Thank you Golden, I will come out for a while then. I had better be careful though because I don't want to go back in there. I defer to others here on gold, but I used to trade metals exclusively and gold it is what got me into futures in the first place. Silver is too fast for me and has that on-again off-again tagalong relationship like platinum. So mostly gold. Not sure I can add anything to what you already know as far as TA goes. It is clearly a widely used hedge, and maybe that is why it sometimes gets sold hard to pay for losses in equities when stuff gets crazy -- even when it has been used in as protection in the run-up to high equity valuations. We've seen this over and over including during 2008. But then when things settle and we get a moderate sense of control as we did in early 2009, it often starts all over again to the upside. As for the rationale all I can do is rehash what I wrote here before. Just one trader’s opinion.
Gold is a human reification of value that derives first from the impracticality of trading bales of wheat, but it does seem to be less an abstraction than the cash it once underpinned -- and our cash is far less an abstraction than federally created computer money. And heaven knows cryptocurrency is the greatest abstraction yet. Crypto is to money what frontier justice was before US Marshals and circuit judges were sent out west. The gold counterbalance is part of western ideals, and it is kind of Lockean in nature, you know? Locke, the British empiricist, might have probably argued for it on the basis that, like our carbon-based forms, it connects us to a world from which we derive our ideas of what constitutes material value. Locke also argued for the decentralization of power, and his argument worked because we now have a hybrid of ancient democracy that works better than it did in the past. So, it stands to reason that in the modern sense, gold is at least partly intended to mitigate centralized power. Ironically, it is also an appeal to the original and the organic. Cryptocurrency is also about the rejection of centralized power -- almost to an anarchical level -- but for reasons already laid out here on this thread, many feel that is a nonstarter. Apart from being relatively rare and not prone to manufacture, gold is something that is closer to the dirt -- just like us. Except (and due respect to the ghost in the machine) gold has perceived longevity.
Every yearning and every subconscious fear related to progress is reflected in our appreciation for gold. It is eternal, and it is an appeal immortality…sort of like when we procreate, and we leave our DNA here in something that is the closest thing to an immortal act we have. We also seem to want to leave something independent of human whims for our children and theirs. If we have no offspring, we leave our legacy of struggle for the benefit of dear friends or those who have less despite their best efforts. Never mind the practical realities of the modern world, for gold is something people want to bury under the shed or on a deserted island. We don't exactly have an unbroken history of adhering to the practical much less the moral or true. What we do have, for the time being, is a unique kind of freedom. We are not using it very well though. Judging by what I see going on, true freedom continues to be dangerous, just…in a less acute way.
The parliamentary democracy mentioned above demands a social compact. The people who drew up constitutional law from Locke's work were not anarchists. Well, their rebellion resulted in a state of liberty the world had not seen before, but they did not advocate for chaos and neither did their progeny. We have strong history of practically constrained freedom. That's why we pay the taxes that generate our fiat currency. We may be removed from nature somewhat -- we had to or we'd all be gone -- but we do stay intact by cooperation within the tripartite of executive, legislative and judiciary powers. And we are Lockean islands in a Hobbesian sea, because despite our efforts, we are still not in sync globally. We have little reason to share all our values at this point and we have many reasons to count on one currency over others. The value that is found in the USD or the AUD, for instance, is in fact predicated on the fact that no one is trying to escape our borders. They are trying to get in. There's a reason for that. Cryptocurrency is impractical because humans don't even agree on the values that underpin what currently serves for fiat currency. It is an aspiration ahead way of its time.
Crypto does not work to transcend our value differences. It is a much greater abstraction than federal currency, and the attempt to make it something more than a creation of the mind goes to the ancient struggle between philosophical realism and idealism and between the acceptance of divisible secular authority over theocracy, monarchy, and the like. That is also what makes it a trade. Ultimately, though, our freedom to be jerks is what makes it a trade. Someone here mentioned the strange inconsistencies present in our interests. I suppose evolution is a relay race of sorts, but goodness we sure do not make good use of the time we have been given by people who had to endure and transcend very harsh realities.
Anyway, this does not answer your question, but the point is that gold ain't no joke. It is part of a centuries-long transition from the state of nature to a world where we supposedly share moral truths. If you think the era of shared values is upon us - no, if most people think that - you can throw away your gold and go with crypto. But those fortunate and hardworking enough to have saved money in this world will probably rely on good old gold. As for the technicals and relationship to any impending price instability, Golden, I will have to have a look. Just know that its fickleness is related to its relative loft and do not get freaked out by exuberance or fear that we see play out in the futures market. Gold, historically stable as it is, is part of an increasingly volatile set of circumstances. Derivative trading contributes to that volatility. Last time it sold off it may have been mostly because everything was catching heat. As our sobriety wavers and we mock the freedom we have in our journey to wherever, I guess we can expect intermittent shake. But for now, utopia is a bit far off yet and we are a work in progress. But we never put too many eggs in one basket. Meanwhile, your question is the one everyone is trying to answer: assuming gold as a currency, how do current prices hold up against monetary policy going into what will eventually be asset tapering and interest rate hikes by the central banks? Well, I better go have a look before I get into more trouble than before.
