GOLD PLUMMETS - SPOT CHART

http://www.kitco.com/charts/livegold.html ^

[Fitzcarraldo]

Source: www.kitco.com

[Chemnitz]

I'm not an expert on this. Please consult with your lawyer and CPA. I don't think derivatives expire. They can be used as a hedge against the interest rate moving up or down, so they are like commodity options. I don't think they expire. Orange County bailed out before the market moved in the right direction, losing them a ton of money.

The worst thing is that they multiply losses and gains. If an institution has made a big bet the wrong way, the losses are enormous. I remember when bankers were conservative!

[#3Fan]

You're playing fast and lose with definitions. "A few ounces" is a lot more than you think when you're actually carrying it all day. When you do a day with 20 quarters in your pocket you'll understand, until then you're just being annoying.

A half ounce of gold and an ounce of silver is $154 and weighs much less than 20 quarters.

In the course of American history we've used a number of currencies with no backing or even participation by the American government. Recent examples include Camel Cash, Marlboro Miles, airline points and S&H Greenstamps.

LOL I've never used these currencies.

Then of course there's the popularity of yanqui dollars in the third world inspite of the government issued money.

They're depending on a foreign government. That's worse than depending on your own government!

Of course part of your problem is that you think "gvoernment backing" has any meaning at all. It doesn't. The government cannot force you to accept the currency, if you won't take it you won't take it. Most fastfood places won't take bills bigger than $20, they don't want to make the change or carry the theft risk.

OK, try to pay your taxes in seashells and see if it's true that the government doesn't force you to use dollars.

People in third world countries aren't depending on our government for the value of a dollar, they're depending on other people's willingness to take the dollar in exchange for goods or services.

That willingness depends on the stability of our government.

Currency has always gotten it's value from use and never from the government.

Our dollars depend on the stability of our government.

[chemainus]

I believe the fall in the price of gold is because the hedge funds saw todays "pop" coming and had to sell their precious gold as the only asset with increased value to cover their shorts BEFORE today arrived.... notice unhedged gold stocks were down 9% today until right at the end when they "popped" back to UP 5%... a ~ 15% move.....this answers questions and poses worrisome questions... answers the sudden precipitous fall ( OK if you KNOW you can buy it back and make another profit)... and asks the question "How did the hedge funds ( note : they are "biggies only" funds ) know there would be a pop today ? Isn't that insider info ? The answer to that also is that the short selling institutions, part of the hedge fund "country club" , are, in fact, one and the same and therefore know when the massive shorts have to be covered to start a new round, and in the process can use their gold for 1) covering and 2) a round trip gold profit from the knowledge the individual investor has NO way of knowing. I guess the moral of this is that if the individual investor makes money ( spare me your "I made a million" stories, they are the same old lottery anecdotes and not pertinent ) in the stock market, as rigged as a State Line Nevada slot machine, then it is pure luck and millions more lose money. Even for the Clinton 90s , most individual investors I know ended up with a net loss. One anecdote that is true...I got completely out of the market in all funds including 401 s in February 2000 and stayed out until this January 2002 ... the market smelled too familiar of the 70s for me back in 2000.

[#3Fan]

So when in post 201 you said that if people carried real gold the government wouldn't have been able to print excess money with no backing that wasn't saying that we should?!

If everyone used real gold, there would have been no printed money to begin with.

Get real. You're off in never never land and contradicting yourself.

At least I'm not going off half-cocked and making wild claims of shiploads and sailors.

[#3Fan]

Retread, not retreat. You know, like retreaded tires. It means you're going over the same ground which we've already shown is defenseless, your arguement is becoming circular in nature.

What's defenseless?

Who cares if the gold is valuable "somewhere"?

I do if I want to preserve wealth.

The economy still collapsed. The way things currently work in the third world yanqui dollars look like they'll always be valuable "somewhere", doesn't stop you from saying they're no good.

They won't if our government collapses.

We've shown you where in history there's been hyperinflation due to gold: Gold Rush California and Colonial Spain (and via Spain the rest of Europe though since the gold wasn't landing in their economy first they just had regular bad inflation not hyperinflation).

