(08-31-2014 05:41 PM)berserk Wrote:  All I can say is that I wouldn't want to be dependent on a pension in Euro or USD 20-30 years down the line.

The same thing was said 20 years ago, 40 years ago, 60 years ago......

It's all doom and gloom.

S&P > Gold

(09-01-2014 10:20 AM)Cattle Rustler Wrote:  

(08-31-2014 05:41 PM)berserk Wrote:  All I can say is that I wouldn't want to be dependent on a pension in Euro or USD 20-30 years down the line.

The same thing was said 20 years ago, 40 years ago, 60 years ago......

It's all doom and gloom.

S&P > Gold

And they were right, since the bank crash, you now have about 25% less purchasing power with Euro in most Asian countries. That is 25% less consumption if you're on a pension.

(09-01-2014 02:30 PM)berserk Wrote:  

(09-01-2014 10:20 AM)Cattle Rustler Wrote:  

(08-31-2014 05:41 PM)berserk Wrote:  All I can say is that I wouldn't want to be dependent on a pension in Euro or USD 20-30 years down the line.

The same thing was said 20 years ago, 40 years ago, 60 years ago......

It's all doom and gloom.

S&P > Gold

And they were right, since the bank crash, you now have about 25% less purchasing power with Euro in most Asian countries. That is 25% less consumption if you're on a pension.

Why rely on a pension? That's the person's first mistake. I'll say they deserve to be swindled out of that 25% for being so naive.

The DAX is doing pretty good, here's SPY:

(08-30-2014 03:11 PM)babelfish669 Wrote:  One very important property of gold today is liquidity. If I hold a pound of gold in my hand today, I truly posses it and can use it to purchase stuff given some sort of secure environment.

If I have, say, $20,000 in my bank account, first the bank may really only have $1,000 thanks to fractional reserve lending (lending out more than exists.) Second, at any time the bank can freeze withdrawals and I have access to $0.

There are other items you can use as currency, but for gold, anyone anywhere will generally accept it as a form of payment. Want to buy something from me with Venezuelan bolivars? No thanks.

Really? in a western country VERY few people will accept it--currency is the only legal payment.

Someone with a lot of gold would be a moron not to secure it--so of course he will pay money to store his gold.

Oh yeah when you sell it you pay a commission(maybe 2?).

Gold main purpose today is to store value over generations but is it an investment? NO WAY. And if one buys today and sells in a month they can even lose money since rates fluctuate.

Investing in simple index mutual funds would be more profitable and too be honest I read someplace that even getting CD rate interest rates can accumulate more value over the last 100 years.

*Me and my bro sold over 130k gold like a year ago. We lost a bit. The rate you see advertised per ounce isn't the rate you actually get.

And yeah gov't s can NOT only confiscate(not guranteed anywhere) but they can flood the market worth gold to discourage people buying it--they did that in the 70's. TBH I think that is more likely what they would do again.
The gov'ts of the world(the modern world) have sworn that they will never have a backed currency EVER again--so they will together flood the market. What the 3rd world or banana republics do is another thing.

Quote:The same thing was said 20 years ago, 40 years ago, 60 years ago......

It's all doom and gloom.

S&P > Gold

Yep...its a big business. All those books out there that say BUY GOLD NOW is a cash cow in multiple ways.

1st they profit on sales and if you research the writers you will often see that they are in the Gold business or were large buyers of it, so if they encourage people to buy it there own value stock of gold goes up. They win..but do the readers?

Be more productive if you suspect the Zombie world to buy weapons, food and other safety stuff. In the DOOM scenario people will want that NOT shiny gold lol.

Interesting thread, love all the opinions, facts and articles. Thanks to all, lots of economists on here

(08-29-2014 04:42 PM)scorpion Wrote:  The short answer is that gold has been treated as money for millennia by nearly every culture than came in contact with it.

This to me is the most amazing aspect of Gold. The fact that remote civilizations who had not been in contact with each came to the conclusion that Gold is valuable.
I understand Europe/Asia and even sub Saharan Africa value of gold Ideas were able to spread over land and time.
What I dont understand is the Indigenous Australians and Americans Value of gold well before Europeans/Asian reached there. The fact that Taino Indians in the Caribbean had a gold culture Pre Columbus is simple amazing to me.

I find it nuts just to chalk this up to multiple discovery theory like agriculture that I can some how understand but Gold getting value in all these civilizations with out them coming in contact with each other.

am i missing something, anyone have any ideas or any recommend readings/ links ?

It has no value. Money has no value, precious metals don't have value, and neither do raw materials.

We give it value. That's the only thing driving it. When people decide it isn't as valuable the price drops.

