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recessiontime
Joined: 21 Jun 2010
Location: Got avatar privileges nyahahaha
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 Posted: Tue Oct 05, 2010 11:26 am Post subject: |
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| jaykimf wrote: |
| recessiontime wrote: |
The answer is interest rates. If the federal reserve raises interest rates like they did in the 1980s that contracts the money supply, therefore deflation occurs and you see the price of gold going down after 1980.
However this time around with a prospect of a double dipping recession Im not too sure Bernanke will raise interest rates. Not to mention, the national debt of the US is 14x GDP of what it was in the 1980s. |
Why was it that only gold deflated while pretty much everything else continued to inflate albeit at a lower rate? And why did gold continue to go down even after interest rates went down? And why don't you respond to this:
| Quote: |
| Yes, that is very simple. So in 1970 when the average salary was $7564, that would buy about 216 ounces of gold, so the average person was making our equivalent of about $280,000. In 1980 however, the average income of $15,757 would buy about 19 oz. of gold for our equivalent of about $25,600. In 1990, the median income of $29943 would equal our $97,314 and in 2000, the $47,998 median would equal our $198,498. Does that sound about right to you? |
Of course you'd look pretty silly trying to defend your nonsensical formula, so I can understand why you'd rather ignore that post and change the subject. |
Sorry but I dont have the time to fact check your stats. You`d have to do that for me, like how I did that when I got you the 1920 average salary. You could of simply pulled those numbers out of thin air.
The reason gold deflated is because the economy was booming again in the 90s into the 2000s and confidence in the fiat currency was strong. Gold does well in uncertain times when people lose confidence in the dollar. |
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Cici88
Joined: 18 Sep 2010
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| Posted: Tue Oct 05, 2010 11:56 am Post subject: |
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| recessiontime wrote: |
| jaykimf wrote: |
| recessiontime wrote: |
The answer is interest rates. If the federal reserve raises interest rates like they did in the 1980s that contracts the money supply, therefore deflation occurs and you see the price of gold going down after 1980.
However this time around with a prospect of a double dipping recession Im not too sure Bernanke will raise interest rates. Not to mention, the national debt of the US is 14x GDP of what it was in the 1980s. |
Why was it that only gold deflated while pretty much everything else continued to inflate albeit at a lower rate? And why did gold continue to go down even after interest rates went down? And why don't you respond to this:
| Quote: |
| Yes, that is very simple. So in 1970 when the average salary was $7564, that would buy about 216 ounces of gold, so the average person was making our equivalent of about $280,000. In 1980 however, the average income of $15,757 would buy about 19 oz. of gold for our equivalent of about $25,600. In 1990, the median income of $29943 would equal our $97,314 and in 2000, the $47,998 median would equal our $198,498. Does that sound about right to you? |
Of course you'd look pretty silly trying to defend your nonsensical formula, so I can understand why you'd rather ignore that post and change the subject. |
Sorry but I dont have the time to fact check your stats. You`d have to do that for me, like how I did that when I got you the 1920 average salary. You could of simply pulled those numbers out of thin air.
The reason gold deflated is because the economy was booming again in the 90s into the 2000s and confidence in the fiat currency was strong. Gold does well in uncertain times when people lose confidence in the dollar. |
Recession, don't bother with these guys, it's not worth it. Let them live in ignorance as the purchasing power of their fiat currency slowly disappears. Within 5-10 years when gold is over 5000, you won't even remember these guys. Ignorance is bliss. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Oct 05, 2010 7:27 pm Post subject: |
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Super-rich investors buy gold by ton
GENEVA (Reuters) - The world's wealthiest people have responded to economic worries by buying gold by the bar -- and sometimes by the ton -- and by moving assets out of the financial system, bankers catering to the very rich said on Monday. |
http://www.reuters.com/article/idUSTRE6932NR20101004
It's impossible to know where this is going. Gold continues to be seen as money, as it was for thousands of years. The Fed wants a cheaper dollar which means gold will rise against the dollar. Other commodities are seeing dramatic inflation now too. Maybe a scenario where Volcker sytle interest rates return if the Fed feels its existence threatened. I don't know why commodity exporting nations like Russia would continue to price their exports in a depreciating asset in a marco environment of weakness in the US.
