If You Own Gold, You Must See This Chart…

Money Morning ^ | 10 July, 2013 | Keith Fitz-Gerald

[Errant]

That's partially true, however the type of unrest has a large bearing to what extent gold or anything else will be affected. When news of some major event occurs, it is a shock to the system and that takes some amount of time for the system to adjust to. You can see 911 in the first chart below, but hardly a blip in the long range chart below that.

Saw this article, though of you, and saved a link in anticipation of your possible interest in reading. It's by that golden jackass Jim Willy, but not bad, IMO. ;)

Gold Sends Signals for Financial System Breakdown on Numerous Fault Lines

Another thing is that I no longer view the market from an investor's perspective, but from someone gone Galt. That makes a huge difference, as we tend to buy and hold something as insurance or for future needs or until "things" change.

I'm no investment guru by any stretch. My goal in my early years was to become financially independent and to not have to work for anyone else. From VERY humble beginnings, I attained this goal below the age of 50 and now live off savings, investments and a tiny retirement fund. Going Galt was easy for me in that respect. Passing on opportunities to make money in adherence to my self-imposed frugality, not so easy. I would like to get back in the game, but not if it means half of my net will go to support the desolation taking place, including the slaughter of our young, promotion of what I view as iniquity within our government, and contributing to global strife. That's just me and I respect others that don't feel as I do.

[Stentor]

But my point is that the only thing propping up Gold prices is the expectation that Gold will remain valuable to people. The current valuation is a psychological value, not a physical value.

What is the non psychological value of the Federal Reserve Note other than starting a fire or toilet paper? Gold is relatively rare and not reproducible without limit. Could fire up a proton accelerator, I guess.

[CharlesWayneCT]

The federal reserve note states it’s value on the note: “This note is legal tender for all debts, public and private”

That means under force of law, anybody who deals in goods and services is required to accept the note in exchange for those goods and services.

Yes, that requires there be a government to enforce the legal requirement, and does allow for a change in value if people require more notes to purchase an item than they did previously.

Notes have the same type of value as would a contract for delivery of goods or services, for a bond, for a promisory note. (Not the same value, I mean similar in “type” of value it has — a FRN is the most secure of this type of instrument, given the full backing of the US).

On the other hand, a FRN is explicitly a medium for exchange. Gold is a commodity used for exchange. So it should be compared to other commodities, many of which have a higher direct value to the average person than gold. Like if you had a basement full of long-shelf-life food items, and a house that was fully paid off, and a large underground storage tank of oil, you already have everything you need to survive the next 20 years, even if nobody will trade you for anything. But you can also use those items to trade for other items if you want.

If things get so bad that U.S. currency is worthless, which would you rather have — a basement full of food and water, or a few dozen bars of gold?

[Stentor]

That means under force of law, anybody who deals in goods and services is required to accept the note in exchange for those goods and services.

Exactly. The intrinsic value of the FRN is the threat of force.

If things get so bad that U.S. currency is worthless, which would you rather have — a basement full of food and water, or a few dozen bars of gold?

The former until the emergency is over and the latter afterward. It reinforces the need for a more difficult to tamper with and non perishable store of value. Bernanke bucks can be declared worth less to worthless on a whim. They will be inflated to the limit.

[central_va]

The booger eating moronic ancient Romans could figure out the gold currency thing, but you can’t.

[Baynative]

Is gold currency?

[Sam Gamgee]

Thanks for that. I have a fairly large position in gold and gold stocks, and would like to add more, but may be suffering from thrice bitten thrice shy right now.

[Errant]

gold stocks

Ouch. I'd look at keeping hang them though. Might turn around in a year or two, if they're stable companies with stable claims, after a few bankruptcies.

[Errant]

No, gold has and likely will serve as a currency standard. Some say the reason the entire world is in the mess we're in, is because Nixon took the US off the gold standard. I agree.

That said, gold has value that is easily converted into any currency in the world.

[alrea]

JPM running low on gold?

[Errant]

You must have ESP. ;)

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