Gold is a Bubble

Party hard kids.

TCB wrote:

Show me a shred of evidence of this happening in the last three decades. People can just as easily add copper to gold to inflate their supplies and have been doing that for thousands of years. There is oversight and strict laws to prevent people from stealing, if we get rid of that then there will be nothing to stop runaway inflation. The Fed has a mandate to control the money supply and has done a great job at it and this country has been rewarded with great growth over the past two decades compared with Europe and Japan.

New Jersey.

Wall Street.

Chicago Politicians.

California Welfare pushing yuppies.

Texas Oil barons.

DC bureaucrats.

This is America. These are the people who control your money and tell you what to do.

Interesting stat from the OP's link:

"In 2005 only 16% of the demand for gold came from investors most went to industrial users and jewelers. Now investors reflect almost 40% of the demand. As a result, gold prices are more exposed to speculators' whims."

To me those who are crazy about buying gold are not really looking at the big picture.

For some reason they think that if they buy gold then their wealth will be protected when the great American economic collapse happens.

If America ever reverts back to the point where gold becomes the currency of choice then odds are we have already went through a horrible period in human history and the ones who saved all of this gold will probably be dead and their gold stolen by those who they used to laugh at who didn't invest in gold.

If we ever truly get to the point where the dollar is worthless then guns, ammunition, and food will be worth way more than any gold these individuals have stocked up.

If the collapse truly does happen those with gold will be as poor as those with dollars.

Gold is in a bubble period just like any other commodity. The Bubble will burst just like all bubbles. I own gold just like any other smart investor but I only own it as a hedge against inflation. I've sold most of it because it has reached a tipping point. It might keep going up but I’ve already made a profit that I'm happy with.

If you truly really want to protect your wealth against any great economic collapse. Own land, stock up food, buy guns, and plenty of ammunition. Go about your normally day and hope and pray that a time never comes when the dollar is worthless.

"Mad Max" or "Book of Eli" type future for the US isn't likely (although Somalia and other places are living that reality now). But things are going to get bad here. Our collapse should be more like Argentina 2001. Ask someone from that country about the value of having some gold and silver.

I got some silver and am ready to sell it now, that it's more than doubled in price.

Where is the best place to sell it?

Would a local place compare with shipping it somewhere online?

ready to sell silver wrote:

I got some silver and am ready to sell it now, that it's more than doubled in price.

Where is the best place to sell it?

Would a local place compare with shipping it somewhere online?

Totally depends on your local places. Nobody, besides someone local will be able to answer your question besides you. Call up a few local places and compare what they're offering to the online places.

X-Runner wrote:

http://money.cnn.com/2011/01/10/pf/investing/investing_in_gold.moneymag/index.htm?source=cnn_bin&hpt=Sbin

CNN artile.

Flagpole should like it.

It looks like it is a speculative hot potato.

It has no earnings. Pays no dividends.

You can't live in it or rent it.

If you get to the point where you have to use it for currency then things will be pretty bad.

But if you can sell it for more than you buy it for then it works out nicely for you.

Hope you don't buy high. (that works if the price is high or you are high)

Yep. I read that article yesterday. Gold is always a speculative hot potato. Nice run up since 2007, but it is so hard to predict, and as it's ONE THING (meaning you aren't protected if it goes down) and it pays no dividends (as you mentioned). I agree that it's a bubble and that this bubble will pop...the problem is of course determining when that will be. I sure can't do that. People will remain in gold as long as they believe the economy and the stock market is bad. If I were a gold owner today, I would be glad that it went up so much, but then I would profit take and sell every last bit of it.

swofford11 wrote:

I own gold just like any other smart investor but I only own it as a hedge against inflation. I've sold most of it because it has reached a tipping point. It might keep going up but I’ve already made a profit that I'm happy with.

1) Good that you sold most of your gold...you should sell the rest of it.

2) Don't need to be owning gold to be a "smart investor". It's too risky, doesn't give any dividends, and you can hedge with other things.

Flagpole wrote:

It's too risky, doesn't give any dividends, and you can hedge with other things.

Spoken by a guy who thinks a 98 percent loss is a plus.

Gold is the final refuge against universal currency debasement.

With the Fed’s printing press going into overdrive to buy your very own US Treasuries! - actually, it’s the click of a mouse rather than actually printing the notes - how long do you thing the US dollar will remain the world reserve currency?