http://www.zerohedge.com/article/china-has-lost-over-100-billion-dollar-adjusted-terms-its-ust-holdings-few-short-months
| Quote: |
| As readers will recall, at the end of July, which was the most recent TIC data update, China owned $847 billion in US Treasury bonds. Since then, the world's reserve currency, which is what said Treasuries are denominated in, has lost 4.7%, or $40 billion in real terms. Yet an even more jarring observation is that from its June highs, the USD has dropped 12.4%. Expressed in real terms from the perspective of China's State Administration of Foreign Exchange, this means that our biggest creditor has lost over $100 billion when adjusted for the purchasing power loss in the dollar. |
The dollar is down 12.4% since June. QE2 is on the way. Whatever one may think about the usefulness of gold, it will appreciate if these conditions continue. |
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Cici88
Joined: 18 Sep 2010
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| Posted: Tue Oct 05, 2010 9:11 pm Post subject: |
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| mises wrote: |
| Quote: |
Super-rich investors buy gold by ton
GENEVA (Reuters) - The world's wealthiest people have responded to economic worries by buying gold by the bar -- and sometimes by the ton -- and by moving assets out of the financial system, bankers catering to the very rich said on Monday. |
http://www.reuters.com/article/idUSTRE6932NR20101004
It's impossible to know where this is going. Gold continues to be seen as money, as it was for thousands of years. The Fed wants a cheaper dollar which means gold will rise against the dollar. Other commodities are seeing dramatic inflation now too. Maybe a scenario where Volcker sytle interest rates return if the Fed feels its existence threatened. I don't know why commodity exporting nations like Russia would continue to price their exports in a depreciating asset in a marco environment of weakness in the US.
http://www.zerohedge.com/article/china-has-lost-over-100-billion-dollar-adjusted-terms-its-ust-holdings-few-short-months
| Quote: |
| As readers will recall, at the end of July, which was the most recent TIC data update, China owned $847 billion in US Treasury bonds. Since then, the world's reserve currency, which is what said Treasuries are denominated in, has lost 4.7%, or $40 billion in real terms. Yet an even more jarring observation is that from its June highs, the USD has dropped 12.4%. Expressed in real terms from the perspective of China's State Administration of Foreign Exchange, this means that our biggest creditor has lost over $100 billion when adjusted for the purchasing power loss in the dollar. |
The dollar is down 12.4% since June. QE2 is on the way. Whatever one may think about the usefulness of gold, it will appreciate if these conditions continue. |
The dollar is still regarded the world's reserve currency, so that is why the Russians and other countries are still trading commodities in dollars. Having said that there has been discussions among major countries to stop using the dollar as the reserve currency and instead using a basket of currencies or the Yuan instead. I think the dollar will eventually lose it reserve currency status.
Of course, Gold is seen as money...it has been the only true form of money for thousands of years. The US constitution created by the founding fathers states that only gold and silver are to be used as money. However, as time passed governments and central banks created fiat currency backed by nothing decided to go off the gold standard and start printing massive amounts of money which have created bubbles upon bubbles and now we're at the stage where the world will start paying for this Keynesian foolery.
Yes, it's impossible to know EXACTLY where the price of gold is going, but many Austrian economists are calling for 5000 to 15000. You realize that the US is bankrupt, and for US to raise rates ala Volker would kill any possible recovery and raise the interest payments on it's ENORMOUS debt ~ The US is the biggest debtor nation in history. Besides, if you read the minutes for the last FOMC meeting, the Fed thinks that there isn't enough price inflation, which means that interest rates will be kept low.
And it 's not just the FED that's wants to devalue their currency...did you read about what the BOJ did today...more quantitative easing and money printing to stimulate their economy and keep their exports competitive. This is the first shot in the currency wars where countries will devalue their currencies to the race to the bottom. Good for gold.
Oh yeah gold hit $1349 in European trading tonight.
