Gold tops $1,400/ounce per my prediction.

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JMapleton

Diamond Member
Nov 19, 2008
4,179
2
81
I'm going to try to address all the nonsense in this thread quickly.

One, paper money can be counterfeited by its issuer while everyone has to work to obtain gold. That prevents the "issuer" of the money from scamming the working man.

Two, Glenn Beck was promoting a company that sold overpriced gold numismatics. That was a scam. Gold itself is not.

Three, gold is a much better store of wealth than typical goods or "cattle" among other things which are perishable, require upkeep, lots of space, etc. Even gemstones are poor monetary instruments since their value depends on more than just their weight and are irreparably divided.

It's not that people with gold expect trade to occur in gold, they want a way to preserve their wealth before its spent in a way that is easy to store and liquidate. If you convert small quantities of gold into dollars when you need to spend it, you make yourself immune to the effects of inflation as only holders of dollars can see its value relative to goods be siphoned over time.

I'm glad someone on here has some sense.
 

DucatiMonster696

Diamond Member
Aug 13, 2009
4,269
1
71
As I've explained in my threads, gold serves are incredibly useful purpose, even in times of major disaster - as a currency.

When it "hits the fan," we won't be using US Dollars to buy goods that's for sure. What do you think we'll use? Take a guess. Come on.

No we cannot barter. A economy cannot function well on bartering.

We'll be using gold and silver. The only store of economic wealth. Never has become worthless in the last 3000 years. Not once.

"Gold has no purpose." It's purpose is currency. Politicians cannot print it. Everyone accepts it.

Actually if the shit were to really hit the floor we will be bartering for goods and services. Gold will be too much of a liability for anyone to carry around. In a "the shit has hit the fan, civilization has collapsed" scenario fuel, water, food, ammo, and medical supplies will be more important then gold.

Edit: That is not to say that gold isn't a good investment but then again you've of had to of gotten on that train when it left the station else you are a bar late and nugget to short.
 
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DominionSeraph

Diamond Member
Jul 22, 2009
8,386
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How is that a fiat asset? I'm asking because I always thought a fiat currency was one under order of law. Yet there is no law saying the value of the that baseball card.

What gives force to law is connected to what gives value to fiat currency.
If everybody thinks a law is worthless, it has no enforcers. If most people think a law is worthless, it would be dangerous to enforce due to the threat of revolution.
So if everybody thinks a fiat currency is worthless, through the power of the people, it really has no force of law.

So to say fiat currency directly follows from law overstates the independence of law. It's the faith of the people which underlies both. The government can just kick-start and act as a little positive reinforcement to a currency.

So the underlying thing that makes fiat currency "by fiat" is the people -- it is only ever by their declaration that fiat currency ends up with value. If they stop declaring it has value, it has none. No other "authority" matters, for without the people to give them force they have no authority.

So we end up with fiat currency being any currency upheld only by the faith of the people.
 

DominionSeraph

Diamond Member
Jul 22, 2009
8,386
31
91
If you convert small quantities of gold into dollars when you need to spend it, you make yourself immune to the effects of inflation as only holders of dollars can see its value relative to goods be siphoned over time.

Unfortunately you also leave yourself wide open to market fluctuations that have absolutely no correlation to the actual value of gold as a commodity, because gold is jacked up in price by only the belief that it is valued as currency. The market is like: "I'm going to pay $2 for your dollar because it's really good for trading for things. | Oh, someone paid $2 for that dollar? It must be worth something then -- I've gotta get a hold of some of these things! I'll pay you three fiddy!"

So you'd be spending $1400 for an ounce of metal that's completely inflated over what it would be worth as a commodity. "Inflation protection," is of little meaning if it could otherwise lose 90% of its value on a scale meaningful to a human life. (Over thousands years or so of market trading you'd average "inflation protection" with bubble burstings cancelling out bubbles, but that doesn't mean much on a human scale where throwing all your retirement savings in in a bubble can irrecoverably wipe you out when it bursts.)

Gold is quite the horrible investment if you're looking for stability.
 

her209

No Lifer
Oct 11, 2000
56,336
11
0
I'm going to try to address all the nonsense in this thread quickly.

One, paper money can be counterfeited by its issuer while everyone has to work to obtain gold. That prevents the "issuer" of the money from scamming the working man.

Two, Glenn Beck was promoting a company that sold overpriced gold numismatics. That was a scam. Gold itself is not.

Three, gold is a much better store of wealth than typical goods or "cattle" among other things which are perishable, require upkeep, lots of space, etc. Even gemstones are poor monetary instruments since their value depends on more than just their weight and are irreparably divided.

It's not that people with gold expect trade to occur in gold, they want a way to preserve their wealth before its spent in a way that is easy to store and liquidate. If you convert small quantities of gold into dollars when you need to spend it, you make yourself immune to the effects of inflation as only holders of dollars can see its value relative to goods be siphoned over time.
You don't think that there wasn't any funny business when gold was being used as a currency?
 

