Gold

[Goldfinger]

if America does something stupid like lower rates to help those arm mortgage holders. then the dollar will tank. And take up gold prices with it.

BUT it will take up the price proportionally to all other limited assets such as property, oil, steel, baked beans, stocks ect

now if you believe more people will flea to gold over another asset then there is a case to go into gold. But for how long?

Correct, there will be a rather short-lived gold-squeeze like back in 1980. That's when you hopefully manage to sell.

After that, gold will fall back. But will level out MUCH higher than it is now (gold never went back to pre 1971 prices,

not even remotely).

[tahoma]

now if you believe more people will flea to gold over another asset then there is a case to go into gold. But for how long?

Yawn, I think I am going to 'flea' this thread and jump off. Good luck with the beans cells, I think people might just grow some if their value goes up.

[Guest DissipatedYouthIsValuable]

The rise in gold that is to come will have almost nothing to do with jewellery.

It will be wealthy people who are desperately trying to keep their wealth once

the Dollar starts erroding for good.

It will be people like cells who suddenly realize that it is a huge problem storing

their wealth (possibly released from selling their BTL, if lucky) in tins of

beans. E.g. if someone sells a flat and suddenly has GBP 100,000 that would

be around 10kg of gold. In volume, that is roughly 1 pint. The same wealth in

beans would be 250,000 tins of beans (@ GBP 0.40 per tin). You get the point.

Although, credit for cells, beans will most likely go up in price as well. So, if you solve

the logistics, it might still be a good investment.

My guess, however, is that all these rich Arabs, Chinese and other people will buy gold

rather than beans. There also might not be enough beans around at the time they

suddenly need them. Furthermore, the financial markets are for thousands of years used

to deal with gold. Tinned beans are less popular for some reason.

If there are people trying to manipulate the gold price, they will fail in the end. Just look

what happened 1971 in the US, or 1992 in the UK. If you manipulate too much and

it suddenly unravels, you're screwed. So, in fact, we should thank the manipulators

if there are any. They keep the price low for us buyers. Finally, when the fundamentals

make it impossible to keep that level, they'll give up. In fact, they will make it much worse

because most likely it is people who have to buy back tonnes and tonnes of gold in a very

short period of time if they want to avoid gigantic losses from selling all this borrowed gold

first place ("gold carry trade").

So, hold on to your gold (and eat the beans).

Well, and this may be me, I believe that the intrinsic value of anything is dependent upon necessity and desire.

And at the last check I'm pretty sure I needed air, water, food and shelter to start with.

After that it comes down more to desire than anything else.

I'd have less utility for gold really.

I suppose I could hammer out a sheet of it and make a shelter.

[cells]

Yawn, I think I am going to 'flea' this thread and jump off. Good luck with the beans cells, I think people might just grow some if their value goes up.

discussion is always good tahoma, dont flea from it

im merely posting why i would be reluctant to hold gold, haven’t yet read anything on this forum to make me feel positive about gold for the long run.

Although if I was a billionaire. i think I could manipulate gold and it would be easy easy, some multibillionaire, or group of multibillionaires get together and buy 25billion in gold slowly, rising its price slowly. then put in £100million to advertise this in india/china/usa/europe/asia and try to get your average guy to buy some. as this happens the price jumps higher and higher. A great ponzi scheme in the making. multibillionaires start to ever so slowly pull out their gold. having made a killing and probably tanking gold with it.

[Goldfinger]

Well, and this may be me, I believe that the intrinsic value of anything is dependent upon necessity and desire.

And at the last check I'm pretty sure I needed air, water, food and shelter to start with.

After that it comes down more to desire than anything else.

I'd have less utility for gold really.

I suppose I could hammer out a sheet of it and make a shelter.

Well, you'll need a huge shelter for your 250,000 tins of beans.

And you'll be never able to move your wealth easily (and without

anyone noticing). But then, you could make a shelter from the tins!

[Impartial]

Well, and this may be me, I believe that the intrinsic value of anything is dependent upon necessity and desire.

And at the last check I'm pretty sure I needed air, water, food and shelter to start with.

After that it comes down more to desire than anything else.

I'd have less utility for gold really.

I suppose I could hammer out a sheet of it and make a shelter.

I refer you to Maslows Hierachy of needs.

Most if not ALL investors with spare cash have fulfilled their basic needs, if not a HPC, DJIA, FTSE etc would be the last of their worries.

Those at the level where they are ready to generate and preserve wealth, choose silver and gold as part of your portfolio, now before it's too late.

[Guest DissipatedYouthIsValuable]

Well, you'll need a huge shelter for your 250,000 tins of beans.

