Why I don't trust gold

[peacepotpaul]

Posted last year in response to a similar OP:

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

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 after that, they were $300, so I bought them back.

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

They're now worth $1200+.

Following the line of reasoning in all of the "gold is not an investment" comments, I would have simply held the original 80 Oz at $125 ($10K) and today they'd be worth $96K. Instead, as a result of actually using gold as an investment, 80 Oz @ $10K is now 241 Oz @ $291K.

That's 29 for 1.

When looking at the DOW, I would have had to sell stocks (as they were dumped from the average) and purchased new stocks (as they were added to the average).

IOW, if I bought and held the DOW with $10k back then, I'd have a big pile of nothing. Buying and selling as the DOW evolved from then (DOW = 1000) to today (DOW = 10,000) would have yielded 10 for 1.

Now, what's this bullshit about gold?

Bosso

what sign in 70s told you to buy gold? or was it just one of many other investments?

 

[Jordan]

One of them owns some portion of that portfolio, or has access to it, or that is illegal. Either way, no-one is taking delivery on houses, so it's irrelevant.

No it isn't. Again, my only point is that just because you bet on something doesn't mean you want to own it. You can't seem to get that through your head.

Paper for paper, so what? Paper for paper that's represented as gold? That's fraud, and just waiting to be exposed.

No its not. If me and my friend want to make a sidebet on gold there isn't anything wrong with that. And no, it isn't fraud, and no, it doesn't mean I want to own gold.

You know Stupidland. You've got a timeshare there (because you can't tell the difference between debt and commodities). People who own gold futures implicitly want to own gold. People who own products like GLD implicitly want to own gold. Period. If you own gold futures, but don't want to own gold, then you must be posting from your timeshare.

Why do they implicitly want to own gold? Why can't they just want to speculate on something, anything, that they think will rise in value in the future?

Yes, but they are speculating in something REAL. If they find out that their futures contracts don't entitle them to delivery, or only to 1/100th the amount they thought, they won't be able to sell them to the end users, the people who want to take that oil, or wheat, or frozen concentrated orange juice, package it, and sell it at the wholesale level. If it turns out that the contract isn't backed by anything, and that the actual commodity is rarer than the market though by a hundred fold, then the price for the real thing will EXPLODE. I understand that you won't understand this, as you are soaking in the culture of Stupidland (careful not to drown in your own drool, that's the number one killer there). When you get back to the real world, hopefully you will understand what I am talking about.

Subtract the attacks, you'd almost have an argument.

If what you say is true, the price of EVERYTHING should explode when the derivatives market falls over and dies. Since, of course, all those people who are speculating actually want to own something.

You're a rare bird, and a stupid one. You ought to change your avatar to a dodo. To replicate the return on a given commodity exactly, you have to own it. You can replicate price action by purchasing other things, but it's a sloppy and expensive business, and you're likely to lose a lot of money unnecessarily to management fees.

Again, not true. Look at the exchange-traded NOTE DGP. I can track the twice the daily change in gold, and the issuer doesn't own a single ounce.

Now, there aren't any unleveraged gold ETNs..yet, but DGP costs just .75% per year, and tracks the daily change quite well. Besides, .75% is far less than you're paying in premiums for physicals..so you'd have to hold for years before making up the difference.

Any given speculator might not want to own it, but SOMEONE does. If the person who DOES want it finds out that there's nothing there, then it becomes worthless, ALL THE WAY DOWN THE CHAIN.

I would suggest you not reply to this until you get back from Stupidland.

Doesn't really matter if they want to only own it to just roll it over again.

 

[Jordan]

so your statement "i dont trust gold" just means "I dont believe anything is forever"?

You can't read. "I Dont Trust Gold" is the name of the article I posted here in the OP.

please tell me the difference between investment and speculation.

An investment is something that produces. For example, a mill takes components, wheat and power, and turns it into something more valuable, flour. It produces wealth, and profits.

