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Denninger On Gold


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What happens when gold hits $1,000,000 an ounce?

At this stage, I expect that owning or not owning some gold is going to be the least of your problems.

[i own some gold as insurance. In some extreme outcomes, it starts to lose its insurance value.]

That seems to be the major problem with Gold... if it's worth 1,000,000 of worthless paper, why would you swop it for worthless paper? You will desparately hold onto it and it becomes effectively untradeable.

In these circumstamces Gold will not be exchanged into any currency, but other "assets". 4-bed semi for 100 oz anyone? ;)

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Wow you guys are hilarious..

Yes something is only worth what someone will pay for it, and at this moment in time the WORLD is paying less for property & trying to protect the value of its currency

with commodities....

Two popular commodities have certain strengths :

Are shiny, can be made to look like certain things, dont corrode , are rare, are running out, etc etc etc etc

WHO CARES !! All I know is that I started on this forum as a housing bear & still am, but I have another side to me now...Im also a gold bull.

and being one has helped my DEPOSIT nearly double... and thats from originaly putting nearly half of it into gold.

One day when my deposit has tripled / quadrupled etc & property is low I will swap over , back into fiat to purchase / put a greater deposit down on a home etc (Yes you dont have purchase a house outright with gold or silver :rolleyes: )

Why..... because if you cant beat em join em B)

Edited by Crashman Begins
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Point brilliantly made.

Gold's value is dictated by what the market is prepared to give in exchange.

Myth of mystical storehouse of value, fiat free, intrinsic value exploded forever!

All commodities are determined by what the market is prepared to trade for them.

Empirically gold is money - like it or not...

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Wow you guys are hilarious..

Yes something is only worth what someone will pay for it, and at this moment in time the WORLD is paying less for property & trying to protect the value of its currency

with commodities....

Two popular commodities have certain strengths :

Are shiny, can be made to look like certain things, dont corrode , are rare, are running out, etc etc etc etc

WHO CARES !! All I know is that I started on this forum as a housing bear & still am, but I have another side to me now...Im also a gold bull.

and being one has helped my DEPOSIT nearly double... and thats from originaly putting nearly half of it into gold.

One day when my deposit has tripled / quadrupled etc & property is low I will swap over , back into fiat to purchase / put a greater deposit down on a home etc (Yes you dont have purchase a house outright with gold or silver :rolleyes: )

Why..... because if you cant beat em join em B)

Fair enough, you got lucky by investing in Gold early. BTW, so did I: 170% return so far and counting...

Question is: Would you buy any more Gold NOW? If no, why not?

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All commodities are determined by what the market is prepared to trade for them.

Empirically gold is money - like it or not...

Empirically so is everything else, like it or not.

please don't get the wrong idea here - I am not anti gold.

I AM anti mystical bullsh1t.

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Empirically so is everything else, like it or not.

please don't get the wrong idea here - I am not anti gold.

I AM anti mystical bullsh1t.

Rubbish - very few things have the right qualities. Try storing masses of piping or using it to trade etc...

Humanity uses gold as money - that is empirical. No justification is needed it is fact. All attempts otherwise have failed.

Sure we can be free to use anything and when we are people use gold.

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Fair enough, you got lucky by investing in Gold early. BTW, so did I: 170% return so far and counting...

Question is: Would you buy any more Gold NOW? If no, why not?

Didnt get in early enough, <_<

I've purchased some more recently and may consider calling it a day when it approaches 1000 GBP per ounce,

Id like to keep my options open by loading up on more fiat & silver & I may need to purchase a property in a couple of years, even though gold may take a lot longer to reach that selling point.

Edited by Crashman Begins
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An alternative view ...

