so when to sell gold/silver/commodities?

[jy006m]

Ok, so now that my position is set, let's say 5 years from now after moderate hyperflation where say the dollar has lost 75% of its value and gold is at $6000/oz and silver is $200/oz, what are the signs that you look for to know that gold/silver is now a bubble?

In looking at the charts gold/silver completely collapsed in 1980 so we may not want to hold onto to gold/silver forever.

 

[MRoCkEd]

Nobody can tell for sure, but good question I guess.

 

[RCA]

I think it's a mixed bag. I think some gold/silver should be held forever due to various reasons (passing wealth on to your kids, a shtf scenario, etc.), but I also think that one should cash in at least a portion of their stack if the timing is right. I guess it all depends on how high it goes and how fast. If we start to approach the all-time highs adjusted for inflation it might be a good time to sell, say, half your stack, etc. Since I've started buying, I can't imagine the desire to want to sell it all no matter how high it gets. I don't want to loose the sense of security I have by owning some.

 

[Dr.3D]

There is a chance the U.S. dollar will collapse and gold/silver will be the only money.

 

[weatherbill]

sell some and keep some, incase gold goes down, but when selling, spend th epaper quickly on usable goods before it might drop even more in value

 

[Josh_LA]

Ok, so now that my position is set, let's say 5 years from now after moderate hyperflation where say the dollar has lost 75% of its value and gold is at $6000/oz and silver is $200/oz, what are the signs that you look for to know that gold/silver is now a bubble?

In looking at the charts gold/silver completely collapsed in 1980 so we may not want to hold onto to gold/silver forever.

no, you don't want to hold on to metal forever, but you won't live forever either.

Even though it collapsed in 1980, 30 years later, it's still back up. Unless there's a fundamental change in monetary policy or reputation of metals, inflation will continue and metal prices will always go up.

You should sell your assets whenever you believe it is worthy or necessary, no earlier or later.

 

[IChooseLiberty]

Easy. Keep an eye on the Dow to Gold ratio.

Currently, we're @ 10.3 on this graph and the line can be extended to that point. Sell your gold when the ratio bottoms and starts turning up. Schiff believes it will get to 1:1 but nobody really knows how low it will go.

 

[Josh_LA]

Easy. Keep an eye on the Dow to Gold ratio.

Currently, we're @ 10.3 on this graph and the line can be extended to that point. Sell your gold when the ratio bottoms and starts turning up. Schiff believes it will get to 1:1 but nobody really knows how low it will go.

Dow vs Gold is assuming

1. stock market will last as it has
2. the dollar is stable

 

[IChooseLiberty]

Dow vs Gold is assuming

1. stock market will last as it has
2. the dollar is stable

How can the ratio assume the stability of it's axes when it illustrates their relative (in)stability? (contradiction)

 

[Anti Federalist]

There is a chance the U.S. dollar will collapse and gold/silver will be the only money.

And that's why you don't "sell" it and why it's not an "investment".

You trade it for goods, services or government chits as the need arises.

 

[Josh_LA]

How can the ratio assume the stability of it's axes when it illustrates their relative (in)stability? (contradiction)

I meant, to use the ratio as in INDICATOR, YOU MUST ASSUME THAT THE MARKET IS STILL STABLE ENOUGH TO MATTER.

because you're not assuming the worst case scenario.

ever heard of something worse than inflation? it's called hyperinflation.
you know what's worse than dollar depreciation? Dollar being (almost literally) worthless

and what's to top market instability? The market completely frozen or collapse, instead of having stocks worth dollars, it can be worth pennies, such that it's unworthy of mention.

 

[Josh_LA]

And that's why you don't "sell" it and why it's not an "investment".

You trade it for goods, services or government chits as the need arises.

you remind me again, why I am anti-semantic.

 

[IChooseLiberty]

Easy. Keep an eye on the Dow to Gold ratio.

Currently, we're @ 10.3 on this graph and the line can be extended to that point. Sell your gold when the ratio bottoms and starts turning up. Schiff believes it will get to 1:1 but nobody really knows how low it will go.

I meant, to use the ratio as in INDICATOR, YOU MUST ASSUME THAT THE MARKET IS STILL STABLE ENOUGH TO MATTER.

because you're not assuming the worst case scenario.

ever heard of something worse than inflation? it's called hyperinflation.
you know what's worse than dollar depreciation? Dollar being (almost literally) worthless

and what's to top market instability? The market completely frozen or collapse, instead of having stocks worth dollars, it can be worth pennies, such that it's unworthy of mention.

This particular graph also illustrates problems in the underlying currency. See the green band? Anything outside of the green band is an issue with the currency. Look at the peak during the great depression... dollar confidence was high. See the trough during the inflation of the late 70's... then there was a currency crisis and dollar confidence was low until being righted by Volker with high interest rates.

