Gold ready to crash?

Market Watch.com ^ | Jun 1, 2006 | Jesse Czelusta

[capitalist229]

America has turned from a net creditor 15 years ago, to a net debtor for many decades to come. In fact we will never dig out from the mountains of debt, the currency will have to be devalued as with any banana republic.

The guvmint will try to reduce that debt, through inflation.

That's why gold is 'as good as gold' for decades to come, until we have rediscovered the merits of hard work and saving.

BUMP

[Cold Heat]

It's really a clue as to the perceptions that seem to dominate this site and others. There is a sense that conspiracy types and end of world worry warts abound, and are pervasive in conservative circles, just as the "Jeff Rense" sort of folks inhabit the liberal and libertine groups.

It is sort of interesting to watch it...

But I view it as entertainment value...:-)

[Anitius Severinus Boethius]

Are you comparing the U.S. Dollar to the Zimbabwean Dollar in terms of legitimacy?

The "value" of the U.S. Dollar is due to faith that the U.S. government will back up and support the note when used as currency. The "value" of an ounce of gold is due to faith that someone will accept the gold as currency.

Both the U.S. Dollar and an ounce of gold retain value due to the "faith" that people put in it. They are both valuable because people have determined they are valuable.

Screaming "fiat currency" does not change the fact that value in gold is just as "faith based" as value in the U.S. Dollar.

[calljack]

My future financial stability is firmly planted on my star wars trading card collection. You just can't do any better than that!!! Trust in the force.

[Toddsterpatriot]

With that kind of track record, I would contend that the burden is on you to explain why that is about to change or, as you seem to suggest, has changed.

Yes, gold has a great track record, if you ignore the last 3 weeks. I can provide charts of stocks that have outperformed gold and also pay a dividend.

To the latter point, it is still worth $631 an ounce as I type.

It certainly is. Only 13% lower than 3 short weeks ago.

[Toddsterpatriot]

In 1935, selling an ounce of gold and buying the equivalent of the DOW or S+P and holding till today would buy you THE ENTIRE SUIT FACTORY!

Shhhhh. Some goldbugs can have an allergic reaction to the truth.

[Toddsterpatriot]

That's why gold is 'as good as gold' for decades to come, until we have rediscovered the merits of hard work and saving.

Stock in good companies can also be a hedge against inflation. Don't forget dividends!

[SupplySider]

If the money system collpses we will be having worse problems.

If the monetary system collapses, your gold had better be buried deep enough to avoid metal detectors. The Red Guard dug up everyone's yard several feet deep.

Also good to have 10% of it on hand to give to the authorities when they come knocking, so they think they've gotten it all.

Not a bad idea to have diamonds, too, as they will pass through a metal detector as you're fleeing the country!

If the monetary system isn't collapsing just buy GLD through a discount stock broker or YG through a discount commodities broker, and be sure you have a systematic plan for selling before you buy.

[norraad]

Soldier in the Rain is an unrecognized classic, esp. in light of what we're talking about here today.

The value of things in relation to what you have and are willing to trade.

The Captain (Jackie Gleason) was wealthy beyond imagination because he had an air conditioner on that hot southern army base.

His underlinings were left to fight bitterly over a fan.

[RegulatorCountry]

"His underlinings"

Jackie Gleason's underlinings? Not exactly a pleasant mental image.

[Enterprise]

Now it sounds vaguely familiar. I may have seen it, but I don't recall. I will make an effort to find it and watch it.

[george76]

The graphs help me with the decisions...but not the only thing.

As you know, buying and/or selling often depends on the time frame.

Compressions or "tensions on the tape" can be opportunities for the day trader to sell ( go short )...while the market is also in a long term bull, up trend .

When I talk like this, my wife will walk out of the room shaking her head.

LOL.

[Anitius Severinus Boethius]

Heck, if you invested $1,000 in Wal-Mart on June 1, 1976, you would only be holding $938,959.24 in stock today. I mean, it's not as good as a lot of 30 year investments, but still...

[stephenjohnbanker]

ROTF!

[redgolum]

If our monetary system collapses, a better investment would be in steel, lead, and copper. Preferably a nice Kimber with reloading supplies.

[SupplySider]

That's why precious metals collectors diversify into brass and lead at some point. :)

One of the leading commodity bulls, Jim Rodgers, has been recommending tin, lead, etc for a few years.

[Atlas Sneezed]

Preserved 87% of it's value since it peaked.

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Since you are hear to "tweak" instead of reading and learning, I'll just say that if you can pick the date in hindsight (of buy and of sell) you can make anything look bad. But one who bought $x of gold each year, even starting at the worst peak, would have yielded 5% return on the money.

If you think the economy of the next 30 years is going to be like the economy of the past 30 years, you would probably put more into other things. If not, gold and other commodities can be attractive.

[Atlas Sneezed]

Don't look at the price of copper wire for electricity if you don't want a heart attack. I saw 200ft. priced at $102 at Home Depot last weekend. GAG!! I paid $28 less than 2 years ago. INSANE!

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How can that be?! We are enjoying a period of low inflation!

[Attention Surplus Disorder]

At the risk of lengthy argument, the dollar is unfortunately not a good standard against which to measure the value of anything. A dollar isn't an inch or a meter or a mile. The dollar has lost about 7% of its value of the past month.

http://www.tfc-charts.w2d.com/chart/US/66 (91 >> 84)

and about 30% of its value since 2001.

http://www.tfc-charts.w2d.com/chart/US/M

Clearly, any arbitrary timeframe can be selected to show the relative outperformance of gold to the dollar. And it also depends on what you're buying: a $399 PC today devastates the performance of a multi-million dollar UNIVAC or GENIAC.

I like the analogy supplied by a FReeper (whose name I don't know) which I will steal:

When gas was 29 cents you could buy a gallon of it for three dimes. Those same (silver) dimes today still buy a gallon of gas.

[Atlas Sneezed]

In 1935, selling an ounce of gold and buying the equivalent of the DOW or S+P and holding till today would buy you THE ENTIRE SUIT FACTORY!

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Hindsight makes some people feel like genuises.