Cha ching. |
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Captain Corea
Joined: 28 Feb 2005
Location: Seoul
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| Posted: Tue Oct 05, 2010 10:18 pm Post subject: |
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| recessiontime wrote: |
| Captain Corea wrote: |
If you happened to buy it the day you were born in 1920, you might possibly be able to use it to buy adult diapers.
WTF does the possibility of buying gold in the 1920s have any real world application to? Name one person posting on this thread that could have done it. Think of how many investments you could have made in the past 100 years that may have netted you even more money.
I've never been pro or anti-gold, but some people just seem to be off their rocker in throwing out numbers.
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Just as anyone can see, you clearly misunderstood my point. I never said you anything along the lines of `if only I`d invested in gold in the 1920`s`.
I compared the salaries to make the point that we now have to work harder just to stay in the same place. In the 1920`s the average individual could work and make enough to support his family, in 2008 the entire household has to work just to keep up with rent and paying for food. |
And he in lies the fault in your argument. You're comparing the 1920s and 2010, and in the comparison, there are so many other things that need to be taken into account. If the average person made X dollars in 1920, what did they spend it on? What luxuries could they afford? How big was their house? Did they travel overseas every year?
If you're looking at a person in 2010 who makes 'the average', what size house can they afford? What is the average sq footage on the market? What luxuries do they have? Do they travel?
Sure, it's easy to say that in 2010 people are struggling, but we could say the same about 1930. What about 2005? 1995? Could the average person at that tie afford the same lifestyle on the average salary that a 1920's worker would have expected?
| Quote: |
| My point is that gold protects you against inflation. Another point I made is that your purchasing power has diminished. Your money buys less gold (and everything else) today than the 1920`s. |
It buys less gold, but you have yet to show that it buys less of other things. I asked you about work hours vs. purchasing power, and have yet to see how there is a VAST difference.
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| The only thing that`s probably keeping all of us afloat is the advent of new technologies that have enriched our lives. That`s probably the only thing distracting most of us from the fact that our purchasing power has gone down so significantly. |
You call it distracting, I call it choice. We have more choices now, and we pay for them.
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| Captain Corea wrote: |
Can you eat gold?
Can you live under it?
Can it drive you around?
Nope, but you can use it to buy those things. And to me, it's only worth is in its ability to do so. |
I don`t think you have comprehended the fact that gold is money and is just as liquid. It does have the ability to be exchanged for goods and services, it always has. The Europeans in the past simply used paper money which were essentially receipts for the gold being held at the blacksmiths or banks. |
I comprehend it just fine... what bothers me is the recent obsession with it. The truth is, it's not really a currency though. When was the last time you walked into a market and used it to purchase items? It's not at that point, and until it is, it's not really as liquid (and that's not always a bad thing as you've pointed out in its stability).
But what bothers me most is comments like these:
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| Don`t worry, I`m not surprised that you are unabashedly ignorant about these matters, but the next time the topic is about something you clearly know nothing about try not to pretend like you know anything about it. |
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| that your paper money you love so much |
| Sergio Stefanuto wrote: |
Please don't dumb the thread down any further. |
First, where on this thread did I say I love paper money?In fact, I simply called any currency a means to an end (purchasing). I really don't see the need to insult people that have a different opinion on this. |
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El Exigente
Joined: 10 Sep 2010
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| Posted: Tue Oct 05, 2010 10:35 pm Post subject: |
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| Cici88 wrote: |
| recessiontime wrote: |
| jaykimf wrote: |
| recessiontime wrote: |
The answer is interest rates. If the federal reserve raises interest rates like they did in the 1980s that contracts the money supply, therefore deflation occurs and you see the price of gold going down after 1980.
However this time around with a prospect of a double dipping recession Im not too sure Bernanke will raise interest rates. Not to mention, the national debt of the US is 14x GDP of what it was in the 1980s. |
Why was it that only gold deflated while pretty much everything else continued to inflate albeit at a lower rate? And why did gold continue to go down even after interest rates went down? And why don't you respond to this:
| Quote: |
| Yes, that is very simple. So in 1970 when the average salary was $7564, that would buy about 216 ounces of gold, so the average person was making our equivalent of about $280,000. In 1980 however, the average income of $15,757 would buy about 19 oz. of gold for our equivalent of about $25,600. In 1990, the median income of $29943 would equal our $97,314 and in 2000, the $47,998 median would equal our $198,498. Does that sound about right to you? |
Of course you'd look pretty silly trying to defend your nonsensical formula, so I can understand why you'd rather ignore that post and change the subject. |
Sorry but I dont have the time to fact check your stats. You`d have to do that for me, like how I did that when I got you the 1920 average salary. You could of simply pulled those numbers out of thin air.
