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I used 25 an ounce because the chart's hard to read, but at any rate, prior to the middle 60s, gold was well under 100 dollars an ounce. If I have to explain the poverty and decay this nation's seen since the middle 60s, I'd say get out of the bubble your living in, and go explore America. Look around you. Go into the city. Drive by all the abandoned factories. Look at the suburbs full of foreclosures. Take a gander at all the social programs and year after year record numbers of people on the dole. Either you're choosing to ignore the obvious signs or you're not old enough to remember how prosperous this nation used to be for everybody. In the period I'm speaking of the bottom 20% of this nation saw the largest gains in economic freedom than during any point in American history before or since. In the past 30 years, the bottom 20% and most of middle America has seen the bottom fall out, and there doesn't seem to be any end in sight.
Oh, so because in the 1960's gold was low...and the country seemed more prosporous. Correlation doesn't mean causation. Shoe size is correlated to reading ability, doesn't mean that larger feet make you smarter.
I requested proof, all I got was claims to look around. Again, please provide evidence instead of just unfounded claims.
Oh, so because in the 1960's gold was low...and the country seemed more prosporous. Correlation doesn't mean causation. Shoe size is correlated to reading ability, doesn't mean that larger feet make you smarter.
I requested proof, all I got was claims to look around. Again, please provide evidence instead of just unfounded claims.
Well, in a technical sense, "the dollar" is worth nothing at all. It's a piece of paper. The only reason it's worth anything is that we believe it's of worth. Technically it should be worth no more than a piece of writing paper from a loose leaf. It's not backed by ANYTHING other than our wonderful government's fine word. Which of course, we all know is a priceless treasure measure from on high--beyond measure, of course.
But, after having said the above, I do place a value on it right now because it is what everyone expects for pay when you walk into a store or pay for something elsewhere. Very few places take silver or gold (there are a few). So even though gold and silver DO have intrinsic value, our nation’s sheep are brainwashed into thinking a slip of sub-penny paper is worth more (in fact, technically, a penny should be worth more). Well, what can I do about it? So be it. When that slip of paper becomes what it really is... worthless... I can say, "I told you so." But that won't really bring me much satisfaction because being on the Titanic and knowing it's going to sink really isn't all that much of a victory once the ship leaves port and I’m on it, now is it?
Fiat currencies work as long as people accept them. If a government were to print money responsibly there would be no problem with a fiat currency. But eventually the governement can't resist printing more for some purpose they deem compelling. Then the trouble begins.
If we were to use the monetary base, currency in circulation and bank reserves pegged to the price of gold there would be a completely different situation. It doesn't matter what the price of the currency is in gold as long as it's stable. As the price of gold moved up or down a currency board which today could be a computer would adjust MB, the base money supply, to keep the gold peg stable. Adjustments through the purchase and sale of government securities are very appropriate for this. Even if a country owns no gold there can be a gold peg which creates a very desirable currency.
But few politicians would accept this as there's no way to print more money to buy votes, start wars, or reward special interests.
Oh, so because in the 1960's gold was low...and the country seemed more prosporous. Correlation doesn't mean causation. Shoe size is correlated to reading ability, doesn't mean that larger feet make you smarter.
I requested proof, all I got was claims to look around. Again, please provide evidence instead of just unfounded claims.
Thank you for the witticism, I now understand that correlation doesn't mean causation. I must have missed that in the several college courses where it was pounded into my head. Let me guess, you're well under the age of 30, so you don't remember the prosperity of the 1950s - 1973. You must have learned your economics in the classroom. I'll further surmise that you'll come back with, "The 50s and 60s were great if you were a white man because that's what public education also teaches people that haven't experienced life or were too young to have been there.
Quote:
Originally Posted by EmeraldCityWanderer
I requested proof, all I got was claims to look around. Again, please provide evidence instead of just unfounded claims.
Proof! That's laughable. Yea, let me go out to the library, scan some books, and paraphrase them for you. What should I use? Internet sources? They're so unreliable. You want proof? I lived through the decades I'm speaking of have you? For the part of the post WWII economic boom I missed, I only had to look to my huge family, family friends, and the several counties I visited throughout a few different states. 1945 - 1973 was the most prosperous time for the entire country, and this was especially true for the bottom 20% of the economic bracket.
