Where are the gold bugs NOW?

Gold Prices Online ^ | 06/27/2002 | Lazamataz

[Lazamataz]

Well, 'the new spoosman' and many like him have told me for months that the 'fiat' currency is worthless, and gold is the only valuable currency out there. Disregarding for a second the fact that these gold bugs are so ready to part with their gold for those 'worthless fiat notes', I would like to point out that since the height of their caterwalling, Jun 01 2002, gold is down from 326$ an ounce to 314$ an ounce today. That is a 4 percent drop in less than a month.

The 'fiat currency' people are out to lunch. I don't expect gold to do any better than index with inflation in the long run, and today managed to show a savage loss of $5 an ounce.

[Lazamataz]

Look, don't get me wrong, I like gold. I love gold. I will own a small stock of it. But it is not the place to put all your money, in my mind. The stock market ebbs and flows, but both it and undeveloped land near cities are the only truly consistent returns on investment. You need to be patient, of course. Day trading or real estate speculation takes more bodies than it delivers wealth.

[DCE]

All. Plain and simple. Central banks doing what they have been doing since 1999 with the Washington Agreement. Manipulating the price. SOmething about to hit markets, so they are trying to drive the price down so banks and mining companies can unhedge . COMEX gold drops as central banks intervene on dlr Updated Fri 6/28/2002 15:21 EST < NEW YORK, June 28 (Reuters) - Central bank intervention to prop up the dollar pulled the rug out from under COMEX gold on Friday, upending early gains and sending futures to a six-week low as bulls turned tail en masse. < Much of the capitulation came suddenly before the close, which left August gold at $313.90 an ounce, down $5.70, or 1.8 percent. It managed an equally head-jerking bounce off $310.50, its lowest since May 16, in the final moments. Spot gold fell to $314.00/5.00 from Thursday's $319.00/50 close. Friday's late fix by London bullion dealers was $318.50. Gold was also a victim of investor outflows back into the stock market. The Dow Jones industrial average was up 53 points in the afternoon, despite news that Xerox Corp. would restate five years of results to reclassify more than $6 billion in revenues in the second accounting debacle absorbed by Wall Street this week. The dollar was firm against the yen after the Bank of Japan led the intervention to prevent a rising yen from choking off Japan's export-led recovery. The greenback failed to stay up against the euro, but still ended above the 28-month low hit at $0.9990 per euro in the morning. "We rallied because of the strength of the euro based on the Xerox situation -- and there are a few other things that make people feel there's no loss of confidence in U.S. equities due to all this thievery going on," said a floor broker. "Then intervention drove the dollar higher and that in turn drove gold lower." Gold, equal parts currency and commodity over the years, has correlated tightly with the euro this year, reaching 2-1/2 year highs early this month above $330 an ounce. Stock market jitters compounded the interest in gold as a store of value, amid worries about the fragile economic recovery, terrorism and corporate book cooking in the wake of the collapse of Enron Corp. Estimated final volume was a busy 45,000 contracts, almost half of which came in the last few minutes of trade. "It took out $316 with stops below that level and just hammered the market on those stops," said David Meger, analyst at Alaron Trading in Chicago. $310 was the obvious point of the movement but when we said that we weren't expecting to get that in the next three minutes." The long position on the COMEX has been a growing impediment as gold ran out of new buyers. The CFTC Commitments of Traders report released after the close Friday showed the net speculative long on the COMEX contracted to 37,967 contracts as of Tuesday from last week's 41,241 lots. July silver <0#SI:> fell 4.3 cents to $4.833 an ounce in a narrow $4.89-$4.825 range. Spot silver was last at $4.82/84, off from $4.86/88 late Thursday. It fixed at $4.87. The net speculative long in silver fell to 39,164 contracts from 44,655 the previous week. NYMEX July platinum <0#PL:> slipped $2.70 to $537.30 an ounce. Spot platinum closed at $535/540. September palladium <0#PA:> rose $1.80 to $318.80, steadying above Thursday's contract low at $314 an ounce. Spot palladium fetched $316/326. ((Alden Bentley, New York Commodity Desk, 646 223 6041, nyc.commods.newsroom@reuters.com)) (C) Reuters 2002. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

[borntodiefree]

I am a gold bug, and here to stay. My 1 oz Gold coin was worth $20.00 in the 1920s/30s. With either my gold coin or my fiat federal reserve note (debt), I could buy a really nice suit.

