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Denninger On Gold


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change the word GOLD for HOUSE and I think we are there.

Please Note:- this is only for viewers in the United Queendom of Great Britain & N.I.

Other nations are less delusional.

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The answer is to pick the correct one.

The problem arises when there are no "correct ones" left.

When there are no correct ones left, it seems that the best way to hold on to real value includes :

- Company shares for well managed businesses that make things rather than provide services.

- Things (gold, silver, coal, oil, agricultural land etc)

- Education

- Etc etc

- And at the very bottom of the pile : houses. I think it was Dr Bubb who showed how badly housing costs were damaged relative to the value of just about everything else during the hyperinflation in the Weimar Republic.

The self called Doctors reasoning was incorect about hyperinflation in the Weimar Republic and housing prices.

With 25% of the population killed in the Great war who is gona need to build ?

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I have a few friends from Zimbabwe with a different experience

Gold works, because of goldbugs.

Who are making a mistake that causes a self referential loop.

Gold has value because goldbugs have valu for gold, thinking that gold is something that it isn't, which gives gold it's value.

This sort of schizophrenic loop is very hard to stop once started and will in fact serve anyone who can trade the yellow stuff dispassionately. The case for gold is still bilge though. it's special in the same way that peices of the one true cross are special.

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The value of gold ascribed to an ounce is around $1216. You can take your currency and exchange it for this particular commodity or slightly less of another metal (Platters for example).

The "market" has decided on the value of gold for this morning. It is based on perceived value as reflected by demand, mood, fundamentals and a few technicals all mixed together to come up with today's value.

The market doesn't exist in that way,nor does anyone or anything ascribe values in this way. An analogy would be to measure something with a ruler and then say it was the ruler that caused the length.

eBay values are driven by the value of any given thing at recent closing prices. I have tried to shift the value of Marshall Amps slightly higher this week by ascribing my own value to one. However, the market disagrees and ascribes a different value.

There is no market in this way.

Gold is not a unique commodity which is why its value changes constantly. It crashes when enough people ascribe a lower value and the price will accelerate one was or the other depending on sell or buy pressure. Much like a '59 Les Paul.. the big difference is that the Les Paul has higher value "intrinsically" because there are not many of them around whereas gold is in limitless supply if demand makes difficult mining viable.

I think Phenwick Gruber is right:

"The most dangerous myth about gold, or any other metal or precious stone for that matter, is that there is no intrinsic value apart from the mood of the market at any given moment. Values are dictated by market forces and there is no difference between a commodity or a currency as the relationship between the two must always remain relative to the market." Phenwick Gruber, 1932

Yes but your previous two statements contradict this last one (again)

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Bilge.

Sorry but gold is just another commodity, albeit one that trades like religious icons due to the poorly thought through quais mysticism that surrounds it.

You're battling against thousands of years of history. It is emphatically not 'just another commodity'

Gold is the commodity that humans chose to be “money”- the most marketable good. It didn’t happen overnight, but over thousands of years of evolution. Billions of trading decisions over centuries made by free men of their own volition – the collective wisdom – installed Gold as money.

Gold has the highest stocks to flow ratio of any commodity i.e. its total above ground stockpile is very large compared to its annual production which is NOT the case for other commodities.

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You're battling against thousands of years of history. It is emphatically not 'just another commodity'

I always am.

it emphatically IS just another commodity that religious minded mystical cretins have latched onto as being special.

Gold is the commodity that humans chose to be “money”- the most marketable good. It didn’t happen overnight, but over thousands of years of evolution. Billions of trading decisions over centuries made by free men of their own volition – the collective wisdom – installed Gold as money.

No, they didn't. Gold has always been installed by a despot as a fiat currency, most often after a collapse in fiat paper. The vast majority of humanity has never used gold to trade with, either.

Gold has the highest stocks to flow ratio of any commodity i.e. its total above ground stockpile is very large compared to its annual production which is NOT the case for other commodities.

Yes I know - but this isn't because gold is special, it's because a lot of people think gold is special (incorrectly) by all means trade the stuff but don't claim it's actually special.

Gold is special the same way that the turin shroud is special - special if you are mystically minded.

Of course, if I am wrong you will be able to tell me the qualities gold has that make you want it so much for yourself. not to trad with, but why you want gold for itself, for yourself.

Edited by Injin
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I think we should make a list of all the Hollywood films where people were conned into buying worthless gold mines or shares in worthless gold mines.

