# Lifestyles & Discussion > Personal Prosperity >  Gold is a risky investment

## YumYum

Those of you who are investing heavily in gold are taking a very high risk. The price of gold is high in terms of the dollar, but not in other currencies such as the Euro, the Australian Dollar and the Yen. The only reason we have seen the purchasing price of gold increase is because the dollar has been deliberately devalued with all the cash that has been pumped out by the Fed. Once the Fed stops creating more debt by printing money the dollar will strengthen and gold will plummet. One thing is for sure, there is no shortage of gold.  If you buy gold, use it only as a hedge against the dollar. Have an equal amount of dollars to an equal amount of gold. At least you won’t lose your shirt when the dollar rebounds. 

On September 11, 2009, spot future Gold closed above the $US 1000 level for the third time. But this time, Gold did not get anywhere near its February 2009 highs in terms of the Aussie Dollar or the Euro and remained below it in terms of the Yen. Here's the record.

Gold In Four Major Currencies Since The February 20, 2009 $US High 


Currency--Feb 20, 2009------Sept 18, 2009--------Up/Down---Percent


US Dollar....1002.20..................1010.30........  ..........+8.10......+0.81%


Euro............796.00....................686.80..  ...............-109.20.....-13.72%



Aus. Dollar..1571.60...................1163.40.........  .......-408.20....-25.97%


Jap. Yen.......94410......................92181........  ..........-2229.......-2.36%


Take a look at the percentages by which three "other" currencies remain below their levels of February this year. To take the most "extreme" example, at current (September 18, 2009) exchange rates, it would take a Gold price of $US 1364.80 for the Aussie Gold price to equal the all time high it set on February 20, 2009.

If the demand for gold were high worldwide due to a shortage, the price would increase not only in terms of the inflated U.S. dollar, but also in terms of the other deflated fiat currencies. But that is not what has happened.

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## not.your.average.joe

So long as interest rates are at record lows, it isnt as risky as you think.  Did you catch the thread about our 3.4 trillion we have to roll over the next 4 years?  No way they raise rates anytime soon... 
and that is bullish for gold/silver isnt it?

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## bobbyw24

http://www.ronpaulforums.com/showthread.php?t=217414

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## brandon

All investments are risky and that's why people preach about diversifying.

The people that are putting 50% + of their net worth into gold are taking a huge risk... they might as well go to a casino.

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## bobbyw24

> So long as interest rates are at record lows, it isnt as risky as you think.  Did you catch the thread about our 3.4 trillion we have to roll over the next 4 years?  No way they raise rates anytime soon... 
> and that is bullish for gold/silver isnt it?


That is true--hyperinflation could well be on its way once the stimulus fully kicks in--at which time precious metals will take off again

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## not.your.average.joe

> That is true--hyperinflation could well be on its way once the stimulus fully kicks in--at which time precious metals will take off again


Yes, and last time i checked i was living in america using US dollars... Not Aussie dollars, or euro dollars...  All the OP is showing is the deterioration of the dollar against other currencies.  Sure, if i lived in Australia and knew they were raising interest rates like they have and not increasing the money supply via easy lending and low rates, gold would not be the best investment...  But here I am in America looking down the road ahead of us, and all i can see is destruction of our currency, disgusting to say the least.

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## bobbyw24

11/02/09 Gaithersburg, Maryland – I think we’re still in the early stages of what could become a gold mania. While there are a lot more people talking about gold now and the gold price is close to all-time highs, it remains an underowned asset. Only a small fraction of investors own any gold at all. Hardly any institutions own any gold, either. As we now have 10 years of market-beating data for gold, it’s going to attract more attention.

I think that attention will eventually carry it to a price of $2,000-3,000 pretty easily — maybe more. So far, gold has had a steady march up since 2000. The last leg, the mania phase, always has a rapid and explosive move before it’s all over. We’re not there yet.

As for what will pull gold back down, I think a strong economic recovery could derail gold’s story for a time, but as long as the U.S. dollar makes its way to new depths over time, I think the gold price will drift higher.

Most people think of gold as an inflation hedge. To me, it is more than that. Gold is primarily a bet against the creditworthiness of the issuers of paper currencies. In other words, as the creditworthiness of the U.S. government weakens — thanks to high debts and deficits — gold will be a strong asset… and gold stocks ought to be one way to juice the return you get from gold. Our two gold stocks are up 80% and 40% since we bought them earlier this year. If we get any pullback in gold, I’ll be a buyer.

Chris Mayer

Chris Mayer studied finance at the University of Maryland, graduating magna cum laude. He went on to earn his MBA while embarking on a decade-long career in corporate banking. Chris is the editor of Capital and Crisis and Mayer’s Special Situations , a monthly report that unearths unique and unconventional opportunities in smaller-cap stocks. In 2008, Chris authored Invest Like a Dealmaker: Secrets From a Former Banking Insider .

http://dailyreckoning.com/when-to-sell-your-gold/

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## specsaregood

> Once the Fed stops creating more debt by printing money the dollar will strengthen and gold will plummet.


