Where is the US economy headed?

Hawkeye the price is being held up not by cold blooded traders but by people that got on the old bandwagon as they saw the price going up and up hearing people like you opinion that there is no limit to the up side.

Once it start to move down in a large way they will panic and jump off faster then they jump on and comments such as do not panic from you will not stop it.

It might simply have been marked down to deter sellers. The drop doesn't necessarily mean any significant trading has taken place.

Sellers are thought to have appeared because something had to be sold to pay for losses in other areas. So make 'em squeal is the name of the game. All bookies do it.

Gold prices are at a very unstable point and anything could cause a crash to the bottom where I am planning on picking up a few gold coins for 300 dollars an ounce or less.

Well Bill- the market is for taking a position with.

I am betting I will be buying my gold coins at three hundreds dollars or less an ounce within no more then two years.


http://www.forbes.com/sites/feeonlyplanner/2011/08/28/gold-bubble-or-not/

Gold: Bubble or Not?
Subscriber Customer Service

27 8 5 6 3 This week GLD, a gold ETF, surpassed SPY, an ETF tracking the S&P 500, to become the largest Exchange Traded Fund. Gold prices also set a new all-time high. This should ring the bubble klaxon!

Gold is an useless asset. It does not produce earnings, it does not pay dividends or interest, and it has few industrial uses. The only things it does well is look pretty. So why is everybody buying it instead of stocks, bonds, rental properties, or anything else that does produce an income stream? There are two possible answers: Gold is undervalued even at its current price. Or herding behavior causes people to buy into a bubble.


The gold price has increased from $255 in August 1999 to well over $1800 today without serious dips or pullbacks. It is easy to see why this attracts investors, especially when compared to the turbulence in the stock market over the same period of time. It is also easy to see why people might expect that gold will continue to rise after watching it gain consistently for well over a decade.

However, history shows that asset prices cannot continue to go up indefinitely. There are always pull backs, crashes, and bear markets. The last time this happened to gold is a distant memory, but we all remember recent examples such as the tech stocks in the ’90s and home prices in the ’00s.

So is gold like the tech stocks or residential housing? As is often the case in finance, it depends on how you look at it. We recently posted about the how much S&P 500 earnings an ounce of gold can buy. By that measure gold is vastly overvalued compared to stocks. However, there are other ways to put the price of gold in relation to the rest of the economy.


The chart at left provides a few examples. We plotted the ratio of the gold price to the value of the S&P 500, to the GDP, to an index tracing industrial metals (i.e. those that are useful rather than just pretty), and to the median family income.

Gallery: Ten Steps To Get Your Retirement Back On Track No matter how you look at it, gold was more overvalued in the lat ’70s and early ’80s. That was a time of double digit inflation and several recessions, which increased the appeal of gold. However, once the crisis was over gold fell steadily for about 20 years.

For the last decade, gold has been climbing again. In none of the categories has it surpassed its relative valuation peak from 1980, but we are getting close compared to the median family income and the price of industrial metals.

So what does all of this tell us? Well, we have the usual mess of contradictory economic data.

The size of the gold ETF screams bubble because it indicates that everybody and their dog have bet all on gold. The relationship between the price of gold and S&P 500 earnings also screams bubble. The gold price relative to industrial metals and personal incomes shouts bubble, but compared to the GDP or the S&P 500 index value it only a murmurs the question: “Bubble?”

Over long time periods, gold has been a terrible investment while stocks, bonds, and income-generating real estate have produced good returns. This is likely to be the case going forward as well.

Even if gold doesn’t unambiguously qualify as a bubble, it is likely that price drops will be drastic when investors shift back into more sustainable investments. The sheer size of the gold ETF virtually guarantees that sellers will not be able to find buyers at current prices. Buyers will appear once gold has become cheap, but all of our ratios indicate that this would require a substantial price drop.

It is always easier to identify assets that are bubbling than to predict when the bubble will pop. Gold has much more downside than upside at this point, but this has been true for years without slowing price gains. Home prices and tech stocks also suggest that bubbles can exist for years even after objective measures (e.g. P/E ratios or rent to buy ratios) show that markets are out of equilibrium.

It is anybody’s guess when gold will correct, but it is very likely that it will be ugly when it does.

After some desultory remarks about the value of what he is writing Titus Livius goes on to say-



Perhaps history is endlessly repeating itself.

Bob Dylan is faster--

http://www.bloomberg.com/news/2011-09-28/obama-jobs-plan-prevents-2012-recession-in-survey-of-economists.html



Of course, the Republicans won't let something that would actually help our economy pass; as that would doom them in the next election, and they know it.