And you'll be never able to move your wealth easily (and without

anyone noticing). But then, you could make a shelter from the tins!

Actually I'm not sure I really want that many beans. I think I'll put my money into seeds

and live chickens.

I'm pretty sure I could yoke together a few chickens and load them up with seeds.

Maybe bags of rice and cows would be better. Might be a bit upscale for me though.

I'd be a first time buyer.

Yep, I'm going for chickens and seeds.

Good food to protein conversion rate in chickens. Bit of a lag time growing the crops.

That's probably where I'd need the beans.

I think I'd diversify a bit.

I'm a bit concerned about gold being so valuable that we'd have to lock it all up in vaults.

I'd want it on me, so I could hammer out a roof.

I'm a bit worried about the negative equity feeling if someone nicked my shelter though.

[Goldfinger]

discussion is always good tahoma, dont flea from it

im merely posting why i would be reluctant to hold gold, haven’t yet read anything on this forum to make me feel positive about gold for the long run.

Although if I was a billionaire. i think I could manipulate gold and it would be easy easy, some multibillionaire, or group of multibillionaires get together and buy 25billion in gold slowly, rising its price slowly. then put in £100million to advertise this in india/china/usa/europe/asia and try to get your average guy to buy some. as this happens the price jumps higher and higher. A great ponzi scheme in the making. multibillionaires start to ever so slowly pull out their gold. having made a killing and probably tanking gold with it.

This applies to anything that can be traded and is therefore an invalid argument.

[cells]

i think one thing should be clear and it doesn’t seem like it is here

and that is inflation is caused by money supply. if there is one trillion £££ in the world chasing goods and services, and the government prints one trillion £££ so now we have 2 trillion chasing the same goods, it is likely in time the value of the pound would half or that you would be paying roughly twice as many £££ for the same goods

price is the difference in £££ due to businesses, it might be supply and demand, manipulation, technology, productivity ect

trying to argue that gold is a good hedge against inflation imo is pointless, since every single asset will be good against inflation. that included gold, stocks, pet dogs, property and our 250k tins of bakes beans

so advocating holding gold, over stocks of silver, or tin, or coal, or oil is moot.

trying to argue the merit of gold over these other assets is the way you should look at gold

so scan any gold bug tell me why the PRICE of gold, not the inflation price of gold is going to go up more so than another asset.

Here ill give u gold buggies a head start, the following would work if you had proof

Indians are buying more gold

Gold production is decreasing

People flea to gold first in a period of inflation

People flea to gold in times of war

ect

This applies to anything that can be traded and is therefore an invalid argument.

not really. it needs to be high value compared to size, limited in quantity and production greatly limited, 25billion as in that example needs to have a high effect on the asset, eg doubling prices, the average jo needs to see and feel it.

stocks and shares are hard to do this with, and 25billion will not double the price. oil/coal/gas is hard to store and too bulky.

guess what 3 things come to mind straight away.

gold/silver/property

infact, the current property boom could easily have been manipulated onto us!

someone group of billionaires slowly buys property in the uk from 95-2000 spending 25odd billion. they pay companies and tv station to put on property porn onto tv, they infiltrate or bribe bank of england to lower rates. the public lap it up. prices soar 3x. they slowly sell. in time it collapses

Edited March 29, 2007 by cells

[Guest DissipatedYouthIsValuable]

This applies to anything that can be traded and is therefore an invalid argument.

Value is based on desire. I like the fact that the world is an interesting interconnected flux state of desire.

I'm pretty happy without gold.

In fact I'm pretty sure I could self actualise (re Maslow's hierarchy of needs) without it.

If paper currency were valueless, and somebody needed me as a doctor I'd rather have a good meal or some help with digging the field for crops than a bag of metal.

Edited March 29, 2007 by DissipatedYouthIsValuable

[tahoma]

If paper currency were valueless, and somebody needed me as a doctor I'd rather have a good meal or some help with digging the field for crops than a bag of metal.

What would be your means of exchange in that situation? It's hard to barter indefinitely. So how do you transfer goods and services? How do you bargain?

If it's not Gold, it would be Lead - fired at high speed from a rifled tube. I know which I would prefer.

[Impartial]

Value is based on desire. I like the fact that the world is an interesting interconnected flux state of desire.

I'm pretty happy without gold.

In fact I'm pretty sure I could self actualise (re Maslow's hierarchy of needs) without it.

If paper currency were valueless, and somebody needed me as a doctor I'd rather have a good meal or some help with digging the field for crops than a bag of metal.