(09-03-2014 12:15 AM)Intl_Rasta Wrote:  

(08-29-2014 04:42 PM)scorpion Wrote:  The short answer is that gold has been treated as money for millennia by nearly every culture than came in contact with it.

This to me is the most amazing aspect of Gold. The fact that remote civilizations who had not been in contact with each came to the conclusion that Gold is valuable.
I understand Europe/Asia and even sub Saharan Africa value of gold Ideas were able to spread over land and time.
What I dont understand is the Indigenous Australians and Americans Value of gold well before Europeans/Asian reached there. The fact that Taino Indians in the Caribbean had a gold culture Pre Columbus is simple amazing to me.

I find it nuts just to chalk this up to multiple discovery theory like agriculture that I can some how understand but Gold getting value in all these civilizations with out them coming in contact with each other.

am i missing something, anyone have any ideas or any recommend readings/ links ?

This though is what I find fascinating.

It's not rocket science why gold has universally been treated as money. I literally explained it in the next few sentences of the post you guys are quoting.

scorpion Wrote:The longer answer is that gold meets all the criteria for money better than anything else. It's rare, it's durable, it's divisible, it's portable, it's difficult to counterfeit, it has commodity value as jewelry and it can't be inflated with a computer or a printing press. So it's very easy to see why gold was the preferred form of money until relatively recently.

Compare gold to other primitive forms of money like beads, seashells, cattle, land or base metals. All of these have serious drawbacks, for example beads can be counterfeited, seashells are very fragile, cattle require significant time and resource investment to maintain, land can't be transported, and base metals rust and must be carried around in large, heavy quantities (think of the poundage value of iron vs. gold).

Gold has none of those problems, which is why every culture that encountered it came to prefer it as money over other options.

Your not trolling.

All great Latin American civilizations Aztec, Maya, Inca, And Olmec viewed gold as valuable. They used it to decorate there temples, Jewelry, Statutes. The Inca even demand it as and tribute/payment/Tax for there protection.


I think the first pyramid in Egypt was also build without the use of the wheel.

What they did was use try logs to roll the big boulders.

It's a natural occurring element
Doesn't break down in the presence of other elements
Doesn't Tarnish
Excellent electric conductivity
Very scarce
People who did not have metal skills in the past could use gold vs iron, coal, etc.

The question that leaves many people perplexed - why is gold so valuable now, compared to 10-15 years ago?

It's a combination of the increased demand for gold and gold's relatively inelastic supply curve. Anything that has to be dug out of the ground with big machines and then processed in a major industrial operation has a similar supply curve.

Demand went up because people have traditionally viewed gold as an inflation hedge and the Bush/Obama deficits put the fear of inflation in people.

Supply is inelastic because it is very difficult and expensive to increase the supply of something that requires such an intensive process to obtain. You have to build new mines and/or processing facilities. The investors who finance those mines also have to worry about the price of gold declining. Think about it, those mines were not already built because the cost of getting an ounce of gold from one of them did not exceed the previously prevailing market price. If the market price goes back down to its previous level, then those investors will have invested in what is essentially a huge, industrial, money losing machine.



The red curve in the above graph illustrates what inelastic supply looks like. Small increases in demand are accompanied by dramatic increases in price because the supply curve is dramatically upward sloping when you get close to 100% capacity.

(08-29-2014 03:47 PM)nek Wrote:  Reading the RoK article on bitcoin today, and some of the dissenting opinions in the comments section favored gold instead of bitcoin. I'm loosely familiar with the gold standard but I don't quite get why gold is so inherently valuabe. Can anyone explain in layman's terms?

Gold is a physical material with actual value and has been used to back the paper currency in the US Treasury (same with silver).

When it comes down to it, Bitcoin is really just an idea and is a nebulous form of currency. Its rate can actually fluctuate significantly and has in the past when Bitcoin exchanges were hacked.

If it was between a physical material with proven value for centuries and an online currency I'm accepting the metal element for payment.

I am not sure if this is what OP is asking about, but here is an interesting article

http://www.npr.org/blogs/money/2011/02/1...insteinium

Quote:The periodic table lists 118 different chemical elements. And yet, for thousands of years, humans have really, really liked one of them in particular: gold. Gold has been used as money for millennia, and its price has been going through the roof.

Why gold? Why not osmium, lithium, or ruthenium?

We went to an expert to find out: Sanat Kumar, a chemical engineer at Columbia University. We asked him to take the periodic table, and start eliminating anything that wouldn't work as money.

The periodic table looks kind of like a bingo card. Each square has a different element in it — one for carbon, another for gold, and so on.

Sanat starts with the far-right column of the table. The elements there have a really appealing characteristic: They're not going to change. They're chemically stable.

