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Old 01-07-2009, 04:30 PM
 
4,182 posts, read 5,917,769 times
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Gold will always have some value, even if civilization totally collapses. Young ladies want wedding rings, men want watches or other displays of wealth meant to allure mates.
If civilization collapses, then gold will have no value. Food, medicines, shelter, guns etc are the things that will have value and what you'd want to have. Gold will have value only if a market economy continues to exist, and people exchange goods and services with each other using gold as currency. But in a state of anarchy and civilizational collapse, why would I buy food from you using gold as payment when I can simply rob you?
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Old 01-07-2009, 04:34 PM
 
Location: NJ/NY
13,254 posts, read 11,059,590 times
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Quote:
Originally Posted by ndfmnlf View Post
The point I'm trying to make is if you have to sell your gold for paper money before you can make a purchase, then that kind of defeats the purpose of having gold as currency. Sure, gold might be a stable reserve (a questionable proposition given that the price of gold today at $850/0z is where it was in 1980), but assuming you are correct, how can you use gold efficiently to buy stuff if you still have to convert it to fiat currency to make a transaction?
Oh come on. Gold was $850 in 1980 for about 5 minutes, a blip, one of the fluctuations I was talking about. It was, not so coincidentally a time of great inflation and double digit interest rates. Look at the whole graph, baseline gold price is as steady as can be.

I have heard people use that line before. You know, trying to trick people into thinking gold hasn't risen since 1980. Why else would you phrase it as you did if not for an attempted deception? Due to my physical location and profession, I have a lot of contact with people in the financial sector. Some are friends. Some are family. They always argue against gold, but at this point in time, it's beating the hell out of the market over the past 5 years. I also believe it is in their self interest to argue against gold, so I take their advise with a grain of salt. When I told them in May that I was pulling out of the market, they told me I was crazy, and spent hours trying to talk me into staying in. I'm glad I didn't listen to them, so why should I listen to what they say about gold?
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Old 01-07-2009, 04:55 PM
 
4,182 posts, read 5,917,769 times
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Originally Posted by AnesthesiaMD View Post
Oh come on. Gold was $850 in 1980 for about 5 minutes, a blip, one of the fluctuations I was talking about. It was, not so coincidentally a time of great inflation and double digit interest rates. Look at the whole graph, baseline gold price is as steady as can be.

I have heard people use that line before. You know, trying to trick people into thinking gold hasn't risen since 1980. Why else would you phrase it as you did if not for an attempted deception? Due to my physical location and profession, I have a lot of contact with people in the financial sector. Some are friends. Some are family. They always argue against gold, but at this point in time, it's beating the hell out of the market over the past 5 years. I also believe it is in their self interest to argue against gold, so I take their advise with a grain of salt. When I told them in May that I was pulling out of the market, they told me I was crazy, and spent hours trying to talk me into staying in. I'm glad I didn't listen to them, so why should I listen to what they say about gold?
Are you accusing me of trying to trick people about the price of gold? No need to be so paranoid, since the price of gold is verifiable.

Adjusted for 3% annual inflation, gold should be at $1944/oz today. Instead, it is still where it was in 1980. That's 29 long years without any meaningful price appreciation. Gold fails as an inflation hedge. //www.city-data.com/forum/inves...inflation.html
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Old 01-07-2009, 05:10 PM
 
Location: NJ/NY
13,254 posts, read 11,059,590 times
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Originally Posted by ndfmnlf View Post
Are you accusing me of trying to trick people about the price of gold? No need to be so paranoid, since the price of gold is verifiable.

Adjusted for 3% annual inflation, gold should be at $1944/oz today. Instead, it is still where it was in 1980. That's 29 long years without any meaningful price appreciation. Gold fails as an inflation hedge. //www.city-data.com/forum/inves...inflation.html
Paranoid? When people dont have real facts to back them up, they attempt to discredit the person with whom they are arguing.

Any reasonable person can read the chart on this page and decide who is correct. Over and over again, you are trying to get people to believe that gold has stayed the same price over the past 27 years. Sure, gold was $850 in 1980, but anyone can see by looking at the graph that that was a short lived fluke due to wild economic swings while recovering from a time of turmoil. It went right back to baseline after the economy stabilized. Why would you use that as your baseline for the price of gold? What is your purpose? I'm sure after looking at the graph, others will be wondering the same thing.
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Old 01-07-2009, 05:21 PM
 
Location: NJ/NY
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By your rational, the dow has been flat since 1998.
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Old 01-07-2009, 05:26 PM
 
Location: Illinois
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Originally Posted by rlxin View Post
Ok, after watching/reading a bunch of Paul/Schiff, I have to admit I have a bit of gold fever. My knowledge of how the markets work is very limited, but what they are saying seems to make sense.

