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Old 12-01-2013, 02:09 PM   #31
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It's very easy to see who is right and who is talking rubbish. Just look at who is hurling insult at those who disagree with his points.
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Old 12-01-2013, 07:06 PM   #32
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Please do not take this as investment advice to invest in gold. Im just stating that gold reflects true inflation. If you think inflation will continue at the same rate as in the past 12 years, gold will be a good form of protecting your purchasing power. I see gold as a vehicle to save, not investment. Someone who bought gold in 2000 did not make 400% return to me, he merely preserved his wealth.

I cannot predict what MAS will do this year or tomorrow.
Maybe it will do the "right thing" and stop printing and inflation maybe go to 0%, or maybe it will jump down the cliff with Abe and friends.

But the M1 and gold price are clear that in the past 12 years, SGD has had a net inflation of 400%. Also note that there are years where MAS kept the money supply relatively constant. Your actual experienced price rise in food may be around 200%-300% due to mitigation by increased food production/efficiency. Property OTOH may have increased more than money supply due to government policy of allowing large influx of foreign labour and restrained housing supply.
I use gold/silver as a barometer because its supply is relatively fixed in the world, unlike housing where more can always be built or food which is consumable and can be affected by weather, increased production.

I don't know what DBU is either
I don't know what is your understanding of economy, Singapore GDP has triple over the past 12 years thus M1 supply has outstrip the economy growth by about 3% a year thus the real inflation is around 3%. I don't see anything wrong, you need to go back and research on what is inflation. Gold supply does not grow in relation to economy growth, when we grow more food, produce more houses etc, gold supply does not reflect that thus you also cannot use gold price to determine inflation. Gold does not have intrinsic value to humans unless you tell me you actually can eat gold to survive. Its value is perceived by those who buy it as precious. If one day, all the central banks think gold its worthless then it will become worthless. The gold standard has its flaws, because you can't grow the gold supply in relation to your economy thus eventually the whole economy will end up in severe deflation risk.

Lets put it this way, if 1 KG of gold buy 1 ton of rice then how much would 10 ton of rice fetch? It should fetch 10KG of gold right? But in reality you can increase the production of rice easily but not that of gold thus when the production of rice go up by 1000%, the price would go down by 90% in terms of gold since the supply of gold is fixed. Eventually civilization will be wiped out since everybody will realise that no matter how hard you work, it will be harder and harder to get that 1gm of gold. In an ideal world, there should be zero inflation or deflation thus 1kg of rice will also cost the same, money supply grow as much as the economy grow. In such a world, price will always remain the same and you would get what you work for.
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Old 12-01-2013, 07:46 PM   #33
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I don't know what is your understanding of economy, Singapore GDP has triple over the past 12 years thus M1 supply has outstrip the economy growth by about 3% a year thus the real inflation is around 3%. I don't see anything wrong, you need to go back and research on what is inflation.
There are 2 definitions for inflation, i have clearly stated which one i use.

Gold supply does not grow in relation to economy growth, when we grow more food, produce more houses etc, gold supply does not reflect that thus you also cannot use gold price to determine inflation. Gold does not have intrinsic value to humans unless you tell me you actually can eat gold to survive. Its value is perceived by those who buy it as precious. If one day, all the central banks think gold its worthless then it will become worthless. The gold standard has its flaws, because you can't grow the gold supply in relation to your economy thus eventually the whole economy will end up in severe deflation risk.
Which is why gold is perfect for measuring inflation. The fact that its quantity is largely stable. There is a reason why it was used as money through the past 5000 years. Yes gold has low intrinsic value(jewellery, all other uses can be satisfied by silver which is cheaper). Ideal money should be of low intrinsic value so that it functions primarily as money, which is similar to our paper/electronic money today(0 intrinsic value).

For the record, i do not think in this digital age that gold is the best money form for transacting anymore. But it remains once of the best forms of store of value.