The reason gold deflated is because the economy was booming again in the 90s into the 2000s and confidence in the fiat currency was strong. Gold does well in uncertain times when people lose confidence in the dollar. |
Recession, don't bother with these guys, it's not worth it. Let them live in ignorance as the purchasing power of their fiat currency slowly disappears. Within 5-10 years when gold is over 5000, you won't even remember these guys. Ignorance is bliss. |
Don't dismiss people's objections just because you disagree with them. You come off really smug as if you are the one who knows The Truth. You don't think there is any chance you could be wrong?
jaykimf makes reasoned objections to your arguments, not even that I necessarily agree with him. But they are valid points which deserve to be addressed rather than merely dismissed.
(BTW, my assets are is gold.) |
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visitorq
Joined: 11 Jan 2008
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| Posted: Tue Oct 05, 2010 11:54 pm Post subject: |
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| Captain Corea wrote: |
| recessiontime wrote: |
| Captain Corea wrote: |
If you happened to buy it the day you were born in 1920, you might possibly be able to use it to buy adult diapers.
WTF does the possibility of buying gold in the 1920s have any real world application to? Name one person posting on this thread that could have done it. Think of how many investments you could have made in the past 100 years that may have netted you even more money.
I've never been pro or anti-gold, but some people just seem to be off their rocker in throwing out numbers.
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Just as anyone can see, you clearly misunderstood my point. I never said you anything along the lines of `if only I`d invested in gold in the 1920`s`.
I compared the salaries to make the point that we now have to work harder just to stay in the same place. In the 1920`s the average individual could work and make enough to support his family, in 2008 the entire household has to work just to keep up with rent and paying for food. |
And he in lies the fault in your argument. You're comparing the 1920s and 2010, and in the comparison, there are so many other things that need to be taken into account. If the average person made X dollars in 1920, what did they spend it on? What luxuries could they afford? How big was their house? Did they travel overseas every year?
If you're looking at a person in 2010 who makes 'the average', what size house can they afford? What is the average sq footage on the market? What luxuries do they have? Do they travel?
Sure, it's easy to say that in 2010 people are struggling, but we could say the same about 1930. What about 2005? 1995? Could the average person at that tie afford the same lifestyle on the average salary that a 1920's worker would have expected? |
The reason our material standard of living has increased so much over time is simply due to improvements in technology. Inflation has definitely made our purchasing power goes down, however this is offset by goods (but not services) becoming better and cheaper to manufacture over time. If it took as much manual labor to produce goods today as it did in the 20s, factoring in inflation it would be far more expensive.
In fact with the technology that is available we should be living like kings, but are instead the most indebted, overworked (and by extension stressed and drugged out) society on earth. The current monetary system is to blame. People come up with the ideas, make the things and provide the services that make our lives better, not the parasitical banking cartel that is the Federal Reserve. |
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Captain Corea
Joined: 28 Feb 2005
Location: Seoul
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| Posted: Wed Oct 06, 2010 12:19 am Post subject: |
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A lot of 'if's' or "should be's" there, man. Simply put, my premise is that if you are going to compare salaries, the price of gold, and living standards of 1920 to present day, then it needs to be fair.
If the average person in the 1920's could buy a house, food, an education, travel and XXX amount of gold on the average salary of the day, then you have to prove how that is not possible today.
