gold vs the economic crisis

Discussion in 'Apple' started by metalman, Sep 27, 2008.

  1. metalman

    metalman Guest

    Gold Vs Oncoming Economic Crisis
    Unless you live in a cave Im sure you have noticed the economic bad
    news daily hapenning in the world, especially in the United States.
    This blog is dedicated to the free and open exchange of information
    relating to purchasing and investing in gold and other precious metals
    as a viable option for avoiding the dollars collapse.
    http://goldvseconomiccrisis.blogspot.com/
     
    metalman, Sep 27, 2008
    #1
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  2. metalman

    Tim McNamara Guest

    Bullshit. Gold is only worth what you can sell it for, so it is no more
    secure from economic trends than anything else. Do people actually fall
    for this scam?
     
    Tim McNamara, Sep 27, 2008
    #2
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  3. metalman

    John Varela Guest

    Gold has been a secure store of value for several thousand years. Do
    you really think that something fundamental changed in the last forty
    years?
     
    John Varela, Sep 29, 2008
    #3
  4. metalman

    Tim McNamara Guest

    Yes. Gold is not a current medium of exchange and has no value except
    as represented in currency (or as art, of course; but the intrinsic
    value of art is not tangible). As a "secure" store of value, it is
    illusory. But there is a vast confusion between money and wealth
    nowadays and gold is merely a form of money. If the economy *really*
    goes south, gold with be a useless as paper money.
     
    Tim McNamara, Sep 29, 2008
    #4
  5. metalman

    John Varela Guest

    One could as easily say that the value of paper money varied that much.
     
    John Varela, Sep 29, 2008
    #5
  6. metalman

    John Varela Guest

    You sound like the guys during the electronics stock market bubble of
    the 90s who said it was different this time.

    If paper money goes south, people will not accept it but will accept
    items of intrinsic value. Gems and precious metals will be among the
    acceptable items of intrinsic value. If you're going to diversify your
    assets, precious metals are a key protection against inflation.
     
    John Varela, Sep 29, 2008
    #6
  7. The market (commodity) value of gold is far above its intrinsic (use)
    value. The value of gold or currency is that we trust that other people
    will value it for the same reason. The value of something like aluminum
    is that we (or others) will value it for how they can use it.

    So in this respect, gold is like currency.

    But there is an important difference between gold and currency. It is
    hard to increase the supply of gold, it is easy to increase the supply of
    currency. In this way, gold is more like aluminum. When a government
    borrows or prints more money (or is expected to do so) that, on the whole,
    weakens the currency.

    Now the relationship between the current dept crisis and the value of the
    US dollar is mixed. And if I really had the answers I would be making a
    fortune in forex. Generally easy borrowing leads to a weakening of the
    currency, so a credit crunch (other things being equal, which they are
    not) should lead to a strengthening of the dollar. But a huge government
    bailout means a expectation of huge government debt so should weaken the
    dollar. So (although masked by the general downward fall of the dollar)
    we should see the dollar move in opposite directions from Wall Street
    during these weeks. Of course one way out of this choice between frozen
    commercial debt markets (making business hard and expensive to conduct, so
    a decline in company values) one the one hand, and a precipitous
    devaluation of the USD (bringing in big inflation which also makes
    business difficult to conduct) would be for the bailout to actually be
    paid for (by taxes).

    If investors believed that the bailout wouldn't just be financed through
    government debt (or printing money) the dollar would survive the bailout.
    But obviously nobody would believe that.

    On the whole, I feel that avoiding having the commercial debt market
    freeze up is the higher priority. But it's an ugly, ugly situation with
    no good way out.

    If people are rational, then gold wouldn't be a good thing to stick your
    money in. But people aren't rational, so gold may be a good bet for a
    while. I'd stay away from anything dollar denominated. I'd call my
    broker, but my brokerage firm just went under today.

    Whoohay!

    -j
     
    Jeffrey Goldberg, Sep 30, 2008
    #7
  8. metalman

    Tim McNamara Guest

    No, this is the way things have always been. Wealth and money have been
    confused for each other by the gullible for ages. There's also a
    misapprehension about how much wealth one actually needs, leading to the
    excesses that landed the US in the mess it's in.
    Good luck eating diamonds and wearing gold. You didn't read the legend
    of King Midas as a child, I take it.
     
    Tim McNamara, Sep 30, 2008
    #8
  9. metalman

    JCrowe Guest

    Gold is a commodity, and one that has often been used as a medium of
    exchange called money. What advocates of holding gold have observed over
    time is that gold acts as a very good store of value because it meets
    certain criteria that have made it useful as money for thousands of
    years. First, it is relatively rare, second, gold is portable and
    divisible, third, it cannot be easily counterfeited and thus cannot
    be manipulated by politics, fourth, it is durable (does not rust,
    corrode, evaporate etc.) and so on. One ounce of gold will buy about
    what one ounce of gold would buy back in 1913 when so many negative
    economic/political decisions were made in the U.S.

