Jesse offers a chart showing an apparently close relationship with the price of gold and the growth of US official debt, thus:
He wonders how this might look in relation to debt/GDP, and I give below gold's correlation with GDP and with debt in its broadest sense (TCMDO, ignoring intragovernmental lending) in the period 1952 - 2010:
I would suggest that gold's basic correlation is with GDP, but with wild swings reflecting debt-fuelled manias and financial crises. On this showing, and despite what looks like a meteoric rise over the last few years, gold is merely coming home and is not yet overpriced in the long view. This, as I understand him, is what Dr Marc Faber also thinks.
Not having had the money at the right time, I missed the opportunity to climb aboard gold when it was severely underpriced; but may do so soon, merely to preserve some of the value of our savings.
I'm not so much a gold bug as a most-everything-else bear. When the system stops lending cheap money to the riverboat gamblers with dusty top cards on Wall Street, I'll be interested in genuine investment.
UPDATE:
Here's the price of gold compared to the growth in Total Public Debt Outstanding since fiscal year 1929 - this includes intragovernmental debt (please click to enlarge):
INVESTMENT DISCLOSURE: None - YET. Still in cash (and some inflation-linked government savings certificates), and missing all those day-trading opportunities.
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.
He wonders how this might look in relation to debt/GDP, and I give below gold's correlation with GDP and with debt in its broadest sense (TCMDO, ignoring intragovernmental lending) in the period 1952 - 2010:
I would suggest that gold's basic correlation is with GDP, but with wild swings reflecting debt-fuelled manias and financial crises. On this showing, and despite what looks like a meteoric rise over the last few years, gold is merely coming home and is not yet overpriced in the long view. This, as I understand him, is what Dr Marc Faber also thinks.
Not having had the money at the right time, I missed the opportunity to climb aboard gold when it was severely underpriced; but may do so soon, merely to preserve some of the value of our savings.
I'm not so much a gold bug as a most-everything-else bear. When the system stops lending cheap money to the riverboat gamblers with dusty top cards on Wall Street, I'll be interested in genuine investment.
UPDATE:
Here's the price of gold compared to the growth in Total Public Debt Outstanding since fiscal year 1929 - this includes intragovernmental debt (please click to enlarge):
INVESTMENT DISCLOSURE: None - YET. Still in cash (and some inflation-linked government savings certificates), and missing all those day-trading opportunities.
DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.
No comments:
Post a Comment
Unfortunately, because of a plague of spam comments, you need to be a "registered user", otherwise your observations will be buried in a torrent of multilingual nonsense. Please do comment!
Say what you please, so long as it's phrased politely and is not libellous or legally proscribed. Fact, reason and wit are keenly welcomed.