Personally, I think the average person has more free time, a larger house, and more convenience than they did 100 years ago. Perhaps they could buy more gold then... or perhaps not. But my main point is that it really doesn't matter. If gold is simply an investment or a currency, then what matters at the end of the day is the lifestyle it allows you to maintain. |
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visitorq
Joined: 11 Jan 2008
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| Posted: Wed Oct 06, 2010 8:44 am Post subject: |
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| Captain Corea wrote: |
| A lot of 'if's' or "should be's" there, man. Simply put, my premise is that if you are going to compare salaries, the price of gold, and living standards of 1920 to present day, then it needs to be fair. |
Yeah, like once each. Hardly "a lot". Anyway, given the amount of resources we have at our disposal and the technology we have to work with, yeah we should be getting a much better bang for our buck than we are. But our currency is debased. We need a return to free market economics. I'm not even against paper currency, I'm just against a government/private banking monopoly on printing it. In a free market paper currency should be allowed to compete freely with gold/silver backed currency. Of course all paper currency will most certainly become debased over time, but if people still want to use it, then it's up to the market to decide.
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| If the average person in the 1920's could buy a house, food, an education, travel and XXX amount of gold on the average salary of the day, then you have to prove how that is not possible today. |
Nobody said it isn't. Just that inflation makes your purchasing power go down. Gold never lost its purchasing power, fiat money has over time (it takes more to pay for less). Our country's debt (public and private) has also never been larger. It can literally never be paid off. Ever. This is all obvious.
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| Personally, I think the average person has more free time, a larger house, and more convenience than they did 100 years ago. Perhaps they could buy more gold then... or perhaps not. But my main point is that it really doesn't matter. If gold is simply an investment or a currency, then what matters at the end of the day is the lifestyle it allows you to maintain. |
Sorry, I have no idea what your point is here. |
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Sergio Stefanuto
Joined: 14 May 2009
Location: UK
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| Posted: Wed Oct 06, 2010 10:21 am Post subject: |
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| Captain Corea wrote: |
| I really don't see the need to insult people that have a different opinion on this. |
Sorry if I was little rude. I know exactly what you're trying to say throughout the thread; you're just being longwinded and imprecise about it. One of the chief blessings of living in a capitalist society is that, even though our money depreciates, it nevertheless buys more - because products become better and cheaper over the years, thanks to innovation, imports and competition. In my mother's local supermarket, one is able to buy many great things for 1 pound. In 1990, buying these things at all, let alone for 1 pound, would have been impossible. And at the same time, amazingly, 1 pound in 2010 is worth a lot less than it was in 1990.
It's a good point, but it doesn't detract from the arguments that gold advocates make. The facts about gold are these: gold can be readily converted into cash and has appreciated enormously in recent years. Had I bought gold in 2001, it would be worth nearly 500% today, so it is similar to a savings account that offers 50% in interest per annum. Of course, it's not entirely reliable, because any asset has the potential to depreciate spectacularly at any time.
Interest rates should be between 10% and 20%, otherwise it encourages demand for high yield/high risk assets such as securitized subprime mortgage bonds. Credit booms and low interest rates are no substitute for classical capitalism - savings, innovation, investment, thrift and creative destruction. The events of the last few years demonstrate this more than amply. A swift return to the days of 19th century capitalism would see us right. |
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jaykimf
Joined: 24 Apr 2004
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| Posted: Wed Oct 06, 2010 2:49 pm Post subject: |
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| Cici88 wrote: |
Like I said, the majority of people here have absolutely no clue what they're talking about....ha ha makes me laugh. If you only truly understood that the US is bankrupt and that we are on the edge of a global depression.....YOU CAN'T PRINT MONEY OUT OF THIN AIR WITH NOTHING BACKING IT.
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Who says you can't? Anyway, U.S. currency is backed by something--its status as legal tender and the knowledge that is is universally accepted as payment of debts and for the purchase of goods and services. On the other hand, my American Express card is not legal tender and is not universally accepted. Is it Money? Is it backed by anything other than a promise to pay? And yet it is widely accepted. It is used as money isn't it? When they raise my credit limit are they creating new money? Is it inflationary? What about my debit card and checking account? Are they money? Are they used as money? Gold may have been used for money for thousands of years, but is it now used as money? Can you go into a store and pay with gold? Gold may be a store of value or an investment or hedge against inflation, but is actually used as money? Money is what money does.