Today, that same Gold coin will buy me a really nice suit, but that $20.00 federal reserve token will barely get me a set of cufflinks.

I don't use my gold to "make" money, I use my gold to maintain my money.

When all the shorts in all the banks are called in someday (when the IMF can no longer manipulate the Gold and Silver market), the dollar will likely drop through the floor, and Gold and silver will still have their value in the euro, suit, food, whatever. It really hasn't truely lost value in the last 6000 years. I'm in no hurry to believe it will start now.

Gold and Silver are still just assets which values go up and down a bit, like a bag of rice, a saw, whatever, but over the long haul its value remains fairly constant.

[demlosers]

If gold is the suppose to be the un-fiat, natural, currency of choice by man, then why is its worth based in dollars and not the other way around; by measuring the dollar against a weight in gold, the supposed natural standard?

.

Answer: It's not anymore!

[Redcloak]

That's because you should be investing in gold-pressed latinum, not gold.

[AdA$tra]

All. Plain and simple.

Plain and simpler: An ounce of gold during the Roman Empire would buy an nice suit and a pair of shoes. Today, an ounce of gold will buy you a nice suit and a pair of shoes.

[mindprism.com]

If gold is the suppose to be the un-fiat, natural, currency of choice by man, then why is its worth based in dollars and not the other way around; by measuring the dollar against a weight in gold, the supposed natural standard?

There is a law, forgot its name, that says 'Bad currency drives out good' in the market -- that law only holds true in a state enforced money monopoly, in a truly free market, good currency drives out bad.

[dennisw]

A fiat currency is a leveraged currency. Our currency is more leveraged than it ever has been....is a bubble currency. All modern currencies are leveraged so we're not alone. I like gold. I like honest money and would be happy with a currency backed by even 10% gold. Today our currency is backed not by gold but by the full faith and credit of the USG. 
IOW the US dollar exists and is accepted on belief, positive psychology and faith.

Someday the dance will end for our currency just like it has for the NASDAQ and will end for our current real estate mania.

Full Faith and Credit
... What will happen to the "full faith and credit of the United States government"
backing the US dollar then? How about the stock markets, bond markets et al? ...
www.gold-eagle.com/gold_digest_01/mcintosh112601.html - 10k - Cached - Similar pages

[Looking for Diogenes]

Today, that same Gold coin will buy me a really nice suit,...

Where can you get a 'really nice suit' for $314? Walmart?

[arthurus]

Gold certainly does not ebb and flow. I keeps its value steady in the short term (less than a couple hundred years). Government fiddling with the economy changes the price (not the value) of gold as liquidity is added or subtracted beyond what is called for by actors in the economy. That is called inflation and deflation. Keynesians and Monetarists who staff this administration as they do most administrations, exist to allow the politicians to believe they can operate an economic perpetual motion machine by fiddling with levels of government spending (Keynesians) or by fiddling with the amount of money in circulation (monetarists). They are always a drag on the economy and add difficulties and thus expense to the flow of commerce.

Gold does not change in value and is not an investment.If gold appears to be going "up" be assured that the value of the dollar is declining. You buy gold when you don't trust positive investments to perform better than inflation and then you keep up with inflation minus transaction fees and storage.

The Fed began to "correct" a 5 year deflation in the fall of 2000 when the price of gold stood at $250. The price since then has risen fairly steadily to it's current level of about $320 (it fluctuates a few % when stability is lacking) The gold theorists had been saying during the deflation that the "proper" price of gold was about $360 because that is where it was when the deflation started. Some said that it should be "corrected" to that price and others said that was too drastic and it should be corrected to $320. Well, it is at $320. If it starts climbing again look for $360.

