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 Replies: 55 / Views: 4,883 |
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New Member
United States
9 Posts |
I don't think the bullion market is crashing. I think the bullion market is still a sound investment. The Bullion market is far from the bubble phase. The fiat currency is still not stable.
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Pillar of the Community
United States
4008 Posts |
I agree. I tend to look at gold and silver as REAL money of constant value. It is not the price of gold that moves up and down but the price of fiat currency that jumps around and makes the price of gold APPEAR to move up and down. This is not the only way to look at it but it is the way that I choose. Others may or may not look at it differently and that's just as valid a position.
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Pillar of the Community
United States
2335 Posts |
I don't buy the argument that gold is constant in value. Take a look at the period between 1980 & the early 2000's. The price of gold was relatively flat throughout that period but the cost of a basket of goods denominated in dollars increased quite a bit. Over the last 10 years the percentage increase in the price of gold has been substantially more in dollar terms than the percentage increase in the same basket of goods.
Look at the recent drop in the price of gold from $1800 to $1600. That's an 11% decrease. The value of the dollar hasn't increased 11% over the same period.
Edited by trdhrdr007
01/03/2012 09:31 am
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Pillar of the Community
United States
2168 Posts |
I think on average gold has stayed relative to costs as well as silver. There may be times not exact but overall averages show a correlation.
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Pillar of the Community
United States
2335 Posts |
In January of 2007 silver was around $12, gold was around $630, & oil was around $51. In August of 2011 silver was around $43, gold was around $1600, & oil was around $90. That's over a 3.5 times increase for silver, almost 2.5 times for gold & 1.76 times for oil. The increase in gold & silver aren't comparable to each other & both are well over the increase in the price of oil.
I picked the dates I did because that was one of the few times that gold & silver have increased in any significant amount. Other times would be between 2000 & 2007, & the late 70's through the early 80's. Prior to the late 70's the price of PM's was pretty much flat. In the early 80's PM's never settled to their pre 1978 levels, but they stayed in a range around $350 for gold & $5 for silver.
I believe that the value of the dollar has a direct effect on the price of PM's. However, I'd have to see proof that the price of goods remained relatively unchanged between 1900-1978 & 1983-2000 before I'd buy that PM's are constant in value.
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Pillar of the Community
United States
4008 Posts |
The whole point of my comment was that a standard of some kind is needed when comparing or discovering the prices of various items. If all prices are constantly moving up and down, this movement makes it difficult to make valid comparisons. This is certainly true at any particular moment in time but the effect can be greatly magnified by throwing a 20-30 or longer year time period into the discussion.
I choose gold for that standard. You might choose something else. Considering how crummy the dollar is becoming, thanks primarily to a declining US GDP and massive over printing, it may well be a poor gauge of what other things, including gold, actually cost.
As others have said, an ounce of gold could buy a VERY nice suit of men's clothes in 1900 and it still can today. So too did it during Roman times 2000 years ago. I agree that this may not be a perfect standard but considering its performance and longevity, it seems to be a pretty good one.
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Pillar of the Community
United States
2335 Posts |
I've heard the suit analogy plenty of times. I've never seen any sort of empirical evidence to support the claim. Can someone point me to a link showing historical data of some sort?
