http://www.zerohedge.com/news/gold-silver-speculative-longs-plunge-march-2009-levels
http://theautomaticearth.blogspot.com/2011/10/october-3-2011-commodities-and.html
"This does not represent our position, which is based on the powerful impact of bubble psychology, rather than on supply and demand. In contrast, we would argue that for commodity price to fall a long way, and very quickly too, it is not necessary for demand to exceed supply, especially by any significant margin.
Changes in supply and demand do not typically occur rapidly, but changes in perception certainly do, and it is perception that drives markets. If the fundamentals of supply and demand were responsible for setting prices, we would not see price collapses over a matter of months, yet this is exactly what we saw in 2008."
this is the type of non linear thinking i employ.
"This does not represent our position, which is based on the powerful impact of bubble psychology, rather than on supply and demand. In contrast, we would argue that for commodity price to fall a long way, and very quickly too, it is not necessary for demand to exceed supply, especially by any significant margin.
Changes in supply and demand do not typically occur rapidly, but changes in perception certainly do, and it is perception that drives markets. If the fundamentals of supply and demand were responsible for setting prices, we would not see price collapses over a matter of months, yet this is exactly what we saw in 2008."
this is the type of non linear thinking i employ.
Article tl;dr. The gist is that credit is contracting and commodity prices will fall with it. If I'm not mistaken, this thread is about gold, not oil. Oil is primarily a consumable commodity; gold is not.
Nicole Foss is the author of that post and this article applies to gold/silver as well as other commodities.
did you bother reading this post of mine:
http://www.hussmanfunds.com/wmc/wmc111003.htm
"The way you spot a thoughtful economist, in my view, is to listen for an understanding of both data analysis and equilibrium. In our experience, most economists and Wall Street analysts seem to analyze the economy as what I'd call a "flow of anecdotes" - weekly unemployment claims did this, retail sales did that, we got a positive surprise here, and so forth, without putting that information into any real structure and without knowing which data points actually matter or in what combination. In contrast, good economists think about the economy as a system - where multiple sectors interact. We tend to use words like "equilibrium" and "syndrome" when we talk about economic data - emphasizing that the best signals involve a whole conformation of evidence, not one or two indicators, where the data - in combination - captures a particular signature of recession or recovery."
you cannot evaluate gold in a vacuum. it very much is influenced by multiple sectors and their interactions. to ignore the widespread deflation going on worldwide is ludicrous.
Gold is reasserting a monetary role: it is being propelled to act as cash, especially in reserve capacity, and therefore will provide a basis for pricing rather than having a price attached to it; relative pricing will be determined by the base of available gold the same way we currently use the USD base money supply.
It doesn't matter if the average person doesn't use gold in daily exchange. Large businesses, cross-regional or international transactions may be conducted in grams or ounces instead of dollars and Euros. That would provide the solid golden base layer upon which fiat acts as a representative instead of the backward system today.
This is psychology in conjunction with supply & demand; non-linear. Reco'nize, son!
Misreality's Emerging Market Update:
All equity markets have been tumbling, what's your point? We already agreed that contraction is the flavor of the month. The charts are just prices yet again (at least with volume, but that's decreasing which suggests the downtrend is slowing) and the point of contention is still gold. I consider news of insatiable demand for gold as far more relevant to the topic.
i really think gold doesn't get this far. with the ferociousness of the upward move in the USD along with worldwide and especially emerging mkt deflation its only a matter of time before gold gets dragged down just like silver and the stocks.