direction and why once the asset mania and credit bubble end, the country is going backwards.

Yes, I know you and others who disagree with me don't believe it.

On 4/28/2023 at 12:47 AM, GoldFinger1969 said:

This is a shift in demand and it's potentially big.  When central banks stopped selling in the early-2000's, gold went up 6-fold in 11 years.

Central banks are just bad market timers, that's all.  Government is the ultimate lagging indicator.  Recent central bank buying isn't in and of itself bullish either.  Back then, the selling would have been considered a bearish indicator when it was the opposite.

On 4/28/2023 at 12:47 AM, GoldFinger1969 said:

It's NOT the same argument as silver (which I haven't heard) because a key silver demand issue went KAPUT (photographic silver demand).   People who are at subsistence income levels do not spend $$$ on cell phones, HDTVs, or gold coins/bars.  Let their incomes go up 10-15% for 2 decades and they will spend it on such stuff.  

The mining deficit was a rationalization used in the 80's by the silver marketers to convince metal bugs to buy it.  After all, it makes intuitive sense.  Demand was higher than production - for years - so prices should go up, right?  Except that it didn't, because that's not how markets work.  Prices fell until 2001, a double bottom with 1993, I think.

You're making a similar rationalization here.  I happen to think gold is heading higher now too, but it's not contingent (at all) on your supposed causal factors.  You can take these supposed causal reasons and correlate it to the price of gold, and there is no possibility to demonstrate it makes any difference.  It's an assumption.

Look at inflation and metal prices.  Yes, I know that over a long enough period, it's correlated.  Except that with silver, prices are still 50% lower after 43 YEARS.  Still gone nowhere (adjusted for price changes) even if bought immediately prior or subsequent to the bubble.  Gold prices are higher nominally but anyone who bought in early 1980 is worse off and had a huge opportunity cost on top of it, if they still hold it which most did not.  Both ran up after late 2008 in anticipation of much higher (price) inflation which never materialized.  Inflation didn't "cause" the price increase.

The reason I keep on having these discussions with you is because you can't get past false "fundamental" causality.  None of these "fundamentals" ever bought a single share or ounce.  

Gold is somewhat different than coins because it actually has some use, but US collectors use similar rationalizations to project rising prices for world coins in countries with limited to no history of collecting.  I've read this claim, over and over.  No amount of affluence will ever make anyone want to buy a single coin because it has nothing to do with it.  Some level of affluence is a necessary precondition, but it has no predictive value, at all.

In a country like China which is most often used, it's buying coins as "investments" and TPG primarily driving the higher price level.  Same as the US starting in the early 70's and then in '86 with TPG.  Same as South Africa on a much smaller scale leading up to the YE 2011 peak.  It's not affluence which matters, it's the cultural mindset behind financially motivated buying.  No, the much higher prices aren't due to subsequent generations of collectors finding the coinage so interesting, never mind labels on plastic holders or in the US, CAC stickers.

In China or anywhere else, it's not like there weren't already plenty of people with enough (fake) wealth to push prices much higher in such pitifully small markets.  This is true in every country on the planet, literally.  In most countries, one or a handful of moderately affluent people could literally buy every single "investment" type coin because the supply and combined market value is so nominal.

[zadok]

On 4/28/2023 at 8:13 AM, World Colonial said:

Culture is more important than every single factor believed by conventional thinkers.  This is completely obvious.  This is why the US is heading in the wrong direction and why once the asset mania and credit bubble end, the country is going backwards.

Yes, I know you and others who disagree with me don't believe it.

Central banks are just bad market timers, that's all.  Government is the ultimate lagging indicator.  Recent central bank buying isn't in and of itself bullish either.  Back then, the selling would have been considered a bearish indicator when it was the opposite.

The mining deficit was a rationalization used in the 80's by the silver marketers to convince metal bugs to buy it.  After all, it makes intuitive sense.  Demand was higher than production - for years - so prices should go up, right?  Except that it didn't, because that's not how markets work.  Prices fell until 2001, a double bottom with 1993, I think.

