price of gold thread, page-3

thanks SP, but I'm not sure if you are serious. I mention the effects of USD numerous times.

What you appear to be ignoring is the presnt day reality.

1. If what you say is happening, where is the evidence 'real' terms? While we might agree that it's coming, at the momoent it's not. I talk about this.

2. You should be really be arguing if the gold price is an inflationary or a crisis response. As both seemed to have occured at the same time in 1980-81, this is unknown. Gold price charts peak up with inflation charts I've looked at.

3. In todays money (Nov09) every transaction 'in USD' with a deflated USD is a bonus for the USA, and is not shown in the terms of trade it's only shown in the buying power of the USD compared to other currencies.

BUT (the bit you are missing) - for transactions NOT in USD, the exchange rate provides the benefit to the recipient, and is much less beneficial to the US (imports trade is more expensive to the US right now). The USD is down against those currencies - this is the measure of the USD index (i.e. against a basket).

(this is the low dollar policy doctrine by the way)

4. If todays trade money is used to buy gold, then it VERY MUCH depends on whether it has HAD the USD depreciation already built into the transaction, or not. If not, what do people want to do with it? Store it, or use it?

5. THIS REASON is why the world wants to transfer out of USD trading, using only USD denomination. Because it has no effect on the US when they are down, but the USD deflation is experienced by the worlds economies ONLY FOR CONTRACTS IN USD. Otherwise, they couldn't care less except for the effects on supply and demand.

Trading in ANY other currency contracts, the bonus is handed to that currency if it is stronger than the dollar.

So I think I've thought about it. The only losers while the USD is where it is, are those trading in USD contracts. This is what you are saying, I agree and I've considered it.

What is the money source that is being used to buy gold? USD index has been down below 90 cents for 12 months now - so this would add some weight to your argument.

As for everything else, until 'real' numbers start showing up, you are leading the cart before the horse, even if you think Bernanke's sell yesterday was unadulterated rhetoric.

All these things affect the 'real' price of gold buyers are prepared to pay before enough is enough, or until events change to warrant it going higher or lower. This is hotly debated, and I've presented some consideration.

So you don't like it. I'm OK with that.