All this money they are printing will bring about inflation in the coming months, years. Inflation drives the price of precious metals, commodities, and other goods/services up. As far as I understand it, thats how it works, correct?

So, should I buy gold? If no, why?

If yes, what kind? stocks, bullion, other?

Iv also learned that about 80% of the gold mined is used for fine jewelery/watches. I have an uncle who has been in the jewelery business for 40 years and he said demand/sales have declined 30%-40% in 08, and he expects it to drop the same amount in the next 12-18 months. How will this effect the price of gold?
''.............the way things are going I would invest in T. It pays a dividend and I suspect when the dividend is figured in it s a better bet than gold........
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Old 01-07-2009, 05:37 PM
 
4,182 posts, read 5,917,769 times
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Originally Posted by AnesthesiaMD View Post
Paranoid? When people dont have real facts to back them up, they attempt to discredit the person with whom they are arguing.

Any reasonable person can read the chart on this page and decide who is correct. Over and over again, you are trying to get people to believe that gold has stayed the same price over the past 27 years. Sure, gold was $850 in 1980, but anyone can see by looking at the graph that that was a short lived fluke due to wild economic swings while recovering from a time of turmoil. It went right back to baseline after the economy stabilized. Why would you use that as your baseline for the price of gold? What is your purpose? I'm sure after looking at the graph, others will be wondering the same thing.

I know I know....I see the chart you are referring to. And what I see is gold failing to beat inflation. What you're calling as "gold going back to baseline" is actually gold crashing from its peak of $850 in 1980 down to the $200 range, and getting stuck there for the next 29 years until it rose again to close to $1000 last year, and then falling back to $850. Big deal. If gold were such a great inflation beater, it would be at $1944/oz, and that's based on 3% inflation. If inflation is actually higher than that (which many gold bugs believe to be the case), then gold's performance is even worse. At 4% inflation, gold should be at $2650. At 5% inflation, gold should be at $3498. At 6% inflation, gold should be at $4605. And at 7% inflation, gold should be at $6047/oz. I hope you get the drift.....

And speaking of discrediting others, I believe it was you who first accused me of "tricking people" when all I'm doing is pointing out the facts as revealed by the numbers. Numbers don't lie.
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Old 01-07-2009, 05:39 PM
 
Location: NJ/NY
13,254 posts, read 11,059,590 times
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Originally Posted by bluescityleon View Post
''.............the way things are going I would invest in T. It pays a dividend and I suspect when the dividend is figured in it s a better bet than gold........
I agree. I am mostly in T bills and cash myself right now.
I am 20% in gold because I think history may repeat itself when we finally do break this deflationary cycle. The fact that Volcker is chief econ. adviser reaffirms this belief. It's a bit of a gamble as this recession may last a long time, but I can afford to hold out for a while.
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Old 01-07-2009, 05:50 PM
 
Location: NJ/NY
13,254 posts, read 11,059,590 times
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Quote:
Originally Posted by ndfmnlf View Post
I know I know....I see the chart you are referring to. And what I see is gold failing to beat inflation. What you're calling as "gold going back to baseline" is actually gold crashing from its peak of $850 in 1980 down to the $200 range, and getting stuck there for the next 29 years until it rose again to close to $1000 last year, and then falling back to $850. Big deal. If gold were such a great inflation beater, it would be at $1944/oz, and that's based on 3% inflation. If inflation is actually higher than that (which many gold bugs believe to be the case), then gold's performance is even worse. At 4% inflation, gold should be at $2650. At 5% inflation, gold should be at $3498. At 6% inflation, gold should be at $4605. And at 7% inflation, gold should be at $6047/oz. I hope you get the drift.....
.
I guess, if you want to use some aberrant number, staring off at 4x the real value as your baseline, then you are right. Compare the price of gold to CPI, you will see that inflation was in check while we were on the gold standard. Since 1971 CPI has quintupled and the price of gold has increased 20X. If you take ALL the historical data, and go by historical averages, rather than single points in time that suit your argument, you may view gold differently.
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Old 01-07-2009, 05:53 PM
 
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Originally Posted by AnesthesiaMD View Post
By your rational, the dow has been flat since 1998.
Excuse me, but I don't go by the DOw. The SP 500 is a better proxy for the stock market. In 1980, the SP 500 was 140. Today, it closed at 906. That's an annualized return of 6.9%, handily beating inflation. The S&P 500 has appreciated 6.4 times since 1980, despite all the turmoil we had over the past year. The returns would even be better if instead of the SP 500, we use small cap stocks as the comparator. Meanwhile, gold is about where it was 29 years ago. Go figure.
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