Speculative investments are those that don't produce. 1 oz of gold is always 1 oz of gold.

 

[Jordan]

Look at your own graph. See where the curve flattens? The 90's. Thank you for proving my point.

Inflation wasn't under control in the 1970s. The money supply was growing almost as fast then as it was in the 90s. Problem is that you don't understand the difference between linear and exponential.

You don't get it (Stupidland, I know). All the oil ever drilled is now CO2, or on its way there. All the gold ever mined is still around. I know you won't get it, so I'll leave it at that.

How much oil has been created since 2007? Not much.

It restored faith in the currency. That was enough to stop the run on gold. You could get a better return by holding on to dollars. This is not the case anymore, and won't be for the foreseeable future (surely even you can understand this).

If the FED starts raising rates, even by a small figure, you can bet your ass that gold gets whacked.

No, you're getting dumber. The tax burden is high now, with rates at zero. What do you think they are going to look like with rates at 10%?

I say inflate away the debt. At least one-time inflation only costs once, whereas debt costs forever (until you pay it off).

If you refuse to understand history, it's going to come back and beat you with a lead pipe, probably to death. I'll buy you a nice arrangement for your funeral (if you're not just left to rot in the street). The prices didn't stick because they raised the interest rates to such an extent that it made more sense for people to save in dollars (I'd be all in on dollars in a simple savings account if I was able to get a 23% return). THAT CAN NOT HAPPEN WITH A $13 TRILLION DOLLAR NATIONAL DEBT.

Funny how frequently you say I refuse to understand history, when I can implicitly remember your rebuttal to my claim that gold is more volatile (risky) and less rewarding than stocks over the same long term period was that you don't care about history because you didn't buy your gold then.

Thanks for the offer. But I'm sure I'll be just OK to pay for my funeral.

 

[Jordan]

Jordon's arguments aren't too convincing here in this thread.

Central banks own gold.
Governments own gold.
I would bet $100 that the Rothschild family owns gold.
I would bet $100 that Warren Buffet himself owns gold.

Central banks own land. Governments own land. I would bet $100 the Rothschilds own land. I would bet that Warren Buffet owns land. No, I'm not saying that land is a good investment, I'm just saying that I can put anything in there. Appeal to authority much?

The debt society was forced on the people through fraudulent techniques and is not likely to last much longer IMHO.

PM's have been used as money for 5k to 6k years until 1964 - 1971 or so.

George Soros claims that the U.S. is bankrupt.

Silver historically has been worth about 1/16 the price of gold when free markets were allowed to operate.

Owning PM's over paper or electronic money has a much better track record.

How?

People have wiped their ass for years with some sort of fiber, maybe they'll switch to a bidet.

Who cares?

Historically its also been more volatile (risky) and provided smaller returns than that of equities.

But its still not an investment.

 

[Jordan]

Posted last year in response to a similar OP:

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

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 after that, they were $300, so I bought them back.

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

They're now worth $1200+.

Following the line of reasoning in all of the "gold is not an investment" comments, I would have simply held the original 80 Oz at $125 ($10K) and today they'd be worth $96K. Instead, as a result of actually using gold as an investment, 80 Oz @ $10K is now 241 Oz @ $291K.

That's 29 for 1.

Hey cool! You timed the market! Me too, I've churned 2600%+ in stock options in the last 7 years. Am I going to claim that as ordinary? No, because I'm not a dumbass.

When looking at the DOW, I would have had to sell stocks (as they were dumped from the average) and purchased new stocks (as they were added to the average).

IOW, if I bought and held the DOW with $10k back then, I'd have a big pile of nothing. Buying and selling as the DOW evolved from then (DOW = 1000) to today (DOW = 10,000) would have yielded 10 for 1.

Now, what's this bullshit about gold?

Bosso

I'm not even going to bother responding.

