Gold

[Goldfinger]

It does make me chuckle when you hear goldbugs bang on as if they are the only ones astute enough to sidestep the effects of a global financial meltdown. If you're a gold hoarder, at what price would you ever sell? If you take it to its logical conclusion, not until all your neighbours had died of starvation. A true goldbug would probably let himself starve before selling an ounce. Nutters.

Lead might become more useful though for protecting assets.

That's a good one!

I would not sell below USD 1200, which is in my opinion the equilibrium price today.

But I expect it to go much higher, since markets are not rational. Just look at house

prices - another case where it's difficult to call the max. Inflation adjusted maximum

prices for gold in 1980 were around USD 2000/ GBP 900 per ounce. That might give

you an idea. Gold would have to triple from where it is now. But 1980 was not Armageddon.

EDIT: One could think of polluting central bank reserve gold radioactively, driving up

the gold price. But that's just me being Goldfinger, wuahahahahahaaaaa!

Edited March 14, 2007 by goldfinger

[Realistbear]

Fiat metals can be horrible investments. I sold my cache of gold sovs in the very early 80's when an ounce hit over $830. 30 years on and Gold is not worth $830 an ounce it is worth: $641.30. Almost $200 less. Add in inflation over 30 years and yer gold is next to worthless as a long term investment. The same amount invested in a conservative stock fund would be up 1000's of percent over the same time frame. When you compare gold to stocks since 1980 there is a clear winner and a clear loser. Gold stank.

That said, fiat gold is a good bet if you are a skilled market timer. Ride the huge waves and be lucky.

Gold is worth what the market declares it to be worth backed by the opinions of enough people willing to pay the fiat (or declared) price. Currencies, gold, commodities, services--it's all fiat. How much is a glass of water worth to a man about to die of thirst? More than a fiat metal?

[Charliemouse]

Hello there - first post, just wanted to respond. I've got a small amount of physical just in case armageddon's round the corner, but the majority is held with Bullion Vault. Same in proportion to Silver, but that's at Goldmoney. I hope I never have to draw on it.

For me, it's a hedge against inflation, a partial reader of credit expansion (if you believe what GATA and others say) and a store of value, nothing more, it's there for you to maintain your purchasing power. You shouldn't look to make money from it, if that makes sense.

If your a build a bunker, stock up and keep your head down kind of a guy like me (mad as a hatter helps too) then youl want your gold and silver in your hand when "armageddon" hits.

If not then trade on my friend trade on. If thair ever is a masive financial Armageddon then any gold in every bank will be confescated. Even if its stored in a Brinks Vault.

[Goldfinger]

Fiat metals can be horrible investments. I sold my cache of gold sovs in the very early 80's when an ounce hit over $830. 30 years on and Gold is not worth $830 an ounce it is worth: $641.30. Almost $200 less. Add in inflation over 30 years and yer gold is next to worthless as a long term investment. The same amount invested in a conservative stock fund would be up 1000's of percent over the same time frame. When you compare gold to stocks since 1980 there is a clear winner and a clear loser. Gold stank.

That said, fiat gold is a good bet if you are a skilled market timer. Ride the huge waves and be lucky.

Gold is worth what the market declares it to be worth backed by the opinions of enough people willing to pay the fiat (or declared) price. Currencies, gold, commodities, services--it's all fiat. How much is a glass of water worth to a man about to die of thirst? More than a fiat metal?

I absolutely agree with RB on that one. Now, here's the good message: gold is in a historical low price phase.

Just look at the graphs, they look like the one on the HPC frontpage, just the other way round. And then there

is also the fundamentals that look rosy. Did I mention that gold is a real bargain today, right this minute?

[Charliemouse]

Realist Bear has a good point and he is always worth listening to.

I wander how much that early eightys $830 spike would be worth if it was to be repeated today?

[Selling up]

Realist Bear has a good point and he is always worth listening to.

I wander how much that early eightys $830 spike would be worth if it was to be repeated today?

I did this calculation a while ago. In 2006 £sterling, I made it something like £1200, but I can't find the exact calculation. Sorry that only helps a little!

