You've heard me yammer away, including putting my money where my mouth is with that big buy I did last week of GLD.
My case: The falling dollar drives gold's price rise, plus a flight to safety, Iran, Iraq, the debt, the deficit, the trade imbalance, rebalancing of foreign reserves, the housing bubble popping, blah blah blah...
The yellow stuff seems to be taking a breather at $635 or so, and I think we'll see $700 by May's end.
For anyone who DOESN'T think gold is in the early days of a big rally, (try to) make your case too. Talk me out of buying more - seriously!
Gold and metals posted strong gains for the second day in a row on Wednesday after strong U.S. economic data supported the outlook for continued demand for commodities.
Gold for June delivery finished up $7.80, or 1.2%, to $642.0 an ounce. Silver for May delivery rose 25 cents, or 2%, to $12.81 an ounce. Copper for May delivery gained 7.45 cents, or 2.2%, to $3.3950 a pound, off a fresh record high at $3.49.
April 27, 2006
Goldbugs - make your case for investing in gold and commodities
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41 comments:
IMHO, this world did just fine with the gold standard. It was an honest and solid safeguard of wealth and commerce. I do not feel at all comfortable with fiat currency measured in unfathomable zeros. If it all comes crashing down and nothing is worth anything, then oh well, I guess the debate was moot. But if we have the ability and fortitude to rebuild, then perhaps gold will once again become a cornerstone of wealth and commerce. If nothing else, some will have a pretty yellow metal in which to pound into jewelry, and others will have paper in which to wipe their bottoms. Will this be the first trade in the new economy?
what about linking fiat currency growth to population growth?
Is that feasible?
If it all goes south and gold becomes the only real currency, Uncle Sam will come knocking on your door asking for his gold. It happened in 1933, it could happen again.
Other than that, gold goes up and down, but it has a high cost of ownership and relatively high transaction costs. You must pay for safety deposit boxes and insurance.
So unless you want to build a room and fill it with gold coins so you can swim around in it like Scrooge McDuck, I think you should forget about gold and look to some real investments.
If you are looking for a good investment, I have a condo in Ft. Lauderdale I could sell you; real-estate never goes down you know, never!
My suggestion would be - buy gold - but don't go overboard like everyone else did with the housing market.
The best rule is to use some common sense. If you do have some extra cash on the bank - then you should probably convert between 10 - 20 % of it into gold and other assets. As the value of the dollar goes down, the increase in value of gold will offset this decline.
Having a higher percentage in gold will mean that you actually start making money... but that's a gamble too. Since you're complaining about so many people who gambled on property - do you want to be doing the same thing with gold?
Like I said - use common sense. Be realistic but don't be greedy. If you have extra cash - change some to gold, some to Euros, some to cheap farmland, etc. If you don't have the cash, then you have nothing to lose anyway.
:-)
The point is to not have all of your eggs in one basket.
Viktor
Note that in march, the fed stopped reporting the M3, a measure of how many dollars they are printing… Without any way for the public to track dollar production, I’m sure they have the printing presses running 24/7. This is hidden inflation. Just wonder with it will catch up with us…
Talk you out of it......? Every spare dollar that I can squeeze out buys gold and silver! Heres a question for all you junior economists who espouse the notion that gold is a "Barbarous Relic"! If you believe paper money is real money and that the present mechanism of bringing this "money" into existence is legitimate; Would you have any problem with the Federal Reserve printing sufficient tender to make all the numbers (present government debt, current obligations and operating expenses and future promises) work out! I mean if green ink covered paper is real money why carry any debt at all?
Just got back from the dentist...Cashed out my 401K and got me some gold diamond encrusted grillz.
Gold is junk, buy and store fiat paper.
http://www.marketwatch.com/News
/Story/Story.aspx?siteid=mktw&guid=
{4A85AD81-
1028-46AE-ABCF-7FA61DD0909C}&dist=bnb
Chapter 2 and the rates will rise!
Helicpoter Ben says rate hikes may end soon. That means inflation will spiral out of control. The only safe haven is precious metals or foreign currencies.
Look at the Deutschemark (Bundesmark)in the 1920's and early 1930's. At one point, they were worth the paper they were printed on and workers hauled home their daily pay in wheelbarrows. People made a million marks a day and still couldn't afford a loaf of bread. The US is headed that way with Easy Al and Helicopter Ben at the wheels. Don't think the Asians are clueless. If this continues, the USD will be replaced with euros and gold. Then who will buy our debt?
The Government can't take what they don't know about.
For all of you think that you need to store it or have a fort in your home you dont, you can do what I did. I bought some GLD (Ticker) its an EFT that tracks gold at 1/10 of an ounce. I also bought GOLDX a mutual fund that invests in companies that mine and are in the industry of gold. When gold goes up companies that GOLDX invests in have expenses that remain constant and a surge in profits from their goods, in this case gold. Take a look at the charts. I have a huge chunk invested in this and I am very happy. I feel I did the right thing by bailing on my house and throwing it into gold.