I'm not saying there is anything wrong with buying gold. Many smart people have bought gold and have made a lot of money, and may continue to make money. I don't care. But it's not for me. I don't do gold or pork bellies or wheat futures or even currencies. Any of those have the potential to make a lot of money if you are smart or lucky. I'm not interested.
Gold may be going up, but why? If it's because of the printing of money and inflation, then why is gold any better than than any other asset that should also be inflating. If gold goes to $10,000 and Google goes to $5000 and a house goes to $2,000,000, what is the advantage of gold ? At least with a stock, there is a chance that the company might actually grow and not merely inflate. At least with a house you can live in it while it is inflating. I don't' care if fiat currency is depreciating. If my $1000 depreciates to where its worth only $100 but I have $10,000 instead of $1000, so what? So its a form of taxation., So what? I want and expect government services and I expect to be taxed to pay for them. Doesn't bother me.
On the other hand, if gold is going up due to the current dismal economic situation and is a flight to safety because of fear, what happens when the economy recovers and the fear subsides. Do you think the economy is going to spiral down forever? Even our own resident Dr. Doom said that the economy could recover in 3-4 years if Obama follows the right policies. What happens then? What happens when people stop buying gold out of fear? What happens when the price of gold stops going up and those who bought it because they expected to make a lot of money bail out because they aren't.
I can't predict when the economy will fully recover, but I expect that it eventually will. Sooner or later. Gold has had a great run over the last 10 years. How much longer that run will continue I don't know. I'm not about to jump on the bandwagon now. Buy low and sell high not buy high and sell higher. Of course what do I know, I'm just an ignorant bonehead who doesn't know what I'm talking about. |
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Captain Corea
Joined: 28 Feb 2005
Location: Seoul
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| Posted: Wed Oct 06, 2010 4:19 pm Post subject: |
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| visitorq wrote: |
Nobody said it isn't. Just that inflation makes your purchasing power go down. Gold never lost its purchasing power, fiat money has over time (it takes more to pay for less). Our country's debt (public and private) has also never been larger. It can literally never be paid off. Ever. This is all obvious. |
This here is what I take issue with. I agree with some of what you said, but question this - how has my purchasing power gone down? We keep comparing 1920 to the present day, and the ability to purchase GOLD seems to have gone down, but what about the ability to purchase lettuce, a car, a house, a trip to Europe?
I would be VERY curious to see man-hours workered then to present day and the big decline in purchasing power everyone (who is promoting gold) seems to be talking about.
| Sergio Stefanuto wrote: |
| Captain Corea wrote: |
| I really don't see the need to insult people that have a different opinion on this. |
Sorry if I was little rude. I know exactly what you're trying to say throughout the thread; you're just being longwinded and imprecise about it. |
That is very, very possible. |
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Cici88
Joined: 18 Sep 2010
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| Posted: Wed Oct 06, 2010 9:46 pm Post subject: |
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[quote="jaykimf"]
| Cici88 wrote: |
| Like I said, the majority of people here have absolutely no clue what they're talking about....ha ha makes me laugh. If you only truly understood that the US is bankrupt and that we are on the edge of a global depression.....YOU CAN'T PRINT MONEY OUT OF THIN AIR WITH NOTHING BACKING IT. |
| Quote: |
| Who says you can't? Anyway, U.S. currency is backed by something--its status as legal tender and the knowledge that is is universally accepted as payment of debts and for the purchase of goods and services. |
Well there's two schools of thought here: Keynesian economists who believe in printing money out of thin air to stimulate the economy or Austrian economists who believe that printing money out of thin air will only cause inflation and make economic problems worse. So what I'm saying as an Austrian economist is that if you print money and expand the money supply, it will create inflation and gold will go up as a result.