And when exactly do you see that occurring?

From: http://www.treasury.gov/press/releases/tg341.htm



> During the October  December quarter, *Treasury expects to issue $276 billion in net marketable debt*, assuming an end-of-December cash balance of $85 billion, which includes $15 billion for the Supplementary Financing Program (SFP). The borrowing estimate is $209 billion lower than announced in July 2009. The decrease in borrowing is primarily related to cash balance adjustments related to the SFP, and lower outlays offset partially by lower receipts.
> During the January - March quarter, *Treasury expects to issue $478 billion in net marketable debt*, assuming an end-of-March cash balance of $45 billion, which includes $15 billion for the SFP.
> These estimates do not include any incremental borrowing needs that would result from a potential increase in issuance under the SFP.

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## tmosley

The dollar is a risky investment.  Gold is staying the same, as you noted.

Keeping dollars is like keeping shares of stock in a bankrupt company.  Maybe you should trade your gold for shares in the old GM.

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## YumYum

> And when exactly do you see that occurring?
> 
> From: http://www.treasury.gov/press/releases/tg341.htm


Unemployment must go up higher. When unemployment reaches 12 per cent or more the Fed will tighten its credit belt. Gold has no basis with the Fed increasing the money supply or loosening it. WE ARE NOT ON THE GOLD STANDARD. This is what people don't get. It is like watching the price of oranges go down in value so people panic and run out and buy pineapples. It makes no sense. What backs the dollar is the unlimited credit of the U.S. taxpapayer, and the debt created has to be paid back by the commodity of labor and productivity; not gold.

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## YumYum

> The dollar is a risky investment.  Gold is staying the same, as you noted.
> 
> Keeping dollars is like keeping shares of stock in a bankrupt company.  Maybe you should trade your gold for shares in the old GM.


If you are a very rich person, then by all means, you should buy gold and sit on it for a long time. But for people who could possibly be losing their jobs and are strapped with debt, gold is a very risky investment. When things get worse people who have lost their jobs will sell their gold to buy food, gas and pay the rent. They will be flooding the market with the gold they bought when they had a little extra cash and they were employed. We are going into a depression and the dollar will deflate.

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## specsaregood

> Unemployment must go up higher. When unemployment reaches 12 per cent or more the Fed will tighten its credit belt. Gold has no basis with the Fed increasing the money supply or loosening it. WE ARE NOT ON THE GOLD STANDARD. This is what people don't get. It is like watching the price of oranges go down in value so people panic and run out and buy pineapples. It makes no sense. What backs the dollar is the unlimited credit of the U.S. taxpapayer, and the debt created has to be paid back by the commodity of labor and productivity; not gold.


Sorry but you misdirected and avoided what I stated.
You said in the OP:  _"Once the Fed stops creating more debt by printing money the dollar will strengthen and gold will plummet"_

I quoted the official govt line that shows they don't plan on stopping creating debt for at least another quarter.  In fact they are planning on creating $478 billion in the next quarter alone.  So if what you say is true, then gold won't be plummetting until after that quarter at the earliest.

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## ArchPaul

"Gold is a risky investment"

Its not an investment. Its insurance.

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## YumYum

> Sorry but you misdirected and avoided what I stated.
> You said in the OP:  _"Once the Fed stops creating more debt by printing money the dollar will strengthen and gold will plummet"_
> 
> I quoted the official govt line that shows they don't plan on stopping creating debt for at least another quarter.  In fact they are planning on creating $478 billion in the next quarter alone.  So if what you say is true, then gold won't be plummetting until after that quarter at the earliest.


You are correct, if they keep creating debt, the dollar will lose its purchasing power compared to gold. But you asked me "when" and I don't have a date in mind. What I have done is look at the unemployment rate historically as an indicator when rates go up and credit is shut down, and it is at about 12%.

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## Dforkus

Commodities, equities, real estate, debt:

 There is no such thing as a "non-risky" investment...

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## CitizenPlain

...

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## Bruno

Imagine in 1933 you tucked away $40 for a rainy day fund (a lot of money back then).   You hid a $20 bill and a one ounce gold Eagle in a safe place.  

Today, you decide to break into your stash.  

Your $20 bill is still worth $20, but that doesn't go as far as it used to.  About 95% of the value of the your dollar was stolen from you quietly through inflation.  

Your gold coin, however, is worth about $1060 (numismatic value aside).

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## specsaregood

> You are correct, if they keep creating debt, the dollar will lose its purchasing power compared to gold. But you asked me "when" and I don't have a date in mind. What I have done is look at the unemployment rate historically as an indicator when rates go up and credit is shut down, and it is at about 12%.


Fair enough, of course we also know that past actions are in no way proof of future actions.  Our situation could very well be described as much more dire now than in the past AND in the past we didn't have anywhere near the numbers of people and businessses reliant upon govt support.   That in the past we had a manufacturing base and exportable products....