Edit: Found it. My answer was £1017

Edited March 14, 2007 by Selling up

[Realistbear]

I absolutely agree with RB on that one. Now, here's the good message: gold is in a historical low price phase.

Just look at the graphs, they look like the one on the HPC frontpage, just the other way round. And then there

is also the fundamentals that look rosy. Did I mention that gold is a real bargain today, right this minute?

Could be right. If you take the silly price of $830 back in, say, 1980 that translates to something around $2400 an ounce today if you add 300% for inflation? We are accordingly about 25% of the irrationally exuberant figure of the 1980's. Cut out the excess froth and lets say 50% of the irrational figure is viable for awhile. That means Gold could peak out at $1200 and not be as extravagant as the 1980's top.

If the preceding is right gold has another 100% to go before it peaks.

Might be worth a punt but I wouldn't put anymore than 5% of my cash holdings into the stuff.

Sold the black gold a few weeks back at 4.98 share after riding it all the way from 1.41 a year earlier. That is 300% for black gold (UKCoal) which was nice. Back down to 4.72 today.

[Backseat Economist]

If your a build a bunker, stock up and keep your head down kind of a guy like me (mad as a hatter helps too) then youl want your gold and silver in your hand when "armageddon" hits.

If not then trade on my friend trade on. If thair ever is a masive financial Armageddon then any gold in every bank will be confescated. Even if its stored in a Brinks Vault.

Exactly, I don't think we'll ever get back to that kind of state. But, frankly, what or who would you put your trust in at that point if things became so serious?

If we do, I can see the government putting us back on the gold standard at least temporarily to try and restore a bit of order, but then again, there might not be a government left after everything has worked itself out

As an aside, I know it's been said on here before, but, I think it's worth repeating:- in terms of tangible value, gold has held it's own over the years - you can buy a decent suit for an ounce and, dating from biblical times, you could get it to buy you 400 loaves of bread - that still, as far as I can see, remains the case to this day. So measure gold in terms of goods and services, rather than in terms of FIAT value.

I don't know about building myself a bunker, might get a bit bored - am more tempted to head for the hills or the coast and do the whole Ray Mears/Bear Grylls thing.

[Johnny Cash]

Money can be anything and it has been in times gone past. I take it you consider 'Gold' to be money because it is a tangible asset, in limited supply and past civilisations 'value' gold.

Gold however does not make a good item to bargin with surely because of its weight and lack of portability. Surely paper backed by Gold would have been the way forward?

In the book, "Goldfinger" by Ian Fleming, Bond goes to see an expert from the Bank of England to learn about gold. "The first thing you need to know about gold", he is told, " is that it is the only commodity in the world which you can take to any town or village anywhere and obtain goods and services in return".

[JustYield]

"The first thing you need to know about gold", he is told, " is that it is the only commodity in the world which you can take to any town or village anywhere and obtain goods and services in return".

I'm sure some women would beg to differ.

[Goldfinger]

In the book, "Goldfinger" by Ian Fleming, Bond goes to see an expert from the Bank of England to learn about gold. "The first thing you need to know about gold", he is told, " is that it is the only commodity in the world which you can take to any town or village anywhere and obtain goods and services in return".

Hear, hear! And still, the BoE sold almost all their gold. They hold 311t today, compared e.g. with Germany that has 3500t.

Regarding Backseat Economist's post, as the 1970-80's proved, no Armageddon is needed to let gold climb to a max.

Also, nothing would be easier than introducing gold-backed money in our time, where everything is electronic anyway.

But then, there is e-gold already. Maybe in the midterm future we will just see several currencies competing. e-gold

is international, and already now people use it to store wealth.

[Charliemouse]

Exactly, I don't think we'll ever get back to that kind of state. But, frankly, what or who would you put your trust in at that point if things became so serious?