But there's also a big drawback: They're gases. You could put all your gaseous money in a jar, but if you opened the jar, you'd be broke. So Sanat crosses out the right-hand column.

Then he swings over to the far left-hand column, and points to one of the elements there: Lithium

"If you expose lithium to air, it will cause a huge fire that can burn through concrete walls," he says.

Money that spontaneously bursts into flames is clearly a bad idea. In fact, you don't want your money undergoing any kind of spontaneous chemical reactions. And it turns out that a lot of the elements in the periodic table are pretty reactive.

Not all of them burst into flames. But sometimes they corrode, start to fall apart.

So Sanat crosses out another 38 elements, because they're too reactive.

Then we ask him about those two weird rows at the bottom of the table. They're always broken out separately from the main table, and they have some great names — promethium, einsteinium.

But it turns out they're radioactive — put some einsteinium in your pocket, and a year later, you'll be dead.

So we're down from 118 elements to 30, and we've come up with a list of three key requirements:

Not a gas.
Doesn't corrode or burst into flames
Doesn't kill you.
Now Sanat adds a new requirement: You want the thing you pick to be rare. This lets him cross off a lot of the boxes near the top of the table, because the elements clustered there tend to be more abundant.

At the same time, you don't want to pick an element that's too rare. So osmium — which apparently comes to earth via meteorites — gets the axe.

That leaves us with just five elements: rhodium, palladium, silver, platinum and gold. And all of them, as it happens, are considered precious metals.

But even here we can cross things out. Silver has been widely used as money, of course. But its reactive — it tarnishes. So Sanat says it's not the best choice.

Early civilizations couldn't have used rhodium or palladium, because they weren't discovered until the early 1800s.

That leaves platinum and gold, both of which can be found in rivers and streams.

But if you were in the ancient world and wanted to make platinum coins, you would have needed some sort of magic furnace from the future. The melting point for platinum is over 3,000 degrees Fahrenheit.

Gold happens to melt at a much lower temperature, which made it much easier for pre-industrial people to work with.

So we ask Sanat: If we could run the clock back and start history again, could things go a different way, or would gold emerge again as the element of choice?

"For the earth, with every parameter we have, gold is the sweet spot," he says. "It would come out no other way."

Today of course, we don't use gold as money; we use paper. It doesn't kill you, but it can be found in abundance and has an annoying tendency to burn when it comes into contact with a flame.

In a future story, we'll explain how we came to use paper money instead of gold.

(09-02-2014 01:55 PM)jimukr104 Wrote:  And yeah gov't s can NOT only confiscate(not guranteed anywhere) but they can flood the market worth gold to discourage people buying it--they did that in the 70's. TBH I think that is more likely what they would do again.
The gov'ts of the world(the modern world) have sworn that they will never have a backed currency EVER again--so they will together flood the market. What the 3rd world or banana republics do is another thing.

I don't think governments, and in particular, the U.S.G., are going to be able to confiscate precious metals this time around. People are not as naive as they were in the 1930s, and they don't trust the government one iota. The government would have a fight on its hands if it tried because there is a high correlation between PM stackers and ammo stackers. Besides that though, the government might have real difficulty even finding their PM to pry from their cold, dead hands. A lot of it would be buried who knows where or at the bottom of a lake.

As for flooding the market, again, I don't think that's going to happen. Most Western governments don't actually have the gold they say they do. Why do you think Germany couldn't get its gold back from the U.S.? Besides which, if they did try to flood the market, there is so much demand that it would be soaked up incredibly quickly, both from small players (most of whom will stack whatever they can at any price -- if you're convinced that gold is going to go to $20,000/ounce or the fiat apocalypse is coming, what's $3,000/ounce?) and from other governments, which brings me to my next point.

There is insatiable demand for gold in Asia, not only from small players, but from governments. Pretty much any significant non-Western government is stacking gold also. Where do you think Germany's, the U.S.'s, etc. gold is? It's in China, Russia, etc., and those countries are vastly under-reporting how much gold they have because they don't want to spook the U.S. out too much just yet, though the U.S. is kind of onto them and their plans to destroy the USD reserve currency status, which is probably a large part of their play in places like the Ukraine. Of course, China has its own issues, but essentially, it both wants to break the USD for geopolitical purposes, and so needs gold to do so, and also because it understands now what a terrible deal US Treasuries are and needs to put money into something else.

Of course, China and other countries all play the fiat game too, but at least initially, they will need something backing their bid to break the USD, and that's gold. Once they break the USD, then they might start playing the same silly games, but not necessarily.