The more conspiracy minded individuals might even suggest that in the past they had no reason to let the US and the USD collapse; but now they do.

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## gls

> Once the Fed stops creating more debt by printing money the dollar will strengthen and gold will plummet.


Yeah I'll take my chances.  Meanwhile gold just hit a new all-time nominal high $1077 an ounce.

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## YumYum

> I am so anguished whenever I risk my fiat paper notes
> 
> for that worthless shinny metal.


When things are really bad and there are no jobs and no money, try and take the worthless shiny metal and use it as a medium of exchange at a conveniance store, or better yet, try and pay a traffic ticket at a courthouse with gold and see how far you get. It is not legal tender, and remember when you are out of work and hungry, and you are staring at your gold and holding it and loving it: You can't eat it!

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## hugolp

> Yeah I'll take my chances.  Meanwhile gold just hit a new all-time nominal high $1077 an ounce.


Over $1080. But hey! stay in Federal Reserve Notes since they will have a hard time printing more.

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## YumYum

> Over $1080. But hey! stay in Federal Reserve Notes since they will have a hard time printing more.


No, you should buy right now! Buy! Buy! Buy!, and keep buying! And don't ever stop buying! Just like the housing bubble, prices were never supposed to go down. They were supposed to keep going up! up! up! Gold is going to go to $30,000 an ounce!! All I can say is the people at the top of this gold bubble love guys like you. Keep buying. Don't stop.

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## specsaregood

> No, you should buy right now! Buy! Buy! Buy!, and keep buying! And don't ever stop buying! Just like the housing bubble, prices were never supposed to go down. They were supposed to keep going up! up! up! Gold is going to go to $30,000 an ounce!! All I can say is the people at the top of this gold bubble love guys like you. Keep buying. Don't stop.


So YumYum, if what the fed is saying is true and they plan on issuing almost $500billion! in new debt next quarter alone, what effect do you think that will have on the price of gold?  Is that gold bearish and dollar bullish?

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## Bruno

> No, you should buy right now! Buy! Buy! Buy!, and keep buying! And don't ever stop buying! Just like the housing bubble, prices were never supposed to go down. They were supposed to keep going up! up! up! Gold is going to go to $30,000 an ounce!! All I can say is the people at the top of this gold bubble love guys like you. Keep buying. Don't stop.


dollar cost averaging and diversification

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## ctiger2

*Gold is money insurance.* You shouldn't buy Gold as an investment. That being said, adjusted for inflation Gold should be around $2300/oz right now. So, there's a bit of money to be made because of heavy market manipulation.

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## Dr.3D

Hummm... gold looks pretty high in Australian dollars too.

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## Dr.3D

India seems to think gold is a good idea.
Looks like they just bought around 200 tons of it from the IMF.
*India's Reserve Bank buys half of IMF's gold for sale*

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## Bruno

> India seems to think gold is a good idea.
> Looks like they just bought around 200 tons of it from the IMF.
> *India's Reserve Bank buys half of IMF's gold for sale*


suckers!

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## Jordan

> Imagine in 1933 you tucked away $40 for a rainy day fund (a lot of money back then).   You hid a $20 bill and a one ounce gold Eagle in a safe place.  
> 
> Today, you decide to break into your stash.  
> 
> Your $20 bill is still worth $20, but that doesn't go as far as it used to.  About 95% of the value of the your dollar was stolen from you quietly through inflation.  
> 
> Your gold coin, however, is worth about $1060 (numismatic value aside).


Imagine if in 1933 you had stashed that $20 in the Dow Jones industrial average, only to watch it waltz to a value of $3300, not including the reinvestment of dividends.

Hedging is not growing wealth.  We've got 17-18 year olds on this board who are buying gold or silver as an investment.  Little do they know they're only protecting the lifestyle and living wages of a 17-18 year old.

Gold is a stupid investment, but to each his/her own.  If you feel that you want to only preserve what you have, rather than grow it, I suggest you stick with gold.  If you actually want a return that is greater than inflation, and actually grows your wealth, look elsewhere.

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## Bruno

> Imagine if in 1933 you had stashed that $20 in the Dow Jones industrial average, only to watch it waltz to a value of $3300, not including the reinvestment of dividends.
> 
> Hedging is not growing wealth.  We've got 17-18 year olds on this board who are buying gold or silver as an investment.  Little do they know they're only protecting the lifestyle and living wages of a 17-18 year old.
> 
> Gold is a stupid investment, but to each his/her own.  If you feel that you want to only preserve what you have, rather than grow it, I suggest you stick with gold.  If you actually want a return that is greater than inflation, and actually grows your wealth, look elsewhere.


I never said it was an investment.  My example is how inflation has stolen the value of the dollar.

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## Dr.3D

Just don't look at the current stock market as a way to preserve or increase your wealth.

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## specsaregood

> Imagine if in 1933 you had stashed that $20 in the Dow Jones industrial average, only to watch it waltz to a value of $3300, not including the reinvestment of dividends.