Give me numbers. What was the value of gold in 1491, and then what was the value in the 1500s?

[chemainus]

Big shock to anyone ? 99.99% of your "money" is not even paper...it is thin air...no certificates , no bonds, nothing, *poof* , trust your government.

[#3Fan]

220 cubic feet over but we're getting closer. When you're talking about filling the entire space with gold every cubic foot represents a lot of money. One must be precise.

So you admit gold has a lot of value?

[#3Fan]

Actually it was DEFLATION of the gold "price", the gold lost value and so became worthless.

When a currency loses value, that's inflation.

When the form of currency loses value that's called inflation. But when you're talking about a commodity (which is doubling as a currency) losing value the actual price is deflating.

Give me numbers. Compare 1491 to the 1500s. Prove your hyperinflation.

If you can't accept that all of Spain is a "significant population" then there's no point in this discussion continuing because it becomes obvious at that point that you've got your sacred cow and it cannot be shaken regardless of the fact presented.

Spain is a signigicant population. You say gold hyperinflated in Spain. I say gold didn't hyperinflate in Spain. Give me a link that proves it hyperinflated.

[Axenolith]

There's lots of gold in the U.S. too; the enviro-crats just won't let anybody mine it.

Heck yea, only 12-15% of the potential of California has be calculated to have been taken out. The big problems with the deep mines is that, when shut down in WWII, they filled with water and it [gold] either wasn't economically priced to make it worth pumping out or today the rules for pumping it out are to onerous.

[tcostell]

Actually, it depends, some derivatives do expire. I used to work for JPMorgan's derivatives department, (and actually spent a great deal of my time there in Commodity derivatives). They do have a huge derivatives position, but the vast majority of them are interest rate derivatives (swaps). Swaps arwe more like a bond than an option, so it might be better to say that they "mature" rather than expire. A typical swap has a duration somewhere between 3 and 40 years. And Since the principal is never exchanged in these derivatives, that 26 trillion number isn’t nearly as bad as it sounds. Also, JPMorgan has the tightest risk management operation in the industry, and an investment grade credit rating. JPMorgan is sound no matter what someone who has an interest in their failure would like you to believe. Gold and gold derivatives are only a Tiny (capital T) part of JP's derivatives business.

The gold advocates on this site are for the most part those who are selling gold and therefore have an interest in your wanting to speculate in it.

They are trying to prey upon your fears and do what they feel they must to encourage that fear. And since they have a buck to make, they have no problem in ignoring the last 50 years of thoroughly proven economic theory if that’s what it takes.

That's why they are subject to such harsh criticism by those freepers who view a monetarist economic policy as a good thing.

JP is often accused of manipulating markets for their own benefit, but for the most part it's all undocumented nonsense.

And don't be put off by the opinion of someone who refers to the financial community as "fat cats". They obviously have an axe to grind.

As for a monetarist economic policy (or as you might otherwise know it, the fiat currency and the federal reserve system) it’s worked extremely well since implemented, and the consensus among respected economists is that it has proven itself. But by all means read Hayek, Friedman and Sowell, and be the judge for yourself.

Also, I'd leave gold alone for a little while. It's generally viewed as a hedge against inflation, and we don't really have that kind of problem in the US right now. But again, read up, and judge yourself.

[#3Fan]

Alright, y'all, everyone take a break for an hour and watch the Travel Channel, there's a show about hidden treasure, gold, etc.!

[teeman8r]

the penalty was that they had to buy gold...

[supercat]

-- Gold does not have any intrinsic value. It only get's it value from what people emotionally attach to it.

Gold is useful for a few applications (e.g. electrical contacts; jewelry) due to its corrosion resistance and other physical properties. It would be useful for many more were alternatives not [currently] cheaper.

Gold's value as currency probably stems from the fact that it has, since the time of Archimedes, been essentially non-counterfeitable. If you put a 19.30kg brick of gold in water, it will displace only one liter. Although it would theoretically be have possible to counterfeit an alloy with that density, it would probably not have been productive until recently. Nowadays that density might be achieved economically with an alloy of about 97% tungsten 3% platinum, though such an alloy would have other physical properties that would reveal it as a fake.