If we do, I can see the government putting us back on the gold standard at least temporarily to try and restore a bit of order, but then again, there might not be a government left after everything has worked itself out

As an aside, I know it's been said on here before, but, I think it's worth repeating:- in terms of tangible value, gold has held it's own over the years - you can buy a decent suit for an ounce and, dating from biblical times, you could get it to buy you 400 loaves of bread - that still, as far as I can see, remains the case to this day. So measure gold in terms of goods and services, rather than in terms of FIAT value.

I don't know about building myself a bunker, might get a bit bored - am more tempted to head for the hills or the coast and do the whole Ray Mears/Bear Grylls thing.

Well said.

The bunker will keep me safe until the riots and hell dies down, then ill read up on Ray Mears and the SAS survival hand book etc and head for the hills. I must get around to buying that crossbow.

Id only give Ray an ounce of silver for his canoe though. I watched him build it.

[ex-MEWer]

Might be worth a punt but I wouldn't put anymore than 5% of my cash holdings into the stuff.

er, from another thread earlier ...

Gold? If Iran settles down I think we could see a return to the $350-400 range by the end of the 2nd Q of this year.

make yer mind up!

[LargelyIgnorant]

I'm sure some women would beg to differ.

Inert metals don't argue.

IIRC, US pilots are given gold sovereigns in case they eject over enemy territory and need a viable method of exchange (i.e. money)

[Goldfinger]

Inert metals don't argue.

IIRC, US pilots are given gold sovereigns in case they eject over enemy territory and need a viable method of exchange (i.e. money)

No joke? I thought the Dollar could buy you anything. But then, in Iraq, Afghanistan, Pakistan, ...

[LargelyIgnorant]

No joke? I thought the Dollar could buy you anything. But then, in Iraq, Afghanistan, Pakistan, ...

Can't remember where I read it. This Orders and Medals Society of America thread says the practice has been discontinued, although posters affirm that the RAF & SAS used them in the gulf.

http://acoins.com/britsov.html says

British Sovereign Gold Coins are recognized worldwide and have been used as "emergency money" for decades. Allied World War II pilots carried British Gold Sovereigns in their survival kits. More recently, American pilots carried these historic gold coins as emergency money in case they were downed in Iraq.

Don't know if they still do it. Difficult to find anything definitive on the subject

edit: this seems fairly definitive on issuance to British military: http://www.pandaamerica.com/details.asp?it...=1&categ=10

The story of this unique set is best told in the accompanying certificate of authenticity signed by General Sir Peter de la Billiere, Lately British Forces Commander Middle East: "A number of gold sovereigns were issued to British military personnel taking part in Operation GRANBY as part of the Coalition Forces during the Gulf War 17 January to 26 February 1991. Sovereigns were provided by the Ministry of Defence and carried by any servicemen who, it was thought, might find themselves isolated and in need of bargaining power if confronted by unfriendly forces. This sovereign is one of the 16,289 pieces returned during the Gulf War by military personnel on completion of their missions into enemy territory."

Edited March 14, 2007 by LargelyIgnorant

[Backseat Economist]

Well said.

The bunker will keep me safe until the riots and hell dies down, then ill read up on Ray Mears and the SAS survival hand book etc and head for the hills. I must get around to buying that crossbow.

Id only give Ray an ounce of silver for his canoe though. I watched him build it.

Think getting a machete and a sharp stone will be a good place to start.

If you're Bear Grylls, why bother with a crossbow? Just catch the animal and eat it while it's still alive!!

He did that on last weekends' show, killing a fish by munching down on it's spinal cord!!!

Now that's what I call survival sushi!!

Sorry this is going off-topic isn't it?

[laurejon]

If you're Bear Grylls, why bother with a crossbow? Just catch the animal and eat it while it's still alive!!

He did that on last weekends' show, killing a fish by munching down on it's spinal cord!!!

Now that's what I call survival sushi!!

John Prescott did something very similar on an old wrinkled Beaver, apparantly he has suffered no ill effects and says that most of the cabinet have done it also.

[Charliemouse]

Think getting a machete and a sharp stone will be a good place to start.

If you're Bear Grylls, why bother with a crossbow? Just catch the animal and eat it while it's still alive!!