It’s only that massive benefit that’s allowing you to consume much more than you produce as of now - but the rest of the world is getting pissed-off at the world’s commodities priced in a currency that’s becoming worthless.

What’ll happen to America when you lose the world reserve status, I hate to think.

But, as both the Indian and Chinese treasuries have been busy buying up gold in 2010 and I notice Russia increased it’s gold holdings by 14% over the last six months of 2010 - I think I’ll stick with what’s stuffed in my mattress.

Your logic is non-existent. Inflation of the dollar is a small fraction of what it is in China, Russia, and India. Commodity prices are soaring because of the strong demand for commodities. Raising interest rates or reducing the money supply will reduce the prices of commodities because the US economy will slow and therefore reduce the demand for the commodities coming from the US. The prices for commodities will still go up because the demand is so strong from emerging markets.

You’re apparently quite relaxed as to the situation regarding your currency.

Seems to me, your Federal Reserve has been printing money with increasing reckless abandon ever since, Nixon was it - cancelled the direct convertibility of the dollar with gold in 71.

Incidentally, JFK was the last president that had plans to dump the Reserve - and look what happened to him.

Now I’m an interested observer, but were I an American with a minimum of grey matter, I wouldn’t be at all complacent, looking at the hideous figures there for all to see.

How can I put this…

Let’s see - your 111th Congress has just ended - and they’ve managed to add more debt to the nation than the first 100 Congresses combined. - ($3,220,103,625,307.29)

That equals $10,429.64 in new debt for each and every one of the 308,745,538 people counted in the United States.

The total national debt of $13,858,529,371,601.09 (or $13.859 trillion), as recorded by the U.S. Treasury at the close of business on Dec. 22, now equals $44,886.57 for every man, woman and child in the United States.

According to your own Treasury Department figures back in June, your debt will reach $19.6 trillion by 2015, but since then, government spending has risen even more.

How are you going to reduce it, or even stop it growing? - just to service last years debt, ran to $420 billion.

And I haven’t even got round to the annual budget deficit - the last figure I’ve seen was for the month of November alone - in that month, the US government spent $150 billion more than it collected in taxes.

Now it seems - Bernanke has found the solution to the deficit - finance it via money creation!

No wonder, we who, for 150 years also were the world’s reserve currency, see the correlation between our downfall and the current state of affairs.

When the tsunami hits, and it’ll be very sudden - first act should be to round up the guilty parties responsible and hang the lot.

The numbers you presented are only marginally tangential to the topic at hand and your logic is still fatally skewed by crack-pot conspiracy theory. The Fed has been very clear that they are not simply printing money. If you knew anything about monetary policy, you would know that the Fed places a much higher priority on preserving its reputation than on diluting government debt. By spreading these lies, you only perpetuate this delusion that the Fed is not acting according to a century's worth of economic theory which has been proven to strongly contain inflation while allowing the economy to actually grow; something that cannot be said for full-reserve banking.

You owe the relative health of your economy to the ability of your government to devalue its currency. If the UK's currency was fixed, you would look like Ireland or Greece, except that no one would be able to bail you out, so you would just default and have 25% unemployment and -10% growth for the next decade. The British economy grew by over 2.7% this year with inflation at a manageable 3.3%. The only thing worse than having lots of debt is not being able to have any.

I don't understand what the obcession by free-market type people is with gold. It's got very little extrinsic worth that paper money doesn't. It can't be printed off with the flick of a button?

What happens if you switch to the gold standard and someone finds a large deposit in their backyard. Or worse yet, terrorists take over some of the big mines.

Do people forget that quests for gold turned real ugly and effectively contributed to the complete annihilation of many peoples as well as the rape of a continent.

The point of currency is that it ought to be able to transfer easily over and over. Basing currency on any one thing artificial or concrete never relieves us of any sort of volatility.

???

smart investing wrote:

Flagpole wrote:

It's too risky, doesn't give any dividends, and you can hedge with other things.

Spoken by a guy who thinks a 98 percent loss is a plus.

Well, the price of gold is influenced by supply and demand.

It's not easy to increase the supply, so demand plays a larger role in the price than supply. Maybe the naysayers are downplaying gold, so they can buy it at a lower price?

Here's a question, for those who play currency markets. In the long term, which currency has ever outperformed gold?

We're not quite out of our economic crisis yet, and with obligations like debt, pensions, and healthcare for baby-boomers, things look like they could get bumpy for quite a while.