What we focus on, we see

Everyone says GOLD is in a bubble. They show a chart against the USD, like the one below.
Next to the USD line is the Mexican peso...they are tracking quite close. Strange isn't it?

Yet let's look at the 20 year period starting 1980...the Mexican peso was in trouble due to their economy...(marked in red)...was gold in a bubble, going up 15 times in 5 years then another 3 times in the 1995 period?

 

It's not gold going up...it's the currency going down...think about it.

“To see things in the seed, that is genius.” Lao Tzu

without comment, because when we comment we direct
when we allow others to ponder they discover

from Mr Lipps' book Gold Wars...

The Role of Oil Wealth and OPEC

   
At the beginning of the 1970s, wage and price inflation soared, leading to lofty energy prices and vice versa. The Arabs were very slow to understand dollar debasement, the currency in which their
bills were paid. For a long time they did not understand they had been cheated for years. The paper money they received for their black gold had dwindled in value. In 1973 and 1979, they massively increased their prices to compensate for the increment in the American Consumer Price Index. The sudden quasi quadrupling of the oil price turned many energy producers into megamillionaires in a very short time. In 1973, one barrel of oil bought one bushel of U.S. wheat. In 1980, the same barrel of oil bought nine bushels of U.S. wheat. By the middle of the 1970s, the demand for gold by investors from oil producing countries exploded.

Not only individual investors were buying gold, but OPEC nations were also in the market. Timothy Green commented: 

.[the] single most important development in the gold market since 1970 has been gold buying by

central banks (or other government institutions) in oil producing nations: Indonesia, Iran, Iraq, Libya, Qatar and Oman have all acquired gold..



comment: maybe many of us are slow to understand dollar debasement

Two questions

1. Why do Central bank hold gold?
http://www.smh.com.au/business/markets/central-bank-buying-gives-gold-a-boost-20121026-28950.html


2. Why are they demanding their gold back?
http://www.telegraph.co.uk/finance/financialcrisis/9631962/Bundesbank-slashed-London-gold-holdings-in-mystery-move.html

Australia - the lucky country...really?

http://www.marketwatch.com/story/australia-facing-a-hard-landing-andy-xie-2012-10-25?pagenumber=1

And Xie has got it right - the timing is the only question.
Those inside the bubble can't see it...2013 may be a little too early...but if this was a debt supercyle, why do Australians, with their love affair with debt fuelled housing think they can survive it's conclusion? They can't.


Any foreign capital-inspired asset bubble bursts when the flow reverses. It causes the monetary system to contract. As the central bank replaces the outflow with new money, the currency value drops, which frightens Asian retail investors who hold Australian dollar deposits. Their flight causes the currency to tank more and liquidity to tighten.

The property market will fall with the tightening liquidity and capital flight, which frightens away more foreign capital in the property market. The new equilibrium is defined by a much lower currency value and property price. In this new equilibrium, the currency value could be half of its peak value.

Mr Lipps, a Swiss private banker wrote in 2001

http://www.fame.org/pdf/Gold%20Wars%200-9710380-0-7%20%20-%2001.21.02.pdf

I demand to know from Western bankers and portfolio managers what confused logic compels them to leave no room for gold in their portfolios. They should know from history that the future of fiat money does not bode well for the survival of their clients. portfolios. I address the Western bankers because the people of the East have a better understanding of gold. Do the portfolio managers really think that stocks of companies with no earnings or bonds in troubled currencies are sensible long-term investments?

Should they not be more interested in sound monetary conditions? It would make their work easier.

I ask the central bankers of this world: Are you really concerned with what should be the main purpose of your jobs: to protect the purchasing power and the integrity of your country.s currency? Are you really sincere and acting to the best of your ability when you decrease your country.s gold holdings only to replace it with continuously depreciating paper claims that may not be honored? Remember, no serious farmer would sell his seeds. If not, you are clearly useless and should get out of the business.

I will not ask anything of the politicians because they will never change. All they have done with their politics is to destroy the purchasing power of money.

Be right and sit tight...Jim is the master at this for good reason

http://www.jsmineset.com/2012/10/24/manufactured-market-drama/

"And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars, I want to tell you this: It never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine-that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader, after he knows how to trade than hundreds did in the days of his ignorance."

Jesse Livermore