Gold

Gohabsgo_IHB

Gohabsgo_IHB

New member
Ok, I've heard enough about Gold that I want to understand more about it.



Other than the fact that Gold is good in a recession, I don't know much about it.



Would someone care to explain the downside and upside of gold vs other asset classes (stock).



Also, what investment horizon should be targeted. I guess gold could fluctuate as much as stocks, so you would need a long investment horizon as well.



Awgee, Graphix, please help me understand this better (looks like you too are big proponents of gold).



Thanks again to everyone who might contribute.
 
[quote author="Roo" date=1227051725]Ok, I've heard enough about Gold that I want to understand more about it.



Other than the fact that Gold is good in a recession, I don't know much about it.



Would someone care to explain the downside and upside of gold vs other asset classes (stock).



Also, what investment horizon should be targeted. I guess gold could fluctuate as much as stocks, so you would need a long investment horizon as well.



Awgee, Graphix, please help me understand this better (looks like you too are big proponents of gold).



Thanks again to everyone who might contribute.</blockquote>
Who said that gold is good during a recession? The value of gold has fallen along with other metals due to a decrease in overall demand and flight to safety in the US dollar. Gold is a great hedge against inflation, which is something we are not suffering from YET. In a deflationary environment, you want to be in bonds or cash.
 
[quote author="usctrojanman29" date=1227052588][quote author="Roo" date=1227051725]Ok, I've heard enough about Gold that I want to understand more about it.



Other than the fact that Gold is good in a recession, I don't know much about it.



Would someone care to explain the downside and upside of gold vs other asset classes (stock).



Also, what investment horizon should be targeted. I guess gold could fluctuate as much as stocks, so you would need a long investment horizon as well.



Awgee, Graphix, please help me understand this better (looks like you too are big proponents of gold).



Thanks again to everyone who might contribute.</blockquote>
Who said that gold is good during a recession? The value of gold has fallen along with other metals due to a decrease in overall demand and flight to safety in the US dollar. Gold is a great hedge against inflation, which is something we are not suffering from YET. In a deflationary environment, you want to be in bonds or cash.</blockquote>


From <a href="http://en.wikipedia.org/wiki/Gold">Wikipedia - Gold</a>:



"In the last century, major economic crises (such as the Great Depression, World War II, the first and second oil crisis) lowered the Dow/Gold ratio (which is inherently inflation adjusted) substantially, in most cases to a value well below 4.[26] During these difficult times, investors tried to preserve their assets by investing in precious metals, most notably gold and silver."



From what I am reading (not only the above), everything in today's environment would suggest a sharp rise in gold prices.
 
Gold is also good in times of political turmoil. I used to have a co-worker who is a Vietnamese "boat person." She told us the harrowing tale of her family's flight from Vietnam on a boat in the early 80s. She ended her story with "we left with only the clothes on our backs . . . . . . . because father needed the suitcases to put the gold in.
 
[quote author="High Gravity" date=1227054023]Gold is also good in times of political turmoil. I used to have a co-worker who is a Vietnamese "boat person." She told us the harrowing tale of her family's flight from Vietnam on a boat in the early 80s. She ended her story with "we left with only the clothes on our backs . . . . . . . because father needed the suitcases to put the gold in.</blockquote>


I'm confused...are you suggesting I buy a boat or a suitcase here?
 
[quote author="Roo" date=1227054272][quote author="High Gravity" date=1227054023]Gold is also good in times of political turmoil. I used to have a co-worker who is a Vietnamese "boat person." She told us the harrowing tale of her family's flight from Vietnam on a boat in the early 80s. She ended her story with "we left with only the clothes on our backs . . . . . . . because father needed the suitcases to put the gold in.</blockquote>


I'm confused...are you suggesting I buy a boat or a suitcase here?</blockquote>


You should always keep a chest full of Kruggerands nearby because you never know what the future will bring. Many Chinese/Vietnamese survived the fall of Saigon relatively well because they had gold, whereas their countrymen who only had VND or South Vietnamese real estate got wiped out. Gold will be most useful when the financial system collapses and we go to a Mad Max economy.
 
[quote author="Astute Observer" date=1227056126]When I see commericals on the cable TV asking people to buy gold every 15 minutes, I know it is probably too late to make money.</blockquote>
Thank you, that is a dead giveaway just like when we began seeing all those house flipping shows which signaled the peak of the market.
 
[quote author="usctrojanman29" date=1227056539][quote author="Astute Observer" date=1227056126]When I see commericals on the cable TV asking people to buy gold every 15 minutes, I know it is probably too late to make money.</blockquote>
Thank you, that is a dead giveaway just like when we began seeing all those house flipping shows which signaled the peak of the market.</blockquote>


The commercials are telling ppl to be sellers, do the opposite and buy up.
 
Roo,



There is already a "gold" thread. Have you read it? I am not being aggressive or sarcastic. Before I give my opinion, I want to know what you have read or what you already know.

I could probably write a bit too much on this subject, so it would be prudent to read the other thread.
 
Is there any significance to this, or is $4.28 trillion of created currency offset by "deflation"? And if so, or not, are there any consequences, and what are they?

<a href="http://www.cnbc.com/id/27719011">$4.28 trillion</a>
 
Millions of words have been said and written on this one - personally, I just try to remind folks that Federal Reserve Notes are not money.