Anyway, a much better play than gold right now is silver. The supply/demand equation there is crazy, especially with the industrial demand. I personally think stocks are still the best long term play if one can ride the bumpy market out and buy value, but I'm increasingly willing to sacrifice some long term returns there to get some precious metals in my portfolio. I'd like to bring precious metals, particularly silver, up to approximately 5% of my portfolio. There's one guy on Youtube who has $330,000+ in gold and silver. He's either extremely rich, or that's a pretty ballsy/mad all in move that I don't think I'd want to make. I could handle 5% of my portfolio going sideways for ten, twenty years and I wouldn't shed any tears over it, but it might be nice to have some real wealth actually in my hands.

(09-02-2014 01:55 PM)jimukr104 Wrote:  

(08-30-2014 03:11 PM)babelfish669 Wrote:  One very important property of gold today is liquidity. If I hold a pound of gold in my hand today, I truly posses it and can use it to purchase stuff given some sort of secure environment.

If I have, say, $20,000 in my bank account, first the bank may really only have $1,000 thanks to fractional reserve lending (lending out more than exists.) Second, at any time the bank can freeze withdrawals and I have access to $0.

There are other items you can use as currency, but for gold, anyone anywhere will generally accept it as a form of payment. Want to buy something from me with Venezuelan bolivars? No thanks.

Really? in a western country VERY few people will accept it--currency is the only legal payment.

Someone with a lot of gold would be a moron not to secure it--so of course he will pay money to store his gold.

Oh yeah when you sell it you pay a commission(maybe 2?).

Gold main purpose today is to store value over generations but is it an investment? NO WAY. And if one buys today and sells in a month they can even lose money since rates fluctuate.

Investing in simple index mutual funds would be more profitable and too be honest I read someplace that even getting CD rate interest rates can accumulate more value over the last 100 years.

*Me and my bro sold over 130k gold like a year ago. We lost a bit. The rate you see advertised per ounce isn't the rate you actually get.

And yeah gov't s can NOT only confiscate(not guranteed anywhere) but they can flood the market worth gold to discourage people buying it--they did that in the 70's. TBH I think that is more likely what they would do again.
The gov'ts of the world(the modern world) have sworn that they will never have a backed currency EVER again--so they will together flood the market. What the 3rd world or banana republics do is another thing.

Quote:The same thing was said 20 years ago, 40 years ago, 60 years ago......

It's all doom and gloom.

S&P > Gold

Yep...its a big business. All those books out there that say BUY GOLD NOW is a cash cow in multiple ways.

1st they profit on sales and if you research the writers you will often see that they are in the Gold business or were large buyers of it, so if they encourage people to buy it there own value stock of gold goes up. They win..but do the readers?

Be more productive if you suspect the Zombie world to buy weapons, food and other safety stuff. In the DOOM scenario people will want that NOT shiny gold lol.

Gold isn't something that is bought in order to make a profit on, at least it shouldn't be. Gold is a good security because its value has risen in relation to a currency's rate of inflation. If you sell gold for less money that you bought it for the loss is made up with the overall increased purchasing power of your dollar.

Gold and silver are a very good way of securing your assets from erosion via inflation and economic troubles.

It will depend on the merchant as to whether or not you can pay them in precious metals.

On another note, your thoughts stockpiling food and ammo is also a good idea. Canned food and bullets will probably be used as currency or barter items in the event of societal unrest.

(09-02-2014 05:13 PM)bojangles Wrote:  Interesting thread, love all the opinions, facts and articles. Thanks to all, lots of economists on here

I'm an economist, but biting my tongue...

(09-29-2014 03:34 AM)anonymous123 Wrote:  

(09-02-2014 05:13 PM)bojangles Wrote:  Interesting thread, love all the opinions, facts and articles. Thanks to all, lots of economists on here

I'm an economist, but biting my tongue...

"Even fools are thought wise if they keep silent, and discerning if they hold their tongues." Proverbs 17:28

(09-02-2014 01:55 PM)jimukr104 Wrote:  Gold main purpose today is to store value over generations but is it an investment? NO WAY. And if one buys today and sells in a month they can even lose money since rates fluctuate.

I never advocated it as an investment. If there is a dollar devaluation, people holding cash & debt will largely be wiped out. Because of the government's ability to confiscate anything (including cash, they can and do this regularly right now) you basically need to already be wealthy and caucasian for gold hoarding to be viable.

The value of gold is that it allows transactions.

Gold does not rust, disintegrate, or get damaged, it is difficult to convincingly counterfeit but easy to recast into different shapes and sizes, and it is recognizable.

People want it because these properties make for good currency.

Gold doesnt react with other elements, to make it is considered impossible only the particle accelerator could create gold but it would take 50m years to create 1gram. So its scarce but not too scarce, durable, has various uses in the world, and backs up the value of currency.

This is a mediocre response but its best I could come up with lol.