$400 gold?

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  • Fri, Mar 27, 2009 - 01:18pm

    #11
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    Re: $400 gold?

This is a timely link from today’s copy of the U.K. Telegraph  http://www.telegraph.co.uk/finance/personalfinance/investing/gold/

It’s in their finance section, everything about gold!

One thing nagging at the back of my brain: economic bubbles are nothing new in human history, but doesn’t it seem like our generation is rushing into & creating bubbles much much faster than prior generations?

Don’t know world history as well as I should (so those of you who do feel free to correct me) but my limited understanding is that there were major economic bubbles every 30 – 50 years or so. Now it’s like we run from one bubble and into another every 2-3 years–>Tech bubble–>Stock bubble–>Real Estate bubble–>Oil/Commodities Bubble . . . What’s next?

As to why the increase in rate of bubbles, I doubt that it’s due to any change in human behavior, but rather due to the massive rate of increase in communication & spread of information. A hundred years ago it might have taken weeks or months for people in one country to find out what was going on in another country, now it’s reported & spread worldwide in mere minutes, enabling us all to act / react en masse.

  • Wed, Apr 01, 2009 - 06:49pm

    #12
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    Re: $400 gold?

It’s important when dealing with issues of gold and gold values to try and disassociate it from conventional attitudes to investment. Clearly gold brings no dividend, interest or return. When markets function normally (or at least to normal levels of dysfunctionality) paper investments deliver better short term returns. What gold achieves uniquly is that it’s never worth nothing. Stocks, notes and dollar bills cannot guarantee this. If you salt away a proportion of your capital in ounces it will always have some value and that value will increase when other forms of capital are under threat.

Bluntly, there isn’t the physical quantity of goldon the planet at current per ounce rates to contain the trillions of dollars of paper "wealth" that will be looking for a safe home if a systemic meltdown takes place. It’s been estimated that at current values only 1% of equity wealth can be contained within the finite tons of gold that have ever been mined – and remain above ground (or in most cases a few feet under ground in vaults and basements). So the prospect of high gold $ values when the system shudders is market driven and almost inevitable. Talk of $3000 gold betrays a misunderstanding of  the difference between price and value. In hyperinflation gold may reach stupid $ prices, yet not be any more valuable – but it will buy what paper cannot and hence be invaluable. I read that at the time of king Nebuchadnezzar  – who was a biblical gold bug – an ounce bought 350 loaves of bread which is about how many loaves it can buy at today’s price. Dollars don’t do that. Some years an ounce of gold it is worth 300 loaves and some years 900 loaves, but it rarely swings "orders of magnitude" in the way that fiat money does in crises, nor does it drip away in value over the years like paper dollars do. So it’s best to just consider gold as the ultimate hedge against crisis and authoritarian chichanery, acquire it and pretend to forget you have it (but not where you put it…) Be glad you have it and equally glad if you don’t have to rely on it. What other insurance policy indemnifies AND has a redemption value in the case of no claim?

A further meme. The Fed is a private organisation which is backed by private financiers who achieved the amazing coup in 1913 of printing the nation’s money, and charging us interest on something of no intrinsic value. That’s a smart trick. The Fed now has the Treasury (ie you and me) in hock to the tune of extra trillions due to bail outs. We will pay taxes for ever to try and repay and it will never end. The population is unwittingly indentured to a private bank that has no real money – just the right to tax us. Over the years the dynasties behind the Fed  have earnt trillions. Faceless families who make Buffet look poor. This crisis was predictable. Therefore at some level it was avoidable and therefore it is intentional. Smart people like that don’t lose the plot. They don’t sit on a a tree branch whilst sawing it off. If the dollar becomes worthless and a new world order and currency results, don’t think that the trillions creamed off the top by the Fed since 1913 is sat in dollar bills or other notes. It will be in tangible finite assets and form the basis of what is to come. To quote from the original 1969 "Italian Job" film (the one without Mark Wahlberg…)  when Turin is brought to gridlock by the bullion thieves the Turin police chief observes "they created this traffic jam and they must have planned a way out of it." Think like the faceless families who own the Fed, and carve your own little life raft against the deluge that awaits.

  • Wed, Apr 01, 2009 - 08:51pm

    #13
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    Re: $400 gold?

Thanks for that, Notdoq.  As clear and succinct an analysis on this subject as I’ve seen to date.  

 

  • Wed, Apr 01, 2009 - 09:42pm

    #14
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    Re: $400 gold?

