The Truth About Gold

1. 65

   Ralph Deedsposted 13 years ago

   "It is part religion, part politics. It is a way to voice a lack of confidence in the central banks of the world and a yearning for the world as it used to be.
   
   "Gold prices continued to rise, crossing $1,400 an ounce earlier this month, as investors shied away from equities and bonds.
   
   "It is an investment that historically made sense when inflation was rampant, and yet it is soaring while the Federal Reserve frets about the threat of deflation.
   
   "It is gold.
   
   'It is tempting to view the soaring price of gold, which went above $1,400 an ounce earlier this month and remains close to that level, as a warning of imminent inflation. Such interpretations have fueled critiques of the Fed’s latest round of monetary stimulus as being the forerunner of a collapse of the dollar...." 
   
   More
   
   
   http://www.nytimes.com/2010/11/26/busin … amp;st=cse

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   1. 60

      Kimberly Bunchposted 13 years agoin reply to this

      Change is always difficult! I can't say anymore about it because I lose interest in it to soon. Yawn! Sorry, I have to say, progress please and do away with the mighty fear factor(s). Unless you have something serious to report that I should really pay heed to. Do you and you wake me from my slumber on this???

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   2. 0

      china manposted 13 years agoin reply to this

      Collapse of the currency is what normally comes when major indicators fly off in different directions.  And according to the rest of the world the dollar has been kept at artificial levels for many years in what has been called, by a leading economist on UK TV recently<  'the biggest financial scam in history'.  I would guess that reality must kick in any time soon - especially after the main rising currency the Yuan tied itself to a range of 'other' currencies after the stupid attack on the Yuan by the US gov.   I predict a major resettlement of the ailing dollar - downward - and quite soon I would say.

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      1. 59

         couturepopcafeposted 13 years agoin reply to this

         Possibly a reason why the downturn came as swiftly as it did?  The hollow shell was broken.

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   3. 65

      Ben Evansposted 13 years agoin reply to this

      Gold for the most part has been the latest trade. 
      
      I watch all metals including the industrial metals such as copper and aluminum.  The industrial metals are actually a truer metric of an inflationary cycle.  While these metals are high, they certainly are not traveling up and establishing new highs now like gold.
      
      Gold has been a good indicator in the past but now it is hyper traded which makes it less of an indicator and more of just a heavily traded issue. 
      
      I am not going to say that gold is too high right now but I will say that it is a less reliable metric of the overall economy than it used to be. 
      
      I think inflation is imminent based on our spending habits but gold is likely to fluctuate with the momentum of the trade.

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      1. 56

         C.J. Wrightposted 13 years agoin reply to this

         Great answer! Gold is being heavily marketed right now and has been for the last 24 months. While I think our economy is in trouble. I don't believe Gold is the gauge everyone is making it out to be.

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2. 62

   Daniel Carterposted 13 years ago

   The gold bubble is no different than the real estate bubble. Watch what happens when everyone finds out their gold is worthless, like their vacation real estate in Vegas.

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   1. 61

      SEO Ibizaposted 13 years agoin reply to this

      the difference between gold & real estate is that this has never happened, not once, in 5000 years with Gold.
      
      If you found a few kilos of inca Gold, would it be worthless?
      
      'It is tempting to view the soaring price of gold, which went above $1,400 an ounce earlier this month and remains close to that level, as a warning of imminent inflation"
      
      IMO it is tempting to view gold as the historical canary in the coalmine announcing that despite Govt propaganda..
      
      ..ALL IS NOT WELL!!

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   2. 73

      Jeff Berndtposted 13 years agoin reply to this

      Gold traders are capitalizing on (and doing their best to build up) the general fears caused by the recession (now over) and the continuing and open-ended "war on terrorism." The fearful are buying it (pun intended).
      
      Once upon a time, gold was in fact, objectively speaking, inherently worthless*.
      
      You can't eat or drink it. It won't keep you warm if you wear it. You can't use it to make tools; it bends too easily for a wrench or lever or screwdriver and it won't hold an edge well enough to be a knife.
      
      And yet, since it's rare and pretty and doesn't tarnish, people value it. Weird. If I were thirsty, I'd rather have potable water than gold. If I were starving, I'd rather have a sandwich than gold. If I were cold, I'd rather have an overcoat than gold. If only I had an inexhaustible source of gold, I could have all the useful stuff I could ever want!
      
      *In the modern age, however, it's useful. It conducts electricity like nobody's business, and is a vital component in a lot of electronic devices. It's been used in dental work, though ceramics are now more prevalent. Spacesuits, I'm told, have gold in the helmets' visors.
      
      If you're really worried about impending social collapse, what you should be doing is learning how to perform useful services and make useful goods.

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      1. 61

         SEO Ibizaposted 13 years agoin reply to this

         "Gold traders are capitalizing on (and doing their best to build up) the general fears caused by the recession (now over)"
         
         I fundamentally disagree that the recession is over, IMO it is a depression and it is far from over, the European crisis is just climbing to a peak
         
         http://www.marketoracle.co.uk/Article24628.html
         
         - think Lehman II - and all these insolvent organisations hiding their bankruptcy off-balance sheets are shortly going to be forced to face the truth.
         
