Posted on 06/28/2002 3:00:46 PM PDT by 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.
But ... it IS virtually worthless. The entire valuation system is a charade. It's a manipulated market. If every governmental bank that is currently stocking gold decided tomorrow that they were going to exchange every ounce of gold metal they own for one pound of pig dung ... pig dung would be worth $314 a pound and that valuation would be every bit as valid as the current valuation of an ounce of gold today. Pig dung has no rational basis for commanding $314 for a one pound mass. But, if pigs stopped dunging and the supply of pig dung was tightly controlled by economically reckless entities (governments) ... that price would hold. So ... let's go to a pig dung currency standard!!! The Vatican and Queen Mother are up to their eyeballs in it! It's ridiculous to me, but I admit that I do not get macroeconomics ... money supply etc.
It would not affect the overall market for gold at all. The price of gold does not fluctuate because of the rise and fall in consumer interest in jewelry. As the gold price rises the margin on gold jewelry actually increases because people buy more of it because gold is rising and they want the gold because their money ios falling.
Don't carry all of it at once! LOL Someone would just steal it from you.
It won't defend you , and you can't eat it.
Nah, you can buy your way out of a lot of things, ask OJ.
If you think of any survival situation, gold is always more of a problem than a solution. Take a sinking ship, for instance. Do you really think that gold will aid your chances of swimming to shore?
I don't recommend using gold as a floatation device, I recommend it for a lot of people to own in case of a national catastrophy that hyperinflates the U.S. dollar, in which case the international price of gold (which would rise in a case like this) would be a standard for the American people to trade for food and necessities until order can be restored. If a national catastrophy struck, I live in a neighborhood where there would be people able to help other people and exchange goods for something they knew would not lose value, like gold. Just because there would be a disaster doesn't mean that everyone everywhere would automatically go for their neighbor's throats. Gold will be a big help to get a lot of good communties back on their feet. It's a lot easier to trade gold for food than, say, to trade a couch for food or whatever.
Or consider a riot/battlefield condition. Will gold aid in your defense, or are other metals such as brass and lead (hint: bullets) more appropriate?
Gold will go farther in my community. If you live in East LA, I recommend a heavy supply of brass and lead.
Or consider that you are lost in a desert with no water around. Will someone trade their last drop of water for your bags of gold?
Nomads are very well prepared to live in desert conditions and would trade water for gold.
Likewise, gold is bad for economic survival. It's very inconvenient to carry around to trade for things, and getting "change" from transactions is problematic.
No it's not. One ounce equals 300 loaves of bread. 300 loaves of bread has enough calories to feed a human to carry an ounce of gold across the nation. That's very good weight to energy ratio. Engineers would kill for that in a machine.
It's difficult to lend out multiple times, so banks soon find that they have little or no financial leverage, too. That fact dries up loans, bringing business cycles to their knees.
I'm not worried about business cycles. This world is going to be tested and business cycles will be the least of our worries.
Then too, gold is subject to the vagaries of world supply. A new "strike" that finds a plethora of gold can quickly devalue your own gold holdings through no fault of your own.
The big Inca Peru strike didn't hurt gold much in the 1500s. Spain lived on that gold for years, it was a lot of gold.
But the worst thing about gold is that it is an ugly, yellow metal. People are forever trying to trade it for paper currencies just to get rid of the stuff.
Enough people don't think it's ugly and will pay 300 loaves of bread for a tiny ounce of it.
Everyone talks about gold as it is valued in Dollars. Even people who claim to like gold go around getting excited if the ugly yellow metal brings in a few more pieces of fiat currency in market trades one day over another.
Our fiat currency currently has value, because our government and military says so. What happens if our government has some kind of extreme crisis? Bye, bye dollar, gone to the asheap with 99% of every other fiat currency ever issued.
Why would real gold-bugs care how much paper currency gold could be traded for? Don't real gold bugs disdain paper currencies?
I love money. But when I look at it, I know that through inflation or disater, it will be worthless some day. Not so with gold.
Methinks they doth protest too much.
You won't see me protest. If you want to give me all your green, I'll take it.
In reality, gold bugs are simply people who are stuck holding on to an ugly yellow metal, and what they really want is for some new sucker to come along and offer them more precious Dollars for their sickly supply of metal.
My investment in gold is for security, not capital gains.
Men will always try to impress women and so the market will never crash.
Art. Jewelry. Electronic terminals. Sun visors.
Yes, but if the market is not speculation, what is it?
I don't invest in gold to make money. Gold is for security. Gold has too many enemies (governments, environmentalists, international bankers) to make a reliable investment. I invest in gold because it's the only thing that can survive anything.
Nope, I've got the bread and that little yellow coin is not acceptable to me. I'll give you a loaf for it. If you can turn that coin into currency, the 300 loaves will be $375 and they are yours for the taking.
See, my bread has an intrinsic value. If I want rice, I can trade my loaves of bread for rice. If I desire wood for warmth, I can trade my bread for my friend's wood. I can trade some of that wood for another neighbor's coat. I can trade some of my excess rice for a butchered chicken. Essential products have value. Paper currency has value, because it is divisible, measurable and easily exchangable. Gold is shiny and yellow.
If you are on the brink of starvation, my loaf of bread is worth 10,000 ounces of your yellow metal.
It does have a lot of potential, though. It hit $800+ an ounce in 1979, equvilant to more than $2000. But with it's enemies, you don't know how or when this will happen.
If the currency is deliberately and by law stable there is really no reason to hold more than a minimum of gold-there could be an economy destroying nuke strike- because there are low risk investments that will increase in value and will allow you to buy moore gold when things get shaky again.
But there could be an immediacy to survival needs that a securities trading company couldn't fulfill. Wall Street was down for a week after 9-11.
I have gold coins of the bullion variety but I do choose the more interesting ones, especially the turkish coins rather than the American or South African ones. They are pretier and have no collector value so the markup is no more than the Krugerrands.
Sounds good.
Yeah, but you'll be dead.
Your argument is the same as telling people to quit have sex because there's no point in putting out the effort. People will always want to have sex, and men will always try to impress women, and so gold will always be worth a lot per volume.
I think your logic is a little flawed.
In 1920, the average income was around $15 a week or just $780 a year. If you wanted one of those $20 gold coins, you would need more than a week's salary to get one.
Today, the average income is $30,000 a year (or $600 a week). You would only have to work about half a week to get that same ounce of gold.
If you invested in blue-chip stocks in 1920, you would have far more wealth today than had you invested in gold only. Even considering the Great Depression that would occur during the 1930s.
Of course, gold is not a bad investment as part of a "diversified" portfolio. But it is greatly overrated as an investment.
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