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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.
| Quote: |
| 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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