If you are interested in properties/history of money, you can watch https://www.youtube.com/watch?v=vowbrq_g5NM


Why should the money supply grow at all? Why should the advancement of mankind be stolen by your government/banks which inflates the money supply under the guise of keeping prices stable? If i can grow rice 2x more efficiently, the price does not go down to benefit ppl because goverment will inflate the currency to keep the price similar. The only beneficiary are the banks and government who profit off the work of the work of everyone else.

Peter Schiff does a very detailed job of this topic:
"What About Money Causes Economic Crises?" with Peter Schiff - Ron Paul Money Lecture Series, Pt 3/3 - YouTube
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Old 13-01-2013, 12:05 AM   #34
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Maybe we should all make a trip down to Fort Knox and ask them questions eh?

Anyway, you are right to say that the gold supply is more or less fixed, but I don't think its right to peg inflation to gold. Gold prices fluctuate based on investors' perception of the safety of US Treasuries and all the other markets. If they think that the world economy is crashing, then there'll be a rush to buy gold and this bumps the price up to no end.

Over the past few years, we all know what happened to the world economy and the credit ratings of various countries. Gold is steadily increasing in price, so what would happen if we were to peg the jap yen to gold? Your theory doesn't hold that much water then. What if gold price falls drastically cos of some event and now its worth half the price? Would we then be experiencing a deflationary situation when CPI is in fact increasing? Of course not!

I don't know why the topic has veered so far off course. I merely stated that I use 3% inflation to make my calculations simple based on govt figures and you smarty pantsy fellas had to drop these kind of comments. Do you actually think 90% of the population gives a damn? You are making my simplified calculation so complex for the sake of proving that you are educated. Umm... So what? The govt artificially release figures, fine. Let's leave it at that. Still, the calculation will remain the same. It is simply ridiculous to base your investment returns on 12% inflation rate when so obviously that is not the case across the board.

Let's just chill and not exchange so much barbs eh? Maybe we can open another topic to discuss econs issues. I'm sure people who are interested in that will read and reply.

Peace.
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Old 16-01-2013, 04:34 PM   #35
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maybe let's stay away from gold..posb singapore investments for unit trusts anyone? Share your experience with us…do you think it's a good platform for newbie investors?

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Old 16-01-2013, 06:33 PM   #36
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maybe let's stay away from gold..posb singapore investments for unit trusts anyone? Share your experience with us…do you think it's a good platform for newbie investors?

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I still invest in gold for reasons i think are valid. Gold aside, a good thing i see quickly for the posb platform is "Enjoy a 0% sales charge* on RSP until 31 Dec 2013". Still, before any investing, i think a newbie has to do his/her homework and due diligence first to learn about how to invest. Otherwise, the newbie will have no idea whether the bank relationship manager is selling them an appropriate product/strategy. A couple of learning articles are below.

Looking through links in the posb site brings me to a couple of interesting articles for newbies:
1) Comprehensive "Introductin to Personal Investing" guide. (click here) produced by the Investment Management Association of Singapore. Basic stuffs about risk/reward, diversification, asset allocation, investment horizon, cash/bonds/shares/unit trust.
2) "Understanding Portfolio Strategies" guide. (click here). I am more interested in the section on "strategic asset allocation models". This talks about how different assets are can be allocated in different proportion to adjust risk/reward of a portfolio.

I have a question though, does any bank relation manager actually build such diversified portfolios for their clients? Or has anyone actually encountered bank realtionship managers/financial agents who actually build such portfolios for them?
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Old 19-01-2013, 02:57 AM   #37
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For 30k, i would put all into Frasers Commercial Trust (FCT).
Friday closing price is $1.335 per share.. can buy 22,000 shares.
TP to sell is above $1.80.
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Old 25-01-2013, 10:48 PM   #38
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Thanks for the contributions here, though newbies may not understand completely it gives us a glimpse of the different interpretations and perspectives on gold/inflation. Maybe there is no one right method or advice, we choose what we want to believe.
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