Hmm maybe you would do better saving the rain forests (what happened to that) or the ozone layer (what happened to that) or joining the latest co2 farce debacle (Hmm no prizes for guessing what will happen to that) rather than talking finance on an economic forum.

good luck saving for your kibbutz

[Guest DissipatedYouthIsValuable]

What would be your means of exchange in that situation? It's hard to barter indefinitely. So how do you transfer goods and services? How do you bargain?

If it's not Gold, it would be Lead - fired at high speed from a rifled tube. I know which I would prefer.

Well, I think you start with the basic needed resources in small groups, you meet other small groups.

You could kill them with lead or make them lust for your gold as a transactional style.

You could even have a philosophical framework which encourages and utilises the skills and resources of ever larger goups.

Depends on which game theory model you want to use, if you want to conceptualise.

We will probably, of course, just be silly monkeys and ****** it all up again.

[Goldfinger]

Well, I think you start with the basic needed resources in small groups, you meet other small groups.

You could kill them with lead or make them lust for your gold as a transactional style.

You could even have a philosophical framework which encourages and utilises the skills and resources of ever larger goups.

Depends on which game theory model you want to use, if you want to conceptualise.

We will probably, of course, just be silly monkeys and ****** it all up again.

DYIV, why do you need to come up with all these theories? Save the time. The history of mankind has shown that

the commodities that are finally used for settling of trade are gold or silver, if they are available. You don't have to

invent the wheel again.

And to address cell's argument that any other good would be inflation proof: look at the real prices of gold (e.g.

compared with real prices of houses). You'll see, gold is historically low. As gold is as good as cash, it will most

likely be used as alternative to fiat cash by more and more people. And, cells, pets can easily be doubled or tripled,

gold not.

EDIT: And as I've said many times before: if there were not people with other opinions, there wouldn't be any gold

for me to buy, and that would make me very unhappy. So, if you don't want it, don't buy it. But don't blame us later

for your evaporated fiat money.

Edited March 29, 2007 by goldfinger

[Guest DissipatedYouthIsValuable]

Hmm maybe you would do better saving the rain forests (what happened to that) or the ozone layer (what happened to that) or joining the latest co2 farce debacle (Hmm no prizes for guessing what will happen to that) rather than talking finance on an economic forum.

good luck saving for your kibbutz

Rainforests - Well, I have a few wooden bits of furniture. They're old but I kind of like them. I'm pretty sure that one of the greatest antihypertensive drugs so far, Ramipril, was developed from Pit Viper Venom. That's made a lot of people's lives longer, and helped the pharmaceutical industry make profits. So I suppose that's helped with people's pensions. I think it was one of those rainforest Pit Vipers.

Ozone layer - Apart from exploding some cans of furniture polish on fires in the 80s as a schoolboy, I haven't really used that much in the way of CFCs. I've prescribed a lot of asthma pumps which used to have a load of CFCs in them as the propellant, I believe. Perhaps the relative intangibility of the Ozone layer overall means it doesn't prey heavily on my mind really, regardless of objective risk.

CO2 farce debacle - Yeah, I agree making a market out of CO2 is a bit weird. You'd need a big stick to really regulate that (the emissions, not the fantasy market built on it). I suppose, personally I'll do what I have been doing and just run the car that I need, wear more clothes over using the heating. All the simple stuff that we know as reasoning human beings. I like travel, so I probably won't give up the flying. I have a solar panel, and I'm not under any illusions that there's probably any net gain in that. It's packed full of some rare mined metals since it's one of the new fancy lightweight ones. It's cool though.

I thought the fundamental of economics was 'infinite wants, finite resources' ?

I think I'll focus on both sides of that statement and see what I personally feel comfortable with.

[cells]

And, cells, pets can easily be doubled or tripled,

gold not.

not pandas

invest in pandas !!!1!!!

And to address cell's argument with any other thing would be inflation proof: look at the real prices of gold (e.g.

compared with real prices of houses). You'll see, gold is historically low.

why are you comparing gold to housing for historically values? why don’t you compare gold to cars, or gold to baked beans, or gold to average wages...... then historically (say 10 years) they are definitely not low.

but then again, you need to compare it to an asset that is overvalued and tripled over 7-10years to convince yourself to buy, right?

Edited March 29, 2007 by cells

[Guest DissipatedYouthIsValuable]

DYIV, why do you need to come up with all these theories? Save the time. The history of mankind has shown that

the commodities that are finally used for settling of trade are gold or silver, if they are available. You don't have to

invent the wheel again.