I say go for it. I am investing in Silver and some Gold. Just have an exit strategy.
First, my comments are worthless because I'm too chickensh!t to act on my opinions. That said; I think golds rise is worldwide seeking of investment return and protection from uncertainty. Too much weight placed on both. The changes in the industry these last decades make it more of a commodity as something like a third is in industrial uses. Bad economy and a third of demand softens? Like other commodities different sources have different cost basises. I think there's a whole lot of $400 gold in the ground. As currency how many people have no paper trail and tradeable 1/10th, 1/2, 1 oz minted coins? Not enough to make it a replacement currency in a real emergency. Finally, my mom was born "The Day The Banks Closed." That I don't have to say more tells you why you may not be allowed to use gold. Still, it is pretty and has lots of uses from jewelry and electronics. Think of it as concentrated copper with sentimental value as well. I'm not interested in paying a sentiment premium. What's the old saying about auto racing and polo? You are safe when everyone out there with you is also a professional. There's the big problem, lots of amateurs on the field. India for but one example has this new "middle class" that has neither personal nor societal investing histories to rely upon when allocating their new found for the first time disposable income.
Like I said, I can't work with the emotional premium so ijust don't. Lumber? Easy. People don't stack 2x4s in their basement. Jewelry? [Finished pieces for retail consumption] Easy. Economy and demographics. See where I'm going? Thought Iwas talking -just- about gold? No. Housing, the new gold. The date? The early 1980s.
Now's probably a good time to get into gold, make your pile, and get out. The current gold boom is a speculative bubble -- if you don't think so, compare what's being said about gold to what was being said about real estate three or four years ago -- but it's early days yet, and there's still a long line of greater fools who haven't yet hopped on the bandwagon. Just remember not to get caught up in the hype, and when investing in gold makes the cover of Time, sell everything.
Here is the case against Gold:
http://www.thefinancialhelpcenter.com/Gold-Silver-Page001.html
Here is the case agiants gold:
http://www.thefinancialhelpcenter.com/
Gold-Silver-Page001.html
Here is the case agiants gold:
http://www.thefinancialhelpcenter.com/
Gold-Silver-Page001.html
These technical analysis studies are a load of crap. That guy can jimmy the numbers as much as he'd like but in the end, he is assuming that the price of gold moves at random. The truth is that the price of gold is tied to geopolitical events.
The real problem is that far too many Americans have no net worth. They think they are "rich" because their house appraised at $750K, they make $200K a year and drive nice automobiles. But in reality they are piss poor because the equity in their house is a fiction, the cars are leased, and their jobs are on the outsourcing list.
People equate money and wealth, when true wealth is control of the means of production. They are really just well-dressed slaves who toil under a slave owner. Shhh -- don't tell them, it will just upset their carefully crafted delusion.
thanks mamboni for your post. question: if the dollar keeps going down, why not put more than 10% of one's net worth into gold/silver? what other options can one put his/her money into to guard against the dwindling value of $ ?
IMHO, signs point toward gold continuing to rise. In 1980, the FED under Volcker raised interest rates in order to bring inflation under control. The short-term result was a recession, but one can argue that this medicine helped rein in inflation. The current generation has gone soft and does not want to feel any pain. As a result, the FED will do whatever is necessary to postpone another recession. As a result, I think the eventual fallout will be much more severe.
As for the dollar, most people in the USA do not have savings. Inflation benefits the debtor class, since they can pay back their debts in depreciated dollars. If you are worried about your savings being depleted by inflation, don't look for the government to change its policy. You are outnumbered by the debtors, and our politicians know where the votes are.
As a result, it would seem prudent to own some gold. You can't stop inflation, but you can protect your purchasing power. On the other hand, I don't really forsee a Mad Max-type future where the government collapses and you need gold and silver just to buy groceries (at least not in the near future). Taking actual custody of gold results in transaction costs (typically, you must pay a premium over the spot value of gold, and your gold would have to rise to this level to break even). Perhaps other alternatives to gold which nonetheless replicate the return of gold might help. I have been investing in a gold mutual fund for 3.5 years and have gotten a good return on this; my broker doesn't charge a fee for mutual fund purchases, either. But this might not be for everyone. Has anyone had any experience with Perth Mint Certificates?
Check out the US $ index. Steep decline in the past month. One month gold has posted a $70 gain. Any questions? Yes, actually does anyonone know what Bernanke was talking about in 2003 when he said that if the demand for US bonds falls that the fed could buy them? How does that work? I am no bond expert, but is'nt that a little crooked. How can you manipulate an open market by buying your own bonds?
Jim
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