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I hate Michael Pascoe

I hate Michael Pascoe because he is a paid for shill for the Establishment and is a shameless anti-gold man.

His latest piece in the mainstream SMH:

While well down from its peak, there’s no denying Australian dollar gold has still done nicely indeed since it took off from below $600 five years ago. To pick a random starting point, Aussie gold is up 10.6 per cent this year – not as flash as the US dollar rise of 16 per cent, but still better than equities and much better over the five-year time frame.

Before that though, gold wasn’t doing much and past performance of course does not guarantee etc. Gold’s current strength doesn’t mean it’s not a bubble. Indeed, it’s rallying because it is bubbling – speculative momentum building on top of cheap money and fear. Physical demand for gold used to be about jewellery and industrial use, but now is mainly for speculation.

(This of course is fluoro red rag stuff to the gold bugs, many of whom believe there is some intrinsic value in the yellow metal and some of whom think capitalism is about to come to an end. But perhaps the most curious justification I’ve seen for buying gold was attributed to the seriously rich and eccentric Jim Rogers, that it has further to go because it’s still well down on its inflation-adjusted 1980 peak of $US2300 – in which case tulip bulbs should be in for quite a surge one of these centuries.)

There’s a lot of money to be made riding a bubble trend – as long as you have the prescience to jump off before it pops. The North Atlantic economies and their management will have to be in better shape before the pin comes looking for gold, but it’s the nature of such popping that it’s very quick when it does happen, making it extremely difficult to jump clear of the wreckage.

His arguments apply to the Oz housing bubble, not to gold.  When fiat paper is being printed in the trillions to save banks, it’s hardly surprising that ‘real’ money rises in value.  It’s not so much that gold is going up as it is fiat money that is going down.

If he thinks gold – inherently limited supply, perfectly liquid, inflation-proof – is in a bubble, what does he think of Oz house prices?  Massively leveraged on historically low interest rates, govt-subsidized pricing, artificially held up by all sorts of financial supports, teetering on a cliff of over-leverage…

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