You're making a similar rationalization here.  I happen to think gold is heading higher now too, but it's not contingent (at all) on your supposed causal factors.  You can take these supposed causal reasons and correlate it to the price of gold, and there is no possibility to demonstrate it makes any difference.  It's an assumption.

Look at inflation and metal prices.  Yes, I know that over a long enough period, it's correlated.  Except that with silver, prices are still 50% lower after 43 YEARS.  Still gone nowhere (adjusted for price changes) even if bought immediately prior or subsequent to the bubble.  Gold prices are higher nominally but anyone who bought in early 1980 is worse off and had a huge opportunity cost on top of it, if they still hold it which most did not.  Both ran up after late 2008 in anticipation of much higher (price) inflation which never materialized.  Inflation didn't "cause" the price increase.

The reason I keep on having these discussions with you is because you can't get past false "fundamental" causality.  None of these "fundamentals" ever bought a single share or ounce.  

Gold is somewhat different than coins because it actually has some use, but US collectors use similar rationalizations to project rising prices for world coins in countries with limited to no history of collecting.  I've read this claim, over and over.  No amount of affluence will ever make anyone want to buy a single coin because it has nothing to do with it.  Some level of affluence is a necessary precondition, but it has no predictive value, at all.

In a country like China which is most often used, it's buying coins as "investments" and TPG primarily driving the higher price level.  Same as the US starting in the early 70's and then in '86 with TPG.  Same as South Africa on a much smaller scale leading up to the YE 2011 peak.  It's not affluence which matters, it's the cultural mindset behind financially motivated buying.  No, the much higher prices aren't due to subsequent generations of collectors finding the coinage so interesting, never mind labels on plastic holders or in the US, CAC stickers.

In China or anywhere else, it's not like there weren't already plenty of people with enough (fake) wealth to push prices much higher in such pitifully small markets.  This is true in every country on the planet, literally.  In most countries, one or a handful of moderately affluent people could literally buy every single "investment" type coin because the supply and combined market value is so nominal.

...been listening to ur n GF discussion on world financial status...interesting n thought provoking...i dont wholly agree nor disagree with either of u, but do disagree with some of the premises presented...just a few tidbits n observations..."gold" n "coins" r not interchangeable, while a substantial portion of gold is purchased in coin form it is mostly in bullion coins n not collectible coins, one can not compare those two n get the same results...both can be "investments" n both can provide returns when liquidated but not in the same manner...the financial community likes to make neat little boxes to explain whats going to happen n why, its segmented at best, cause n effect is not all consuming...yes they like graphs n formulae n rules that predict whats going to happen but they simply dont work, they barely indicate trends, there r just too many world random events n influences to quantify..."culture" big word n bigger problem to quantify n dynamic, constantly shifting, n gold is deeply invested in many if not all cultures, its almost a part of human nature, for most of mankind gold has been recognized n regarded as special n the base for wealth only surpassed by land...i would estimate that 95% of all the people i know own some gold n value it higher than most of their other possessions, my family has always owned gold...i have a reasonably well diversified portfolio, i do not consider my gold possessions as investments but i do consider them as assets, second only to land i own, having said that my gold assets r greater than all of my other portfolio assets combined n i am very comfortable with than n increase the amount every year, i guess its part of my personal "culture"..."causal fundamentals" i dont think that can ever be put in a little box n quantified, it mutates constantly...u can not even take gold, silver n oil n graph them n get a consistent indicator...just tidbits of no meaningful relevance....