    Paper money has a horrible record of holding value, unless really
    backed up by something more tangible. In the U.S. the paper dollar has
    devalued something like 66% since 1980.
    Will be by present indicators.
    Look at the U.S. after the revolution and after the WBtS. Look at
    post WWII Hungary, Yugoslavia in the 80s, Mexico in the late 80s/
    early 90s, Asia in 1997 and certain African countries right now....
    and possibly coming soon to the U.S. When central banks peg the
    value of currencies to the promises of governments, those currencies
    always fail eventually. As an aside, wars are horribly wasteful of
    real resources and when a country is constantly embroiled in wars,
    it will, historically, dramatically suffer from currency devaluation.
    It's instructive, I think, to observe the transition of Rome from a
    representative republic to an empire. Apply that to the U.S. in current
    times and the outlook is not so rosy.

    The prudent individual would at least consider the addition of gold
    to his or her asset protection plans. Now to drag this to relevance to
    a Mac newsgroup, would anybody care to map gold price to Mac price since
    1984????

    P.S. - there's always a chance that the federal government in the U.S.
    will once again make the private ownership of gold illegal, but
    it seems to me that the ferals have bigger fish to fry right now.
     
    JCrowe, Sep 30, 2008
    #9
  10. In that time, the Hungarian currency was printed using scientific notation
    because there wasn't room for all of the zeros. One of the things that
    actually made the communists popular was that they did introduce a new,
    stable currency.
    A couple of amusing links regarding a certain African country.

    http://www.macupdate.com/info.php/id/19249

    and

    http://newsbiscuit.com/article/governor-of-bank-of-zimbabwe-forced-to-explain-inflation-of-1-000-003

    A Tiny URL for the latter is.

    http://tinyurl.com/4xaep4


    Cheers,

    -j
     
    Jeffrey Goldberg, Sep 30, 2008
    #10
  11. metalman

    JCrowe Guest

    An interesting proposition, but if it comes down to that, the
    people who stockpile food and water are likely to be smart enough
    to have you outgunned as well. Besides, at that level of breakdown,
    roving, armed individuals will likely have fallen prey to the
    trained military mopup operations.....e.g. let's just drop a
    bunker buster on 'em and let god sort it out....
     
    JCrowe, Sep 30, 2008
    #11
  12. metalman

    John Varela Guest

    Talk about your non sequitur...and you didn't understand a word I said.
    A silver dime right now is worth almost a dollar. $1,000 face value of
    silver dimes would buy enough food to last a couple of months for two
    people.

    I hope you own a wheelbarrow to carry your paper money in when and if.
    Which by the way I'm not making a prediction, I'm merely pointing out
    that the events of one's lifetime do not negate all of history.
    History tell us that gems and precious metals will always be accepted
    in exchange for items of value, the last forty years notwithstanding.

    If you want to protect yourself from inflation and don't trust gems and
    precious metals, then buy antiques and fine art. The ability to do the
    latter is one reason the rich aren't as troubled by inflation as the
    poor. Land is also good, but not generally accepted in payment at the
    grocery store.
     
    John Varela, Oct 1, 2008
    #12
  13. metalman

    John Varela Guest

    Oops! Bad arithmetic. According to

    http://www.coinnews.net/tools/automated-silver-coin-valuator/

    $1,000 face value of silver dimes is worth $9,375.26 (Tuesday's spot
    price), which will buy a lot more than two months' food. If the dollar
    were to fall to one tenth its present value, you could expect that
    those same dimes would be worth 90-something thousand dollars.
     
    John Varela, Oct 1, 2008
    #13
  14. The question isn't how many dollars that much silver will buy you, the
    question is how much food that silver will buy you. It will only buy you
    food if the seller of the food either

    (1) Has a desire to use the silver directly (making pretty spoons?, or
    photographic emulsion?)
    (2) Believes that other people will trade usable things for the silver.

    Considering that (1) is not the driving force for the price of silver,
    then it is from (2) that silver gets its value. In this respect silver is
    no different than currency. The only difference between silver and
    currency is that nobody can easily increase the overall supply, and
    silver is harder to counterfeit.

    The value of silver, like currency, depends upon people's confidence that
    others have confidence in it. I think that in a complete and utter
    economic break down gold and silver won't buy nearly as much fuel, food
    and ammo as it does today.

    -j
     
    Jeffrey Goldberg, Oct 2, 2008
    #14
  15. metalman

    JCrowe Guest

    Hopefully you have done some in silver as well. I understand they
    work on vampires, politicians, lawyers and other bloodsuckers.
     
    JCrowe, Oct 2, 2008
    #15
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