Just wondering, 
Which companies were included in the DOW in 1933?  Did the stocks listed in the DOW change between that $20 price and the $3300 price?  How many went under?

Agreed gold and silver aren't good investments.  I however use it to store my wealth.  My work and my business are my investments.  Different strategies for different people.  I for one don't trust those companies in the DOW right now.

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## Dr.3D

> Just wondering, 
> Which companies were included in the DOW in 1933?  Did the stocks listed in the DOW change between that $20 price and the $3300 price?  How many went under?
> 
> Agreed gold and silver aren't good investments.  I however use it to store my wealth.  My work and my business are my investments.  Different strategies for different people.  *I for one don't trust those companies in the DOW right now.*


Nor should you.    The whole thing looks like a toilet waiting to be flushed.

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## Danke

> What I have done is look at the unemployment rate historically as an indicator when rates go up and credit is shut down, and it is at about 12%.


And here I though tight credit caused higher unemployment.  But it is the other way around...hmm.

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## hugolp

> And here I though tight credit caused higher unemployment.  But it is the other way around...hmm.


Well, you could say that tigh credit can cause unemployment, but in reality is the previous inflationary boom that disalocates the workers into non-profitable bussiness, and then when credit tightens bad bussiness close and people have to work for a new job, but this is a good thing, since its healing the economy. If this does not happen its only creating a bigger problem and bigger unemployment in the future.

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## gls

> Imagine if in 1933 you had stashed that $20 in the Dow Jones industrial average, only to watch it waltz to a value of $3300, not including the reinvestment of dividends.
> 
> Hedging is not growing wealth.  We've got 17-18 year olds on this board who are buying gold or silver as an investment.  Little do they know they're only protecting the lifestyle and living wages of a 17-18 year old.
> 
> Gold is a stupid investment, but to each his/her own.  If you feel that you want to only preserve what you have, rather than grow it, I suggest you stick with gold.  If you actually want a return that is greater than inflation, and actually grows your wealth, look elsewhere.


I don't agree with this argument. In the past 8 years gold's price in US dollars has nearly quadrupled. Are you contending that the cost of living in America has quadrupled since 2001? Of course not. My $600 a month studio apartment was not going for $150 a month in 2001. The $1 double cheeseburger on the McDonalds menu was not $0.25. The fact is that gold's purchasing power has increased substanially.

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## YumYum

> So YumYum, if what the fed is saying is true and they plan on issuing almost $500billion! in new debt next quarter alone, what effect do you think that will have on the price of gold?  Is that gold bearish and dollar bullish?


I am not pretending to ba a finacial advisor. I am a college student who just finished my rough draft thesis, on the Federal Reserve System and Central Banking. The Fed, as they and every Central Bank have done in the past, is going to strip you and I of our wealth. They call it "reclaiming their wealth."

If you want to play the metals market, here is what I recommend:

Take $18,000 and break it up 6 ways:

1.) $3,000 in gold.........because of it's worldwide popularity and a hedge against the dollar.

2.) $3,000 in U.S. dollars.......because it is our medium of exchange and most likely will deflate in the future.

3.) $3,000 in Australian dollars....because it is deflating and currently it has a greater purchasing power than gold and the dollar.

4.) $3,000 in silver U.S. dollars. These are a medium of exchange and legal tender in the U.S., except they are only worth a dollar at the bank. If the governement  outlaws the hoarding of gold like it did in 1933, silver can be used to purchase food from farmers.

5.) $3,000 in platinum. Platinum is in scarce supply and could go through the roof if the economy turns around and the automobile industry makes a comeback.

6.) $3,000 in food supplies. If everything goes to hell, food will be the most precious commodity there is besides water.

Again, this is my view as  more of a safeguard rather than an investment to get rich.

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## YumYum

> And here I though tight credit caused higher unemployment.  But it is the other way around...hmm.


The discount rate is low right now but the average Aemrican can't get a loan. That low rate is currently benefitting banks and large financial institutions; not the consumer. When the Fed ups the discount rate, more of the bigger companies will go under, creating more unemployment.

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## Danke

> The discount rate is low right now but the average Aemrican can't get a loan. That low rate is currently benefitting banks and large financial institutions; not the consumer. When the Fed ups the discount rate, more of the bigger companies will go under, creating more unemployment.


oh, so now tighter credit will produce the higher unemployment.

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## YumYum

> oh, so now tighter credit will produce the higher unemployment.


Yes, because companies that are currently still enjoying a line of credit will be cut off in the future.

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## Jordan

> I don't agree with this argument. In the past 8 years gold's price in US dollars has nearly quadrupled. Are you contending that the cost of living in America has quadrupled since 2001? Of course not. My $600 a month studio apartment was not going for $150 a month in 2001. The $1 double cheeseburger on the McDonalds menu was not $0.25. The fact is that gold's purchasing power has increased substanially.


No, I am not saying the cost of living has quadrupled in the past 4 years.  But I would like to thank you for opening this door, if I may, I would like to pass through... 

