Equity Bubble About to Burst?

[AWOL]

I find myself wondering about gold, but I kind of just don't get it.

I don't 'get' why government bonds have been trading at negative yields, other than the 'bigger fool' theory that central banks will buy bonds at any price and the rather convenient legal obligation of pension funds to hold a certain proportion of assets in government bonds.

Nor do I 'get' why anyone would be foolish enough to lend to governments in the very long term due to the eventual tendency for bonds/debts/currency to be inflated away.

One day our central-bank-fuelled bond mega-bubble will pop (I appreciate many on here don't like the word bubble but that is exactly what most bonds are) although bubbles tend to take longer to pop than anyone expected and reach crazier extremes than anyone could predict.

Eventually - maybe a few years, maybe a few decades - the inflation/devaluation monster will decimate bonds.

Agreed - I don't like bonds either, especially those issued by Western governments. Hard to see them offering much protection I agree. I hold few, and they are mainly corporate rather than government, but not much better.

Regarding precious metals in general, I do hold some physical for fun. I cannot get exposure through my main pot (work pension) though i do hold resources funds. I must learn more. I agree strongly with your posts on the problems, and I would certainly agree that if major currencies truly go pop, then gold would offer some insurance. What is it they say? Hold gold but hope you never need it?

Government Bonds have the attraction of certain "return of capital" (or most of it in a negative rate environment) as opposed to uncertain "return of capital". With PE rates where they are it is getting very difficult to see where Equity gains will come from, other than a rotation to value, restocking as growth has a large bounce back post-pandemic (yes there are a lot of caveats around that).

As for Netflix etc. with their heady PE values and this time is different. I feel very much like how I did in the late 90s about TMT (technology, media, telecoms) and even more like how I felt pre-financial crisis when I would discuss on a regular basis how I couldn't decide where to invest, buy to let property valuations, and I couldn't understand why Banks were so highly rated and performing so well. Although I could smell the coffee I didn't wake up until Lehman Brothers.

Right now I am scratching my head and wishing I hadn't had early retirement forced upon me when PE values are so high and bonds so unattractive. I guess reality will assert itself some time this decade but I expect some sort of recovery first and value to have it's day in the sun. Ultimately valuations matter just not in the short term!

I am questioning my 95% equity 5% cash portfolio!

[taken2often]

Hi GS Saw your comment about my opinion on Gold. Perhaps you could advise us on which Banks these large Global entities trust to hold their offshore trillions of Dollars. The problem is, what I think they do, is what I would do. It makes sense. If the globalists decide amongst themselves to adjust the gold value down by selling a batch, then buy it back at a cheaper price instant profit. The problem would be if they did not buy it back.

I do have to say that I have bought Gold many years ago. Kept it in Switzerland, storage costs, insurance costs. Never saw it, sold it, cant even remember why we did it, but there was a good reason and it worked out fine. But it was short term.

Always nice to hear from you

Bob

[dealtn]

The problem is, what I think they do, is what I would do. It makes sense. If the globalists decide amongst themselves to adjust the gold value down by selling a batch, then buy it back at a cheaper price instant profit.

How does that work then? The price movement going down is the same but opposite to going up. The average sell price matches the average buy price - no profit, let alone an instant one.

Market makers love people who behave in that way - oddly enough they are rare.

[BT63]

The problem is, what I think they do, is what I would do. It makes sense. If the globalists decide amongst themselves to adjust the gold value down by selling a batch, then buy it back at a cheaper price instant profit.

How does that work then? The price movement going down is the same but opposite to going up. The average sell price matches the average buy price - no profit, let alone an instant one.

Market makers love people who behave in that way - oddly enough they are rare.

He's probably referring to the (valid) suspicions that large sales of gold are timed for strategic moments when a lot of speculators are very long gold, with stops just below the current price.

A few well-timed hefty sales can run the stops of the speculators for relatively little cost considering the potential price decline which can be triggered; the speculator stop-loss-related selling causes most of the price decline.