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 Replies: 47 / Views: 3,922 |
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Rest in Peace
United States
9104 Posts |
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Rest in Peace
United States
7075 Posts |
He seems to have a lot of insight. Too bad he got it wrong about presidents being able to order that money be printed -- which they cannot do.
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Pillar of the Community
United States
4008 Posts |
I found this article quite interesting. Although he has obviously been coached on these subjects, he seems to have a pretty good grasp of what is real money and what is not, monetary vs. price inflation, how the Fed works, where paper money comes from, etc. In fact, I know few adults who are this aware on these subjects.
As to his thought that the president allows the Fed to print paper money, this is not all that far off. The chairman of the Fed IS appointed by the president and any Fed chairman who wants to get reappointed usually acquiesces to the desires of the president. From what we have seen so far, Ben Bernanke seems to be more political than many previous Fed chairmen so is unlikely to oppose any presidential hints or suggestions about the US money supply.
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Pillar of the Community
United States
830 Posts |
Of course Uncle Ben knows what QE will do to the dollar, but its either that or default.
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Pillar of the Community
United States
4989 Posts |
The actual data does not support his hypothesis: http://www.fintrend.com/inflation/i...nflation.aspInflation was -.34% in 2009 and 1.64% in 2010. Real assets such as homes, that usually inflate, are crashing. Only Gold, it seems, is rising. I say it is a bubble long term investors who buy in at today's $1800 an ounce price will get crushed. A few people may make money in the short term. Gold is not real money - it is a speculative investment with a currency conversion rate determined by markets. Take a look at what happened to bit coins... another "rare" rate-controlled pseudo-currency: http://www.forbes.com/sites/timothy...tcoin-crash/Gold does have some underpinning due to demand for it as jewelry but as a pure rarity/metals play it is ten times as common as platinum and vastly more common than rare earths, etc... Not the best metals play by a long shot. |
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Pillar of the Community
United States
667 Posts |
Who cares is gold & silver is money or not? In fact what is money? Gold & silver does in fact have value among most people. Why are some cultures moving to increase their personal holdings? I am not talking about banks or governments. People keep trying to say it is not money but who cares? History has proved one things people certainly value it and that is what is important. Everybody still waiting for the bottom to come. I'm never sure why every one is in a hurry to say it is coming. Ok lets be fair enough people have predicted that Gold and Silver will fall in price soon. Well at least they have been saying this for 6 months or longer. I predict if they say it long and often enough they will get it right once.  And if it does life will go on most people I know will not incur a loss by selling it then, they are smarter than that. Though heavy speculators looking to make a fast buck may be in trouble especially if they used money they should not have or even worse borrowed to buy. |
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Pillar of the Community
Canada
1502 Posts |
Quote:
Gold is not real money - it is a speculative investment with a currency conversion rate determined by markets. Take a look at what happened to bit coins... another "rare" rate-controlled pseudo-currency: "money" is in and of itself only as "real" as what the guy you are paying is willing to take it for. The rarity, restricted/difficult production, and innate appeal of Gold are the reasons that made its value more or less stable across the ages. I don't know much about bitcoin but its ideas seems right. Too bad it is not as inherently appealing as gold, else it would've caught on a lot better. |
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Pillar of the Community
Canada
1502 Posts |
coached or not, the world through a 9 year-old's mouth sounds oddly clear. It's like the lawyers and doctors with their fancy Latin words for common ideas, we forget how simple things are (or should be) when big words cover them up.
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Pillar of the Community
United States
4989 Posts |
Why would you pay $1800 an ounce for something that, in 2010 inflation adjusted dollars, has averaged only $450 per ounce historically? http://inflationdata.com/inflation/...on_chart.htmIf you are willing to pay a 400% premium over inflation, as these data indicate, why not pay a 4000% or a 40000% premium? Why not pay $1,000,000 for a gram of Gold? Gold is stable if bought at fair value. It is NOT at fair value right now. |
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Pillar of the Community
United States
1450 Posts |
Fenton,I admit I am not a savvy investor and I don't claim to understand all the technical charts folks throw around but I find it interesting that so many people who are anti-gold(meaning this constant barrage about it being overpriced)are the same folks who talk about the markets pricing things correctly. If gold is not being manipulated,who has priced gold?the markets?if so,why is this not a fair value?