Gold's purchasing power has indeed increased substantially from 2001.  How awfully convenient of you to pick the lowest charting point in recent history, though it will only help me substantiate my claims as well.

Gold's low of $290 per ounce in 2001 would reflect poorly upon the assumption that gold maintains a return equal to inflation.  That would be a multiple of 14.5 over the 1933 price, and we all know the money supply has grown much faster than 1,450% since 1993.

The change in pricing from 2001-2009 wasn't a gain, that was gold merely catching up to where it should have been priced.  (Assuming it keeps in line with inflation).

My point is that gold makes a terrible investment, and a poor choice as a hedge.  Physical gold should be left for the paranoid among us, and anyone who wants to make some real money (assuming gold continues its charge upward) would be better with gold mining stocks.

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## Jordan

I would also like to ask anyone in here advocating the purchase of gold if they have already enough assets to carry themselves through retirement?

If you're not already wealthy enough to retire with the wealth you have today, and investing in gold, you've failed personal finance 101.

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## Danke

Threads like these always give me a good chuckle.

I started investing in gold when it was under $400, and silver less than $5.  And that was only ~ 7 years ago.

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## Bruno

> I would also like to ask anyone in here advocating the purchase of gold if they have already enough assets to carry themselves through retirement?
> 
> If you're not already wealthy enough to retire with the wealth you have today, and investing in gold, you've failed personal finance 101.


As you are if you don't disversify, which the purchase (not investment) of gold can be part of

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## ctiger2

The 1 thing I absolutely LOVE about buying Gold is that Central Banks HATE it. It sends them a message that you've lost faith in their worthless fiat paper currency. Everyone should be buying as much Gold as they can to send that message.

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## YumYum

> The 1 thing I absolutely LOVE about buying Gold is that Central Banks HATE it. It sends them a message that you've lost faith in their worthless fiat paper currency. Everyone should be buying as much Gold as they can to send that message.



That is not entirely true. Historically, central banks shore up gold reserves by buying up gold over a period of time, only to "dump" it later. They are helping to create the current gold bubble that everybody is jumping in to. Only thing is, they will sell before everybody else does, and "take back their wealth", which they feel rightfully belongs to them .

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## ctiger2

Too bad we're nowhere near a Gold bubble. I'm still seeing ads on TV for people to *sell their Gold to the Gold Guys* because it's at an all time high. Hmmm, the Gold Guys want it...

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## Jordan

> Too bad we're nowhere near a Gold bubble. I'm still seeing ads on TV for people to *sell their Gold to the Gold Guys* because it's at an all time high. Hmmm, the Gold Guys want it...


Of course they want it, especially at pennies on the dollar.  Cash4Gold pays anywhere from 15-22% of the melt value of the gold.

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## Dr.3D

> That is not entirely true. Historically, central banks shore up gold reserves by buying up gold over a period of time, only to "dump" it later. They are helping to create the current gold bubble that everybody is jumping in to. Only thing is, they will sell before everybody else does, and "take back their wealth", which they feel rightfully belongs to them .


Typically, they buy paper gold and silver.   From what I understand, most of that 'gold' and 'silver' does not even exist.   They use the paper metal to manipulate the price on the market.   

When it is exposed that they don't actually have that much gold and silver and there are defaults in delivery, the cat will be out of the bag and the prices should go up.

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## JoshLowry

> I am not pretending to ba a finacial advisor. I am a college student who just finished my rough draft thesis, on the Federal Reserve System and Central Banking. The Fed, as they and every Central Bank have done in the past, is going to strip you and I of our wealth. They call it "reclaiming their wealth."
> 
> If you want to play the metals market, here is what I recommend:
> 
> Take $24,000 and break it up 6 ways:
> 
> 1.) $3,000 in gold.........because of it's worldwide popularity and a hedge against the dollar.
> 
> 2.) $3,000 in U.S. dollars.......because it is our medium of exchange and most likely will deflate in the future.
> ...


Better take another math class before you leave.

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## YumYum

> Better take another math class before you leave.


lol, I didn't even see that!

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## tmosley

> That is not entirely true. Historically, central banks shore up gold reserves by buying up gold over a period of time, only to "dump" it later. They are helping to create the current gold bubble that everybody is jumping in to. Only thing is, they will sell before everybody else does, and "take back their wealth", which they feel rightfully belongs to them .


What happens when no-one wants their dollars as they are buying it back?  THey can certainly sell off all their gold (assuming their "gold" isn't just plated tungsten), which would certainly depress the price of gold, but that wouldn't leave them with any options, or any real wealth.  Gold is the only thing that the Fed owns that is worth anything right now, or likely to be worth anything in the future.

Central banks become "wealthy" by printing money, not by buying and selling gold.  At most, they use their gold supply like a gun with one bullet.  Once they use it, they're out of ammo, and gold can continue its rise.  When they are simply printing money, and the market knows it, they are going to price it accordingly.  If you use Zimbabwe as an example, they made it so that gold wasn't available at any price due to the exponential nature of the growth of their money supply.