Treasure of Sierra Madre

How The West Was Won

North To Alaska

The list is almost endless... mainly because gold has been a well-known scam for thousands of years...

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Yes I know - but this isn't because gold is special, it's because a lot of people think gold is special (incorrectly) by all means trade the stuff but don't claim it's actually special.

Gold is special the same way that the turin shroud is special - special if you are mystically minded.

Of course, if I am wrong you will be able to tell me the qualities gold has that make you want it so much for yourself. not to trad with, but why you want gold for itself, for yourself.

I think the problem really is that all "investment" is essentially gambling on relative outcomes, and some people don't like to gamble, or acknowledge they're gambling, so they choose a particular category (gold, property) and infuse it with mysterious gobbledygook in order to assure themselves that they're onto a sure thing.

They then fall into the time-honoured trap of emotionally identifying with their "investment" against all sense and logic. I'm happy for people to promote gold as a gamble (who knows, they might be right over a given time period) but this kind of secret-property-of-gold-unknown-to-the-masses type spiel just makes them sound weird.

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I think we should make a list of all the Hollywood films where people were conned into buying worthless gold mines or shares in worthless gold mines.

Treasure of Sierra Madre

How The West Was Won

North To Alaska

The list is almost endless... mainly because gold has been a well-known scam for thousands of years...

You could draw up a far longer list of paper scams involving shares, bonds, currency, etc etc.

The biggest scam in the world today is fiat currency.

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The real bugs are the paper bugs - people who believe in fiat currency (or 'fiat' anything for that matter).

Fiat means forced, it doesn't mean paper. Gold can be a fiat currency, just needs a law passinf - such as when there is a gold standard.

But you are right if this is what you meant - the battle isn't between metal and paper it is betwene freedom and force.

I fully support your right to indulge in any mad crackpot fantasy you like as regards some dull boring useless metal. Just as long you extend me the courtesy of rejecting any mystical nonsense that surrounds it.

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I think the problem really is that all "investment" is essentially gambling on relative outcomes, and some people don't like to gamble, or acknowledge they're gambling, so they choose a particular category (gold, property) and infuse it with mysterious gobbledygook in order to assure themselves that they're onto a sure thing.

They then fall into the time-honoured trap of emotionally identifying with their "investment" against all sense and logic. I'm happy for people to promote gold as a gamble (who knows, they might be right over a given time period) but this kind of secret-property-of-gold-unknown-to-the-masses type spiel just makes them sound weird.

+1

Spot on.

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You could draw up a far longer list of paper scams involving shares, bonds, currency, etc etc.

The biggest scam in the world today is fiat currency.

Fiat doesn't mean paper, it means force.....and you are right.

The biggest scam in the world today is the idea that you can create value by decree.

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Gold works, because of goldbugs.

Who are making a mistake that causes a self referential loop.

Gold has value because goldbugs have valu for gold, thinking that gold is something that it isn't, which gives gold it's value.

This sort of schizophrenic loop is very hard to stop once started and will in fact serve anyone who can trade the yellow stuff dispassionately. The case for gold is still bilge though. it's special in the same way that peices of the one true cross are special.

With all my respect to you (and there are not so many I do respect, so you are on the same board as E. Tolle ie) does Errol not has a point in believing that there will be more people that put value in gold, thus making it cost more in whatever measure you chose.

And as OP and the rest of discussion make case that US$ (or any other currency) is better than gold, would you agree/disagree with such statement, ie would you rather keep your savings in a currency or in gold.

If you chose neither, what is this mythical, the term you use, "something" has has a true value and can serve as an inflation hedge?

Thank you.

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You're battling against thousands of years of history. It is emphatically not 'just another commodity'

Gold is the commodity that humans chose to be “money”- the most marketable good. It didn’t happen overnight, but over thousands of years of evolution. Billions of trading decisions over centuries made by free men of their own volition – the collective wisdom – installed Gold as money.

Gold has the highest stocks to flow ratio of any commodity i.e. its total above ground stockpile is very large compared to its annual production which is NOT the case for other commodities.

Diamonds, gold, silver etc. all have been used over the millennia as means of value and as bartering objects. Gold is not unique and is subject to the dictat/fiat of the market that decided in 1980 that a peak would be reached never to be touched again (to date that is).

In theory, gold could become a base metal much like cheap brass if production increased to extremely high levels or if technology found an economic way of manufacturing it along the lines of diamonds.

