I consider the best way to avoid confusion is to talk either of "monetary inflation" or "price inflation".

Go to a butcher in Iran with a stack of dollars and you might get arrested.
Try it with a gold sovereign and you will get the best service there is.

Well price inflation is what will screw you over time. As gold is being mined it probably cancels out the money printing aspect

Less than a century ago "monetary inflation" was generally understood simply as "inflation" whereas "price inflation" already had its own term: "rising prices". Not until Keynesian economists redefined "rising prices" as "inflation" itself was there ever any confusion.

Am I to understand by your use of the word 'only' that you're claiming that rising prices having nothing to do with a money supply increase? If so, where is this fanciful claim unequivocally substantiated by historical, empirical data?

You've demonstrated no such thing. Repeating popular Keynesian soundbites doesn't render them true. The current dictionary (re)definition of inflation simply acquiesces to the beliefs of most contemporary (largely Keynesian) economists — who've gotten more wrong than right in recent decades. You're obviously among those who are nevertheless happily conditioned to parrot their boilerplate ad nauseam, which you've done here most deftly.

But some of us still aren't content to believe in (let alone regurgitate) Keynesian hogwash, preferring to base our conclusions and economic decisions on repeated, observed and measured historical patterns. To convince us to do otherwise, you'll have to do better than arbitrarily labeling things like pre-Keynesian dictionaries 'wrong' without providing a solid, factual and historically demonstrable basis for doing so.

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"Live every day as if it were going to be your last; for one day you're sure to be right." — Harry Morant

Prices are based on what people can afford & wish to pay, or how much they can borrow, nothing to do with cost of producing goods.

You may have noticed that goods are often more expensive in Switzerland, because people are happy to play, however inflation in CH has historically been very low.

Perhaps you can explain Golds 40% fall during a period of high money printing?

Yes, I am aware of that 'inflation' originally ONLY meant "an (excessive) increase in the supply of money". Since I'll be turning 70 this year I have over the years witnessed this change taking place. But many other English words have also undergone changes in meaning.
Also a pity is that the German language has adopted the word Inflation but with the 'wrong' meaning, i.e. a rising price level.
Thankfully German has two words that cannot be confused:
Geldvermehrung = increase in the money supply
and
Verteuerung = increase in price level

Inflation can (in theory) be very easily controlled by the central bank. To understand inflation, you have to understand the

>>Equation of exchange<< first:

M * V = P * Q

The central bank can change M at will, especially increasing M through printing money.

If the central bank prints only little additional money (Switzerland) you have low rates of inflation. If the central bank prints huge amounts of money, you have high inflation (Italy&Greece during Lira/Drachme times, Belarus, Zimbabwe or Germany during hyperinflation times)

Whenever governments can effectively tax people on existing money, there is usually low inflation. Where governments cannot tax people (Mafia + huge sub-legal sector), the government prints new money instead to pay their outstanding bills or build new streets...

The only entity who can legally change M in above equasion is the government. (A forger does the same, but illegally)

If the concept is understood, you can see that inflation can only be created by the government that controls the currency in question, and hence the conclusion is:

Inflation is a tax on holding a currency

Inflation allowed the Italian government to tax the Mafia, because even the worst criminal needed Lira to have lunch with his family Indeed this was a major problem, and Anti-Mafia measures were enforced more than ever just before the € was introduced.

Any government with its own currency cannot go bankrupt, as long as they only incur liabilities in their own currency, which they can print at will.

This also leads to some matters, which are not factored in above equasion: Foreign Exchange. Obviously changes in FX-rates can also have an effect on the inflation. But that´s a whole other story.

Considering the amount of US$ China holds, the US can (indirectly) tax China quite substantially (through the devaluation of the $)!

Basically, when holding any currency, the holder grants a free credit to the Central Bank of that currency.

I´d say gold was seen as a safe haven by many, and the price rose exponentially because not only was physical demand high, but also speculative demand. Speculators thought the market is overheated, and sold off their paper-based gold, which dropped the price considerably compared to any FIAT currency.