BansheeX

Senior member
Sep 10, 2007
348
0
0
Unfortunately you also leave yourself wide open to market fluctuations that have absolutely no correlation to the actual value of gold as a commodity, because gold is jacked up in price by only the belief that it is valued as currency. The market is like: "I'm going to pay $2 for your dollar because it's really good for trading for things. | Oh, someone paid $2 for that dollar? It must be worth something then -- I've gotta get a hold of some of these things! I'll pay you three fiddy!"

That's like saying food is jacked up in price by the belief that it is valued as food. Money defeats the inefficiency of barter. A common means of exchange is as important as goods themselves in a trading society. It should be rather obvious at this point that what drives gold's value is not industrial demand, but almost entirely monetary demand. We have chosen to keep running massive deficits. As a result, the dollar is losing scarcity to other currencies, gold, commodities, and stocks. And it's going to keep losing because there is no will in this country to contract government jobs, programs, and entitlements.

So you'd be spending $1400 for an ounce of metal that's completely inflated over what it would be worth as a commodity.

How is a fiat note any more immune to such criticism? They're generally much more valuable by weight than what their base materials are used for in industry. Your argument is inane.

"Inflation protection," is of little meaning if it could otherwise lose 90% of its value on a scale meaningful to a human life. (Over thousands years or so of market trading you'd average "inflation protection" with bubble burstings cancelling out bubbles, but that doesn't mean much on a human scale where throwing all your retirement savings in in a bubble can irrecoverably wipe you out when it bursts.)

A thousand years? People don't have that kind of a time frame. I would recommend trying to recognize periods of currency debasement and preserve your wealth. If you see massive interest rate hikes on the horizon a la 1980, then it might be time to move out of gold for the moment. There are lengthy periods, all explicable, where gold massively outperforms the DOW, and they're easier to spot to anything else in this clusterfuck.
 
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nobodyknows

Diamond Member
Sep 28, 2008
5,474
0
0
Gold is the commodity of fear, once the fearmongers pipe down and Investors feel safe again, gold will drop faster than Paris Hiltons panties on Saturday night

QFT, the only problem is what does wall street have to offer? I personally would like to see interest rates rise so I couold just put money in a CD for now.

Gold is a commodity and right now it's hot and everyone wants some. It only costs about $450/oz (some say $300) to produce but the demand for it is high so it's price is high. I would think that at over 3 times the cost of production one should think twice (at least) before investing in gold.
 

Phokus

Lifer
Nov 20, 1999
22,994
779
126
QFT, the only problem is what does wall street have to offer? I personally would like to see interest rates rise so I couold just put money in a CD for now.

Gold is a commodity and right now it's hot and everyone wants some. It only costs about $450/oz to produce but the demand for it is high so it's price is high. I would think that at over 3 times the cost of production one should think twice (at least) before investing in gold.

Is that cost mining it + melting it?
 

nobodyknows

Diamond Member
Sep 28, 2008
5,474
0
0
Is that cost mining it + melting it?

http://www.wealthdaily.com/articles/gold-mining-production-costs/2201

In 2000, Barrick Gold (NYSE: ABX) was producing gold for $145 an ounce (inflation adjusted = $185/oz). During the first three quarters of 2009, the company's total cash cost were $463 an ounce — a 215% increase.

According to GFMS, a world authority on gold markets, Barrick's current production costs are about average. Data from GFMS shows world gold production costs for the first half of 2009 averaged $457/oz. This average cost is down from $623/ounce in the third quarter of 2008.

Gold production costs swelled over 150% in five years between 2003 and 2008. And due to recent increases in energy and labor prices in the second half of 2009, experts estimate global gold production costs may average up to $500 an ounce for the year.
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Eldorado Gold is a mid-tier gold producer active in exploration and development in Brazil, China, Greece, Turkey, and surrounding regions. The company plans to produce a total of about 550,000 ounces of gold this year at a total cash cost of $340 an ounce. During the third quarter, Eldorado produced 89,000 ounces at $297 an ounce.
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Minera will produce over 75,000 ounces of gold this year at an estimated $330 an ounce, although there is no official guidance. During the third quarter, the company produced 22,000 ounces of gold at $313 an ounce.
 
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bamacre

Lifer
Jul 1, 2004
21,029
2
61
There's no one stopping you from mining your own gold on your own land.

Well, perhaps the government. You may need a permit for that. ;)

BTW, good luck!
 

manimal

Lifer
Mar 30, 2007
13,559
8
0
If producers scale back mining/production could they experience what coffee growers in South America did with cutting exports.....
 

JMapleton

Diamond Member
Nov 19, 2008
4,179
2
81
QFT, the only problem is what does wall street have to offer? I personally would like to see interest rates rise so I couold just put money in a CD for now.

Gold is a commodity and right now it's hot and everyone wants some. It only costs about $450/oz (some say $300) to produce but the demand for it is high so it's price is high. I would think that at over 3 times the cost of production one should think twice (at least) before investing in gold.

Give me an alternative investors can use to curb against inflation given that every currency in the world is being wrecked.

Gold is a currency of fear because for the first time in a long time, there is a real reason to be fearful.
 

