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Thinking about buying gold
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Any thoughts about this as an alternative to physically holding gold:
A Cheap Way To Invest In Gold
LSE.L
A Cheap Way To Invest In Gold
LSE.L
Here's something to consider:
Every bubble in history, every single one has returned prices to their pre-bubble levels. From Dutch tulips to all the paper scams the powers-that-be have historically foisted upon the public, every one of them has fallen back from 90-100%. And if you find an example where that didn't happen, you'll undoubtedly find a massive decline on the order of at least 80% nonetheless.
In spite of the recent run-up in the market, we're in a secular (long-term) bear market. There's along way to go before we work out the excesses of the 90's.
I've done well recently trading small cap stocks recently, but most of my money is in safe investments.
If the markets do fall below their pre-bubble levels, precious metals will be looking good.
kranky
Elite Member
You could sell them to just about any coin dealer, but obviously the price will vary. Bigger dealers will probably offer a bit more.
Again, most coin dealers would sell you a single coin.
With bullion coins, you want to pay as little over spot as possible. Call some nearby dealers in the Yellow Pages and ask for their price. Remember that prices will probably change daily with the current price of gold. Bigger coins have a smaller markup, so try to stick with the 1 oz. or 1/2 oz. coins.
Hey, Kranky. I came across some interesting info that isn't being reported in the mainstream press.
Malaysia is converting to a gold currency (and trying to convince ohter Muslim countries to do the same.
The Chinese gov't will allow citizens to purchase gold sometime this year.
Will there be a spike in demand????
Malaysia is converting to a gold currency (and trying to convince ohter Muslim countries to do the same.
The Chinese gov't will allow citizens to purchase gold sometime this year.
Will there be a spike in demand????
kranky
Elite Member
My amateur guess is that if some countries start demanding payment in gold, the Western nations will dump their holdings in order to keep the price down and make the move backfire. I think the greater danger would be if other nations (Japan, etc.) stop buying our IOU's. There's not much we could do about that, and interest rates would take off.
Kranky, that's certainly more of an imminent threat. Here's more on the Gold Dinar:
Malaysia, Iran bank on dollar alternative
Taken from Asia Times Online. Published on 04 July 2003.
Malaysia, Iran bank on dollar alternative
By Kalinga Seneviratne
KUALA LUMPUR - Malaysia's efforts to use the gold dinar for trade with Iran is Prime Minister Mahathir Mohamad's latest initiative to overhaul the international financial system, which he has long criticized as being skewed toward rich countries and speculators.
If successful, this could be extended to 32 countries that have bilateral payments arrangements (BPA) with Malaysia, Mahathir told an international convention here on Tuesday on the gold dinar as an alternative international currency.
It was the latest of Mahathir's attempts to sell the concept of using, instead of the US dollar, the gold dinar - a monetary unit whose value is based on the price of gold - in international settlements between national banks, for instance (see Malaysia goes for gold, February 8).
The pilot scheme between Iran and Malaysia, which officials hope to start this year, means that their bilateral trade would be denominated in gold dinars, and that they would settle trade balances every three months. During this period, all Malaysian exporters will be paid in the local currency, ringgit, by Bank Negara (Malaysian Central Bank) and all importers will pay the equivalent in the local currency as well to it.
Iran's Central Bank will do the same for the country's exporters and importers. At the end of the three-month period, the two countries will settle the deficit in gold dinars or an agreed currency.
But this experiment has bigger ramifications. Some say it is time, years after the 1997 Asian financial crisis, to develop an alternative to the current financial system. Others see it as loaded with political meaning, as part of Malaysia's campaign to take up the cudgels for the developing world - and the Muslim world.
"We need to make a stop to the artificial manipulation of currencies," said Raja Mohamad, vice president of the Malaysian Islamic Chamber of Commerce and convenor of Tuesday's conference.
A publisher and marketing executive, Raja believes that gold-dinar trade has another aspect to it - it can help forge unity among Muslim nations. "It is because of the Muslim world's dependence on the United States that the neighboring Arab countries were not able to stop the war on Iraq," he argued. "If we don't need to depend on the US dollar for trade between our countries, that will be a good foundation to forge Muslim unity," he said.
Local businessman Rosali Che Pin said: "If the gold dinar becomes a reality for international trade between Muslim countries, we will be very proud of it."