However, the security associated with physical gold still exists: Should USD/EUR/FIAT currencies collapse, it´s a pretty cool thing to have physical gold stored somewhere safe. It will always be possible to change gold against something and/or any potential new FIAT currency.

Some interesting charts from Casey Research on where gold and gold mining stocks are at the moment.

Link: http://www.caseyresearch.com/cdd/con...am-coming-true

Gold was interesting because of the (then) upcoming low interest environment plus the fact that the financial shitstorm from the upcoming housing crises hadn't been factored in. By 2008 everyone should have been aware that the SHHTF and then the real bubble could build.

By 2012 any prudent person should have bailed out of gold and certainly by the time that QE tapering was publicly broached, the rest should have gone.

So long as the low interest remained, and other assets under-performed, it wouldn't have been too costly to hold gold and suffer the carry costs.

However, rightly or wrongly, risk appetite has increased and the threat of QE tapering is enough to shift the risk/reward away from gold, IMO.

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The reason why western banks continue to hold gold close, and emerging market governments continue to buy. Why? They still consider gold's insurance function as the main reason.

Here's a recent—and well-articulated—article by Paul Craig Roberts (no new-comer to the international world of economics and finance), explaining what, how and why the Fed and its friends have been doing with gold during the past several years:

The Hows and Whys of Gold Price Manipulation

The gold bulls always come up with all sorts of excuses when the market moves against them.
Markets are priced what a buyer & seller will accept at any moment in time. It's quite normal that at times sellers will exceed buyers, when the price has fallen enough then the buyers come out to play works both ways. You have to have very big pockets to manipulate the markets for more than a few days as the British government found out with the £ when it left the ERM.
People make money when the market falls or rises, depending if your long or short & nobody will be right all the time
As the economy has been strengthening the USD has risen , the doomsday scenario has faded away along with the price of gold, not really a surprise to anyone who keeps their eyes open.

Edit links
http://www.fontcraft.com/idiotwars/?p=21
http://www.amnation.com/vfr/archives/004474.html

In connection with the article by Paul Craig Roberts mentioned in my previous post, Reuters reports that Deutsche Bank wants to opt out of the game by selling its gold and silver fixing seats to another member of the London Bullion Market Association (LBMA):

Deutsche quits gold price-setting as regulators investigate fix

BTW, Peter Schiff, who (unlike his Keynesian counterparts) has accurately predicted many recent critical economic events, last year had this to say about the "conventional wisdom" favoring fiat currencies vis-a-vis gold, and in 2011 had this to say about Keynesianism in general.

So what, maybe they are trying too keep the price high or ramped the price up since 2000, it's not as if almost insolvent banks could short for ever, is it?

Maybe also because for the last week or so there have been more investigators in the bank than bank employees (many of whom have hightailed it, the biggest ones to Israel no doubt!).

Germany wants ALL of its gold back from USA.
Fat chance they've got of getting that.*

Transatlantiker fordert deutsches Gold zurück

* That is unless Fatmanfilms has got it right and the price falls to err! (what was it again Fmf?).

Now Reuters also reports that Singapore drops plans for gold fix amid London pricing probe.

Does that effect your bullishness on gold?

Rumour has it that this gold was loaned out to other banks to cover paper gold and it would now be difficult to repatriate it back to its owners.
I am sure this is just a rumour and far from the truth


LOL
http://nsnbc.me/2013/04/18/federal-r...-u-s-vaults-2/

My feeling is that very soon something is going to happen.
And when I say happen I mean HAPPEN.

And I don't think it will be major gold price fluctuations.
The next big thing will be a bank,
that is too big to fail,
and bankers,
that are too big to jail.

And all pointers seem to aim at Deutsche Bank,
but no doubt there are many other capable leading role contenders.

When banks wobble, money wobbles.
Then comes gold.