Mr. Denninger and Gold or Why the Dollar-Deflationists Are Wrong

http://www.zerohedge.com/article/mr-denninger-and-gold-or-why-dollar-deflationists-are-wrong

Gold is the currency beyond Governments. It is the most liquid form of money accepted throughout the world – the true reserve currency of the world - whereas Dollars, Yuans and Euros etc. are only guaranteed to be accepted within their own respective countries, and as long as their respective governments last. Why would you want to tie yourself down to the paper currency of a particular nation, especially in times of such turbulence? It points to a very limited sphere of thinking when you advocate that holding only dollars is the best strategy. It is a fallacy to believe that there is no refuge outside the system; that you have to be trading paper tickets all the time to “keep up” with the dilution of your purchasing power or just stand by idly holding dollars while the government rapes you. Gold is your refuge outside the system.

Got Gold, Mr. Denninger?

Keep the image below at the forefront of your mind:

exter-inverse-pyramid.jpg

sao tell me again, if gold is so good, why can it lose 75% of its value for a entire generation?

I'm all into long term investing but I want to be alive when I get a positive return on my investment (well, in the case of gold, wait 20 years to break even)

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Rubbish - very few things have the right qualities. Try storing masses of piping or using it to trade etc...

I have done. Works just fine.

Humanity uses gold as money - that is empirical. No justification is needed it is fact. All attempts otherwise have failed.

Humanity has also used loads of other things as money and when it's free trade it works great.

Fiat doesn't work. What the statists have done is move the goalposts on fiat away from fiat = force to fiat = paper. They did a similar trick with the word inflation but the goldbugs weren't having that.....

Sure we can be free to use anything and when we are people use gold.

A tiny minority of people, yes.

Most folks use copper or silver, wheat or tobacco, favours or even *GASP* coloured paper.

Thy disctinction is between freedom and force. All else is an illusion.

Edited by Injin
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The value that has been assigned to gold this morning is $1216. A decent '59 Les Paul is around $70,000.

But the values so ascribed may change dramatically in the next few days such that the declared value of gold may dip to $850 and the iconic Axe could fall below $50k.

Meanwhile, the value ascribed to the paper currency that you can exchange for these commodities or things that can be bought and sold on the market, will rise as the value of gold and Axes falls.

I therefore have to agree with the following statement:

"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

Out of curiousity, I asked google to search on the phrase 'Phenwick Gruber'.

Nothing. Not a single hit.

Are you playing a little joke on us, RealistBear?

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I have done. Works just fine.

Humanity has also used loads of other things as money and when it's free trade it works great.

Fiat doesn't work. What the statists have done is move the goalposts on fiat away from fiat = force to fiat = paper. They did a similar trick with the word inflation but the goldbugs weren't having that.....

A tiny minority of people, yes.

Most folks use copper or silver, wheat or tobacco, favours or even *GASP* coloured paper.

Thy disctinction is between freedom and force. All else is an illusion.

My point is people use gold when they are free - other things are used but with less success.

Empirically gold is money - other commodities do not fit the bill.

Silver tarnishes, copper has too low a value to weight ratio, wheat is difficult to store and transport, paper is a promise to deliver some other thing as you know.

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My point is people use gold when they are free - other things are used but with less success.

Empirically gold is money - other commodities do not fit the bill.

Silver tarnishes, copper has too low a value to weight ratio, wheat is difficult to store and transport, paper is a promise to deliver some other thing as you know.

Sterling silver doesn't tarnish that much. the use of silver as money historically is more widespread than gold - fact

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"Bread is money, and nothing else." J.P. Hovisburton, testifying before the US senate.

Herbert B. Warburton, a member of the House of Representatives (link) concurred, saying "we need to do something about these bread lines".

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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.

For me the odds for gold are better than they are for £/$ and I am likely to protect myself better than putting my £ in the bank. It is a gamble, of sorts, but I believe that it is a calculated risk which over the longterm has excellent odds of me being right. Ofcourse, in 20 years time it is highly likely that I could have made a lot more from investing in markets/property/land/agriculture or whatever but I dont like risk and have to work aswell so dont have the time to research and manage such investments

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