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the values of the worlds currencies are effected by golds value.
No they aren't, no major nation has a currency that is linked to gold as a result the price of gold has no barring on the value of their currency.
Quote:
Originally Posted by mathjak107
gold is a currency like an other in the world and is a competitor to the us dollar.
Except of course that no major nation uses it for trade...accounts aren't settled in it, etc. Its not a competing currency because its no longer a currency. Now, could it become a currency again? Perhaps, but so can spices, sea shells, stone wheels and all the other things people have used as currencies throughout time.
Quote:
Originally Posted by mathjak107
why do you think almost 2 trillion in gold is held by central banks around the world?
As I said previously, its there for historic reasons and they can get rid of it whenever they wish.
Quote:
Originally Posted by mathjak107
golds price effects the valuation of currencies around the world even though a gold standard doesnt exist anymore.
Oh yeah? What exactly is the price of gold though? You mean the price of gold in US dollars?
Its sorta sad that people are vesting their retirement in these erroneous ideas about gold.... And to say it once again, how gold functions in the global economy is not a matter of opinion....
Central banks added about 500 tons of gold to their reserves in 2011. They were also net buyers in 2010. S. Korea alone converted/exchanged $1 billion into gold.
Quote:
Originally Posted by user_id
2.) It plays no role as an international currency
3.) Its not used as a currency by any developed nation
It is held as a store of value in every developed and undeveloped country. The is the definition of money.
Even 100 years ago, gold was not used very much to buy things. It was stored and people used paper money which is easier to carry around.
Quote:
Originally Posted by user_id
It pays no dividends
That is because everyone knows that if you have $1,000 worth of gold, 100 years from now, it will still have value substantially the same as it has now.
You can't say the same for $1,000 worth of any world currency. You have to earn interest on any other form of money. Gold does not have to earn interest.
Quote:
Originally Posted by user_id
4.) Demand for gold is primarily from investments, second is jewelry and only a small fraction is used by industry.
That is irrelevant. -- Gold's only value is the value that people attach to it. It has no intrinsic value.
The same can be said for all other forms of money so the point is moot.
The same can be said for great jewels, art, etc. - again the point is moot.
The difference is that the supply of gold cannot be manipulated over the long run while the supply of dollars,
euro, yen can be increased at will - making all already existing specimins of those currencies worth less.
Gold is like housing. Over the course of a lifetime, it does not increase or decrease in value in real terms.
In the shorter term, it can outperform or underperform stocks, bonds, property, etc. To say gold is junk is to say a house is junk.
Quote:
Originally Posted by shmoov_groovzsd
mathjak 1, user_id 0
How are you scoring that? Shouldn't each post count as a point?
while priced in dollars golds price effects every currencies strength and value in relation to how it trades against each other. .
Gold is not officially priced in dollars, instead you are just looking at its price in dollars.
You can repeat this as much as you like, but its simply not true. Gold has no effect on how currencies trade against each other, that is determined by the relative demand/supply of the respective currencies or in some cases its fixed by the respective government(s).
Central banks added about 500 tons of gold to their reserves in 2011. They were also net buyers in 2010. S. Korea alone converted/exchanged $1 billion into gold.
And yet gold plays no role in modern central banking. Central banks could get rid of all their gold and nothing would change.
Quote:
Originally Posted by mortimer
That is irrelevant. -- Gold's only value is the value that people attach to it. It has no intrinsic value.
This is funny, you think that gold has no intrinsic value yet you think its going to always maintain its currently value. Why? Why are people going to think of gold in the same way over the next 100 years?
But, no, investment demand is not irrelevant. The price of gold, like anything else, is determined by supply/demand. If investment demand for gold dries up the price of gold will collapse.
Gold has seen huge fluctuations in value over the last few decades, yet you think its a store of value instead of a speculative asset?!
Quote:
Originally Posted by mortimer
Gold is like housing. Over the course of a lifetime, it does not increase or decrease in value in real terms.
Gold is nothing like real estate. Real estate cash-flows, that is holding it provides annual value to the owner. Gold provides nothing. Real estate has intrinsic value, gold has none.
when we say priced we mean its denominated in us dollars. but it is inversely linked to the dollar.
Sure, but the problem here, as I pointed out earlier, is that gold isn't denominated in US dollars.
Plus, a commodity being denominated in some currency doesn't mean that much in the first place. For example, oil is denominated in dollars yet it trades in other currencies all the time.
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