Perhaps the most interesting recent contribution to the discussion came from <a href="http://seekingalpha.com/article/103613-on-martin-armstrong-s-it-s-just-time">a jailhouse typewriter in a dungeon under Manhattan.</a>
 
[quote author="awgee" date=1227061145]Is there any significance to this, or is $4.28 trillion of created currency offset by "deflation"? And if so, or not, are there any consequences, and what are they?

<a href="http://www.cnbc.com/id/27719011">$4.28 trillion</a></blockquote>
I would be surprised if more than that will be destroyed in credit once everything settles down.
 
[quote author="awgee" date=1227061145]Is there any significance to this, or is $4.28 trillion of created currency offset by "deflation"? And if so, or not, are there any consequences, and what are they?

<a href="http://www.cnbc.com/id/27719011">$4.28 trillion</a></blockquote>


Can't the offset of deflation only be temporary? Since the actual currency base isn't decreasing, only a brief period of unwinding credit. Thus once the velocity of money returns, credit will then be a multiplier of a much larger currency base and we see the real fun inflation. At the same time the FED will be unable to reel in the money base because more than likely the assets they own now will never be able to sell for as much as they paid for them.
 
[quote author="upperlowerclass" date=1227073494][quote author="awgee" date=1227061145]Is there any significance to this, or is $4.28 trillion of created currency offset by "deflation"? And if so, or not, are there any consequences, and what are they?

<a href="http://www.cnbc.com/id/27719011">$4.28 trillion</a></blockquote>


Can't the offset of deflation only be temporary? Since the actual currency base isn't decreasing, only a brief period of unwinding credit. Thus once the velocity of money returns, credit will then be a multiplier of a much larger currency base and we see the real fun inflation. At the same time the FED will be unable to reel in the money base because more than likely the assets they own now will never be able to sell for as much as they paid for them.</blockquote>


Along those lines, I think it is important to distinguish between credit destruction and asset depreciation. Currency created to offset credit destruction is offset, but currency created to balance asset destruction offsets nothing in the money supply and the only way that I am aware of to decrease the money supply is to destroy portions of the money supply which also destroys the false economy built on money supply increase. In order to avoid hyperinflation, it will be necessary to destroy the economy, a option our government and Federal Reserve will not choose. I am wondering how long it will take before folks realize that an expanding economy built on inflation of the money supply via credit expansion is not an expanding economy at all, but rather a false affluence built on debt and the spending our children's future. My experience so far, is that most folks choose not to think about it. They figure someone in power can always fix it. Or they just console themselves with whatever inane explanation they hear on CNBC.



Query: As tax revenue falls, where will the cities, states, and federal government make up for the shortfall? If you think tax revenues are not decreasing and this is a false assumption, I wish you luck.
 
[quote author="awgee" date=1227075165][quote author="upperlowerclass" date=1227073494][quote author="awgee" date=1227061145]Is there any significance to this, or is $4.28 trillion of created currency offset by "deflation"? And if so, or not, are there any consequences, and what are they?

<a href="http://www.cnbc.com/id/27719011">$4.28 trillion</a></blockquote>


Can't the offset of deflation only be temporary? Since the actual currency base isn't decreasing, only a brief period of unwinding credit. Thus once the velocity of money returns, credit will then be a multiplier of a much larger currency base and we see the real fun inflation. At the same time the FED will be unable to reel in the money base because more than likely the assets they own now will never be able to sell for as much as they paid for them.</blockquote>


Along those lines, I think it is important to distinguish between credit destruction and asset depreciation. Currency created to offset credit destruction is offset, but currency created to balance asset destruction offsets nothing in the money supply and the only way that I am aware of to decrease the money supply is to destroy portions of the money supply which also destroys the false economy built on money supply increase. In order to avoid hyperinflation, it will be necessary to destroy the economy, a option our government and Federal Reserve will not choose. I am wondering how long it will take before folks realize that an expanding economy built on inflation of the money supply via credit expansion is not an expanding economy at all, but rather a false affluence built on debt and the spending our children's future. My experience so far, is that most folks choose not to think about it. They figure someone in power can always fix it. Or they just console themselves with whatever inane explanation they hear on CNBC.



Query: As tax revenue falls, where will the cities, states, and federal government make up for the shortfall? If you think tax revenues are not decreasing and this is a false assumption, I wish you luck.</blockquote>
The cities, counties, and states will go to the federal gov't for money. The federal gov't will have the treasury keep the printing presses going to fund those grants.
 
Tue Nov 18 20:51:38 2008 EST



BEIJING (Dow Jones)?China?s central bank is considering raising its gold reserve by 4,000 metric tons from 600 tons to diversify risks brought by the country?s huge foreign exchange reserves, the Guangzhou Daily reported, citing unnamed industry people in Hong Kong.



The Guangzhou-based newspaper didn?t elaborate on the plan.



China?s forex reserves, at US$1.9056 trillion at the end of September, is the world?s largest. U.S. dollar-denominated assets, including U.S. treasury bonds and mortgage agency bonds, account for a big proportion of the forex reserves ...
 
[quote author="awgee" date=1227060863]Roo,



There is already a "gold" thread. Have you read it? I am not being aggressive or sarcastic. Before I give my opinion, I want to know what you have read or what you already know.

I could probably write a bit too much on this subject, so it would be prudent to read the other thread.</blockquote>


Honestly, I didn't think about looking... in fact, I didn't even know there was an economy forums (brain cramp). I'll have to spend some time in here as well!
 
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