17 Sep '10 10:17>
Originally posted by PalynkaIf you are long-term hedger, then temporary volatility is irrelevant.
So the biggest drop in gold was the 1979 oil crisis and yet he says it's a good "hedge"? Haha!
His arguments actually defend that gold rises in the run-up to a crisis (see his comments about trust in IOUs) because people don't know where to put their money. This means you get high volatility in gold during crisis (fast rises followed by fast drops). That' ...[text shortened]... ppens in any bubble. Like the musical chairs, the last one to stop dancing is going out.
The price of all investments, not just gold, is partly the product of reflexive psychology. That reflexive psychology affects price does not mean fundamentals are not also or primarily determinants of the prices.
Gold can't be printed on demand. That's a good reason to own it in an era of money supply expansion and looming currency crises due to excessive borrowing. You can't debase gold like you can other currencies.