The government wants you to accept and believe in fiat currencies. Society has been conditioned to believe and accept what governments tell them. Paper money is useful as a medium of exchange, but remember we used to have a gold standard where fiat paper currencies were backed by gold. This also means that governments were kept honest as they could not create paper money out of thin air because they could not create gold out of thin air. During the gold standard the only way to expand the paper money supply was to increase the gold supply (it takes 10 years for a gold mine to go into production). But ever since the gold standard was removed, there is nothing backing paper money and allowed governments all over the world to create and print money at will creating credit and real estate bubbles and resulting in inflation and and loss of purchasing power of all paper currencies. So my point is, you can't stimulate an economy by creating money using the printing press which is happening all over the world right now. As long as the printing presses are running, gold is going up.
| Quote: |
| On the other hand, my American Express card is not legal tender and is not universally accepted. Is it Money? Is it backed by anything other than a promise to pay? And yet it is widely accepted. It is used as money isn't it? When they raise my credit limit are they creating new money? Is it inflationary? What about my debit card and checking account? Are they money? Are they used as money? Gold may have been used for money for thousands of years, but is it now used as money? Can you go into a store and pay with gold? Gold may be a store of value or an investment or hedge against inflation, but is actually used as money? Money is what money does. |
No your Amex card is not legal tender. Only central governments and the Fed can create or expand the supply of money. When they raise your limit, they are not creating new money or creating inflation. Credit card companies have reserves and if your creditworthiness increases, they increase your limit because they have the reserves to cover your limit.
Your debit card and chequing account are not money, merely tools provided by banks to provide the convenience to spend the fiat funds in your account. Gold is the only true form of money, it has intrinsic value which paper money doesn't. Central banks all over the world are increasing their gold reserves. If gold wasn't money why would they do this? Over time paper money has become to be universally accepted and used as the most common medium of exchange. Governments realized that under a gold standard where paper money was backed by gold they couldn't increase the money supply. So with elimination of the gold standard, people have just blindly accepted paper money as being universal. If you want to believe that gold isn't money and that paper money is the only form of money I think you're thinking is very one dimensional, but I really don't care. Just remember, under the gold standard your paper money wouldn't be losing value as it is now.
without the gold standard in place, your paper money is losing value everyday, because it's backed by nothing. It's a big con in my opinion.
You may not be able to buy something with gold, but again it's because it's government regulated as a commodity because they couldn't expand the money supply with the gold standard. I've learned that you shouldn't blindly accept everything that mainstream media and governments try to tell people. You should learn to question and be skeptical. Most people are truly living in the Matrix. Gold and silver are the only true forms of currencies. Also, you can always convert your gold into more fiat money and buy more things and have more purchasing power.
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| I'm not saying there is anything wrong with buying gold. Many smart people have bought gold and have made a lot of money, and may continue to make money. I don't care. But it's not for me. I don't do gold or pork bellies or wheat futures or even currencies. Any of those have the potential to make a lot of money if you are smart or lucky. I'm not interested. |
No one is forcing you. I really don't care what you do. I think the point some of the other posters were trying to make is that there are serious flaws in your way of thinking, and that you really don't understand the situation with gold.
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| Gold may be going up, but why? If it's because of the printing of money and inflation, then why is gold any better than than any other asset that should also be inflating. |
Gold is going up for a number of reasons:
1) printing of money to expand the money supply which is creating inflation
2) Sovereign debt crisis
3) loss of confidence in governments
4) strong physical demand
5) gold price suppression scheme has been exposed.
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| If gold goes to $10,000 and Google goes to $5000 and a house goes to $2,000,000, what is the advantage of gold ? At least with a stock, there is a chance that the company might actually grow and not merely inflate. At least with a house you can live in it while it is inflating. I don't' care if fiat currency is depreciating. If my $1000 depreciates to where its worth only $100 but I have $10,000 instead of $1000, so what? So its a form of taxation., So what? I want and expect government services and I expect to be taxed to pay for them. Doesn't bother me. |
In today's inflationary environment, even if google, stocks or real estate goes up you have to realize that it's caused by the expansion in the money supply and the rise in these assets are in NOMINAL terms in relation to the money supply. Relative to gold these assets are not going up but rather going DOWN in REAL terms. Housing prices are not inflating in the US, there's been a housing bubble remember? And again, relative to gold even if housing prices go up, it's in NOMINAL terms caused by the expansion of the money supply. So what this means is that in real terms the price of the house is not going up at all, but going down. It's an illusion perpetrated by central banks to deceive you. And it's not just gold that's going up...it's all commodities and other hard assets.
