yet another gold price question....

[cbc58]

i came into the gold discussion about 3 months after gold hit an all time high and I wonder what the financial picture was at that time which caused it to reach that level.

was there a quiet "crisis" developing at that time or was it just speculation and a commodity run up?

 

[Cowlesy]

You know I am still torn over gold.

I do own some electronically and physically.

But if things really get bad, even though it has stored value for 6,000 years, who really is going to want it other than the tiny gold market? (the gold market is very small)

This may shoot fire out of the backs of some goldbugs, but I am starting to wonder if there are better stores of value out there than gold.

 

[amy31416]

You know I am still torn over gold.

I do own some electronically and physically.

But if things really get bad, even though it has stored value for 6,000 years, who really is going to want it other than the tiny gold market? (the gold market is very small)

This may shoot fire out of the backs of some goldbugs, but I am starting to wonder if there are better stores of value out there than gold.

My incredibly non-expert opinion: Tools, staples (stuff that won't go bad), anything you can use to make actual goods that people will always need. I like to keep it simple though. I do have physical silver (the junk kind) just in case though.

 

[Josh_LA]

You know I am still torn over gold.

I do own some electronically and physically.

But if things really get bad, even though it has stored value for 6,000 years, who really is going to want it other than the tiny gold market? (the gold market is very small)

This may shoot fire out of the backs of some goldbugs, but I am starting to wonder if there are better stores of value out there than gold.

Absolutely, but consider what you can afford.

1. Food, you can't eat gold
2. Fuel, how much can you store?
3. Weapons. But how much can you use?
4. Houses (if you can own it outright with no debt)
5. A car (for as long as it works, but it ALWAYS depreciates)
6. Collectibles, even harder to sell when times are bad.

When times are bad, you'll need food to survive, simple as that.

 

[Acala]

Short term versus long term

Short term - food, water, guns, ammo, items for barter, etc. Lots of good discussion on short term survival on this list.

But if your short term preparations work the way they should, then what? Now you are into long term survival. The short term is just that - short term.
The Great depression lasted more than a decade. It is not practical to store 10 years worth of food. Most food will start to deteriorate long before that and the sheer volume is daunting. The short term panic will be over shortly after it starts. The criminals will kill each other, or be killed by armed folks protecting their communities, or will starve. The weak will die off. Those who are left will form simple, local economies. At that point your short-term preparations run out of steam. It is true that you can't eat gold in the short term. But there has virtually never been a time anywhere in the civilized world that you couldn't use gold to buy something to eat. That might not be the case in the initial panic, but it WILL be the case before the hard times are over. A LONG time before the hard times are over.

The simple local economy that we will have to survive in will last for many years. It will run on barter at first but will move quickly to some kind of currency because barter is inefficient. This will almost certainly include silver coins. It may include gold. It may include silver and gold minted in foreign countries. Down here in the Southwest, I think it is very likely that Mexico will issue silver coins and they will circulate. To the extent you have silver and gold you can buy what you need. But in the same way that you cannot store a decade's worth of food, you are also not likely to be able to store enough gold and silver to live off of for a decade or two. So what are you going to do?

You need to find a way to participate in the localized, simplified, subsistence economy that is our future. What skill can you offer your fellow man that they will be willing to pay you for? What tools do you have that will allow you to render valuable service? What knowlege? What relationships have you developed with other patriots that will help you build a community?

Prepare for the short term. But prepare for the long term as well. I believe that includes precious metals. But it also includes a plan for fitting into a local economy.

 

[cbc58]

this kind of got off track........ can anyone answer my original question?

 

[Bruno]

gold and oil generally follow each other. Gold was just a little early on its rise, oil followed. The gold dipped, and oil did as well not long after.

but i've only been paying attention for 6 months or so myself. hope that helps.

 

[gaazn]

The rich people in Asia were buying up gold any time they could. Gold is always a good bet. Rich people will always buy gold. The problem is in a Great Depression, how are you going to move it (sell it)? It's already illiquid as it is, can you imagine when there's a depression and gold-stealing gangs out there?

 

[Dr.3D]

The U.S. Dollar Index has a lot to do with it.

Well, silver and gold both follow each other pretty closely.

You can see from this chart what happens to the price of silver when the U.S. Dollar index changes. This is also true with gold. If you look at the same chart with gold vs. the U.S. Dollar Index, it will look pretty much exactly the same.

 

[Josh_LA]

i came into the gold discussion about 3 months after gold hit an all time high and I wonder what the financial picture was at that time which caused it to reach that level.

was there a quiet "crisis" developing at that time or was it just speculation and a commodity run up?

Ok, your original question is answered like this :

Simply as always, fear of instability and inflation.

It was when BS was going down.

 

[Josh_LA]

Well, silver and gold both follow each other pretty closely.

You can see from this chart what happens to the price of silver when the U.S. Dollar index changes. This is also true with gold. If you look at the same chart with gold vs. the U.S. Dollar Index, it will look pretty much exactly the same.

Where did you get this graph?

It's very fallacious, the two graphs are looking at completely different numbers.

Silver is $10-20, which means 100% difference
Where the dollar index is 70-80, not even 12% difference.

 

[Acala]

Sorry

this kind of got off track........ can anyone answer my original question?

Sorry, I helped take it off track.

I don't think there are always, or even usually, rationally understandable reasons for short term movement in gold. But the decline in the exchange value of the dollar over months helped drive gold up recently.

At the risk of diverting from your question again, I would not suggest thinking about gold in the short term and I don't think many people here would suggest that you should. If you are going to think about gold in the LONG term, as I believe you should, then what you need to consider is the probability and severity of future inflation, the possibility of a complete collapse of the dollar, and even the possibility that gold will be reinstated as the world's money.

 

[Dr.3D]

Where did you get this graph?

It's very fallacious, the two graphs are looking at completely different numbers.

Silver is $10-20, which means 100% difference
Where the dollar index is 70-80, not even 12% difference.

I keep the data in Excel every day the market closes.

Here is the chart for gold versus the U.S. Dollar index.

This chart shows what happens with the price of gold when the value of the USDI changes. Notice how when the USDI goes up the spot price of gold goes down and vis a vis. It is pretty much inversely proportional. It is like looking at a mirror image.