And to address cell's argument with any other thing would be inflation proof: look at the real prices of gold (e.g.

compared with real prices of houses). You'll see, gold is historically low. As gold is as good as cash, it will most

likely be used as fiat cash alternative by more and more people. And, cells, pets can easily be doubled or tripled,

gold not.

EDIT: And as I've said many times before: if there were not people with other opinions, there wouldn't be any gold

for me to buy, and that would make me very unhappy. So, if you don't want it, don't buy it. But don't blame us later

for your evaporated fiat money.

You know, let's say you're ill, maybe even dying. Is gold not a fiat currency then? I've got a lovely vault full of medicines.

Of course if you shoot me, you won't be able to use my knowledge. And I might not be wanting gold.

Comes down to this. Is your magpie-ish desire for shiny metal stronger than your fear of death?

Let's settle this with a p i s s i n g contest. Whoever gets it further up the wall wins?

[enrieb]

trying to argue that gold is a good hedge against inflation imo is pointless, since every single asset will be good against inflation. that included gold, stocks, pet dogs, property and our 250k tins of bakes beans

so advocating holding gold, over stocks of silver, or tin, or coal, or oil is moot.

trying to argue the merit of gold over these other assets is the way you should look at gold

so scan any gold bug tell me why the PRICE of gold, not the inflation price of gold is going to go up more so than another asset.

firstly to answer the question at the begining of the thread about 'gold, and why it will go the same way as property'

Gold and other precious metals are assets that are both tangible and liquid (i.e. easily traded), unlike real estate which is tangible but not liquid, or company shares and bonds which are liquid but not tangible.

With property it depends on where the property is and what is happening in the surrounding area, is there an over supply of houses in that area? or are they in demand? Has the area changed due to economic decline, flood risks, unemplyment, crime etc... You can take your gold to a different part of the country where it would be in demand, you cannot take your house anywhere.

so scan any gold bug tell me why the PRICE of gold, not the inflation price of gold is going to go up more so than another asset.

This is not something that 'I find' gold bugs are saying, I'm sure that 'some are' just probably not the majority. Gold will probably go up broadly inline with the other above asset classes as you say above, however gold as a form of money has these advantages over other comodity assets, advantages that I believe were first listed by Aristotle in the fourth century BCE. Here is some of the desirable features that money should have (taken from the wiki.)

To function as money, the monetary item should possess a number of features:

To be a medium of exchange:

It should have liquidity, and be easily tradable, with a low spread between the prices to buy and sell, in other words, a low transaction cost.

It should be easily transportable; precious metals have a high value to weight ratio. This is why oil, coal, vermiculite, or water are not suitable as money even though they are valuable. Paper notes have proved highly convenient in this regard.

It should be durable. Money is often left in pockets through the wash. Some countries (such as Australia, New Zealand, Mexico and Singapore) are making their bank notes out of plastic for increased durability. Gold coins are often mixed with copper to improve durability.

It should minimize contamination and contagion. Since money is frequently handled it becomes a pathway for infectious disease transmission. Recent studies have shown that the area in business offices that show the highest contamination by disease causing organisms is the accounting office where money must be counted and handled. Unlike paper, silver is used as an anti-bacterial and anti-viral agent, as are platinum and titanium. This property of silver has been recognised for millennia, which is why silver is often used in eating utensils.

To be a unit of account:

It should be divisible into small units without destroying its value; precious metals can be coined from bars, or melted down into bars again. This is why leather and live animals are not suitable as money.

It should be fungible: that is, one unit or piece must be exactly equivalent to another, which is why diamonds, works of art or real estate are not suitable as money.

It must be a specific weight, or measure, or size to be verifiably countable. For instance, coins are often made with ridges around the edges, so that any removal of material from the coin (lowering its commodity value) will be easy to detect.

To be a store of value:

It should be long lasting and durable; it must not be perishable or subject to decay. This is why food items, expensive spices, or even fine silks or oriental rugs are not generally suitable as money.

It should have a stable value.

It should be difficult to counterfeit, and the genuine must be easily recognizable.

To be anonymous:

In the opinion of all libertarians and most laissez-faire economists, money should not be subject to government tracking.

In the opinion of all libertarians and most laissez-faire economists, it should be usable for purchases in a black market.

It should not require equipment, tools or electricity to use.

Money also is typically that which has the least declining marginal utility, meaning that as you accumulate more units of it, each unit is worth about the same as the prior units, and not substantially less.

For these reasons, gold and silver have been chosen again and again throughout history as money in more societies and in more cultures and over longer time periods than any other items.

One key benefit of these features of money is that it facilitates and encourages trade, as barter is far less efficient.

