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XMFSinchiruna (27.60)

A Golden Breakout

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January 30, 2009 – Comments (9)

Of course, the breakout already occured weeks ago in most world currencies.

9 Comments – Post Your Own

#1) On January 30, 2009 at 5:21 AM, XMFSinchiruna (27.60) wrote:

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#2) On January 30, 2009 at 5:27 AM, DaretothREdux (39.98) wrote:

Your score should skyrocket today! No one can say you didn't warn them...

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#3) On January 30, 2009 at 6:16 AM, kaskoosek (79.63) wrote:

I have heard people bearish on gold, because of the gold/oil ratio.

I have this to say to them.

OIL is a lagging indicator, because it does not capture inflation expectation like gold does.

This is a reply to Demon from my previous blog.

When inflation expectation is high and economic activity is low, I would argue that that the gold/oil ratio has to be high, because for normal human beings it is much easier to store gold.

Oil would definitely follow gold in the long run, but in the end it depends on the time horizon. The supply/demand equation for oil would take some time to correct.

 

 

 

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#4) On January 30, 2009 at 6:54 AM, XMFSinchiruna (27.60) wrote:

Many ratios are of limited significance when we're treading in unprecedented waters.

The only relevant ratio that's totally out of whack and will certainly correct itself to some degree going forward is the gold/silver ratio. 

Gold to the USDX is an important ratio. Gold to every major currency... these are important ratios. Until people start selling oil for gold, Gold to oil simply is not of major significance... and certainly cannot be used to determine the future direction of gold in this environment.

Over-reliance on ratios, with all due respect to my friend Demon, is a set-up for disappointment.

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#5) On January 30, 2009 at 8:23 AM, binve (< 20) wrote:

Yep, if it can stay at this level for the close today, the next week should be very interesting :)

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#6) On January 30, 2009 at 9:38 AM, alstry (36.24) wrote:

Any ratio is meaningless when you are dealing with an asset class whose total historical value is not much more the annual budget of the US Military alone.

The total value of all gold ever mined would be $3.39 trillion at October 2008 prices.

http://en.wikipedia.org/wiki/Official_gold_reserves

And this is what you guys are fawning all over?????

As a shareholder of the United States of America......how much gold would you hand over to my country for protection like this:

to protect your gold from things like this:

Just trying to teach you how to think outside the box a bit.  Don't trap yourself into a narrow lane of logic.  It is not who holds the gold today, it is who can get it tommorow who really has control of the world's gold supply.

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#7) On January 30, 2009 at 10:40 AM, kaskoosek (79.63) wrote:

Alstry

I think it is the other way around. If some country doesn't use $$s, then we are going to bomb it like crazy.

See petrodollars and the Iraq war.

Some people hinted that part of the reason behind the war in Iraq was Saddam using euros to trade in oil.

 

 

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#8) On January 30, 2009 at 5:44 PM, Gingerbreadman55 (26.23) wrote:

alstry

None actually, All of that protection and we still got nailed by some dudes who took over a few airplanes? Riiiiight. Even the real little guy will figure out a way to hurt you if you're cocky enough and make him mad enough

 

The real problem is that all of america's millitary "protection" is over in Asia and the middle east "protecting" my home.

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#9) On February 02, 2009 at 3:39 PM, tfirst (27.57) wrote:

Even Hitler had world support....til he came out with his own currency..

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