Why is gold considered a safe haven investment?

TANSTAAFL! wrote:

http://www.reuters.com/article/idUSTRE65E5NH20100701

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.

Right, because a single day's loss clearly proves that gold is in a bubble. Thank God we have the economic geniuses on letsrun to extrapolate long-term trends from day-to-day fluctuations.

Won't pretend to understand finance but I think it's interesting that gold dropped at the same time the rest of the market took a plunge. If it's the "safe haven" wouldn't you expect it to jump a little when other investments start looking shaky?

Gold is like any financial asset - it is only worth something if there is a buyer.

The US has been off a gold standard for +100yrs.

1889 - 2008, The US$ has lost 99% of its value vs gold.

Same period - the Yen has lost 99.8% of its value.

If the US$ is screwed, then so is the Yen, RMB, C/A/NZ$ etc.

For each failed currency, what has replaced it - another currency. So why would this time be any different.

Who would I bet on? The US. Why? How much human and intellectual capital is in the US? Then...how much in Japan? BLOODY.F@#KALL. China? Same. They might be cheaper, but that does not make them better. look at Japan - they take no council but their own and have been a basketcase for +20yrs as a result.

AR is a moron. She did not know what she was talking about. Normative thinking w/ respect to markets and economics (things SHOULD be this way) is a great way to lose your ass.

A safe or your mattress.

What do you think happens to the guy who hoards gold when society goes to shit? Do you think people are going to respect him and say, "oh there goes gold guy, even though law and order no longer exist i won't rob and/or kill him"?

If you're stockpiling gold in your home, you will be robbed. If you're storing it somewhere else, you'll never see it again if society goes down the crapper.

If you're really worried about this, buy some guns, store some food, and get a piece of land out in the middle of nowhere.

Hey Dawg wrote:

What do you think happens to the guy who hoards gold when society goes to shit? Do you think people are going to respect him and say, "oh there goes gold guy, even though law and order no longer exist i won't rob and/or kill him"?

If you're stockpiling gold in your home, you will be robbed. If you're storing it somewhere else, you'll never see it again if society goes down the crapper.

If you're really worried about this, buy some guns, store some food, and get a piece of land out in the middle of nowhere.

First, most people investing in gold do not physically keep the bullion in their homes. The smart ones store it abroad.

Second, even if they did keep the bullion in their homes, do you really think they would broadcast the fact to the whole neighborhood? Do you think they would post a sign in their front yard saying "I STOCKPILE GOLD IN MY HOUSE?" No you f***face.

How does one get so detached from reality as to come up with shit like this?

Student of Ayn Rand wrote:

First, most people investing in gold do not physically keep the bullion in their homes. The smart ones store it abroad.

Second, even if they did keep the bullion in their homes, do you really think they would broadcast the fact to the whole neighborhood? Do you think they would post a sign in their front yard saying "I STOCKPILE GOLD IN MY HOUSE?" No you f***face.

How does one get so detached from reality as to come up with shit like this?

...so you have an Allocated Account @ LBMA?

Worst case scenario: Society literally crumbles and comes to resemble "Mad Max 2: The Road Warrior."Questions: Is this what awaits us if every nation on earth continues to spend beyond its means? If so, how will possessing gold help you, other than its use to buy weapons and construct a private fort? I mean you won't be able to go around with a little pouch of gold coins to buy food. The motorcycle bandits will pillage you.

Student of Ayn Rand wrote:

First, most people investing in gold do not physically keep the bullion in their homes. The smart ones store it abroad.

Second, even if they did keep the bullion in their homes, do you really think they would broadcast the fact to the whole neighborhood? Do you think they would post a sign in their front yard saying "I STOCKPILE GOLD IN MY HOUSE?" No you f***face.

How does one get so detached from reality as to come up with shit like this?

Hahaha they store it abroad? And I suppose in the event of catastrophe they'll just ship it back here and have no problems picking it up?

And it will be perfectly obvious who has gold, moron. The guy going out and BUYING STUFF WITH GOLD while his neighbors are penniless is in for an interesting time.

Historically in time of depression the price of gold remains stable or rises

In the current recession the price has gold has risen

http://en.wikipedia.org/wiki/File:Gold_price_in_USD.png

You need to look at the facts rather than your idle 'speculation'

genius wrote:

I think that the only real safe haven investments are food, water and shelter stocks. Is there a Survival Index??

You forgot guns. They're a lot more durable than food.

Hey Dawg wrote:

Hahaha they store it abroad? And I suppose in the event of catastrophe they'll just ship it back here and have no problems picking it up?

And it will be perfectly obvious who has gold, moron. The guy going out and BUYING STUFF WITH GOLD while his neighbors are penniless is in for an interesting time.

Nobody is going to be buying anything with gold. They will instead trade the gold for US dollars. I would explain how it works in more detail but I doubt your are sophisticated enough to understand.

Student of Ayn Rand wrote:

Nobody is going to be buying anything with gold. They will instead trade the gold for US dollars. I would explain how it works in more detail but I doubt your are sophisticated enough to understand.

So you think the US will return to a non-fractional reserve gold backed currency, pushing gold to $10k/ounce?

You are so totally high...you have no idea of the consequences of a move like that.

I am very happy knowing that you are far far away from any real policy making....

Nigel Tuffnell wrote:

Who would I bet on? The US. Why? How much human and intellectual capital is in the US? Then...how much in Japan? BLOODY.F@#KALL. China? Same. They might be cheaper, but that does not make them better. look at Japan - they take no council but their own and have been a basketcase for +20yrs as a result.

It's true that on paper the Japanese economy has been in "trouble" for 20 years. But still, in my personal experience, the average Japanese enjoys a better quality of life than the average American. And the sub-average person is far better off in japan.

Derek Smalls wrote:

So you think the US will return to a non-fractional reserve gold backed currency, pushing gold to $10k/ounce?

You are so totally high...you have no idea of the consequences of a move like that.

I am very happy knowing that you are far far away from any real policy making....

Individuals can sell their gold holdings for dollars anytime they want and the process has nothing whatsoever to do with policy. Is this really that difficult to understand? The idea of buying a resource when it's cheap, then selling it at a later time when it's value has appreciated? Is this concept totally forgeign to the functional illiterates who post here? Some of you are really stupid.

Nigel Tuffnell wrote:

If the US$ is screwed, then so is the Yen, RMB, C/A/NZ$ etc.

For each failed currency, what has replaced it - another currency. So why would this time be any different.

Who would I bet on? The US.

I read the news today, oh boy... SDR, HERE WE COME!

You were talking about some kind of cataclysmic meltdown earlier, which is what I was responding to. Yes, you can use gold as a hedge or whatever; that's obvious and isn't really worth discussing. Gold's still a crappy "investment"

Warren Buffet is not a big fan of gold, probably because he has made most of his fortune in equities. He says something like:

"Why would you buy gold? They dig it out of the ground, and melt it down, so you can bury it and pay people to guard it."

Remind me not to go to dinner at this guy's home.