Why is gold considered a safe haven investment?

gold

food

property*

*as long as it is not taken away.

Why gold? Doesn't tarnish or react easily with other elements. 6000 years with a good track record.

Gold is the money of the free market. It holds its value because it is a scarce natural resource which has objective value and the government can't magically create more of it out of thin air. The only reason anybody accepts fiat money is because the govenment forces us to accept it. But this world is about to discover just how fraudulent government money really is. And, frankly, a lot of the people on this board deserve exactly what they are going to get.

Has objective value? Really? According to whom?

There is a limited quantity of dingleberries in the world, but so far, to my knowledge, nobody has placed an "objective" value well above $1,000 per ounce on dingleberries...

You pointed out one difference, but you disregarded the most important similarity between gold and fiat money. They were both assigned value arbitrarily by mankind.

Gold has objective value because it has properties which make it a better store of value than anything other known resource on Earth. It is useful in industry (and the primitive equivalent of industry), prized for its beauty, soft, malleable, light, divisible, easy to carry, easy to store, etc. This is why gold and other precious metals emerged as money in all parts of the world thousands of years before the advent of modern central banks and their printing presses. Dingleberries are not suitable as currency because they are perishable, plentiful, and do not have any unique or important uses, among other reasons. Perhaps in an isolated community in which food was scarce and dingleberries were the only foodstuffs availible, they might emerge as currency, but that is an unrealistic hypothetical scenario. Gold is real money. That's why it's called the "gold standard" and not the "dingleberry standard."

Gold appears to be overpriced when compared to the cost to produce it. I would not be buying it at this level. But I make no claim as to expertise in this area.

http://www.miningweekly.com/article/what-does-it-cost-to-produce-an-ounce-of-gold-2009-03-16

Gold is an example of how silly markets can be and how the "invisible hand" of the market is doing something a bit obscene. Ten years ago, gold was trading at under $300. Now it is over $1200. That price increase has nothing to do with real demand for gold (jewlery, industrial uses, etc.), but with a massive speculative bubble that is ready to burst (gold is down almost $50 as investors are moving back to cash).

I put a grimy dime into the vending machine a few days ago to get some chips. Yesterday, that dime came back to me as change! Am I richer or poorer for ending up with the same dime?

Precious Roy wrote:

Gold is an example of how silly markets can be and how the "invisible hand" of the market is doing something a bit obscene. Ten years ago, gold was trading at under $300. Now it is over $1200. That price increase has nothing to do with real demand for gold (jewlery, industrial uses, etc.), but with a massive speculative bubble that is ready to burst (gold is down almost $50 as investors are moving back to cash).

Quick, Roy, sell any gold that you own and hoarde as many paper US dollars as you can stash under your mattress. Paper is the money of society, and you wouldn't want to bet against society. After all, when has society ever been wrong?

Student of Ayn Rand wrote:

Precious Roy wrote:

Gold is an example of how silly markets can be and how the "invisible hand" of the market is doing something a bit obscene. Ten years ago, gold was trading at under $300. Now it is over $1200. That price increase has nothing to do with real demand for gold (jewlery, industrial uses, etc.), but with a massive speculative bubble that is ready to burst (gold is down almost $50 as investors are moving back to cash).

Quick, Roy, sell any gold that you own and hoarde as many paper US dollars as you can stash under your mattress. Paper is the money of society, and you wouldn't want to bet against society. After all, when has society ever been wrong?

Sounds good. You do realize that the reason gold is so expensive is the same reason people value government issued money? The price of gold has nothing to do with the actual demand for the product but is valued based on people's belief that it won't lose any value. That is bubble thinking. The exact same thing happened to real estate. People who were getting hosed in the internet bubble dumped their cash into real estate. Once the world economy returns to sure footing, the price of gold will dive fast and hard as everyone pulls their money out to put back into better producing stocks.

Student of Ayn Rand wrote:

Quick, Roy, sell any gold that you own and hoarde as many paper US dollars as you can stash under your mattress. Paper is the money of society, and you wouldn't want to bet against society. After all, when has society ever been wrong?