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## YumYum

> What happens when no-one wants their dollars as they are buying it back?  THey can certainly sell off all their gold (assuming their "gold" isn't just plated tungsten), which would certainly depress the price of gold, but that wouldn't leave them with any options, or any real wealth.  Gold is the only thing that the Fed owns that is worth anything right now, or likely to be worth anything in the future..


That is not entirely true. The Fed owns the "unlimited credit" of the American people. That debt has to be paid back with labor. A bar of gold is pretty to look at, but it cannot plant a garden or build a house. But human's can, and your and my labor is worth more than gold. That is why Hitler's paper money had greater purchasing power than gold. The Nazis backed their Reichsmark with the labor of the German people. When the Nazis created work building up Germany's inferstructure (the autobaun, bridges, water systems etc..) they paid the German's with a "receipt" for their labor, which was the Reichsmark. This paper had value because it took labor to justify its printing, and the paper was "backed" by labor. Also, when nobody wants the dollar, the Fed will stop printing dollars and cut off all credit, creating less debt, thus deflating the dollar.






> Central banks become "wealthy" by printing money, not by buying and selling gold.  At most, they use their gold supply like a gun with one bullet.  Once they use it, they're out of ammo, and gold can continue its rise.  When they are simply printing money, and the market knows it, they are going to price it accordingly.  If you use Zimbabwe as an example, they made it so that gold wasn't available at any price due to the exponential nature of the growth of their money supply.


That is partially true but you must remember that the whole world is on a central banking system that uses fiat money as a medium of exchange. There are many ways that the central banks steal people's wealth. One is through inflation. Another is by running up incredible debt with wars and social programs, which requires a creation of massive debt. Another is by contracting credit to the point that the paper deflates as well as the price of articles, such as real estate, businesses and other banks. With a deflated currency and deflated prices, central banks buy up these articles a penny on the dollar.

The "dumping" of gold by the central banks helps to "jump start" the deflation of a paper currency. The central bank will dump gold at the same time it contracts credit. You cannot compare Zimbabwe to the United States because Zimbabwe does not have a large central bank authorizing the printing of their money. You have a mad dictator with a copier machine.

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## JoshLowry

> That is why Hitler's paper money had greater purchasing power than gold.


Gold wins in the long run every time.  It will never go to zero unlike a piece of paper.

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## YumYum

> Gold wins in the long run every time.  It will never go to zero unlike a piece of paper.


That is true, but a person must have a lot of wealth to sit and watch gold for thirty years. Gold is not a medium of exchange in this country and when people are out of work and broke and the price of gold drops in a pullback people will sell it at a loss to pay bills. I only have posted my observations because I don't want to see people who are struggling get stung in this current gold bubble. Gold in the long term (thirty, forty years) I am all for. Gold in the short term is high risk.

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## ctiger2

It will be interesting to see what happens when the massive fraud and manipulation with the stock market & PM market is finally exposed.

BTW Schiff says to buy Gold:

YouTube - Buy Gold!!!

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## tmosley

> That is not entirely true. The Fed owns the "unlimited credit" of the American people. That debt has to be paid back with labor. A bar of gold is pretty to look at, but it cannot plant a garden or build a house. But human's can, and your and my labor is worth more than gold. That is why Hitler's paper money had greater purchasing power than gold. The Nazis backed their Reichsmark with the labor of the German people. When the Nazis created work building up Germany's inferstructure (the autobaun, bridges, water systems etc..) they paid the German's with a "receipt" for their labor, which was the Reichsmark. This paper had value because it took labor to justify its printing, and the paper was "backed" by labor. Also, when nobody wants the dollar, the Fed will stop printing dollars and cut off all credit, creating less debt, thus deflating the dollar.
> 
> 
> 
> 
> 
> That is partially true but you must remember that the whole world is on a central banking system that uses fiat money as a medium of exchange. There are many ways that the central banks steal people's wealth. One is through inflation. Another is by running up incredible debt with wars and social programs, which requires a creation of massive debt. Another is by contracting credit to the point that the paper deflates as well as the price of articles, such as real estate, businesses and other banks. With a deflated currency and deflated prices, central banks buy up these articles a penny on the dollar.
> 
> The "dumping" of gold by the central banks helps to "jump start" the deflation of a paper currency. The central bank will dump gold at the same time it contracts credit. You cannot compare Zimbabwe to the United States because Zimbabwe does not have a large central bank authorizing the printing of their money. You have a mad dictator with a copier machine.


The Nazis were overrun before their new experiment in fiat money could collapse in upon itself.  I really wonder if it was their monetary policy, or a relaxation of regulations that caused their economy to emerge from the depression so early.  You can't point to a monetary system that was only in existence for 15 years as a success story.  The US dollar was great for the 15 years following Volcker's action to "kill" inflation.  Now, it's not so great.