If we saw inflation like that of Wiemar or Zimbabwe and the currency lost confidence, the line in the graph would drop to the bottom and prices for all goods would be spiraling way out of control. Not to mention that you'd be getting constant pay raises to keep up with inflation so I think it would be pretty obvious at that time that you should not sell your gold until inflation is under control.

 

[rapidtrends]

The DOW/Gold ratio has historically proven to be a pretty accurate indicator of when gold has topped.

This does of course require a "functioning" market. Stable and functioning are not the same thing. It could be argued that the last few tops in gold didnt necessarily occur during a "stable" market.

DOW/Gold ratio aside however, there are a few other indicators that we can use to gage if it has topped.

My favorite by far is the "everyman" indicator. When everyman is singing the praises of gold and silver, and that it is THE investment, then you will know that its time to sell.

Examples:

• The shoe shine guy in the airport is giving you gold and silver tips
  
• The cab driver is giving you gold and silver tips
  
• You see gold all over the cover of time magazine
  
• There are more gold websites and advertisements than there are forex websites and advertisements
  
• Grandma who knows absolutely nothing about financial wealth building is giving you gold tips
  
• There is an entire industry that grows up around selling gold (like the lead up in real estate agents, mortgage brokers, and everything to do with real estate leading up to the popping of that bubble)

Etc.

In the event of a hyperinflationary environment, I wouldnt sell gold AT ALL unless it was in exchange for property such as during Wiemar. I have read you could buy an entire City block in germany with all the commercial buildings on it for 20 ounces of gold at the height of the German hyperinflation.

Aside from something like that, why would you redeem gold into a hyperinflating currency? Makes more sense to just sit on it, and redeem some of it when great opportunities arise to invest in real tangible wealth growing assets.

 

[lodge939]

If the dollar collapses, there will be a world economic conference and a new monetary system will be established. Some people may advocate the euro as a reserve currency, but some may advocate a gold standard. If, miraculously, we go back to an international gold standard, gold will be worth a FORTUNE

as to the Dow/gold ratio, we need a free-market to lead the Dow out of it's bottom

 

[jy006m]

In the event of a hyperinflationary environment, I wouldnt sell gold AT ALL unless it was in exchange for property such as during Wiemar. I have read you could buy an entire City block in germany with all the commercial buildings on it for 20 ounces of gold at the height of the German hyperinflation.

Aside from something like that, why would you redeem gold into a hyperinflating currency? Makes more sense to just sit on it, and redeem some of it when great opportunities arise to invest in real tangible wealth growing assets.

Yeah, that's what I'm planning to do. It was Mike Maloney back in January of last year who said eventually we'll be able to buy a house with $8000 worth of silver (when it was trading at $18/oz). Do you think people would accept gold/silver as payment for a house? Or would I have to convert it to some form of legal tender first?

 

[jy006m]

If, miraculously, we go back to an international gold standard, gold will be worth a FORTUNE

I guess as long as we don't have 20% interest rates and gold still not being legal tender like in 1980, we'll be okay.

So we are really banking on them adopting gold standard at the end of the crisis. BTW, what would gold be worth today if we were on a gold standard?

 

[IChooseLiberty]

I guess as long as we don't have 20% interest rates and gold still not being legal tender like in 1980, we'll be okay.

So we are really banking on them adopting gold standard at the end of the crisis. BTW, what would gold be worth today if we were on a gold standard?

The recession around 1980 is very different than what we are experiencing today. While both our recession and their recession suffer(ed) from stagnant/negative growth, the main characteristic of the 1980's was rising interest rates to fight high inflation. Today, our problem is not inflation but deflation and interest rates are falling to fight it.

Nixon actually ended the gold standard in 1971 by the way. Gold was not legal tender in 1980 and the dollar was fiat.

This graph illustrated what I'm talking about if you have an understanding of past recessions in American history.

You can actually extrapolate the line further down to about 2% which is the recent low.

The yield will bottom when we reach the end of the Kondratieff Winter and enter Spring.

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[jy006m]

The recession around 1980 is very different than what we are experiencing today. While both our recession and their recession suffer(ed) from stagnant/negative growth, the main characteristic of the 1980's was rising interest rates to fight high inflation. Today, our problem is not inflation but deflation and interest rates are falling to fight it.

Nixon actually ended the gold standard in 1971 by the way. Gold was not legal tender in 1980 and the dollar was fiat.

This graph illustrated what I'm talking about if you have an understanding of past recessions in American history.

I am talking about 5 years from now, when it will be similar to 1979 but perhaps worse.

 

[Anti Federalist]

Ohhhhh Kayyyyy....

you remind me again, why I am anti-semantic.

I'll bite...

What?