[Black Powder]

I want to see the size of your shed, there's a hell of a lot of gold out of the ground.

His shed would have a volume of 20 cubic yards.

[Chemnitz]

Thanks for your thoughtful comments. I noticed that the market went up 500 points after the rumor of the secret bail-out meeting. I used to get newsletters from my father about what the feds were going to do next with money. It never happened but he still paid a lot for the newsletter, which fed his fears. It was printed on heavy paper, so that made it more credible.

I bought gold once, when it was on its way up. I noticed that it never really did well after that. I would rather invest in the industrial might of America. This is a great time to buy stocks, especially in technology. Everyone will need a new computer soon.

[discostu]

You also asked for a link on the California Gold Rush. Is your memory that short?

SF was a large town at the time and if you'd read the information in the link you would have seen that the economic effect hit the entire state AND that CA's population increased by nearly 2 million people during the gold rush.

Hey dimbulb, if people missed the gold in CA, which was litterally just sitting on the ground when it was first found, for hundreds of years apparently it's NOT that easy. And if our top mining scientist can't figure out an economical way through the permafrost again apparently NOT that easy. Pay attention here.

It's called right of conquest, not stealing. And of course you're the only person in the world who thinks how Spain got the gold is important. All the actual historians believe it's painfully obvious that what happened was a massive influx of gold crushed their economy. The easy evidence for this is the fact that Spain had more gold than any of the other European nations, and yet couldn't afford to maintain contact with their colonies. There's only one way that happens: gold became worthless in Spain.

Actually the trading in the stock market requires no cash. You open a stock account with a check, and then keep it populated by buying and selling stock. No actual US Mint printed dollars are involved.

[discostu]

Great so in two "coins" I have $154, now how am I supposed to use that to buy a bag of Doritos for 3 bucks? See the common stuff of the life is so cheap compared to the current trading values of precious metals that we'd have to make coins that were mostly something else with only a core of the precious metal, otherwise it would be completely useless. Then you're carrying a pocket full of quarter sized things tearing holes in your pants and making them sit on you funny. Really, check out Chapter 4 of Wealth of Nations to understand why metal sucks, Smith nailed it in 1 (as he so often did).

Bummer, my mom still has the gravy boat she bought with greenstamps they were all the rage in the 70s. Camel Cash and Marlboro Miles were quite popular in the early 90s (Winston had one too, but nobody smokes Winstons so nobody cared). And surely you've at least seen the credit card commercials about airline points? Or do you live in a cave.

No, they're not depending on any government, think about it. You think these guys are gonna traipse up to DC from the Amazon basin to cash in their yanqui dollars? No, they're gonna use them to buy stuff. Like I've said every time, and one of these days it might penetrate your sacred cow, the PEOPLE THAT USE IT give currency it's power. America could cease to exist tonight and these third world guys would still be using our dollars, at least until they all wore out. It has nothing to do with the government and everything to do with us and how much we travel and spend money, often times without bothering to exchange it for the local stuff.

[discostu]

True, but as I've pointed out, if every used real gold our pockets would be shreaded. Check Smith, he outlines the problems very well.
http://www.adamsmith.org.uk/smith/won-index.htm

[discostu]

It's trading for $300+ an ounce. Duh. What it doesn't have is INTRINSIC value. But we're giving it a lot of value. Important to understand the difference between intrinsic value and accepted value. Good currency doesn't have intrinsic value, things with intrinsic value are useful and it's bad when people start using your money as something other than money.

[Deuce]

Great so in two "coins" I have $154, now how am I supposed to use that to buy a bag of Doritos for 3 bucks?

The same way you do now, you give three bucks to the clerk. The issuer of the three bucks is obligated to redeem them upon the demand of the bearer in a specified quantity of gold. This serves the purpose of preventing the issuer from overdoing the issuance, a tendency all such issuers always have. It's called fiducuary paper money as opposed to fiat paper money.