Rich Dad Predictions -

[Systemic Risk]

I also bought a lot of gold last year. Know I'm not sure if it was the right choice...

If you've bought gold you obviously had your reasons/macro views and was probably prepared for significant fluctuations.

Thought I'd share the views of experienced traders I've been following. Interestingly they are currently all relatively cautious on gold, but say long term higher gold is a high probability almost sure thing due to their macro views. But one of them has consistently been saying to his subscribers to expect a sharp fall (and to actively hedge their gold) as the catalyst for higher gold is a turn in the bond market and a crisis in which gold would fall initially. (Rather than a simpler quantitative easing story).

While it's always been my view that larger events in government debt will come to pass, I earlier thought it might be an easy to ride up for gold. I think we need to have a longer term focus and prepare for downside in 2013. Hedge your gold if you like (and follow a newsletter like Larry Edelson's).

Because talk of a turn in the bond market and those particular interest rates is getting much louder in 2013.

Fixed income and long term bonds is not the safe place many of us kiwi savers are lead to believe. Due to interest rate risk and default risk, sovereign bond holders could get hit badly in 2013.

From what I read, this year is key to what will drive the real pumping of liquidity that will properly drive global inflation and severe devaluation of the hardest-hit currencies.

[Systemic Risk]

Systematic Risk: You seem to be enamoured with gold and the gold bug theory that we are going to see hyper inflation....the GFC central banks have been fighting deflation and have been inflating the economy ( by various money "printing" measures) to avoid a catastrophic depression. Such a scenario sees Hyper inflation as improbable....Buying gold expecting substantive inflation is an eggs-in-the-one-basket approach and exposes one to potential substantive loss. ( I have a fair holding of gold but I stopped buying in 2007).

Hi Austrokiwi, I agree with a lot of what you're saying and also agree with your warning against people getting too heavily into gold right now.

However, I'm not a hyper-inflationist. Gold is a good investment given the debt-corner in which much of the world/central banks/governments will be trapped going forward. (Unless we have explosive GDP growth like the 90s, which Reinhart & Rogoff's work strongly argues against.)

I'd recommend people watch at least the first 10 minutes of this video. [grr! can't post links yet! Just search "Americatalyst 2011" on youtube]

Again, discussion/feedback appreciated, as I still question how the above could affect NZ property (via banks, interest rates etc) as sovereign default risk and eventual global inflation accelerates as central banks target "nominal growth" in GDP.

However (as many inflationists say, eg Larry Edelson) there is likelihood of a bout of deflation first -but that's big picture, not necessarily local to us- before any global sovereign crisis. So gold buyers need to take care.

Whether central banks bring the inflation under control or not is another issue. The difficulty is, as Kyle Bass says, "today Paul Volker can't even show up" due to sovereign debt-levels - as even a small rise in rates detonates the debt bomb. This is the non-linear situation we face today despite the relative calm. But I still don't believe in hyperinflation.

[Austrokiwi]

Systematic Risk: You seem to be enamoured with gold and the gold bug theory that we are going to see hyper inflation. There is a counter hypothesis and one that has so far matched the actual market performance. that is that since the GFC central banks have been fighting deflation and have been inflating the economy ( by various money "printing" measures) to avoid a catastrophic depression. Such a scenario sees Hyper inflation as improbable. Europe seems to be clawing its way out of the morass its been in with some reports suggesting that Greek banks are going to be all the more stronger in the medium term. Buying gold expecting substantive inflation is an eggs-in-the-one-basket approach and exposes one to potential substantive loss. ( I have a fair holding of gold but I stopped buying in 2007). Some evidence for continuing deflationary pressures current mortgage rates in Austria are 1.6% below the latest inflation measures.

[Systemic Risk]

i bought a little gold in 2007

sold it early in 2012 when the price appeared to have peaked

but i've dipped my toe back in the water...

I agree with your outlook, although I follow newsletters that are telling gold-bugs to hedge going into 2013. Maybe an opportunity for you to buy at lower prices? Am a bit annoyed I can't find kiwisaver involving physical gold!

[eri]

i bought a little gold in 2007

sold it early in 2012 when the price appeared to have peaked

but i've dipped my toe back in the water...

[Systemic Risk]

Hi, just to revive this "gloom (boom) & doom" thread - the inflation/hyperinflation discussion interests me a lot. Has anyone read John Mauldin's book Endgame?

It paints a similar picture, but goes into detail of sovereign balance sheets (as studied by Reinhart & Rogoff) and says the hyper-inflation scenario only materialises if the authorities fail to control the inflation. Inflation (not hyperinflation) is highly likely despite the threat of deflation.

(Sovereign debt is a catalyst for not just more QE but actual printing to pay bondholders to avoid default losses to banks.)

Anyone here buying gold and silver, or just real estate?!

[kingkong82]

ha ha ha ha the price of oil is not coming down....

[drelly]

I liked the bit where the first guy said the price of oil wasn't coming down...

[green as grass]

Part 4 is interesting, talking on gold, silver & hyperinflation.
They were wrong with their predictions for 08 but yet still could be right. Will be very scary if they are right.

[donna]

Part 2


From: http://www.youtube.com/watch?v=EgSrFkbCw6U


Cheers,

Donna

[donna]

From: http://www.youtube.com/watch?v=8CQ5gJNxsdk

Robert Kiyosaki - Rich Dad predictions 2008 part 1 of 4

Cheers,

Donna