Platinum and varicose other precious metals are like gold in that the amount produced is less than the amount in existence.

Gruber's thesis simply states that nothing has intrinsic or set value and all depends upon the vagaries of the marketplace. Gold looks nice and it does not tarnish that is why it has fascinated for centuries. The issue is that it can fall in value very quickly and not recover for decades or even centuries and that the market has determined that state of reality.

Fiat has noting to do with value. It is a latin term meaning that something has been ascribed something--a value for example. In a sense everything that is bought or sold relies on a "fiat."

A better word for gold bugs would be "intrinsic" which would reflect the belief that gold will hold up no matter what the market does and in this way it is unique from other things that are bought and sold.

Gruber de-mythologised gold at a time when the world was upside down trying to find something that would not fall in value when everything else seemed to be failing.

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These threads are very amusing, but tend to go in circles.

There is little point in continuing the debate. Best to just wait for the future developments (like $5000 gold, gold being integrated into the currency system etc etc).

Edited by Errol
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Fiat doesn't mean paper, it means force.....and you are right.

The biggest scam in the world today is the idea that you can create value by decree.

I think you have touched upon the essence of the debate here.

The market is, in reality, a sort of scam because it is unreliable, ever-changing and often erratic. Buffet's pendulum theory of market forces is a good example--the fiat/ascribed value of anything is driven by the herd. Perhaps no more so than in the case of gold.

The bottom line is that nothing is totally reliable as a store house of value.

The ultimate reality is that the value of your own life is worth more than all the value in the universe.

A 17kg brick of gold is worth the price of a glass of water to the man dying of thirst. IT is worth $1216 an ounce to the person making an investment today hoping to sell at $2000 an ounce in 2070. The market may scam that investor and revert to 1980 value for longer than that investor has to live.

All bows the knee to Buffet's pendulum.

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Fiat means forced, it doesn't mean paper. Gold can be a fiat currency, just needs a law passinf - such as when there is a gold standard.

But you are right if this is what you meant - the battle isn't between metal and paper it is betwene freedom and force.

I fully support your right to indulge in any mad crackpot fantasy you like as regards some dull boring useless metal. Just as long you extend me the courtesy of rejecting any mystical nonsense that surrounds it.

(Possibly) Unrelated to our discussion some do believe that gold has just that, mystical values, if you believe in this sort of things of course. There is an opinion that despite popular confusion alchemists were producing the philosophical stone from gold, not the other way around.

But it's probably the wrong board to discuss such theories so let's stick to fiat currencies vs gold. :)

Edited by JOliver
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I think you have touched upon the essence of the debate here.

The market is, in reality, a sort of scam because it is unreliable, ever-changing and often erratic. Buffet's pendulum theory of market forces is a good example--the fiat/ascribed value of anything is driven by the herd. Perhaps no more so than in the case of gold.

Fiat means forced.

Markets means not forced.

No one ascribes market value, it is found by voluntary trade. Market price is a rcord of other peoples trades, it is no an order that forces behaviour. You are free of it.

There is also no herd. just individuals.

The bottom line is that nothing is totally reliable as a store house of value.

The ultimate reality is that the value of your own life is worth more than all the value in the universe.

A 17kg brick of gold is worth the price of a glass of water to the man dying of thirst. IT is worth $1216 an ounce to the person making an investment today hoping to sell at $2000 an ounce in 2070. The market may scam that investor and revert to 1980 value for longer than that investor has to live.

All bows the knee to Buffet's pendulum.

Except that what you've done here is refiy the term "the market" and tried to treat it as equivlent to being forced to do something and then made a load of further dedustions from that initial thinking error - and therefore pretty nearly everything you type is nonsense, at best right by accident.

Edited by Injin
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You're battling against thousands of years of history. It is emphatically not 'just another commodity'

Gold is the commodity that humans chose to be “money”- the most marketable good. It didn’t happen overnight, but over thousands of years of evolution. Billions of trading decisions over centuries made by free men of their own volition – the collective wisdom – installed Gold as money.

Gold has the highest stocks to flow ratio of any commodity i.e. its total above ground stockpile is very large compared to its annual production which is NOT the case for other commodities.

It's just a religion gold has no real value, you've been told it does.

Why not use titanium as a means of exchange or platinum, the fixation with gold is intriguing on the psychology level but if the consensus disappears over it's economic value it's about useful as fiat paper money.

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