Friday, May 29, 2009
Gold severely undervalued...
The Market Oracle: U.S. Gold Reserves, Going or Completely Gone?
'No credible audit of the Sovereign U.S. Gold Reserve will EVER be allowed – because the gold is simply not there.' Confirms what I have always thought, there is no alternative to holding physical gold. Don't bother with the ETF's.
Posted by hpwatcher @ 09:33 PM (1052 views) Add Comment
16 Comments
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1. dead spider said...
Doesn't that graph show that the UK in January 2009 :
Exported : 1,060 Kg to USA
Imported : 17,500 Kg From USA
That's a facking huge heap of gold init ?
Is that high or low ?
2. uncle tom said...
The key issue though is that the commercial uses of gold are small in volume terms, and it's social and cultural use is on the wane. No-one backs their currency against gold reserves anymore
Platinum, copper & titanium (to name but three..) are far more significant metal commodities, while Indium and Gallium are very scarce but important elements in emerging technologies..
..think forward, not back..
3. hpwatcher said...
No-one backs their currency against gold reserves anymore
Ah, yes of course it's backed by paper.
4. quiet guy said...
@hpwatcher
Yes. It's about time the dollar bills were redesigned. Perhaps a new design could be adorned with a portrait of Ben Bernanke?
5. cyril said...
I agree with Uncle Tom. Gold's not a particularly useful material so it's no different in principle to paper.
They should put Ben bernanke's head on the billion dollar bill when it comes out.
6. hpwatcher said...
@ uncle tom
The key issue though is that the commercial uses of gold are small in volume terms, and it's social and cultural use is on the wane. No-one backs their currency against gold reserves anymore
What have china been doing? Moreover, I don't care whether people find gold useful or not, what is important to me is it's investment potention, which is great. The other metals you mention have less investent potetial as they aren't used to back currencies and - under your own criteria - the industries they relate to are in decline....the relation between cars and platinum is the classic example.
But have it your own way......
7. inbreda said...
I think UT and Cyril are missing the point. The ability to print more money devalues that currency (all else being equal) so backing it up by something is required to prevent such printing. Gold is perfect a) because it is fairly finite and and the "easy to get at" reserves are gone and b) because it has no other uses.
You couldn't back a currency with something that is useful in production - otherwise there would be competition for that material!
8. Stoatgobbler said...
Yeah, that's a great plan. Let's back the currency with gold. We could call it 'The Gold Standard' and everything would be fine forever.
Genius.
9. will said...
Both the USA and the UK Governments have reduced their reserves in recent years, as I believe they recognise the shiny stuff simply holds no value in this modern financial era. In the 1970's it's value was undoubtedly recognised throughout the World as a real asset which during financial crises economies held in reserve. The US and UK governments disposal of gold in recent years is a sign that these economies will no longer rely upon gold from now on. The speculators, and those who continue to mine gold for it's magic properties in engineering , science and medecine as well as jewellry will continue to talk up the price of gold, but I don't see the price rallying much higher in the near future. For some the allure of the shiny metal is too much to resist as an investment, and some will talk it to the moon. Good luck to them all - but don't expect world economies to join in the ride.
10. inbreda said...
but surely, Will - even if finance has gone "all electronic", and gold serves no purpose other than to prevent easy money printing...
...correct me if I'm mistaken, but that would have prevented gordon from ruining the uk economy. So, given the choice between holding a currency that is not so easily destroyed, and one that is reliant on the abilities of our corrupt government - I choose the former.
11. general congreve said...
Will @8 - Yes, the UK and US abandonment of gold show that we no longer rely on gold to support our currencies. Getting rid of the gold standard worked well for a bit didn't it? Mind you, seems to be ending in tears now, doesn't it? Perhaps we relied on gold to back currencies in the the old days for good reason.
12. last_days_of_disco said...
The only thing that will give gold value is if people perceive it to have value and use it in the place of paper. My local chippy still doesn't accept gold and silver coins, so gold has little use to me.
13. hpwatcher said...
Both the USA and the UK Governments have reduced their reserves in recent years,
Politicians absolutely hate gold, because they can't control it like a fiat currency. Well, we would not have the mess we are in now if we had stuck to the gold standard...that's for sure - and that is one very good thing to say for gold at least!
14. inbreda said...
ldod - if gold was ever to make a resurgence as a currency, the local chip shop is probably not the best place to look for the first signs of it.
Futile comment.
15. bellwether said...
Good post @2. I think a feature with gold bugs is that in theri magination holding gold obviates the need to trade or produce (the oft quoted no counter party risk which is really anti economy and trade (other than trade they control completely see next para) which is just a way of saying no interdependance.
The other fantasy at work is that in the event of eccomomic collapse (which gold hoarders wish for more than christmas or sex ) they become the the market and the central bank rolled into one, dictating prices, essentially sovereign.
But beyond those grandiose subconcious fantasises gold bugs often lack imagination. It would be surpsiring for example for a gold bug to respond to a post like this in other than a cliched and defensive manner.
All that said interesting jump in goldprice last week
16. Blindleadtheblind said...
the ignorance shown by some as to the use of glod in a monetary system are quite shocking. He who holds the gold makes the rules, and as this and other articles say the US and UK no longer hold the gold. China is busy changing ever more potentially worthless paper into gold reserves for precisely this reason. Ignore these sea changes at your peril.