"In hyperinflation gold may reach stupid $ prices, yet not be any more valuable. . . ."

True.  This is why I feel like having debt is as important as having PMs.  (If you believe high inflation is coming.)

  • Fri, Apr 10, 2009 - 01:55pm

    #15
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    Re: $400 gold?

I just joined the forum. So it’s not a good idea to invest in Gold right now or am I mistaken?

  • Fri, Apr 10, 2009 - 02:35pm

    #16
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    Re: $400 gold?

You have to make that decision yourself.  An accountant once told me that if you lose even one night’s sleep over an investment that you shouldn’t be in it. Just invest in what you feel comfortable investing in, but remember, as Chris Martenson has said, gold will never go to down to zero.

I question at times where gold will go as well, but a strong indicator to be bullish on gold is that a lot of the big-time investors, i.e. Jim Rogers, Marc Faber, George Soros, etc. have all recommended purchasing gold.  Marc Faber recently said that if he was in jail and could not phone a broker, he would rather have gold than anything, including real estate because it would be worth something when he got out. 

What really stands out to me personally is that Bruce Norris  http://www.thenorrisgroup.com/ , a total real estate investor (he’s made a fortune in real estate) advised his students at a recent seminar to purchase some gold and silver. You might not be able to find it on-line, but I have a copy of the book from the seminar where he makes that point. 

The concern is the dollar losing its value, so one should own "tangible" assets, something real, as opposed to a stock, which is just a piece of paper or blip on a computer screen, or dollars which could quickly lose its value due to Bernanke’s bill printing habit (it’s like a heroin for him).  Also, lot of central banks are purchasing gold.  Lastly, the price of gold has not gone down as much as at least I have expected.  When the markets go, up gold usually goes down.  That has not happened that much in the last few weeks. 

Gold can go up and down very quickly, so you have to stick with your strategy if you choose to go with it.   

I’m no expert, but I think it’s prudent for everyone to look at the possible down-side to any investment they get into, especially in these volatile times when nothing is assured and there’s either too much information or outright misinformation out there. 

Good luck, take your time and feel comfortable in what you do. 

  • Fri, Apr 10, 2009 - 02:39pm

    #17
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    Re: $400 gold?

Just saw a number, it costs Barricks 400 just to extract an ounce from Mother Earth right now.  If they are a charity then gold should go to 400 Wink

  • Fri, Apr 10, 2009 - 03:30pm

    #18
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    Re: $400 gold?

great first post notdoq.

welcome

i think there is a psychology in investing in gold that needs exploration.

many have bought gold because of the possibility of a collapse of the fiat money system. many have bought it as a hedge against infaltion or hyperinflation. many have bought it because someone told them to.

i think many will hold on to gold for the same reason people have held on to their 401k’s and ira’s. what else are they going to do after they have bought in at 600,700,800, or 900 they will hate to take a loss and will stay with it till it comes back up.

they will do this unless they are forced to sell the gold to pay bills. i think this will support the price of gold over the long haul.

anyone got any other ideas?

 

  • Fri, Apr 10, 2009 - 03:42pm

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    Re: $400 gold?

[quote=plantguy90]Just saw a number, it costs Barricks 400 just to extract an ounce from Mother Earth right now.  If they are a charity then gold should go to 400 Wink[/quote]

 

I am going to assume that cost is just for extraction.  How much more does it cost to process it into an American Eagle?  This would seem to suggest a price support of at least $500 and ounce?  With the IEA report on the next oil shock that was posted here in the last two days I seriously doubt mining cost will go down in the future.  I really doubt we will ever see $300 – $400 gold again just based on that point alone.  Is this assumption correct? 

  • Thu, May 21, 2009 - 12:30pm

    #20
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    Re: $400 gold?

I’ve recently become aware that there are some folks who believe that gold is not a "free-floating" commodity which is immune to changes in fiat currency, but simply another tool used by the bankers to regulate and control the extent of inflation/deflation… and this process is handled in much the same way that a lot of business is handled in this country, i.e., behind the scenes. The deliberate impression conveyed by the media is that we are protected against outright theft and fraud by a government whose primary concern is the welfare of its citizens… but this is not the case, is it?

I believe, and have for many years, that gold is the safest possible investment… but it might be wise to stay abreast of all-too-possible  hanky panky in the "free" market. You can safely assume that any effective way to extract money from the less informed will (and is) being exploited.

Suggested reading: http://www.gata.org

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