         The gold market is booming not through traders hyping it, but because the world's investment community at large understands the situation better than the powers that be would like, they reallse their "paper wealth" is being devalued and inflated away into the US' financial black hole from which there is physcally no  recovery possible, ever, and are ensuring that their wealth WILL make it through the big reset, as it always has, every single time throughout human history.
         
         in my opinion if you have cash sitting around you stay in "paper" at your own peril.

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   sandra rinckposted 13 years ago

   Doesn't matter much to me really.  My mom on the other hand is a gold hoarder!  I could never understand why she always bought gold when I find it pretty useless and not at all the "pretty" but she would always call it "an investment".

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   1. 61

      dfantoposted 13 years agoin reply to this

      is gold uptrend will continue next year, or  is any correnction?

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      1. 61

         SEO Ibizaposted 13 years agoin reply to this

         the gold uptrend will continue until all the world's financial problems are fixed, and all the central banks are behaving responsibly, not printing money etc.
         
         corrections happen all the time, but Gold continues to appreciate against ALL paper money, all the time and IMO will do so until the whole world's broken financial system is fixed. (no time soon)
         
         http://buygoldsilver.org/2010/08/us-eco … swissfranc
         
         if the price corrects in a massive asset sell off, it STILL doesnt correct as fast as stocks and real estate, so you still gain as things fall.
         
         I genuinely don't see why people dont get this, seems pretty clear cut to me for the forseeable future.

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         1. 65

            Ben Evansposted 13 years agoin reply to this

            The reason the market makers are trading gold is not because of any fundamental but because it will make them money.  It has nothing to do with the economy.
            
            I used to trade pivots on currencies.  It is actually kind of crazy when you consider it and how it is calculated but the thing is that there were enough people who prescribed to the theory so it worked.
            
            Lets wander over to the equities market and lets consider an earnings event for lets say GOOG, AAPL, or RIMM.  Now if you follow options, you will notice there is an incredible amount of implied volatility (IV) just right before and earnings.  What is even more incredible is that this IV is going predict a much higher movement than what really happens.  Often there is frothing at the mouth and prices rise incredibly into earnings announcement of stock like the aforementioned just to fizzle after earnings.  These are not fundamental events, these traded events.  That is also true with gold.
            
            In the past very few people could trade gold but now. 
            
            You can buy bullion
            You can buy an ETF
            You can trade Gold as a commodity
            
            One very dangerous way to trade is to wishfully trade.  I have done this before.  Gold has a different trend line than other industrial metals.  So what right?
            
            Think of it this way.  The industrial metals are currently showing the market.  They are indicative of how much is being manufactured and how much people are buying.  They are high but they don't have the same trendline as gold.
            
            Watch out for the safe haven argument for gold.  Here is the trap.  No one tells you this but if gold gets high and the major holders which are countries may sell.  The trick to trading is to be contrary to the market.  The reason is that the major traders will not tell you what they are going to do.  In fact if I had a lot of gold, I would be telling everyone to buy.
            
            Now, I am not saying that gold will go down but if you look at the trend line it is quite a bit flatter than it was.  Who knows where it will go.  It could go parabolic again but then it could capitulate.
            
            I personally am wary of issues like gold.  I will have to say that gold's current price has nothing to do with the economy.  However. copper and aluminum show a direct correlation to the current economy.

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            1. 73

               Jeff Berndtposted 13 years agoin reply to this

               "I will have to say that gold's current price has nothing to do with the economy."
               Exactly what I've been saying.
               When the price of gold drops again, that's when I'll buy it again.

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4. 0

   cookingdivaposted 13 years ago

   Is interesting! I was told last year by some friends to invest in gold as they knew prices were going go up. LOL, I personally do not think gold is great investment, as when you go to sell it, you get 20% value back and it is not liquid.

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   1. 76

      Tim_511posted 13 years agoin reply to this

      You can get upwards of 90% of the spot price if you sell it right.  Sell to a good refinery and they should give you around 98%.

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5. 62

   qwarkposted 13 years ago

   I would no tbuy anything at its "peak" price.
   Qwark

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   1. 61

      SEO Ibizaposted 13 years agoin reply to this

      if you had just bought a small amount every month for the last 10 years, a lot of the time you'd have bought at it's (latest) "peak" price and on some of it you'd be approaching 450% gains over the decade.
      
      "peak" is relative.

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      1. 62

         qwarkposted 13 years agoin reply to this

         ...yep peak is relative!
         This is as high as I've ever seen the price of gold in my 65+ yrs.
         10 yrs ago when I was prospecting, it was worth about $300+ bucks an oz.
         The following 10 years of screwed up world economics and it's @ about $1400 an oz.
         No one knew then that in 10 yrs we'd be as economically "depressed" as we are today. Hell, if I'da known that I'da bought the stuff by the bucket load.
         There's no way I'd buy gold @ $1400's an oz.
         I've seen markets bull and bear. This is the worst I've seen.
         If I go broke, so will all of you, with the rest of the world.
         A billion dollars today is worth a million when I was young.
         I'll just fill my pillowcase with my worthless paper dollars and keep my fingers crossed.
         Qwark

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