Edited March 29, 2007 by enrieb

[LargelyIgnorant]

You know, let's say you're ill, maybe even dying. Is gold not a fiat currency then? I've got a lovely vault full of medicines.

Of course if you shoot me, you won't be able to use my knowledge. And I might not be wanting gold.

Comes down to this. Is your magpie-ish desire for shiny metal stronger than your fear of death?

Let's settle this with a p i s s i n g contest. Whoever gets it further up the wall wins?

I'd just find another doctor

[Goldfinger]

You know, let's say you're ill, maybe even dying. Is gold not a fiat currency then? I've got a lovely vault full of medicines.

Of course if you shoot me, you won't be able to use my knowledge. And I might not be wanting gold.

Comes down to this. Is your magpie-ish desire for shiny metal stronger than your fear of death?

Let's settle this with a p i s s i n g contest. Whoever gets it further up the wall wins?

You seem to not at all understand what the purpose of money is.

[Goldfinger]

not pandas

invest in pandas !!!1!!!

why are you comparing gold to housing for historically values? why don’t you compare gold to cars, or gold to baked beans, or gold to average wages...... then historically (say 10 years) they are definitely not low.

but then again, you need to compare it to an asset that is overvalued and tripled over 7-10years to convince yourself to buy, right?

Any broad enough inflation index would do.

[Guest DissipatedYouthIsValuable]

I'd just find another doctor

One with a lust for gold?

What if they gave you the wrong medicine or the wrong dose?

They could probably get a little bit more of that gold from you than you'd bargained for.

And start a profitable practical anatomy class to boot

Paid for in gold, of course.

[LargelyIgnorant]

One with a lust for gold?

What if they gave you the wrong medicine or the wrong dose?

They could probably get a little bit more of that gold from you than you'd bargained for.

And start a profitable practical anatomy class to boot

Paid for in gold, of course.

Just one that abided by the Hippocratic oath.

[Goldfinger]

firstly to answer the question at the begining of the thread about 'gold, and why it will go the same way as property'

Gold and other precious metals are assets that are both tangible and liquid (i.e. easily traded), unlike real estate which is tangible but not liquid, or company shares and bonds which are liquid but not tangible.

With property it depends on where the property is and what is happening in the surrounding area, is there an over supply of houses in that area? or are they in demand? Has the area changed due to economic decline, flood risks, unemplyment, crime etc... You can take your gold to a different part of the country where it would be in demand, you cannot take your house anywhere.

This is not something that 'I find' gold bugs are saying, I'm sure that 'some are' just probably not the majority. Gold will probably go up broadly inline with the other above asset classes as you say above, however gold as a form of money has these advantages over other comodity assets, advantages that I believe were first listed by Plato. Here is some of the desirable features that money should have (taken from the wiki.)

enrieb, thanks for your contribution. However, I think some people here won't understand.

The reason is that they grew up in a largely politically and financially stable environment.

Most people have a severe lack of imagination if it comes to things that they have not

experienced before (like hyperinflation or a really severe economic crisis). But it is only

then when we will see the real value inherent in things.

Edited March 29, 2007 by goldfinger

[redgenieuk]

I've been reading this thread and I cannot keep up with its growth rate! (although watching the TV too!)

I have a few questions and comments from the threads that I hope someone can answer.

Firstly, as all goverments are essentially printing money and increasing money supply in double digits, surely the values of the currencies remain stable(ish). If there is a credit crunch, (and hence a reduction in money supply) then surly that currency will benefit? So credit crunch i the USA = Stronger USD (assuming no effect from other factors like China USD dumping?)

If China had a freely convertable currency, what kind of USD decline do you think we would see?

Printing money / Money Supply leads to inflation. All countries printing money leads to global inflation. If one USD buys 2 GBP today and bouth countries double money supply, one USD will still be worth 2 GBP. If all other countries do it too, the same will apply the ratios will remain the same. If the ratios between the currencies remain the same then surely this will make inflation an irrelevnce? (clearly if currency ratios change then it is not an irrelevence at all).

I believe HPI is massive around the world. I think I believe in a HPC and I have sold my house at the prospect of it happening. I am also a very big fan of the arguement that Gold, Silver e.t.c have no value in times of real hardship as people want to eat, drink e.t.c more than have gold, however people would rather have a house over there head rather than have gold also!?! I would!

Also I think gordon is a prat. But maybe the money supply increase is simply a responce to everyone else doing it? Otherwise the pound would rise.... which would not always be desirable. would it?

Charlie

PS sorry is anything is unclear or seems silly