That is a silly argument. "Society" are the same people who determine the price, and value, of gold.

genius wrote:

"Society" are the same people who determine the price, and value, of gold.

But "society" is NOT who determines how much paper money is in the system. Only "The Creature From Jekyll Island" determines that.

The original poster's question is flawed because gold isn't a "safe haven investment". It is a commodity that tends to go up in value when the stock market is going in the opposite direction. Being a exceptionally useful material, it has intrinsic value so it's value is very unlikely to go to zero, though it's market price is certainly subject to wide fluctuation mostly due to speculation.

genius wrote:

Student of Ayn Rand wrote:

Quick, Roy, sell any gold that you own and hoarde as many paper US dollars as you can stash under your mattress. Paper is the money of society, and you wouldn't want to bet against society. After all, when has society ever been wrong?

That is a silly argument. "Society" are the same people who determine the price, and value, of gold.

Get ready for your world to be rocked. You are about to learn a hard lesson, and I sincerely hope that you don't have young children that will have to learn it with you.

You guys probably already saw this but gold did take a big hit today. If I had money in it I'd be at least a little worried we're sitting on another bubble. The price gains over the last decade just don't seem realistic.

Ayn Rand Disciple wrote:

Gold has objective value because it has properties which make it a better store of value than anything other known resource on Earth. It is useful in industry (and the primitive equivalent of industry), prized for its beauty, soft, malleable, light, divisible, easy to carry, easy to store, etc. This is why gold and other precious metals emerged as money in all parts of the world thousands of years before the advent of modern central banks and their printing presses.

So we'll head to 7-11, buy a 6pack and the clerk will say, "that'll be 0.25 grams of gold please!"

wrong...it will still have to be held in vaults

It will be deposited in (central) banks, and recipeits (ie. currency) issued. What if they issue more currency than the value of the gold? Thats what they did in Switzerland in the 1400s and was the start of fractional reserve banking.

Having the gold there means as much as NOT having it there ie its meaningless.

Why is it going up? Because of expectations that governments will inflate their way out of debt.

Get 30-50yrs of Dow prices and gold prices. How many units of "Dow" could you buy in 1975 w/ 1 ounce of gold? 1000/$100, 10 units.

Now? 10,000/$1200. 8,3

Gold means nothing....unless you predict history by looking in the rear view mirror and spout the ramblings of a delusional self-absorbed whackjob.

Haha this is OT but I'm at the library and on the shelf of decirculated books for sale they have "Are You Missing the Real Estate Boom" published in 2005. It's still in good condition; I wonder why they're getting rid of it?

History meant something to everyone before us who saw it repeated in a bad way. Americans have a short term vision because we are a short term nation. US dollar is fragile as ever, we have russian spies who are interested in learning about our gold and meanwhile russia is stocking up on gold (along with china, india and others) and you think everything is rosy.

As the Japanese say, business is war, or in other words, war is now business.

Every paper economy in history has failed but we will be the exception, forever???? What because we are so rich and powerful?

How did we get here? Industrial revolution followed by tech revolution?

The rest of the world is catching up on both accounts, hell they are probably passing us we just wont see it until the damage done. Our only leverage is confidence and that can (and will eventually) be shattered.

Obama doesn't know what the f@ck he's doing or he's just as much of a puppet as Bush and all before him were. The richest stand to benefit from the fall of the middle class, why do you think they don't broadcast they damage they are causing? They are in it to win it, this all benefits them because they are leveraged to monopolize on it. The biggest banks are all getting bigger. Theres a secret club of the biggest polititions, banks and industries who are loving life, and loving that the fluoride in your water has eroded your brain and will power.

TANSTAAFL! wrote:

Haha this is OT but I'm at the library and on the shelf of decirculated books for sale they have "Are You Missing the Real Estate Boom" published in 2005. It's still in good condition; I wonder why they're getting rid of it?

People stand to get very rich off real estate during these times, assuming they have the means to purchase.

However there is a good chance the author of that book is not rich and is heavily invested in the stock market, is saving us dollars and avoiding gold or silver.