You claim that central banks steal money by running up massive debts.  They certainly do exhibit that behavior, but that in itself is not threat.  It is the act of repudiating the debt, or paying it though the printing press that is the act of theft.  That is coming.  There is no way to manipulate their way out of this hole.  Intelligent central banks see this, and are buying gold with both hands.  Central banks run by Keynesians are incapable of learning this lesson, and will continue with their policies no matter what, as they did in Japan, until they either finally recognize their fate and repudiate the debt, or everyone else does, and their currency collapses.

Dumping gold would only make sense if they had already shut off the QE spigot.  There are no signs of that, not on the horizon, not on the radar, I doubt if Hubble could see it.  It's not going to happen.  It would be political suicide.

The banking conspiracy died ages ago.  The only ones left are the spoiled next generation of economists who bought the Keynesian theory hook, line, and sinker.  Tell a lie enough times, and it starts to seem like the truth.  Tell it enough times, and it is accepted by EVERYONE as truth, even those who were party to the lie.  The bankers have lost real control (otherwise, they wouldn't have gone bankrupt and aroused the anger of the populace at their bailouts).  Now, it's the politicians who are in control.  They DEFINITELY have no clue what is going on, and were never in on the lie to begin with.

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## specsaregood

> Gold in the long term (thirty, forty years) I am all for. Gold in the short term is high risk.


Who would buy physical gold for the short term?   I just dollar cost average purchase every month, bury it and forget about it.

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## LibForestPaul

> Well, you could say that tigh credit can cause unemployment, but in reality is the previous inflationary boom that disalocates the workers into non-profitable bussiness, and then when credit tightens bad bussiness close and people have to work for a new job, but this is a good thing, since its healing the economy. If this does not happen its only creating a bigger problem and bigger unemployment in the future.


Or, malinvestment causes unemployment. People having careers that were never supported by the free market, only by FED bubbles.

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## LibForestPaul

IMF sold gold? Where did they get this gold? They do not belong to any nation-state? And what did they purchase their gold with?

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## eric_cartman

lol... it's so funny that YumYum started another thread telling people to sell their gold

the last thread he made about gold was Oct. 25th, telling us that it was about to crash... well guess what... gold made another new all time high.  gold FTW!

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## Arklatex

reminds me of the time.. a few months ago.. a bloke was going to "show everyone how it's done" by putting up $100,000 short the S&P  


keep em coming!

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## YumYum

> lol... it's so funny that YumYum started another thread telling people to sell their gold
> 
> the last thread he made about gold was Oct. 25th, telling us that it was about to crash... well guess what... gold made another new all time high.  gold FTW!


Keep laughing. Now I know why G-d made people like you. Somebody has to pay retail.

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## ctiger2

> lol... it's so funny that YumYum started another thread telling people to sell their gold
> 
> the last thread he made about gold was Oct. 25th, telling us that it was about to crash... well guess what... gold made another new all time high.  gold FTW!


I'm guessing YumYum works for The Fed. Joined in Sept, 2009 to fight pro Gold sentiment on the RPF. Good Luck!

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## YumYum

> reminds me of the time.. a few months ago.. a bloke was going to "show everyone how it's done" by putting up $100,000 short the S&P  
> 
> 
> keep em coming!


Another forum member shared this enlightening article. The person that is quoted in this article is highly intelligent and educated. You may need someone to explain to you what she is saying.

http://europe.theoildrum.com/node/5917

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## YumYum

> I'm guessing YumYum works for The Fed. Joined in Sept, 2009 to fight pro Gold sentiment on the RPF. Good Luck!


It is obvious you haven't read my posts. If you don't believe me then believe the woman in this article who has forgotten more than you will ever know about economics.

http://europe.theoildrum.com/node/5917

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## Arklatex

Well YumYum where are you putting your money, US Treasuries?

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## ctiger2

> It is obvious you haven't read my posts. If you don't believe me then believe the woman in this article who has forgotten more than you will ever know about economics.
> 
> http://europe.theoildrum.com/node/5917


You're correct, I haven't read any of your posts... thoroughly. I don't believe you AND I don't believe the woman in the article I'm not going to read AND I hope she's forgotten more than me about economics than I'll ever know because I'm not a paid economist. However, I'm smart enough to understand who really knows what they're talking about and that's all that matters to me.

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## Dr.3D

> I'm guessing YumYum works for The Fed. Joined in Sept, 2009 to fight pro Gold sentiment on the RPF. Good Luck!


It's strange that you said that.   What with all of the anti gold sentiment from YumYum since he got here, I was thinking the same thing.

Of course, it may be he isn't aware of what Peter Schiff has been saying about gold all this time and how most of us have been listening to him.

Are you aware of those facts YumYum?

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## Bossobass

Y-Y,

If you're gonna talk about gold as an investment, then talk about gold as an investment.

What investor buys gold and holds it for 30 years? Here's a hint: NOT ONE.

When I was your age, in the 70s, I scraped up $10K, a big sum back then for a schmoo from the West End of Pittsburgh. I bought Krugs for $125 each.