GuitarDaddy

Lifer
Nov 9, 2004
11,465
1
0
The problem with gold as an investment is its volitile, history shows gold can make great swings in a small amount of time. If you had the foresight to buy in a couple of years ago your investment has paid off handsomely, even if gold starts to tank you can get out with quite a profit. But those that have bought in the last year between $1000 and $1400 better have a very quick trigger finger when it starts to devalue or else they may see their profits turn to losses overnight.
 

DominionSeraph

Diamond Member
Jul 22, 2009
8,386
31
91
That's like saying food is jacked up in price by the belief that it is valued as food. Money defeats the inefficiency of barter. A common means of exchange is as important as goods themselves in a trading society. It should be rather obvious at this point that what drives gold's value is not industrial demand, but almost entirely monetary demand.

Gold is a pseudo currency in a market of currencies. Because it really isn't used as a currency but is only traded in relation to other currencies, its price has little connection to even its use as a currency.

If I had a $700 item for sale, I'd trade it to you for an ounce of gold. Not because gold is a wonderful currency accepted anywhere for anything, but because there's a sufficient edge market that I could easily offload it for ~1000 dollars, and those I can use. With gold trading at around $1300 an ounce, that gives me $300 for my trouble in finding someone who will convert it to dollars, and the person I trade with a potential $300 for the trouble he has to go though to find the sucker who will pay the full $1300.

Gold is not worth market value in a real transaction. There is no way in hell that I would give you anywhere near $1365 (bid price as of now) for an ounce of gold. It's a purely speculative market and I don't feel like speculating. I'd want to dump it, and I can't just dump it anywhere. The value of your gold takes a hit because of the disconnect between the suckers who believe it's a super-awesome-bestest-thing-ever currency and will pay $1365 for it and those of us who can look around and see that NOBODY EXCEPT FOR THEM WILL TAKE THE STUFF, and so factor in the costs involved in shoveling it in their direction.

If you think that a SHTF moment will make you master of all, I'd say that's naive to the extreme. Governments stoop to controlling birds FFS, such as the Queen owning all wild swans on open waters and the Federal Government pwning your ass if you kill or trade in eagles (up to a felony carrying two years and prison and $250,000 fine). Yet you think that governments would fail to control their monetary supply when it could be done as simply as a decree that only gold stamped as the Crown's may be used, with violations carrying penalty of death?

For SHTF protections, I'd stay far away from anything that is likely to be socialized. Even that won't necessarily do you any good. Ask the Native Americans how we treated their land, their forests, their herds, their air, and their water. But it's still the best you can do.
 
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bamacre

Lifer
Jul 1, 2004
21,029
2
61
DominionSeraph, just FYI, it is damn near impossible to find gold or silver bullion (except junk, i.e., anything less than .999 pure) for less than the spot price. PM's are traded every day on sites like ebay and even craigslist. The market works a little differently than you seemingly imagine.
 

DominionSeraph

Diamond Member
Jul 22, 2009
8,386
31
91
DominionSeraph, just FYI, it is damn near impossible to find gold or silver bullion (except junk, i.e., anything less than .999 pure) for less than the spot price. PM's are traded every day on sites like ebay and even craigslist. The market works a little differently than you seemingly imagine.

http://www.mlparena.com/Forums/viewforum/f=57.html
121120103938.jpg


You can trade in My Little Ponies, too. That doesn't mean that anyone who isn't a part of that scene wants to.
 

JMapleton

Diamond Member
Nov 19, 2008
4,179
2
81
You can trade in My Little Ponies, too. That doesn't mean that anyone who isn't a part of that scene wants to.

You will not find one well minded or educated person on this Earth who wouldn't trade for gold. That will be no different if all governments collapsed today.
 

DominionSeraph

Diamond Member
Jul 22, 2009
8,386
31
91
You will not find one well minded or educated person on this Earth who wouldn't trade for gold.

You can't go to Walmart and make a purchase in gold. Or Home Depot. Or Stop & Shop. Or Mobil. Or Sears. Ain't a payment option at Newegg. Or Amazon. Or Dell. Paypal doesn't take it. Power company doesn't list it as an option. Same with Comcast. Or my heating oil company.

Blanchard shipping isn't in gold. They don't accept commodities in exchange for gold, either.

(Amazing how all of these "Buy Gold Now!" places are selling gold... for dollars.)
 
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bamacre

Lifer
Jul 1, 2004
21,029
2
61
You can't go to Walmart and make a purchase in gold. Or Home Depot. Or Stop & Shop. Or Mobil. Or Sears. Ain't a payment option at Newegg. Or Amazon. Or Dell. Paypal doesn't take it. Power company doesn't list it as an option. Same with Comcast. Or my heating oil company.

Blanchard shipping isn't in gold. They don't accept commodities in exchange for gold, either.

(Amazing how all of these "Buy Gold Now!" places are selling gold... for dollars.)

Assuming that it's voluntary for both the buyer and seller, do you think they aught to be able to accept gold or silver as payment?