Actually the "correction" of the "incorrect" gold price is just the wrong thing to do. It should be stabilized at whatever point the Feds get their heads out of their orifices. It is the change that is harmful, not any particular level.

The rise since fall 2000 represents about 30% inflation that we will experience in the general price level. Commodities have been drifting up for a while. Retail stores are starting to feel the pinch and are raising peripheral prices as they try to hold down the prices on their major lines.

[Lazamataz]

I am a gold bug, and here to stay. My 1 oz Gold coin was worth $20.00 in the 1920s/30s. With either my gold coin or my fiat federal reserve note (debt), I could buy a really nice suit. Today, that same Gold coin will buy me a really nice suit, but that $20.00 federal reserve token will barely get me a set of cufflinks.

Wrong unit of measure, but I understand how you might make the error:

In the 1920's or 1930's, you could buy a decent suit for about 50 hours of unskilled labor. ($0.40 an hour * 50 hours = 20$). Now, you can buy a decent suit for about 38 hours of unskilled labor ($9.00 an hour for 38 hours = 350$).

Dollar amounts are meaningless unless you take into account inflation of wages as well as inflation of prices.

[Lazamataz]

Where can you get a 'really nice suit' for $314? Walmart?

LOL, I downgraded from 'really nice' to 'decent' in my example. :o)

[Lazamataz]

Today our currency is backed not by gold but by the full faith and credit of the USG.

Not a bad bet, in my estimation. At least in our lifetimes.

[rohry]

"I would like to point out that since the height of their caterwalling, Jun 01 2002, gold is down from 326$ an ounce to 314$ an ounce today. That is a 4 percent drop in less than a month."

Actually, I'm glad (for you) that your wife is handling the finances. Here are the facts (Year to date):

Gold has gone up 12%

The Dow is down 8-9%

S&P is down 14%

NASDAQ is down 26%

Since the gold peak (which was actually June 4)

Gold is down 4%

The Dow is down 4%+

S&P is down 4%+

NASDAQ is down 7%

I am not a gold bug (15% of my net worth is in precious metals) but over the past year that 15% has outperformed the other 85% (mostly bonds).

Appreciating assets don't go up in a straight line, depreciating assets don't go down in a straight line.

Also, several gold bugs are no longer on this forum (spoos, robnoel and a few others)

[surely_you_jest]

Where do you buy your really nice suits? Because I want to go there. I am clearly being way overcharged.

[Lazamataz]

That's because you should be investing in gold-pressed latinum, not gold.

Oh, I do.

That's me on the left with my idiot, profitless brother.

[Willie Green]

In the 1920's or 1930's, you could buy a decent suit for about 50 hours of unskilled labor. ($0.40 an hour * 50 hours = 20$). Now, you can buy a decent suit for about 38 hours of unskilled labor ($9.00 an hour for 38 hours = 350$).

Using unskilled tailors to have your suits made?

No wonder you're always whining about your pants falling off while you're playing on your 'puter.

[mindprism.com]

Fiat currency value is only maintained by the illegal manipulation of the gold market, see gata.org. Eventually, soon, the gold miners will be forced to file lawsuits against this manipulation because they are going under because they cannot extract it from the ground and reasonably profit at the artificially maintained price. Meanwhile, jewelry and industrial demand continues to force the gold reserves into consumption.

In short, its a pressure cooker that will devestate the currency markets should it blow.

[Lazamataz]

Like I said, I'd keep a small portion in gold. Some virtual, some physical. I just like the shiny stuff.

But unless you personally move out of your gold positions, in the long run the market will outperform you.

Always has. Not to say it always will.

[Lazamataz]

Using unskilled tailors to have your suits made?

Nope. The unit of measure of value I am using is the unskilled-labor-hour. We can use skilled-labor-hours if you so desire. Lawyers would be a good unit of measure. Of course, it would merely more prominenty display my point.

No wonder you're always whining about your pants falling off while you're playing on your 'puter.

Not true. I say that I am not wearing them to begin with. There is a difference.