Uk Property Already In A Severe Bear Market

[Magpie]

This should tell us something but I'm not sure what it is or whether its a meaningful comparsion. Does anybody else have views on this

I just think that in spite of gold's reputation as "real money" it is important to remember that it is an asset like any other, subject to bubbles and crashes.

Not to say it's overpriced yet - I don't know about that. I just get alarmed by people talking about gold being as "safe as houses". It's been a better bet the last few years, but all investments, property included can go up or down. And when gold falls, it can fall pretty fast.

[frugalista]

A tentative framework for valuing gold:

Isn't the true value of gold all the traditional and cultural associations that it has? Even though gold is no longer the universal currency (and perhaps never will be again) it did have this role for thousands of years and in many parts of the world. This meant that its value became infused into many local cultures. In the English language you can think of many references "the goose which laid the golden egg", "you are sitting on a gold mine", "gold rush", "golden handshake" etc. In some languages the word for gold and the word for money are the same, e.g. German.

As long as these traditions and cultures remain, people are going to demand gold for wedding rings and church domes and even bathroom taps. There is no substitute which people will readily turn to, because the substitute will not have the cultural connotations.

So, as traditional societies (which includes most of the world) become wealthier the price of gold should increase, because the supply is limited.

As people forget their traditions and culture, they would realise gold was simply a pretty, inert metal and they might demand it less, so the price could fall. This could also be happening, because of the rise of globalised culture.

frugalista

[Magpie]

A tentative framework for valuing gold:

That's interesting - it's a good stab at a way of working out whether or not gold is good value or not as well - if the factors you talk about are something that can truly be measured.

But in the end isn't any asset valued by a complex set of cultural, social, informational and business factors interacting (which is why it's so damned hard to to predict movements)? It all comes down to demand and supply operating in an imperfect market, but putting your finger on what influences demand is often extremely hard, not just for gold, but for many assets. Observing cycles in charts is one way of extracting information about asset prices. Another is close examination of micro-factors suchas those you've mentioned.

I still think it all boils down to gold just being an asset like any other. The economic factors affecting its price include the things you've mentioned, but many assets are affected by more factors than "simple supply and demand".

[BayAreaBear]

After a break of, lo these many months, the BayAreaBear returns just to add a note that it is gratifying to see the trends so long predicted establish themselves in such a powerful fashion. It is good to see open minded folk like Ceri also trumpeting the truth so that the readers of this forum can throw of the Bankers shackles.

May be soon the BayAreaBear will update his legendary chart?

BAB

Edited May 8, 2006 by BayAreaBear

[Flat Bear]

This thread has touched on a question which is bugging me and to which I have seen no decent response:

How do you value gold?

frugalista

Dont you measure it in vegtables? Well carrots anyway

Where do you store all this gold? someone could just nick it? The bank would want more for storing it for you than money. Wonder how you could get change when you buy something? and who pays the interest on the value. And what can you do with it; make nice jewelry (its a nice colour), use it in certain scientific instruments, ???? so why is it so valuable??????? I know its unreactive and quite rare but so are lots of rocks etc So why would anyone get involved in a "asset" product that cant do alot unless they realised it was in a bubble situation and were simply entering and leaving the bubble at profitable times.

I could understand Tulips (sort of) and South Sea Island shares but gold is just a percieved wealth that, without hype, is worth very little at all.

Whats wrong with sharks teeth as a new asset to take over gold? Theres the obvious disadvantage for the sharks but you would only get reports of people being badly gumed off the Barrier reef, so it could save lives aswell..

[Magpie]

I could understand Tulips (sort of) and South Sea Island shares but gold is just a percieved wealth that, without hype, is worth very little at all.

To be fair, gold has economic and industrial uses and is traded for these reasons as well as for speculative purposes. Because we have a few goldbugs here we mostly see the speculative side, but it is a real tradeable asset in its own right.

But it is also one that is used as a store of wealth and for speculative buying and selling and as such it is subject to irrational rises and falls. It is not "real money".

[Flat Bear]

To be fair, gold has economic and industrial uses and is traded for these reasons as well as for speculative purposes. Because we have a few goldbugs here we mostly see the speculative side, but it is a real tradeable asset in its own right.

But it is also one that is used as a store of wealth and for speculative buying and selling and as such it is subject to irrational rises and falls. It is not "real money".

Seriously I dont know what the economic uses are

[oracle]

Seriously I dont know what the economic uses are

fortunately I do......it is extensively used in wireless apparatus because it is incredibly conductive.silver is another metal widely used in the comms field as reflects RF better than the likes of aluminium(mostly high power telco equipment is silver plated)

In places like china,russia and india the land masses are so great that it is more economic to use wireless than install fixed line....there's your demand improving along with the uptake of mobiles for the up-and-coming in these countries.

[AgeingBabyBoomer]

Dont you measure it in vegtables? Well carrots anyway

Where do you store all this gold? someone could just nick it? The bank would want more for storing it for you than money. Wonder how you could get change when you buy something? and who pays the interest on the value. And what can you do with it; make nice jewelry (its a nice colour), use it in certain scientific instruments, ???? so why is it so valuable??????? I know its unreactive and quite rare but so are lots of rocks etc So why would anyone get involved in a "asset" product that cant do alot unless they realised it was in a bubble situation and were simply entering and leaving the bubble at profitable times.

I could understand Tulips (sort of) and South Sea Island shares but gold is just a percieved wealth that, without hype, is worth very little at all.

Whats wrong with sharks teeth as a new asset to take over gold? Theres the obvious disadvantage for the sharks but you would only get reports of people being badly gumed off the Barrier reef, so it could save lives aswell..

I think its single most redeeming feature as a fiorm of money is that it cannot be fabricated.

Debauchment is easily dtected too, hence its value cannot be eroded like paper monies

through wanton printing or forgery.

ABB

[Flat Bear]

fortunately I do......it is extensively used in wireless apparatus because it is incredibly conductive.silver is another metal widely used in the comms field as reflects RF better than the likes of aluminium(mostly high power telco equipment is silver plated)

In places like china,russia and india the land masses are so great that it is more economic to use wireless than install fixed line....there's your demand improving along with the uptake of mobiles for the up-and-coming in these countries.

Why is this an economic reason? Surely this is an industrial use or am I missing something?

[Magpie]

Why is this an economic reason? Surely this is an industrial use or am I missing something?

By economic I just meant jewellery etc...

[Flat Bear]

By economic I just meant jewellery etc...

OK thanks

[frugalista]

fortunately I do......it is extensively used in wireless apparatus because it is incredibly conductive.silver is another metal widely used in the comms field as reflects RF better than the likes of aluminium(mostly high power telco equipment is silver plated)

In places like china,russia and india the land masses are so great that it is more economic to use wireless than install fixed line....there's your demand improving along with the uptake of mobiles for the up-and-coming in these countries.

That's fine, but if (as I suspect) 99% of the demand for gold is for non-industrial uses (mosque domes, earrings, watches, etc.) then it is the volume of non-industrial demand that will determine the price.

frugalista