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 Replies: 73 / Views: 7,199 |
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Bedrock of the Community
United States
36745 Posts |
Ed_B you hit the nail right on the head. Gold's track record as a store of value for thousands of years can not be disputed.
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Valued Member
Canada
135 Posts |
Let me play devils advocate here for a minute.
The key difference is the past "thousands of years" was not anything like our post industrial revolution. Gold is not as much of a "commodity" as it used to be.
"Gold's track record as a store of value for thousands of years can not be disputed." -This is way too simplistic to be true nowadays.
Gold has no intrinsic value, you can't eat it, you can't heat with it, it doesn't grow.
The reality is buying gold is speculating, not investing, call it what it is. Buying gold now at $1600 an ounce is risky.
You can't eat gold, buying physical gold cost a premium up to $90 over spot per ounce.
During the nineties, gold prices were stagnant while the S@P nearly quadrupled.
No matter what you say, gold price is tied to fiat money, and price is set by the Government.
How quickly you forget how FDR confiscated all the gold during the last depression and devalued it by %60!
Gold is hard to value, it has no revenue stream, it is strictly based off supply and demand. Evaluation models are useless for gold.
This does not make gold a bad investment necessarily, just use some caution is needed before plunking your life savings into gold.
The ones who are really benefiting, are the ones that purchased it at $300/ounce.
Realistically, I would not invest more then 10% in gold, based on $1600/ounce.
If I had purchased gold 10 years ago, that would have been a "good" investment.
Edited by Sixthcents
07/22/2012 08:37 am
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Pillar of the Community
Canada
3692 Posts |
You also can't eat stocks and paper money. What's your point? It's 99.9% recyclable. The fact that you can't grow it IS the benefit.
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Pillar of the Community
United States
5830 Posts |
An excerpt from blurt it! Quote:
Yes you can eat gold. It is a permissible food colouring with its own e-number which is E175. Gold was first used in cooking in the Middle Ages. While peasants went hungry the rich decorated their lavish banquets with a patina of gold. Roast birds and other meat dishes were wrapped in thin gold leaf in an ostentatious display of wealth. The most frequent use of gold in edible form today in its use by chocolatiers. Top quality chocolate makers often produce chocolates flecked with gold leaf. There is also a liqueur called Danziger Goldwasser which is flecked by minute particles of gold leaf suspended in the liquid. The liqueur is used the flavour the aptly named souffle Rothschild. Edible gold leaf is easily purchased from a range of suppliers who also supply gold powder and gold paints which contain the real thing. Premium food producers have even successfully markets marmalade with gold particles. The body does not absorb gold easily so what you eat will quickly leave the system. However, in larger quantities gold does become toxic and harmful to human health. |
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Pillar of the Community
United States
1391 Posts |
thousands of years can not be disputed." -This is way too simplistic to be true nowadays. "During the nineties" "If I had purchased gold 10 years ago..." So you are disputing thousands of years based off of decades? "was not anything like our post industrial revolution." People have said that about everything. Stone age, bronze age, Iron age, agriculture revolution, cities, etc. But what did the industrial revolution let us do? Basically automated and make production of things faster. All the stuff we did before, just different. Even with out information age what are we doing? Bidding on ebay for ancient coins... |
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Bedrock of the Community
United States
10982 Posts |
There's no doubt gold could fall back to $700-$800 an ounce in the next year or two. It's not likely, but it certainly could happen.
Silver could fall to $15 an ounce too. I like silver at its current price better than gold at its current price. Both have downside risks and so does everything else out there.
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Valued Member
Canada
135 Posts |
"But what did the industrial revolution let us do? Basically automated and make production of things faster."
Exactly.
Just they fact that Gold is easier to mine is a HUGE difference. This is not pick and shovel anymore. Sure gold is still rare, but it can be had for MUCH less physical labor then it used to.
Are priorities are different.
The past hundred years might be the most profound in all human existence. The last 100 years have seen an explosion of change in the way we do things.
You could go on and on, from mass shipping, farming, production, airplanes, medical industry, computers, personal communication, religion. You need to add hundreds or thousands of new variables, not just one or two. We have almost infinite new was to spend money, and ways to use materials.
Some metals are valuable and some are frivolous, depending on the context.
Thousands of years ago metals got their "value" mostly from practical terms. The same thing applies today, except we are using different materials now, for different reasons.
The only thing that makes Gold expensive, is it's rarity. Pound for pound there are more powerful, valued metals in today's context.
Gold historically was perceived valuable when the Kings got Bling and you don't. Now there are thousands of new things that are coveted by poor people besides shiny metal. Competition, plain and simple.
Historically it was harder to spend money, as silly as that sounds, once you got food, booze, land, clothes and hire a mason to build you a house or monument, there was not much else to buy. Some resorted to building even bigger stone monuments, that still stand today in Egypt etc. So in this context, Gold has less competition for the "elites" money.
When we started working with industrial Aluminum in the late 1800s, it was more expensive then Silver, arguably a better all round material for manufacturing due to it's light weight, compared to Silver.
A silver airplane would be heavy and expensive.
In 1884 they capped the Washington Monument with a 100 ounce capstone of Aluminum. <It was highly regarded and expensive.
So what changed? Basically the ability to make large quantities using electricity, and other modern techniques to drive the cost down.
