4 ms·

Quick answers : Technical analysis can give you a false sense of 'knowledge' - when you may only be picking up patterns in randomness. But it's very seductive

by mdda 14y ago

Quick answers : Technical analysis can give you a false sense of 'knowledge' - when you may only be picking up patterns in randomness. But it's very seductive in its certitude. Gold : If the 'store of value' argument is obvious to you, it's also obvious to a lot of other people. The price of gold tends to balance out the two camps : Anyone who sells you gold believes (naturally) that the price is higher than can be justified (vs. other assets). Gold can certainly go up and down from here. People also used to believe that houses were a fantastic store of value ('everyone has to live somewhere') - that was only 6 years ago. The typical trader's wisdom is that if a taxi driver (or some other version of 'the man in the street') offers an opinion about a 'sure thing' - run in the opposite direction. Currently, taxi drivers love gold. A few years ago, they had friends flipping condos. Before that it was internet stocks, etc...

javert 14y ago
Your answer on gold has definitely made me think. If the 'store of value' argument is obvious to you, it's also obvious to a lot of other people. I don't know, I mean, there's lots of smart people who think gold bugs are just nutty libertarian types, and then there are other smart people who aren't particularly bullish on gold (such as yourself). But it seems kind of backwards to just "do the opposite of what everyone thinks is a sure thing" (as you said) or "do the same and jump on the bandwagon". Ultimately, in many cases, there will be economic fundamentals (and not just other people's sentiments) that will drive the value of things over time. Which leads me to a more specific question: What kind of event would cause a major "correction" that would drive the gold price down (either over time, but a significant downward trend, or suddenly, like a bubble popping)? I can't really think of one. Can you? I mean, one would be if everybody "sentimentally" just decided gold was in a huge bubble, but that seems quite unlikely without an underlying factual reason. Another would be if there were lots of much better investment opportunities, that would drive wealth stored in gold into factors of production... e.g. a very major, capital-intensive global economic boom. Right? Which is something I would be willing to bet against, at least over the course of the next decade.
- saraid216 14y ago
  > I don't know, I mean, there's lots of smart people who think gold bugs are just nutty libertarian types, and then there are other smart people who aren't particularly bullish on gold (such as yourself). 1) It doesn't depend on how smart the person is. It only depends on whether or not they believe it. 2) It doesn't have to be everyone. It just has to be enough people. > Which leads me to a more specific question: What kind of event would cause a major "correction" that would drive the gold price down (either over time, but a significant downward trend, or suddenly, like a bubble popping)? I can't really think of one. Can you? This actually makes me wonder what it would take to synthetically manufacture gold. A glance at Wikipedia says that it's not feasible (possible only in "unmoderated reactors", and I don't know what that means), but we seem close enough that if we wanted to, we could probably do it. I will be thoroughly entertained if Iran actually decides not only create a honest-to-God nuclear reactor, but uses it to synthesize gold and flood the market. It'll never happen, but it would be hilarious.
  - JonnieCache 14y ago
    >(possible only in "unmoderated reactors", and I don't know what that means) I'm fairly sure that refers to a nuclear reactor gone into meltdown. By the time you've knocked together enough particles to make gold nuclei it's quite hard to calm the thing down again...
  - crntaylor 14y ago
    We can already create synthetic diamonds [0] and there is no market for them, at least not as gemstones. People seem to want 'the real thing'. [0] http://en.wikipedia.org/wiki/Synthetic_diamond http://en.wikipedia.org/wiki/Synthetic_diamond
    - jjjeffrey 14y ago
      Somehow I can't imagine lab-produced gold being worth less than naturally occurring gold for jewelry, etc. I imagine the only potential difference would be the distribution of isotopes. But I suppose it could still happen if large players would benefit.

by mdda 14y ago

javert 14y ago

Your answer on gold has definitely made me think. If the 'store of value' argument is obvious to you, it's also obvious to a lot of other people. I don't know, I mean, there's lots of smart people who think gold bugs are just nutty libertarian types, and then there are other smart people who aren't particularly bullish on gold (such as yourself). But it seems kind of backwards to just "do the opposite of what everyone thinks is a sure thing" (as you said) or "do the same and jump on the bandwagon". Ultimately, in many cases, there will be economic fundamentals (and not just other people's sentiments) that will drive the value of things over time. Which leads me to a more specific question: What kind of event would cause a major "correction" that would drive the gold price down (either over time, but a significant downward trend, or suddenly, like a bubble popping)? I can't really think of one. Can you? I mean, one would be if everybody "sentimentally" just decided gold was in a huge bubble, but that seems quite unlikely without an underlying factual reason. Another would be if there were lots of much better investment opportunities, that would drive wealth stored in gold into factors of production... e.g. a very major, capital-intensive global economic boom. Right? Which is something I would be willing to bet against, at least over the course of the next decade.

saraid216 14y ago
> I don't know, I mean, there's lots of smart people who think gold bugs are just nutty libertarian types, and then there are other smart people who aren't particularly bullish on gold (such as yourself). 1) It doesn't depend on how smart the person is. It only depends on whether or not they believe it. 2) It doesn't have to be everyone. It just has to be enough people. > Which leads me to a more specific question: What kind of event would cause a major "correction" that would drive the gold price down (either over time, but a significant downward trend, or suddenly, like a bubble popping)? I can't really think of one. Can you? This actually makes me wonder what it would take to synthetically manufacture gold. A glance at Wikipedia says that it's not feasible (possible only in "unmoderated reactors", and I don't know what that means), but we seem close enough that if we wanted to, we could probably do it. I will be thoroughly entertained if Iran actually decides not only create a honest-to-God nuclear reactor, but uses it to synthesize gold and flood the market. It'll never happen, but it would be hilarious.
- JonnieCache 14y ago
  >(possible only in "unmoderated reactors", and I don't know what that means) I'm fairly sure that refers to a nuclear reactor gone into meltdown. By the time you've knocked together enough particles to make gold nuclei it's quite hard to calm the thing down again...
- crntaylor 14y ago
  We can already create synthetic diamonds [0] and there is no market for them, at least not as gemstones. People seem to want 'the real thing'. [0] http://en.wikipedia.org/wiki/Synthetic_diamond http://en.wikipedia.org/wiki/Synthetic_diamond
  - jjjeffrey 14y ago
    Somehow I can't imagine lab-produced gold being worth less than naturally occurring gold for jewelry, etc. I imagine the only potential difference would be the distribution of isotopes. But I suppose it could still happen if large players would benefit.