Why would anyone invest in stocks when they can invest in precious specie?

[werepossum]

And in this vein, this article is an interesting read. With so much manufacturing in China, their demand for silver is rising fast.

http://www.commodityonline.com/news/Silver-investment-demand-in-China-soars-37007-3-1.html

That's doubly interesting because historically the Chinese have preferred silver to gold. At one point Europe was silver-starved because of traders buying silver and taking it to China to sell for gold, because of the large difference in exchange rates. It's like history is repeating.

 

[BurnItDwn]

Gold is generally a low return investment and highly risky.
Stocks are also highly risky, but on average, they beat inflation.

 

[JS80]

You question the fact that the value of currency could plummet to virtually nothing?
Its happened many times throughout history.

Theoretically they could print a 500 quadrillion dollar bill.
What are you gonna do about it?
Oh you have dollars? Too bad, sucks for you.

No, theoretically you couldn't. The US could not "print" that much money without the markets freezing and politicians revoking Fed powers. There are checks and balances in place so that can't happen.

You have this image of the Federal Reserve creating a bunch of debits without any credits. It is wrong. For every debit there is an equal credit. For every credit there is an equal debit.

 

[JS80]

Not exactly, their values are both subjective but thats it. The gold is actual physical material that has SOME utility and rarity.

The paper note itself (the physical piece of paper) is basically worthless and is relatively not scarce at all because it is just paper.
(I guess it could be burned for heat, but thats pretty much it).

Since gold and silver is a commodity it is not fiat money.
The dollar we use today is fiat money.

Their values are both subjective though so.

They can make all the currency they want, they could not do the same for gold (unless someone can figure out how to turn other material into gold or something)

The only utility gold gives me is that I can trade it in for dollars and buy something with it. Other than that it has zero utility for me.

iPad 2 and H&B > shiney metal

 

[Throckmorton]

I'm talking about a complete collapse of the economy. Steel can be forged into useful items, gold just looks pretty. A water filter can be used to keep you alive while the company that made it is no longer in existence.

Well gold was used for currency before paper money because its supply is limited.

 

[SphinxnihpS]

The stock market is risky and you usally have to pay someone to manage your money for you.

However, Precious metals are not risky because the dollar never deflates, and even if it does, just reinflates and then some.

I keep on telling my parents that my dad's retirement savings are going to be wiped out but they just say "oh well, someone else handles that for us". I also tell my dad that he could've retired two years ago if he had invested his savings in gold a decade ago and then he says it's a shame he didn't invest in gold a decade ago. Yet he still PAYS someone else to *maybe* make more fiat currency for him.

I invest all of my savings in silver, and I ordered silver for my graduation present. I'll never waste money in the stock market.

LMFAO LMFAO LMFAO LMFAO LMFAO

My god, can you even define economics!?!?

 

[Jaepheth]

Well gold was used for currency before paper money because its supply is limited.

True; gold may still hold value, even high value, if society nearly completely disintegrates. But that still depends on other people agreeing with you that it's valuable. Objective utility of an item helps guarantee that that item is valuable.

What I guess I'm trying to say is that more useful items have a much higher price floor than gold, stocks, cash, etc.

 

[matt0611]

No, theoretically you couldn't. The US could not "print" that much money without the markets freezing and politicians revoking Fed powers. There are checks and balances in place so that can't happen.

You have this image of the Federal Reserve creating a bunch of debits without any credits. It is wrong. For every debit there is an equal credit. For every credit there is an equal debit.

How the fed is said up, it wouldn't happen, I agree.
But as a concept (fiat money) means they can print money at will, devaluing all the dollars in circulation. Thats all I am saying.

 

[bamacre]

And in this vein, this article is an interesting read. With so much manufacturing in China, their demand for silver is rising fast.

http://www.commodityonline.com/news/Silver-investment-demand-in-China-soars-37007-3-1.html

[/B]

Silver and gold imports in China have less to do with manufacturing and more to do with high inflation.

 

[bamacre]

That's doubly interesting because historically the Chinese have preferred silver to gold. At one point Europe was silver-starved because of traders buying silver and taking it to China to sell for gold, because of the large difference in exchange rates. It's like history is repeating.

They are buying a lot of both.

 

[matt0611]

The only utility gold gives me is that I can trade it in for dollars and buy something with it. Other than that it has zero utility for me.

iPad 2 and H&B > shiney metal

Personally for you, yes, gold as little utility value to you.
But its intrinsic properties makes other people value it so you can trade it for other things.

This makes gold a good store of value.

Yes, an iPad 2 has more utility to you, but would you save in the form of iPads?

Put an oz of gold in a box and 2 iPads in a box for 10 years. Which one would you take after 10 years?

If you take the iPads you have 2 obsolete electronic devices since iPads depreciate in value every year.

If you take the oz of gold you still have, well, an oz of gold. You could probably buy 3 or 4 iPad 5s with the gold.

So in this way, gold > iPad


Now, I'm not saying there is no risk in owning gold, of course there is. Theres risk in anything.

 

[Brainonska511]

But its intrinsic properties makes other people value it so you can trade it for other things.

Gold has no intrinsic property that gives it value. It only has extrinsic properties of value (properties bestowed by people) - people perceive gold as valuable for no real reason beyond the belief that that particular shiny stone can be traded for goods and services that actual have real, intrinsic value.

 

[matt0611]

Gold has no intrinsic property that gives it value. It only has extrinsic properties of value (properties bestowed by people) - people perceive gold as valuable for no real reason beyond the belief that that particular shiny stone can be traded for goods and services that actual have real, intrinsic value.

It has industrial uses and jewelry uses because of its beauty.
The metal has intrinsic value to it.
In addition to that it has the value that you mentioned.

The dollar has no value in itself, only what it can buy.

 

[bamacre]

Gold has no intrinsic property that gives it value. It only has extrinsic properties of value (properties bestowed by people) - people perceive gold as valuable for no real reason beyond the belief that that particular shiny stone can be traded for goods and services that actual have real, intrinsic value.

While it may seem illogical, it's still reality. Deal with it. Why do you think central banks hold and continue to buy gold? It's money, it has been for thousands of years.

 

[the DRIZZLE]

It has industrial uses and jewelry uses because of its beauty.
The metal has intrinsic value to it.
In addition to that it has the value that you mentioned.

The dollar has no value in itself, only what it can buy.

The intrinsic value of gold is far below its market price. If you really want to use commodities as a store of value based on their intrinsic value gold is a bad one to pick.

 

[matt0611]

The intrinsic value of gold is far below its market price. If you really want to use commodities as a store of value based on their intrinsic value gold is a bad one to pick.

Yes, because people are using it as a hedge against inflation.
More demand, higher price.

It always holds some extrinsic value as "money".
Even the US government holds about 5000 tons of it, supposedly.

 

[the DRIZZLE]

Yes, because people are using it as a hedge against inflation.
More demand, higher price.

It always holds some extrinsic value as "money".
Even the US government holds about 5000 tons of it, supposedly.

Right but if its intrinsic value is say 50% of its market value, than its pretty silly to buy it for said intrinsic value. Gold is just like any other bubble. People are buying it because they think its going to go up, which makes it go up. Thats great until it pops.

Even that floor level of non-financial intrinsic value is not absolute. It is still subject to a variety of macro and micro factors.