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Pillar of the Community
United States
2120 Posts |
The thing everyone misses about the "money" debate is: Money is only an object used in the barter and trade system. "Money" is an object, with an agreed upon value, that can be traded for goods and services. It just happens that "money" is such an item that is almost always accepted in trade, without refusal. If there is something you have that I want and something I have that you want, we can trade those things to each other. But you don't always have something I want. So you can give me something that I know I can trade someone else for what I want. This could be Fiat Money, Gold, Stamps (Civil war era), or Tulips (Google it). The real Fun begins when people stop accepting "money" (read, fiat money) and want something that has value to it. |
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Pillar of the Community
Canada
1502 Posts |
This is how I see it, in as 9-year-old terms as I can muster to keep in line with the thread, and please do correct me because I'm not investment savvy either:
Inflation = decrease in the value of money against some average of stuffs you can buy with that money.
Inflation more or less climbs steadily because we steadily print more money. But, that doesn't mean the value of individual items has to climb steadily. A Picasso painting will jump up in value when Picasso dies regardless of inflations trends.
To talk about premiums over inflation means little to me especially when it's about PM. An ounce of gold in 2000 (~$300) would land me a entry level bicycle, one ounce in 2010 (~$1000) would get me started on a dirt bike, and 1 oz gold coin today (~$2000) could buy me a 3rd hand car. Inflation or not, as long as the value of PM holds, it's not a bad investment.
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Pillar of the Community
United States
2120 Posts |
Quote:
Inflation = decrease in the value of money against some average of stuffs you can buy with that money. ^ Price inflation |
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Pillar of the Community
United States
4989 Posts |
That's the problem the value of Gold today, where 1 oz can buy a 3rd hand car, is way out of bounds relative to its normal trading range.
Gold is supposed to be a hedge against inflation that represents a store of value not some speculative investment that yields you 1000% appreciation above and beyond inflation. When that occurs, it is in a bubble similar to what we saw back in 1980 where it was trading at inflation-adjusted levels comparable to today.
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Pillar of the Community
United States
1450 Posts |
But it means that people value it more now than they did then. Why can't it rise in real value over other things? The market(people with money looking to buy things with that money)think it is more valuable than the dollar,the yen,the euro,etc. They apparently think it is a better investment than paper assets. I don't see where that is a problem. If stocks go up,that's just expected,if gold goes up,there is something amiss. Bottom line is this,I and others like me,CHOOSE to put our wealth into gold and silver. WE ARE THE MARKET and we are willing to pay the price for this commodity,therefore,it is a fair price.
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Pillar of the Community
United States
667 Posts |
Old thinking is still a problem. Look I can't tell you what gold will be tomorrow less a year from now.
What I can say if you think gold is overpriced then don't buy it.
But old thinking is not the way to look at gold in the CURRENT market place. I know Asians value gold far more than we do in the West. India and China are two places that their citizens are buying as much as they can afford.
I certainly wouldn't cash in everything and turn it to gold. Putting everything into one holding to me isn't smart. From the people complaining about gold my strong feeling is they missed the boat and are now crying.
There are some of us that have been in this game a lot longer and we made smart moves or at least had the opportunity to make them at the current market price.
I'm not sure how the new players will make out that are trying to flip and make some money. There has always been a chance that any PM would drop in value.
So is Gold over valued? I don't know and I certainly have not seen a written rule that states it is. I have long forgotten about ratios and charts, we are in a new and different setting. Understanding this new market is the key. I'm still trying to do that.
What I know is people value gold for the most part. You can't eat it and you can't build a house with it but people value it. People feel it is safe and I expect even with a large drop people will still feel safe with gold.
Yes we speculate with gold and that means we take a risk betting that it will be at a price when we need to sell to make a profit. There are those unwilling to take this risk but will warn people of the eventual drop and crash. Trust me some day it will be less than what we paid for it.
I like the interview with the 9 year old. Coached or not it starts to give him a understanding. I use to place 4 quarters on the floor explaining to my daughter this was her paycheck. Then I would take 50 cents to pay the Federal taxes. Next I would take 25 cents to pay state and local taxes leaving her with just 25 cents. She looked at me and asked why is that fair if she earned the full dollar.
Try it with your child and she if they think it is fair. Kids know a lot more than we give them credit for.
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Replies: 47 / Views: 3,922 |
Posted 08/30/2011 1:47 pm