[World Colonial]

On 4/28/2023 at 9:30 AM, zadok said:

...been listening to ur n GF discussion on world financial status...interesting n thought provoking...i dont wholly agree nor disagree with either of u, but do disagree with some of the premises presented...just a few tidbits n observations..."gold" n "coins" r not interchangeable, while a substantial portion of gold is purchased in coin form it is mostly in bullion coins n not collectible coins, one can not compare those two n get the same results...both can be "investments" n both can provide returns when liquidated but not in the same manner...the financial community likes to make neat little boxes to explain whats going to happen n why, its segmented at best, cause n effect is not all consuming...yes they like graphs n formulae n rules that predict whats going to happen but they simply dont work, they barely indicate trends, there r just too many world random events n influences to quantify..."culture" big word n bigger problem to quantify n dynamic, constantly shifting, n gold is deeply invested in many if not all cultures, its almost a part of human nature, for most of mankind gold has been recognized n regarded as special n the base for wealth only surpassed by land...i would estimate that 95% of all the people i know own some gold n value it higher than most of their other possessions, my family has always owned gold...i have a reasonably well diversified portfolio, i do not consider my gold possessions as investments but i do consider them as assets, second only to land i own, having said that my gold assets r greater than all of my other portfolio assets combined n i am very comfortable with than n increase the amount every year, i guess its part of my personal "culture"..."causal fundamentals" i dont think that can ever be put in a little box n quantified, it mutates constantly...u can not even take gold, silver n oil n graph them n get a consistent indicator...just tidbits of no meaningful relevance....

Yes, I agree gold and coins are not interchangeable.

One is a collectible and seldom "investment".

Since this is a coin forum, I was using it as another example of how people use external events to rationalize a forecast all the time.

Besides, I consider the relative value of gold to what people buy a lot more relevant, not the USD or fiat currency price.

[GoldFinger1969]

On 4/28/2023 at 1:28 PM, World Colonial said:

Yes, I agree gold and coins are not interchangeable. One is a collectible and seldom "investment".

If the price of gold goes up substantially, it's dragging up any gold coin that trades as bullion and lots of others that are quasi-bullion, quasi-numismatic.

If gold goes to $3,000 then an MS-65 generic Saint will probably cost close to $4,000.

[GoldFinger1969]

On 4/28/2023 at 8:13 AM, World Colonial said:

Central banks are just bad market timers, that's all.  Government is the ultimate lagging indicator.  Recent central bank buying isn't in and of itself bullish either.  Back then, the selling would have been considered a bearish indicator when it was the opposite.

Some CBs are bad market timers, others not so.  Anyway, when Russia and the UK and European countries stopped selling, it went up.  They still had lots of gold and even became net-buyers and the price rose bigtime.

I don't make predictions based on CBs, because their decisions are political not economic.  They can reverse on a whim.  I will NOTE it, but not base buying or selling decisions on it.

On 4/28/2023 at 8:13 AM, World Colonial said:

The mining deficit was a rationalization used in the 80's by the silver marketers to convince metal bugs to buy it.  After all, it makes intuitive sense.  Demand was higher than production - for years - so prices should go up, right?  Except that it didn't, because that's not how markets work.  Prices fell until 2001, a double bottom with 1993, I think.

I'm not a silver hawker or perma-bull.  Most people who deal in PMs -- not all but most -- are always bullish even though as investments it does NOT pay to recommend their purchase for long periods of time (not the case with stocks and bonds quite as much).

As for this silver mining thing....typical marketing hype.  After a 50-fold increase in the price of silver in 12 years to $50/ounce, I don't know why anybody thought prices would keep going up but I started working in an Economics group a few years later and our Base Forecast Projections used to incorporate a $50 oil price in the late-1980's when it wouldn't meet that price for another 15 years.

High prices destroy demand and that rise in silver was the quintessential bubble, dragged up by inflation/gold/oil/the Hunts.

My bullishness on gold is increased demand -- end USER demand, retail demand, 3rd World demand, plus more PM/coin interest in the developed world (not CB buying) -- with higher costs of mining and supply (ESG, etc.) and maybe even resource nationalization (i.e., Chile seizing lithium deposits).

This is a long-term forecast and I freely admit gold could be stuck in a $1,650 - $2,100 price range for a few more years.