Bullion's Sneaky Little Problem

There are three mentalities for those with an interest in gold: the trading view the long-term investment view the religious view Traders see gold (and all precious metals) as vehicles to go long or short depending on the opportunity set, nothing more.

By Skyler Greene: With all the advertising from companies offering to trade cash for gold (or sell you gold) and a news headline every other day predicting hyperinflation and the dramatic collapse of the dollar, it's easy to get confused about the future, and how gold will weather it. Many companies in the business of reselling bullion (or "news" websites funded by advertisements from such companies) have a direct financial interest in propagating these untruths.

BySalman Ebrahim:Whenever there is a research note or comment suggesting gold (GLD) price estimates at $5,000 in two to three years due to inflation, I wonder at the inflation implied in such a forecast. The hyperinflation bogeyman allegedly lurking around the corner since 2008 threatens to turn all the trillions of dollars to dust when it shows up therefore it must be hedged against.

From GoldCore Gold Bullion “Pension Money Invested In Bullion Is 'Peanuts' ... At The Moment” Today’s AM fix was USD 1,663.50, EUR 1,272.37 and GBP 1,035.35 per ounce. Yesterday’s AM fix was USD 1,653.75, EUR 1,261.06 and GBP 1,028.07 per ounce.

ONE of the fun things about the blogosphere is that occasionally a tiny debate that occured months ago will be reanimated and advanced. Last year, Matt Yglesias mused that the complete displacement of paper money by electronic money could give central banks the tools to end recessions once and for all by eliminating the problem of the zero lower bound.

With the masses screaming their lungs of about hyperinflation, something that is highly unlikely at best, Hugh Hendry of Eclectica Talks About Hyperdeflation, why China might have a hard landing, and various off-the-beaten tracks Japan plays. Here is clip from a Barron's interview. Barron's: Where do you find yourself outside the existing belief system today?

By Skyler Greene: The precious metals investing community tends to make a lot of generalizations about economics, debt, and 'fiat currencies,' few of which hold water when you look at them. While precious metals like gold (SPDR Gold Trust ETF: GLD) can definitely diversify a portfolio and provide returns during certain periods, they don't function the way everyone generally assumes they do.

Article written by Prieur du Plessis, editor of the Investment Postcards from Cape Town blog.The World Gold Council has just published the latest issue of “Gold Demand Trends” (Third quarter 2011). This is a rather bullish report, highlighting a surge in central bank purchases – more than doubling from the second quarter and increasing by 556% from a year ago!