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| "I don't' care if fiat currency is depreciating. If my $1000 depreciates to where its worth only $100 but I have $10,000 instead of $1000, so what? So its a form of taxation., So what? I want and expect government services and I expect to be taxed to pay for them. Doesn't bother me" |
If you accept the fact that debasement of your paper currency will result in a sever loss of purchasing power, that is your choice. But you simplify things too much; if 1000 dollars today could buy you 20 widgets, you're ok with the fact that with inflation and a depreciating currency that your 1000 dollars can only by you 5 widgets in the future? By printing money and expanding the money supply, you're not even realizing that you're own government is robbing you blind....truly ignorant.
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| On the other hand, if gold is going up due to the current dismal economic situation and is a flight to safety because of fear, what happens when the economy recovers and the fear subsides. Do you think the economy is going to spiral down forever? Even our own resident Dr. Doom said that the economy could recover in 3-4 years if Obama follows the right policies. What happens then? What happens when people stop buying gold out of fear? What happens when the price of gold stops going up and those who bought it because they expected to make a lot of money bail out because they aren't. |
Well, the US is 14 trillion dollars in debt and including unfunded liabilities the true national debt exceeds 400% of GDP and and is around 80 trillion dollars and growing. With real unemployment at 22%, 1 in 7 people receiving food stamps and the high probability of more money printing, the prospects for economic recovery are very very dim. The only way for the economy to recover is for the US is to drastically reduce spending, reduce government, stop spending on borrowed money, and service their debt. Also, 70 percent of the US economy is based on consumer spending and US has a very low savings rate. So in addition to the above mentioned factors, the US needs to start saving, investing and manufacturing. Then a recovery can take place, and the price of gold may start going down. But do you really think Washington has the political will to the implement the above? Don't believe everything politicians tell you...the US is at almost at the point of no return. Is it still possible for a recover? Yes, but Washington must act quickly and must do a 180 degree turn...which I highly doubt will happen. It's not just the US...same problems are affecting many other western governments and countries...these problems are not limited to the US, they are global in scale. This is why gold is going up.
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| I can't predict when the economy will fully recover, but I expect that it eventually will. Sooner or later. Gold has had a great run over the last 10 years. How much longer that run will continue I don't know. I'm not about to jump on the bandwagon now. Buy low and sell high not buy high and sell higher. Of course what do I know, I'm just an ignorant bonehead who doesn't know what I'm talking about. |
I don't think you truly understand the magnitude of the severity of the problems that the US and other Western governments are facing. Buy low and sell high is good, but gold is still undervalued when adjusted for inflation. It's still cheap. See ya at $5000 gold.
There is no way that the US will recover.....
http://www.youtube.com/watch?v=4ECi6WJpbzE
http://www.youtube.com/watch?v=udT3dbbryEU&feature=channel
Last edited by Cici88 on Thu Oct 07, 2010 1:09 am; edited 15 times in total |
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recessiontime
Joined: 21 Jun 2010
Location: Got avatar privileges nyahahaha
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| Posted: Wed Oct 06, 2010 9:58 pm Post subject: |
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gold is now 1353 USD per troy ounce.
I think it still has a long way to go but I'm kind of reluctant to buy more because of how expensive it is getting to purchase it. I might buy silver or rice commodities. With silver, can anyone tell me how liquid it is? Because I can sell my gold on ebay for above spot price very easily. |
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Cici88
Joined: 18 Sep 2010
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| Posted: Wed Oct 06, 2010 10:51 pm Post subject: |
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| recessiontime wrote: |
gold is now 1353 USD per troy ounce.
I think it still has a long way to go but I'm kind of reluctant to buy more because of how expensive it is getting to purchase it. I might buy silver or rice commodities. With silver, can anyone tell me how liquid it is? Because I can sell my gold on ebay for above spot price very easily. |
1365 now.
Silver is more volatile than gold, but in the long run silver will do even better than gold. The gold to silver ratio is about 60 and will soon return to 16. The silver market is also smaller, but I don't think you should have any liquidity issues. |
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