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.

[Toddsterpatriot]

That's the econ 101 view, but the reality is different.

Are you saying inflation did not occur under the gold standard. Please explain further.

The "price" of gold was ~ $20 for a looong time, roughly 150 years.

And that meant no inflation? How about deflation?

[Toddsterpatriot]

Since the re-valuing took place post confiscation of Gold from US citizens, individual investors were generally unable to profit.

So I can't use a chart that shows how rock steady gold was for 133 years and it's not fair to show that gold spiked 69% in 1934? And I can't use charts that start in 1980? Lots of rules with you gold investors.

[Freedom4US]

Anyway, have you ever heard of an expedition being assembled in order to find some monarch's long-lost checkbook? Why do you suppose that is?
No. Are you saying gold money had a good track record? Define good track record please.
I'm not "saying" anything. And yet again fail to answer the questions. The fact is, precious metals have been desirable and used as a store of value for thousands of years. You seem to be more interested in arguing for the sake of arguing than facts.

[Freedom4US]

The burden of proof is always on the one making the claim.

Unless you've got some proof for your assertions...

You lose.

[Toddsterpatriot]

Unless you've got some proof for your assertions...

I admit there has been inflation and deflation under paper currency regimes. Do you admit the same for gold backed currencies?

[simon says what]

So I can't use a chart that shows how rock steady gold was for 133 years and it's not fair to show that gold spiked 69% in 1934? And I can't use charts that start in 1980? Lots of rules with you gold investors.

Todd buddy.... you can do and say whatever you want. No rules here man.... just occasionally opposing view points.

[Toddsterpatriot]

Anyway, have you ever heard of an expedition being assembled in order to find some monarch's long-lost checkbook? Why do you suppose that is?

If I knew where Julius Caesar's checkbook was I'd certainly mount an expedition because it must be very valuable.

I'm not "saying" anything.

Yes, I've noticed.

The fact is, precious metals have been desirable and used as a store of value for thousands of years.

The only thing I can say to this is duh!!

[razorback-bert]

Hmm, do I want gold or Enron, World Com, Global Crossing or hundreds of other failed stocks in the last hundred years.

I am not defending gold, only pointing out investing is not a static endeavor.

[GGpaX4DumpedTea]

"A 75% profit for Uncle on the backs of Americans the SOB"

You got that right - exactly what FDR was - an SOB.

[Toddsterpatriot]

To the rescue!

[Marxbites]

Yeah Boy, a regular ego-maniac, spoiled brat, mommy run charlatan. He broke the law as Sect of Navy, loved ships and made his interests in Newport News Shpg a fortune, without Congress's approval. On and on it goes, abuse of power ad infinitum.

I bought this old book on the Roosevelt/Delano dynasty pub'd in 1948 by Josephson. It has a Roosevelt family supplied family tree. He's related to 11 previous presidents. Curiously Grant was closet at fourth cousin. Eleanor was TR's niece!!!!

This book is chocked full of nasties about him and all the worst enimies of America like the Rockefellers who controlled him.

See this post http://www.freerepublic.com/focus/f-chat/1536055/posts

[Toddsterpatriot]

What is your definition of inflation and deflation?

Same as the dictionary.

Inflation
2 : an increase in the volume of money and credit relative to available goods and services resulting in a continuing rise in the general price level

Deflation
2 : a contraction in the volume of available money or credit that results in a general decline in prices

[GLDNGUN]

No doubt the cliches of stocks always go up rings in their heads as well. Such as the DJIA never goes down for any long period of time, true perhaps but they change out the stocks like the Pony Express changed out horses. It seems us barbarians must hold our gold forever and that the rule of "buy low sell high" does not apply to us when it comes to the antis.

Yup. Stocks have their worth too, but like you said, you have to have the RIGHT stocks. Even if the stock market is on a never-ending bull ride, occassional bear markets notwithstanding, the SAME stocks don't continue to go up. Some go up, some go down, crash, and burn.

For the anti-gold bugs, it's NEVER a good time to buy. If someone tried to sell to them a few years ago, the reaction was "Oh, sure, you just want me to buy it because it's worthless!" And now, it's "Oh, sure, you just want me to buy because it's so expensive!" Nobody's going to get one past them, by golly. ;-)

[junta]

Of course to the gurus of stocks I could not win with my stategies for stocks since I choose div yield as a main parameter. With them we all have to pile on some junk with the greater fool theory burning a hole in our heads and wallets. Full disclosure I have 10% of my porfolio in tech growth and I want my div in a flat panel TV in time for the Super Bowl.

[Alter Kaker]

Hmm, do I want gold or Enron, World Com, Global Crossing or hundreds of other failed stocks in the last hundred years.

Agreed, that's why you should have a balanced portfolio. If you do, you'll make money in the long-term, even allowing for your fair share of Worldcoms, and your money will actually be safer than if you invest in gold.

[mugs99]

Anyway, why can't gold become worthless? Why is it anymore immune to the laws of supply and demand than anything else?
I don't need to know why...history shows that it does.
You couldn't carry enough fiat money to buy a loaf of bread in post WWII europe. Those with gold lived well.

But it will if you ever decide to sell it, because you'll have to pay someone to authenticate it.
That may be true if I were to sell several pounds in our present economy. I can, and often do, use gold in private transactions. I have never had a problem using gold. I have never needed to 'authenticate' gold nuggets. You only need an assay when you sell to a smelter.
If you had invested $20 in the stock market in 1900 and reinvested the dividends, you'd have tens, if not hundreds of thousands of dollars now
Sure, the stock market and bonds are good investments. But...our family lost everything in the crash of '29, yet lived good during the depression because gramps kept his gold in a coffee can under his bed. I do the same.

That's legitimate. However treasury bills, real estate, and even pork bellies are probably more secure and more likely to be convertible.

When the banks and brokers close their doors, only gold has value. All other investments are nothing more than IOUs. Gold does not need to be converted. It is usable as is.

Stashed gold is for disasterous emergencies. It would probably take WMD attacks in Europe and America to crash our modern economy. Government would recover in a matter of months, but gold will keep food on the table while you're waiting for recovery.
.

[BeHoldAPaleHorse]

"Stashed gold is for disasterous emergencies."

No, that's what copper-jacketed lead is for.

[BeHoldAPaleHorse]

"In 1900 Gold was $20/oz. Hold Specie or Paper your choice.

"If you hold Gold that ounce is now worth $510.

"If you hold paper that $20 is now worth $1 due to debasement."

Which means that ounce of gold is now worth $25.50 in constant 1900 dollars.