A couple of years later, they were $800. I wasn't greedy, I sold when they reached $680.

A couple of years later, they were $300, so I bought them back.

In 2008, I sold them all for $1000. Later in 2008, I bought them back for $750.

They're now worth $1100. Are you any good at math?

Following the line of reasoning in your comments, I would have simply held the original 80 Oz at $125 ($10K) and today they'd be worth $88K. Instead, as a result of actually playing gold as an investment, 80 Oz @ $10K is now 241 Oz @ $266K.

Now, what's this bull$#@! about gold?

Bosso

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## YumYum

> It's strange that you said that.   What with all of the anti gold sentiment from YumYum since he got here, I was thinking the same thing.
> 
> Of course, it may be he isn't aware of what Peter Schiff has been saying about gold all this time and how most of us have been listening to him.
> 
> Are you aware of those facts YumYum?


I've read Peter Schiff's book and I have listened to him on his video blogs and I read his articles in Euro-Pacific. So, tell me, do you only do what Peter Schiff tells you to do? How did Peter Schiff make his millions? By going against popular opinion when he made his investments. You worship Peter Schiff's every word, and yet he is human just like you and I, and he has made mistakes. Peter is right that gold will go up, but history has shown that when bubbles burst, credit contraction hits hard and will drive gold down. The bankers who are in control know what they are doing in stealing our wealth back. Peter needs to be careful; they might steal his wealth also.

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## YumYum

> Y-Y,
> 
> If you're gonna talk about gold as an investment, then talk about gold as an investment.
> 
> What investor buys gold and holds it for 30 years? Here's a hint: NOT ONE.
> 
> When I was your age, in the 70s, I scraped up $10K, a big sum back then for a schmoo from the West End of Pittsburgh. I bought Krugs for $125 each.
> 
> A couple of years later, they were $800. I wasn't greedy, I sold when they reached $680.
> ...


That's great bosso! But the problem here is that you have people buying gold who aren't as savy as you. They buy the gold, but they are not sure when to sell. Besides, the dollar will become worthless and gold is going to go to $30,000 an ounce. Right? Hell, I could make a killing in pineapples if I knew when to buy and when to sell.

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## Dr.3D

The old Wall Street adage to hold 10% of your portfolio in gold and hope it does not work remains more than valid.

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## YumYum

> The old Wall Street adage to hold 10% of your portfolio in gold and hope it does not work remains more than valid.


Ten per cent is much more reasonable than the panic talk of "BUY GOLD!" that I have witnessesed on these threads. A diverse mix is the way to go. I posted this a few pages back, but here is the way I see it if I was to play metals:

"I am not pretending to ba a finacial advisor. I am a college student who just finished my rough draft thesis, on the Federal Reserve System and Central Banking. The Fed, as they and every Central Bank have done in the past, is going to strip you and I of our wealth. They call it "reclaiming their wealth."

If you want to play the metals market, here is what I recommend:

Take $18,000 and break it up 6 ways:

1.) $3,000 in gold.........because of it's worldwide popularity and a hedge against the dollar.

2.) $3,000 in U.S. dollars.......because it is our medium of exchange and most likely will deflate in the future.

3.) $3,000 in Australian dollars....because it is deflating and currently it has a greater purchasing power than gold and the dollar.

4.) $3,000 in silver U.S. dollars. These are a medium of exchange and legal tender in the U.S., except they are only worth a dollar at the bank. If the governement outlaws the hoarding of gold like it did in 1933, silver can be used to purchase food from farmers.

5.) $3,000 in platinum. Platinum is in scarce supply and could go through the roof if the economy turns around and the automobile industry makes a comeback.

6.) $3,000 in food supplies. If everything goes to hell, food will be the most precious commodity there is besides water.

Again, this is my view as more of a safeguard rather than an investment to get rich."
__________________

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## Dr.3D

> Ten per cent is much more reasonable than the panic talk of "BUY GOLD!" that I have witnessesed on these threads. A diverse mix is the way to go. I posted this a few pages back, but here is the way I see it if I was to play metals:
> ~Snip_


Well, when I started out, it was 10% of my portfolio.... now with the dollar value of the metals having gone up, I have more than 20% of my portfolio in precious metals.

I doubt I am supposed to sell some of the metals to diversify and bring my precious metal holdings back down to 10%.

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## american.swan

I need the historical evidence showing this is what central banks or the FED has done time and time again.

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## Zippyjuan

All investment have risk.  Gold is no different. You may get lucky when you buy and sell- or you may not. I was unlucky by buying in 1980 at $640 and $750 an ounce. People and media kept saying gold was going higher- $2000 or even $5000 an ounce. Can't lose. I did.   Allowing for inflation, I am still losing money on that.

 For now, I am putting my money into paying off my mortgage.  Once that is gone, I have a guaranteed return by not having that mortgage payment- and that will increase my after tax available money by 33%. A very nice return!  And guaranteed!

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