The gold dinar was the currency of the Muslim world until the collapse of the Ottoman Empire in 1924. Today, Malaysia believes that using a currency apart from the US dollar would help poor countries with small foreign currency reserves to trade more freely.
But Bank Negara's assistant governor, Latifah Merican Cheong, warned that "the [real] challenge now is how to develop the gold dinar and make it credible so that traders are willing to use it".
Malaysia has already started talking to the Saudi Arabia-based Islamic Development Bank and several countries about the use of the gold dinar in international trade. Earlier reports said Turkish leaders had mooted the idea.
Malaysia hopes to offer this to all its BPA partners - including countries as diverse as Cuba, Brazil, Hungary and Myanmar - once the scheme's credibility is established, officials say.
Malaysia also has an alternative trading arrangement with some countries, which includes using palm-oil credit to pay for its purchase of Russian jet fighters, North Korean insulators and, soon, for Indian and Chinese construction services for a railway project here.
But the promoters of this scheme are quick to point out that they do not want this trade to be restricted to Islamic countries. Muslim countries can come in first, then others can join in, Raja says.
Realistically, he says, while Malaysia holds the chairmanship of the Non-Aligned Movement and can push the alternative currency scheme, it may not necessarily be welcomed by some member governments since "they have been distracted by this Muslim terrorist tag" and may be wary of taking action perceived to be anti-Western.
Thus far, Mahathir says, neither the US government nor the International Monetary Fund (IMF) - both of which had objected to earlier proposals for an Asian Monetary Fund to help countries with financial problems - have raised objections to the gold-dinar scheme.
But Ralston Thiedeman, senior director of the Singapore-based Swiss Asia Capital, told the convention that the establishment of the gold-dinar currency "is in direct contradiction to and forbidden by the existing rules of the IMF".
He added that an initial fallout of the scheme would be that countries using the gold dinar would use fewer US dollars in their international trade - and this would lead to the further weakening of the US currency.
Thiedeman also said that many of Malaysia's trading partners in the Muslim world, which include Saudi Arabia and Kuwait, are not large holders of gold in their central bank reserves. Thus, he believes that the launching of a dinar scheme will have a "bullish" effect on the international gold market.
Malaysia has already set up a secretariat for disseminating information about the use of gold in international trade.
Mahathir said that the gold dinar trade would bring more stability to world trade and national economies. He argued that currency traders have turned national currencies into commodities and made transactions "totally hidden from public eye".
While speculation in gold can still take place, Mahathir argued that it would be minimal, because it would not be possible to deliver the gold upon settlement. "The amount would be too big and too cumbersome for the rapid transactions of the currency traders," he pointed out.
Raja admits that Washington may try to sabotage the gold-dinar idea. "No doubt, the dinar [trade] will affect US power," he noted, but "we want to ensure that the Islamic world can start something to change the world."
(Inter Press Service)
I my limited knowledge, I just don't understand WHY any fairly-developed country would be interested in using anything other than Resource-Cheap Money for their currency. It just doesn't make sense. Maybe someone could enlighten me?
(Later I'm taking my first test of the semester in ECON 350, Money and Banking)
(Later I'm taking my first test of the semester in ECON 350, Money and Banking)
The Islamic Dinar
Malaysia has suggested that its trading partners in the Islamic world should all use the gold dinar. This appears to be politically motivated, as one of its main aims appears to be to reduce the dependence of the Islamic world on the US dollar for international settlements. It may also be intended to attack the value of the dollar by means of Islamic nations and their people, selling dollars and switching into gold dinars. Malaysia has stated its hope that other non-muslim countries would also use the gold dinar, although this may have been to deflect any criticism of the scheme as a closed-shop muslims only, anti-western club.
Text
Malaysia has suggested that its trading partners in the Islamic world should all use the gold dinar. This appears to be politically motivated, as one of its main aims appears to be to reduce the dependence of the Islamic world on the US dollar for international settlements. It may also be intended to attack the value of the dollar by means of Islamic nations and their people, selling dollars and switching into gold dinars. Malaysia has stated its hope that other non-muslim countries would also use the gold dinar, although this may have been to deflect any criticism of the scheme as a closed-shop muslims only, anti-western club.
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