The Return of the Gold Bugs

Newsweek ^ | December 7, 2005 | Robert Samuelson

[DebtAndDelusion]

The price of gold passed $500 an ounce last week, its highest level since the late 1980s. This is either an ominous development—or it isn't...

If you'd lived a century ago, gold would have been the basis of your money. Great Britain dominated the global gold standard; its currency, the pound, was freely convertible into gold...

On April 5, 1933, President Franklin D. Roosevelt ordered Americans to surrender their gold coin; the country effectively went on a paper-money standard...

Higher demand collides with constricted supplies; wham, prices rise...

Gold is an unending mystery, because its value lies less in what it does for us (it is not like sugar, copper or oil) and more in what it symbolizes. It is almost as unfathomable as the human drama itself.

[BeHoldAPaleHorse]

"Great, let me know when our fiat money collapses."

I bought a Fiat in 1972 and it collapsed in 1974. Does that count?

[mugs99]

Absent a fiat currency collapse does gold always protect your wealth?
Yes. The purchasing power of gold remains the same. One ounce of gold will buy you a good suit no matter the spot price of gold. Fiat currency has no value. It is an IOU.

When I can't trade my interest and dividends for food, no one will be living high on the hog
But those with gold will be living better than those without. After the crash of '29, many had to trade their cars for food. Those with gold drove the finest automobiles.
.

[BeHoldAPaleHorse]

"Yes. The purchasing power of gold remains the same. One ounce of gold will buy you a good suit no matter the spot price of gold."

I once believed that, until I saw someone try to buy a suit with an ounce of gold. The store owner threw him out.

"But those with gold will be living better than those without. After the crash of '29, many had to trade their cars for food. Those with gold drove the finest automobiles."

The folks who drove the finest automobiles after the crash were the same folks who drove them before the crash.

[mugs99]

twenty five years ago, 100 ounces of gold would buy you a nice 4 bedroom house.
today, 100 ounces of gold would buy you about one-fourth of that house

That's a warning sign that housing is overpriced and financing is out of control. I see that as a need to store more gold.
.

[mugs99]

Until someone trades you a copper-jacketed piece of lead for your gold, and everything else you have, of course

You don't need gold to get robbed, and the robber doesn't always win.
.

[BeHoldAPaleHorse]

In the situation you describe, where there's general economic collapse, it's not a question of IF you will get robbed of everything you have, it's a question of WHEN.

[mugs99]

I once believed that, until I saw someone try to buy a suit with an ounce of gold. The store owner threw him out

That store owner was a fool. I have never had a problem spending gold. It has been my experience that people will give you a better deal for gold.
.

[BeHoldAPaleHorse]

"That store owner was a fool. I have never had a problem spending gold. It has been my experience that people will give you a better deal for gold."

Where the f*** do you live, Somalia?

[Toddsterpatriot]

Yes. The purchasing power of gold remains the same.

That's funny. How much did a $900 ounce of gold buy in 1980? How much does a $500 ounce of gold buy today? The same amount?

[mugs99]

In the situation you describe, where there's general economic collapse, it's not a question of IF you will get robbed of everything you have, it's a question of WHEN.

The strong take from the weak. I'm not weak.
.

[BeHoldAPaleHorse]

"The strong take from the weak. I'm not weak."

And the stronger take from the strong.

[Toddsterpatriot]

Fiat currency has no value. It is an IOU.

That's funny too! I just bought some food with my fiat money. It must have some value after all. I bet I could even buy gold with fiat money. My fiat money must be really valuable if I can get people to give me that valuable gold for it!!!

[mugs99]

That's funny. How much did a $900 ounce of gold buy in 1980? How much does a $500 ounce of gold buy today? The same amount?

The same as it did in 1980. If you want to use the 1980 spike you need to factor in the daily spot price. Gold must be averaged. The post Carter inflation of those days is just another example why gold is good insurance.
.

[mugs99]

That's funny too! I just bought some food with my fiat money. It must have some value after all. I bet I could even buy gold with fiat money. My fiat money must be really valuable if I can get people to give me that valuable gold for it!!!

ROFL!!!
Fiat money has collapsed many times in history. Gold never has. Money is a measurement of labor. You have to do more labor for those fiat dollars than I do for gold. You can trade me your five hours of labor for my one hour any day!
.

[Toddsterpatriot]

The same as it did in 1980.

I don't know what planet you're on but $500 worth of anything buys less today than $900 bought in 1980. Just a little matter of 25 years on inflation, not to mention the 44% drop in gold value.

Unless there was deflation on your planet?

[Toddsterpatriot]

Fiat money has collapsed many times in history.

And yet the dollar is still here.

You have to do more labor for those fiat dollars than I do for gold.

Huh?

You can trade me your five hours of labor for my one hour any day!

Why would your hour of "gold labor" be more valuable than my 5 hours of "fiat labor"?

[mugs99]

Where the f*** do you live, Somalia?

I live in the Sierras but I've purchased with gold in San Francisco, Los Angeles, Las Vegas, Austin, Boise and Missoula to name a few.
.

[mugs99]

And yet the dollar is still here

And will be after the next collapse. It just won't be worth as much.

Why would your hour of "gold labor" be more valuable than my 5 hours of "fiat labor"?

I don't know, I just mine the stuff.
Ask your boss.
.

[Toddsterpatriot]

I thought you were talking about gold, the metal. You're obviously dealing with Acapulco Gold. Now your drug addled comments make more sense.

Smoke up dude!!

[BeHoldAPaleHorse]

"Why would your hour of "gold labor" be more valuable than my 5 hours of "fiat labor"?"

Because any labor on a Fiat is wasted. :)