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Pillar of the Community
United States
3670 Posts |
Back on subject, the bullion market does not appear to be in any danger of crashing, even though we could wake up to 1200 dollar gold an 15 dollar silver tomorrow. Not likely anyway but it could happen.... Today gold and silver had some nice gains pushing back up around 1600 an 30 an oz.... While I was at the silver shop waiting to talk to the guy about a job, I grabbed a real nice 1990 proof eagle for a few cents shy of 68 bucks, purple case version, San Fran S mint..... Also I took interest on an ease drop of two ladies with three kids (one crying half the time), and the other two acting a fool in the parking lot. There father had past, and the four next of kin was looking to divide up their apparent late father's silver/coin collection, mostly consisting of 40 an 90 percent silver, via Peace dollars and such. They were not happy with offer of 1300 for it all, which was fair with current spot, the fact that his grades were from a no name basement grader, and much next to little of value items like Sacagawea dollars.... I of course did not interrupt or give my opinion as the lady's thought it over as that would have been beyond rude, but part of me wanted to say sell in six months, lol. I would have loved that added new stock when it cleared in 30 days, but one hates to see a family not get the most possible on a family inheritance. And I could not help but over hear in such a small store. I was happy to hear they decided to wait, and the dealer was more than fair telling them it may be in their best option to wait six months an perhaps make twice as much then.... My point, the common public has no clue, when to buy when to sell, and there expectations were for 4 to 5 grand in the stash, when in fact it may have been worth retail 2 grand to 2500 max I figure. He said you could do better as well, via piecing it out an selling one at a time via ebay or something.... Like most say here at CCF, present a silver eagle to 10 basic people, and maybe 2 may know it is worth 40 bucks on average, verses thinking it is worth more like 5 or 10 dollars. It blows my mind how many still ask me...."Wow Kev, you can actually buy silver or gold on ebay?", rof   .... Edited by Silverhawk74
01/03/2012 8:46 pm
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Pillar of the Community
United States
2168 Posts |
So just wondering a dealer has to wait 30 days to resell? Just wondering
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Valued Member
United States
302 Posts |
Quote:
"Wow Kev, you can actually buy silver or gold on eBay?", rof.... Quote:
I've heard the suit analogy plenty of times. I've never seen any sort of empirical evidence to support the claim. Can someone point me to a link showing historical data of some sort? I can't do that. However, when I was younger (1964) gold was $35 per oz and gas was 35 cents per gallon, or 100 gallons per oz of gold. Today, gold is $1600, gas is $3.25, or 492 gallons per oz of gold. Silver was $1.29 per oz giving 3.68 gallons per oz of silver. Today silver is $30, or 9.23 gallons per oz. I am sure that you can find similar ratios with anything with a long history, including suits. Just don't try it with computers, iPads, or the like. Edited by mmerlinn
01/03/2012 9:37 pm
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Pillar of the Community
United States
4008 Posts |
Quote:
Can someone point me to a link showing historical data of some sort? What? You want us to do your Google searches? lol |
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Pillar of the Community
United States
2335 Posts |
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What? You want us to do your Google searches? lol I have done a google search. There is no evidence that gold has a constant value. Picking 3 discrete points in time that gold would purchase the same item & then claiming it holds true is not scientific nor does it make the statement true. Data showing CPI versus the price of gold shows points in time where the price of gold is equal to the price of the basket of goods. It does not show a direct & constant relationship. For gold to have remained a constant the price of said basket of goods would have had to quadruple since 2004. The price of that same basket of goods would also have to have been roughly the same between 1900-1978 & 1984-2004. Obviously that's not the case. |
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Pillar of the Community
United States
5863 Posts |
Quote:
As others have said, an ounce of gold could buy a VERY nice suit of men's clothes in 1900 and it still can today. So too did it during Roman times 2000 years ago. I agree that this may not be a perfect standard but considering its performance and longevity, it seems to be a pretty good one. I've heard this analogy a well, but it seems to only be valid if you carefully cherry pick your dates. Could an ounce of gold buy the same quality of suit at any time during the 1980s or 1990s? A lot of people have questioned why the price of gold and silver have been going up so fast in recent years and have come up with a whole bunch of possible explanations that let them make predictions about the future. Perhaps a better question, though, is not why it has suddenly gone up but why it remained flat for so many years before its current rise. We have had plenty of instances of inflation and deflation in the past and the value of the dollar has gone up and down, and yet the price of gold and silver was seemingly the one item that didn't keep up with inflation during the 80s and 90s. If you bought PM in the 70s with an expectation to sell it in 20 years (which is certainly a long term view and not just looking for short term profits), that would have been a pretty bad investment. Even sticking your money into a savings account would have produced a better return. Anyway, my point is that right now it does indeed look like silver and gold values are right where they should be in terms of inflation. But for a long time they weren't keeping up with inflation and until we know why that was the case it's impossible to know whether they will continue to keep up with inflation or whether they might either remain flat or even go back down. Of course, maybe some day we'll go back to the gold standard and the price of an ounce of gold will be fixed at $300/ounce... |
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Pillar of the Community
United States
2168 Posts |
Tha problem with 300 per oz is that there is way to much money printed and on books to allow for a price like that. The dollars alone probably account for more than all the gold ever mined at 300. But who knows what time will bring
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Pillar of the Community
United States
5863 Posts |
Well, $300 was just a number. Even if it were set at a more realistic $1500 ounce, however, it would mean the end of gold as an investment vehicle.
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Replies: 55 / Views: 4,883 |
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Posted 01/02/2012 6:56 pm