He did that on last weekends' show, killing a fish by munching down on it's spinal cord!!!

Now that's what I call survival sushi!!

Sorry this is going off-topic isn't it?

sometimes i get so hungry i could eat the ass off of a charging rhinoceros.

Sorry. well off-topic. Funny though.

Ill shut up now.

Edited March 14, 2007 by charliemouse

[Backseat Economist]

John Prescott did something very similar on an old wrinkled Beaver, apparantly he has suffered no ill effects and says that most of the cabinet have done it also.

I have nothing to add to that except:

[Orbital]

If your a build a bunker, stock up and keep your head down kind of a guy like me (mad as a hatter helps too) then youl want your gold and silver in your hand when "armageddon" hits.

I dont get the armageddon argument, when people are worrying about where their next meal is coming from, who will care about a shiny metal? If I had 10years of tinned food in my basement, and someone offered me some shiny metal for it Id laugh at them! Gold is only useful as long as people perceive its worth. But its not really that useful to anyone outside the electronics industry. Maybe a 1000yrs ago, any self respecting king had to have a nice big fat crown etc, but thats not really relevant today. Using gold to show wealth died out years ago in Western culture - although admittedly enjoying a small revival in the limited bling bling culture.

Also, yes, you can print more money. But you can also dig up more gold...

Edited March 14, 2007 by Orbital

[Frank Mason]

OK.... I read somewhere that silver is more likely to rocket than gold due to various reasons like it being actually used in industry etc for circuitry.

I have started to buy more and will be get some more gold soon.

Just exchanged contracts on my house sale! Hoorah, hoping to have STRed by beginning of April so need to dump a few quid into metals.

Regards to all

Frank

[MarkG]

If I had 10years of tinned food in my basement, and someone offered me some shiny metal for it Id laugh at them!

Yes, but you think that saving for ten years for a deposit while house prices triple is good economic planning.

But you can also dig up more gold...

From where?

[Pluto]

Gold is money, infact it is the only currency that is accepted in exchange for local currency anywhere on the planet. I know you can't take it into Tescos and exchange for baked beans, but neither can you any investment or any other currency other than the local one.

Gold is the Central bankers biggest nightmare, it stands the test of time, and shows inflation for what it really is: the printing of money.

Those who try and belittle gold are not going very far back in history. Before 1971 we had a stable monetary system due to the strict controls gold provided. Since '71 it has been boom and bust all the way.

The next big bust, property, will usher in stricter monetary controls, one based on Gold.

God willing.

Edited March 14, 2007 by Pluto

[Backseat Economist]

I dont get the armageddon argument, when people are worrying about where their next meal is coming from, who will care about a shiny metal? If I had 10years of tinned food in my basement, and someone offered me some shiny metal for it Id laugh at them! Gold is only useful as long as people perceive its worth. But its not really that useful to anyone outside the electronics industry. Maybe a 1000yrs ago, any self respecting king had to have a nice big fat crown etc, but thats not really relevant today. Using gold to show wealth died out years ago in Western culture - although admittedly enjoying a small revival in the limited bling bling culture.

Also, yes, you can print more money. But you can also dig up more gold...

I agree and don't agree with this - I'm 32 and have known nothing but FIAT currency as the way to get what you want. If someone had said to me a few years ago, that for hundreds of years we were able to easily barter with gold and sliver I'd have called them a nutter. I simply didn't know, and didn't perceive that society used to work in that way. Just because it doesn't work like this now, doesn't mean it won't in the future. Guess in the same guise people at the moment can't perceive that house prices can go down, but eventually, they will.

The majority of us have grown up accepting that this is the way things are. Until I learnt that £1 in 1971 is now the equivalent of £8 today, even though the face value is the same and started to understand the purchasing power effect, I was clueless about inflation and money supply. This is why people are making the fatal mistake of assuming that debt and rising house prices are real wealth. Everything has gone horribly wrong because people perceive this debt fuelled housing and credit bubble as normal. They've got no reference for it because they DON'T KNOW ANY BETTER. What IS normal? I can't answer that, but I know that it's not this.