 

[libertybrewcity]

Hey guys,

Where is the best place to learn about the commodities markets and investing in general? I used to have an account on updown.com where I invested pretend money and did exceptionally well, but I really just got lucky/followed Jim Rogers advice.

Any suggestions?

i also would like some suggestions! ive been reading a lot on kitco for gold and silver, this guy is the only daily blog i can find on the gold price.

http://silver-and-gold-prices.goldprice.org/

 

[FrostyLeaf]

The question here ultimately is:

"What is real wealth?"

 

[Travlyr]

Central banks own land. Governments own land. I would bet $100 the Rothschilds own land. I would bet that Warren Buffet owns land. No, I'm not saying that land is a good investment, I'm just saying that I can put anything in there. Appeal to authority much?

Investment definition: An asset or item that is purchased with the hope that it will generate income or appreciate in the future.
Land can be a good investment. All wealth comes from the land. But this thread is about gold. Gold can be a good investment too.

The debt society was forced on the people through fraudulent techniques and is not likely to last much longer IMHO.

How?

Everybody knows that the Federal Reserve Act of 1913 was implemented fraudulently. The creation of the international central bank was designed to enrich a few at the expense of the many. Read:"The Secret of the Federal Reserve" by Eustace Mullins.

Historically its also been more volatile (risky) and provided smaller returns than that of equities.

Only in the last 100 years... since the inception of the FED.
Historically (for 5000 years) gold has ruled. The Rothschilds did not go to Russia to destroy Tsar Nicholas II and his entire family in 1917 for equities or paper. They stole his gold!

 

[peacepotpaul]

An investment is something that produces. For example, a mill takes components, wheat and power, and turns it into something more valuable, flour. It produces wealth, and profits.

Is production of new items always producing or increasing value?
What if a mill makes items that are useless, would that be a failed investment?
So is a printing press that counterfeits money "productive" and an "investment"?

Speculative investments are those that don't produce. 1 oz of gold is always 1 oz of gold.

speculative investments? so speculation and investment can meet? not mutually exclusive?

 

[peacepotpaul]

Investment definition: An asset or item that is purchased with the hope that it will generate income or appreciate in the future.
Land can be a good investment. All wealth comes from the land. But this thread is about gold. Gold can be a good investment too.

so that'd be synonomous with speculation, am I wrong?

 

[peacepotpaul]

Central banks own land. Governments own land. I would bet $100 the Rothschilds own land. I would bet that Warren Buffet owns land. No, I'm not saying that land is a good investment, I'm just saying that I can put anything in there. Appeal to authority much?

Calling what the rich own and invest in "appeal to authority" is like calling a elected official "appeal to popularity".

Voting is all about the popular numbers, and investment is all about money, more specifically, with supply and demand, where the big spenders land their money is by definition what is valued (and valuable).

 

[tmosley]

Inflation wasn't under control in the 1970s. The money supply was growing almost as fast then as it was in the 90s. Problem is that you don't understand the difference between linear and exponential.

Wow, you really don't know how to read charts, do you? The chart you posted was linear, not a log scale graph. It clearly was going up steeply in the 70's and was flat in the 90's, proving my point that gold went up fast while inflation was out of control, and went down as faith in the currency was restored.

How much oil has been created since 2007? Not much.

What planet are you living on?

If the FED starts raising rates, even by a small figure, you can bet your ass that gold gets whacked.

Not going to happen. It would CRUSH the Federal Government. And no, a small figure won't work, it would have to go up to AT LEAST 5% to beat real inflation, and should lending resume and/or should there be a run on the dollar at any point then you will have to raise it to 10, then 20, then 30%. Gold actually increased in value as they raised rates until they finally increased them well above the inflation rate.

I say inflate away the debt. At least one-time inflation only costs once, whereas debt costs forever (until you pay it off).

And what do you think monetization of 13+trillion dollars of debt is going to do the dollar? This is exactly what is going to happen in the end. If you think this is going to happen, then you shouldn't be in anything except for PMs!