Gold is kept high based on tradition and is a bit of a "luxury" item who's value is propped up by it's supply. The difference is with Diamonds, the shortage is an artificial one.
I mean is gold worth more or just the USA dollar worth less? Chicken or the egg here, think about it. This false excitement about $1600 an ounce should really be an alarm bell for inflation.
So in today's context, if we hit bad times and have a shortage in all metals, gold will take a spot farther down in priority, compared to metals that can be used to keep you alive.
If the SHTF in 2012 like the Mayans predict, gold will quickly end up in the Pawn Shop.
History will never be the same as it was, just as you state.
I don`t want to get anyone riled up, as I said, just taking a devils advocate approach to this.
Edited by Sixthcents
07/22/2012 2:14 pm
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Pillar of the Community
United States
4008 Posts |
Quote:
This is way too simplistic to be true nowadays. Truth does not require complexity. Yes, these times are different. But then, so are ALL other times. |
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Pillar of the Community
Canada
3692 Posts |
@sixthcents: Mayans did not predict ANYTHING. Where in their calendar do you see any mention of USA, or status quo, SHTF, or anything about gold and pawn shops? You're really just following what others are saying about the whole invented 2012 mythology. You might as well believe in ghosts, too.
Everything you say about aluminum is still true today, so why is it so cheap?
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Pillar of the Community
United States
808 Posts |
Quote:
I mean is gold worth more or just the USA dollar worth less? Chicken or the egg here, think about it. This false excitement about $1600 an ounce should really be an alarm bell for inflation. and... Quote:
Gold is kept high based on tradition and is a bit of a "luxury" item who's value is propped up by it's supply. I think history is pretty clear on this question. It's only been 41 years since gold convertibility ended for the US dollar. And up until 48 years ago, silver was most definitely money in the most literal sense of the word. Lets flash forward a few years. Even Gen-X'ers and the Millennials, generations who likely never knowingly spent a 90% silver quarter and certainly never knew a gold-backed federal reserve note, still have an innate (if imprecise) understanding that gold is more than "bling" and "goldschlager." So, yes, since the end of convertibility, the US dollar has clearly suffered ongoing debasement. The current price of gold simply reflects the dollar's diminished buying power due to it's arbitrary valuation as fiat currency. Edited by coinwatch
07/22/2012 5:52 pm
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Pillar of the Community
 United States
1454 Posts |
Quote:
What other mere commodity is stored in bank vaults? Gold's simply the most well known, Ed. Bulk diamonds and other rare gems are stored in some bank vaults, for one. I've even heard of casks of rare wines being stored in bank vaults in Europe. |
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Pillar of the Community
United States
2269 Posts |
I chose silver because I personally feel the current price per ounce is low.
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Pillar of the Community
United States
863 Posts |
there are lots of things to store that potentially go up in value. If we all could go back in time and kep the things our grandparents used in mint condition we would all be millionaires.
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Pillar of the Community
United States
1454 Posts |
Sixthcents, Consider this forum something akin to a site sports fans of a certain team might gather. Right now, you've rudely entered said site and essentially flamed the beloved Golds and fans have flocked to its defense post haste. Regardless of the accuracy of some of your comments regarding the metal's potential to suffer major price corrections like any other commodity, it won't make you many friends around here.  People who have lived long enough and invested in metals over the course of decades know that gold can fall much faster than inflation; but you still find many fans stating that they buy gold "as a hedge against inflation", as if this is some kind of truism. It really all about timing the market, right? Anyway, I just wanted to welcome you to the forum and tell you all counter-culture opinions are welcomed and much appreciated by some of the more decadent and ill-favored posters around here who don't always toe the company line. Even as a fair-weather fan of the Golds, I know the team isn't perfect and has flaws that can be exploited on any given day, or even over the course of concurrent seasons. |
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Valued Member
Canada
135 Posts |
Whaa, The OP asked about "$5,000 burning a hole in his pocket", not investing his life's savings for protection during a wartime.
Frankly if your net worth is $5,000 in gold, in today's dollar, you are in rough shape anyways.
It's hard to imagine that you view an unbiased, realistic opinion of gold as "flaming" and "counter culture".
How original, a forum with entrenched camps.
I was hoping this place would not be like that, and that I could learn something more advanced then investing in gold while it's expensive. Chuckles.
I am not interested in joining one side or the other, nor is it my intention "rudely enter and flame" the "gold's fans", so I am truly sorry about that, seriously I had no idea folks would get that jacked up about it, I am a little amused.
Why have a poll then? So a bunch of dudes can agree and pat each other on the back? lol
Libertad, the remark about the Mayans was clearly tounge in cheek.
"Everything you say about aluminum is still true today, so why is it so cheap?"-because the insane amount of electricity it takes to make aluminum is "affordable", or at least attainable.
If electricity prices start to behave like the gas pumps, you will see huge rises in Aluminum prices.
If new aluminum production is not maintained, and the existing "recycled" stock becomes the only source, you will see it's value rise dramatically.
I'll be telling my Grand kids how we used to drink beer out of aluminum containers, then just toss 'em away.(Give them away, not implying you litter)
Edited by Sixthcents
07/22/2012 7:24 pm
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Posted 07/22/2012 07:26 am