I lived it, have you? That's your proof. Moreover, this is city-data, a caviler forum for exchanging ideas not some regime of conscripted laborers. If my claims are unfounded, prove it!
Last edited by bolillo_loco; 05-08-2013 at 08:06 PM..
Reason: No Rhodes scholar here
I don't have a crystal ball that works any better than anyone else's.
But it seems to me that gold is usually a hedge against bad economic times. As the economy continues to recover, I'd expect gold prices to continue to drop.
With the Fed pumping so much money into the system, including all the money already doing so, deflation is not likely. Especially with rates so low and borrowing increasing.
I don't think you can wholly determine gold futures based on what the Fed does, gold is a globally traded commodity so the situation in the US is only maybe a quarter of the story, the direction of the world economy as an aggregate is what determines the price of gold and deflation might happen with the Eurozone (a bigger economy), and their may be deflationary pressures from housing bubbles in several countries that are ripples from the real estate boom in China.
People talk about the "drop" in gold prices. Those were paper gold prices. Physical gold hasn't gone down much, if at all. I was at a pawn shop last week and was able to find a 1/4 oz gold eagle, and a 1/10 oz gold maple leaf. Granted, fractionals have a higher premium, but even though this guy knows me well, I paid $385 for the 1/4 oz, and $190 for the 1/10 0z. Do the math, and tell me how low the physical price went! It didn't - and gold is getting hard to find.
What's happening is that the paper price and the physical price are separating. This is a good thing, not bad. It means that physical gold is doing its job as a store of value. The Federal Reserve is 100 years old this year (it's not federal, and has no reserves), and for 43 of those years, the paper it prints has had zero backing. It is too late to go back to Paul Volcker and the 1970s. The Federal Reserve Note is going the way of all paper - into the trash bin of history. Paper currencies last 35-40 years; ours has lasted a little longer because it's the world reserve currency. It won't be for much longer, and it won't buy much for very much longer, either.
Get into tangibles...ag land with no financing, stored food, precious metals, diamonds, fuels and energy. If you stash paper, you'll end up with...a stash of paper. The spot prices of (paper) silver and gold are becoming more meaningless every day. No matter how low they go, you still can't buy 'em for cheap (physical). That should tell you something, right there.
In 1933 Roosevelt devalued the dollar by 40%. To do this, he had to expropriate the people's gold, as we were on a gold standard then. The price was $22.40 per oz. As soon as he had the gold, they changed its price to $35 per oz, then there it remained until the end of the London Gold Pool in 1967 (the only purpose of this was to suppress the price to the $35 per oz). In 1971 Nixon cut all ties between the dollar and gold internationally, and we've been on pure paper fiat ever since.
Care to check what prices of things in dollars were back in 1933? You'd be shocked.
I can see the market owners fighting deflation tooth and nail so not too sure about deflation. Deflation is not the usual mantra. Hyper inflation seems possible, however, this is manipulated in ways that make it far less visible to many. I think it will be milked, but they will try not to do as much damage as the great depression. Of course, even if people were suffering on the streets, they would sweep them up and say move on.
Well, in a technical sense, "the dollar" is worth nothing at all. It's a piece of paper. The only reason it's worth anything is that we believe it's of worth. Technically it should be worth no more than a piece of writing paper from a loose leaf. It's not backed by ANYTHING other than our wonderful government's fine word. Which of course, we all know is a priceless treasure measure from on high--beyond measure, of course.
But, after having said the above, I do place a value on it right now because it is what everyone expects for pay when you walk into a store or pay for something elsewhere. Very few places take silver or gold (there are a few). So even though gold and silver DO have intrinsic value, our nation’s sheep are brainwashed into thinking a slip of sub-penny paper is worth more (in fact, technically, a penny should be worth more). Well, what can I do about it? So be it. When that slip of paper becomes what it really is... worthless... I can say, "I told you so." But that won't really bring me much satisfaction because being on the Titanic and knowing it's going to sink really isn't all that much of a victory once the ship leaves port and I’m on it, now is it?
Basically this is correct. Not even much paper any more. Just digits. However, though gold does have intrinsic value, the real value in any economic system is the people. Far too often I think this isn't discussed.
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