Cycloptichorn

Well Cyclo-the historians tell the story of how Severius deposed King Tarquinius by pointing to his ignoble birth, the devious way he had come by his position and how his common origins, uncouth by our standards I should think, had caused him to "hate the nobility possessed by others", I'm quoting Livy, and to " plunder the leading citizens of their land and divide it amongst the dregs of the populace. And all the burdens which had before been borne in common he had laid upon the nation's foremost men."

Shades of tax the rich eh?

That was in about 550 BC and many years from the Greatness of Rome coming to pass.

But I must admit that Livy was of aristrocratic leanings.

I'm in one of my cyclical history theory phases.

But Severius did depose Tarquinius, restored the balance of wealth and Rome did become great.

http://finance.yahoo.com/blogs/daily-ticker/housing-market-hasn-t-bottomed-because-american-consumer-160508402.html;_ylt=AvMU.810xGQfBwPfUSqLJK67YWsA;_ylu=X3oDMTFjNWZtM3V0BHBvcwMzBHNlYwNGUERhaWx5VGlja2VyQmxvZwRzbGsDaG91c2luZ21hcmtl

True, except that a huge wave of new slum lords are quietly buying up the housing stock at a 20-30% discount , and there is no way in the forseeable future that they will shift back into owner occupied status. This does not end well for the American people, "its a wonderful life" is no longer classified under Nostalgia, the desire to own our homes rather than paying a greedy rich person is the wave of the future.

Just as is raising health insurance premiums which small business can't afford. Big is beautiful it is said.

**** that, the problem is that a whole couple of generations are now locked in for rising bills to pay for the care of the the debts of the older generations, and lower income to do this with. You are a history buff...how does that usually work out??

What is even better that we are handing off a nation that never in recent memory has come close to making the investments in infrastructure that is needed, and in which most of the institutions are deeply dysfunctional. I dont think todays young people are going to be in any mood to pamper mom and dad in their old age, do you?

Older people vote at a very high levels and younger people do not so whatever the feelings are as long as the government had not been overthrown and younger people do not vote it does not matter how they feel about mom and dad.

Second it is not a problem at all about the wealth not being there to pay retirements benefits it is a problem of it being lock up by a few percents of the population.

Our lack of fidelity to social justice while claiming great fidelity to social justice can not be dispensed with by arguing "it is your own damn fault that the thieves are stronger than you". Kids cant vote and they are getting fucked over, so we old people who want to excuse ourselves for our misbehavior based upon having the vote might to **** over the young should have trouble looking at ourselves in the mirror in the morning.

Bullshit, the thievery conducted by the ruling class compounds the problem, it is not the problem in total. The grand total of promises made verses money that is likely to be available in America, the existence of the baby boom bubble, the fact that the political system is broken and the fact that American global dominance is over are the core problems. Had you been paying attention you would have heard way back during the 1980's that America was on a collision course with reality, long before the Bush tax cuts, spending trillions on military adventures and expansion of the medicare promises made the situation worse.

Some sort of revolution leading to a strong man to knock heads together who then goes drunk with power. But how it has worked out before is not necessarily a guide to how it will work out in the future.

The only person I have seen who won't go drunk with power is Bob Dylan. Willie Nelson's promotion of "green" gas rules him out.

Every Ponzi Scheme has a bubble, hawkeye. Blame FDR and LBJ who enactedSS and Medicare. FDR promised SS would never be taxed, and LBJ was only another big spender Democrat following the the FDR tradition of buyingvotes with his "Great Society" programs., to be paid for by future generations.

The only items I have heard of that Bob Dylan has lent his name to are ladies underwear and Fender guitars and I'm sure he can defend his integrity on both accounts. His songs are where integrity exists.

Eighteens to late twenties somethings can not vote??!!!!!?????

Seconds if you mean below 18 years they are not paying more then a tiny tiny tiny fraction of the SS bill or any other bill for that matter.

When a group as small as the top 800 men and women or so wealth equal the bottom half of the total population the problem is so large that if overshadow any other problem.

No solutions to any of our others problems can be found until that situation is address.

The problem is not so much that so much wealth is at the top...it is that their best interests diverges from the rest of ours. In theory they don't need to have the wealth removed right away, them agreeing to work towards the greater good would be enough. I firmly believe that we have the right to remove wealth from the wealthy at will and treat them as criminals if they refuse to comply, but I am hoping that it does not come to that.

hawk, Good on ya; your perspective is spot on. The repubs continues their old saw about the transfer of wealth from the rich o the poor as our countries infrastructure gets neglected and our dedicit continues to grow.

There's no cure for stupid.