Funny how frequently you say I refuse to understand history, when I can implicitly remember your rebuttal to my claim that gold is more volatile (risky) and less rewarding than stocks over the same long term period was that you don't care about history because you didn't buy your gold then.

Your memory must be going. Perhaps the drool is blocking your oxygen supply. I never said that. But you are wrong there as well. Gold is only highly volatile when you include the big drop in the 80's, which occurred as a result of a one time rescue by Volcker, something that CAN NOT BE REPEATED DUE TO THE MASSIVE NATIONAL DEBT. You also fail to recognize that the conditions match those of Weimar Germany in the year leading up to their famous currency collapse, except that we don't have an industrial economy any more (welfare state, increasing government spending, and a massive, unpayable debt).

Thanks for the offer. But I'm sure I'll be just OK to pay for my funeral.

I very seriously doubt that. You might be able to afford a stick of gum, or maybe a whole pack if you get lucky in the stock market, but a casket will be out of your reach if you continue on the path of paper without any security. 5% in physical PMs in your possession will ensure your survival, at least.

 

[tmosley]

Doesn't really matter if they want to only own it to just roll it over again.

I just noticed this gem. You can't roll it over if there aren't any buyers. Any given contract is for delivery at a certain date. If you possess the contract past that date, you have to take delivery. The contract disappears.

You are so used to "trading" that you can't even see the real function of the market anymore. You can't see that it is dysfunctional. You can't see the forest for the trees here. And you have totally missed the forest fire, having convinced yourself that the raging flames and chocking smoke are a normal part of market operations.

Enjoy these markets, they'll be your funeral pyre one day, and soon.

 

[Bossobass]

what sign in 70s told you to buy gold? or was it just one of many other investments?

There was a local businessman who knew my father, also a local businessman. My father bought rental property on a very small scale, but methodically, as others would instead have a savings account or a stock portfolio.

The local businessman was a member of JBS. When Nixon removed the Breton-Woods gold standard, the JBS guys saw the handwriting on the wall and he sold all of his real estate holdings and bought gold.

My father bought a duplex from him for $25k. I remember my father saying that he thought the JBS guy was crazy ( "Birchers" were considered nutjob extremists back then to the majority, as TPTB had done a thorough job of painting them as communists, etc.) and that he wished he could have known earlier and bought more of his properties.

The JBS guy bought gold at $35-36/Oz. I was in HS at the time and had zero money. It took me 5 years to scrape up $10k or I would have done it sooner.

As a young man, I listened intently to my successful elders. I had no credit or history to be able to buy real estate at that time, so I bought gold. Both of them (my father and the JBS guy) did well in their investments, but the JBS guy won that round, hands down.

As the 70s turned into the 80s, I learned a lifetimes worth about the inflation/recession cycle and the importance of gold. None of what I learned as a young man has changed at all.

I wish I had bought more over the years. Alas, I was bred to be an American Consumer, and wasted a lot of $$ in that worthless pursuit.

Bosso

 

[YumYum]

Isn't sliver and gold supposed to go through the roof since last Monday?

 

[peacepotpaul]

Isn't sliver and gold supposed to go through the roof since last Monday?

 

[YumYum]

lol!!!

 

[xd9fan]

that's a buy signal from yahoo news

no shit......cause when you boil away the bullshit it really comes down to two choices.
Gold (which bankers will tell you is in a 6 thousand year bubble)
or
paper money.....now of which the IMF is creating to replace sovern paper
YouTube - Managing Market Volatility, SDR's or Gold?
1:50 in the video

 

[tmosley]

Isn't sliver and gold supposed to go through the roof since last Monday?

No, it's supposed to go up slowly, which it is doing. If it had closed above 1200 such that those options expired in the money, they would have had a lot more redemptions, and may have been forced to scramble for physical bullion. There may still be a scramble, but it certainly won't be as large.