The investment thread brought up a long time question/thought I've always had regarding gold.
I don't understand why Gold is so valuable.
"Flock from the falling dollar and purchase Gold, blah blah blah" the commercials say.
But, Gold, as it sits isn't legal tender for anything. I mean, if you have a gold nugget, it's not like you can go buy groceries/booze, put gas in the car, etc.
Can someone make sense of it for me?
Gold gives our cash value. Otherwise, its just a piece of paper.
But I can't educate you on the nuances. I don't understand it myself.
Actually gold does not give our cash value, there are people that do that for us now.
Gold is a commodity, like frozen concentrated orange juice... If you buy all the FCOJ low you can control the price when people need it.
It's a hedge against the falling value of the dollar. It isn't that gold is worth more, it's that the dollar is worth less, so it takes more of them to buy that gold nugget. If you buy the nugget with $500 dollars, then sell it when the value of the dollar has been cut in half, then you can buy twice as much groceries, gas, booze, or frozen concentrated orange juice.
Gold has lasting, international, intrinsic value. The dollar only has value as long as people have faith in the US government. When the government keeps doing things to make people lose that faith, the relative value of gold to dollars increases.
Gold is bought by individuals as insurance usually. As dollar values fall gold prices usually goes up. It also works for other commodities. Anything that goes up in value as the dollar falls in value will do the same thing. Gold is just easier to store and doesn't have a shelf life. This from someone who owns no gold.
It's shiny.
It's too bad that whoever the first person was who decided gold was valuable didn't pick something else, like mud...then we'd all be millionaires. :)
stuart in mn wrote: It's too bad that whoever the first person was who decided gold was valuable didn't pick something else, like mud...then we'd all be millionaires. :)
Yeah, and it's a good thing we'd all be millionaires, because with inflation at a rate like that it'd cost like $40mil to fill up our gas tanks.
DILYSI Dave wrote: The dollar only has value as long as people have faith in the US government.
economy not government. Who gives a crap what the government does its all about how healthy your economy is..
Unfortunately since we use a debased currency, the actions of the government can directly affect the health of the economy.
DILYSI Dave wrote: It's a hedge against the falling value of the dollar. It isn't that gold is worth more, it's that the dollar is worth less, so it takes more of them to buy that gold nugget. If you buy the nugget with $500 dollars, then sell it when the value of the dollar has been cut in half, then you can buy twice as much groceries, gas, booze, or frozen concentrated orange juice. Gold has lasting, international, intrinsic value. The dollar only has value as long as people have faith in the US government. When the government keeps doing things to make people lose that faith, the relative value of gold to dollars increases.
I get all that, what I'm saying is, you can't use it anywhere. You'd have to take and convert it back into currency.
In which case, it seems just like buying stock. Try to buy low and sell high.
Just one of those things I've never quite understood.
The survivalists out there feel that in the event of a zombie apocalypse, printed currency will be worthless though, and then their gold stash will reign supreme.
3Door4G wrote: The survivalists out there feel that in the event of a zombie apocalypse, printed currency will be worthless though, and then their gold stash will reign supreme.
Nonsense; paper currency will still have value when you're starting fires. Gold will only have value if it's on the hard end of a zombie-skull-crushing mallet.
oldsaw wrote: Nonsense; paper currency will still have value when you're starting fires. Gold will only have value if it's on the hard end of a zombie-skull-crushing mallet.
Not really. It is too malleable (though it is heavy) to be good for that. wrought iron is much better for staving in zombie skulls.
3Door4G wrote: The survivalists out there feel that in the event of a zombie apocalypse, printed currency will be worthless though, and then their gold stash will reign supreme.
In that case or any other "doomsday" scenario, Lead in the form of shotgun shells will be much more valuable than gold.
This is the most important thing you need to know about gold:
http://gawker.com/5599293/how-glenn-beck-and-goldline-rip-off-fox-news-viewers
"A 2010 investigation into Goldline by Congressman Anthony Weiner discovered that their average markup on numismatic coins was 90% above melt value and 47% higher than their competitors. According to the report, the 1/4 oz Proof Gold American Eagles have a melt value of $285, competitors sell them for $318, and goldline sells them for $813. If you bought these as a hedge against inflation, you immediately lost 64%. The price of gold would have to soar to $3,200 an ounce for you to break even. It's currently around $1,200."
[It's now at $1,228/oz]
http://cache.gawkerassets.com/assets/images/7/2010/07/goldlineglennbeck4.jpg
Come on Goldline needs to mark up the coins in order to afford to sponsor guys like Beck, That ain't free, I mean he needs to pay for the air he breathes and the nonsense he spouts!
z31maniac wrote:DILYSI Dave wrote: It's a hedge against the falling value of the dollar. It isn't that gold is worth more, it's that the dollar is worth less, so it takes more of them to buy that gold nugget. If you buy the nugget with $500 dollars, then sell it when the value of the dollar has been cut in half, then you can buy twice as much groceries, gas, booze, or frozen concentrated orange juice. Gold has lasting, international, intrinsic value. The dollar only has value as long as people have faith in the US government. When the government keeps doing things to make people lose that faith, the relative value of gold to dollars increases.I get all that, what I'm saying is, you can't use it anywhere. You'd have to take and convert it back into currency. In which case, it seems just like buying stock. Try to buy low and sell high. Just one of those things I've never quite understood.
The hedge version = it is like a stock. Buy low sell high. Since it has value outside the value of dollar (true for all commodities) then it tends to do well when other things that have their value tied to the dollar are doing poorly.
The zombie apocalypse version = Dollars will be worthless pieces of paper and the only way you will be able to buy your zombie mauls is with gold coins.
I'd buy gold assets, but I'd stop short of buying stamped gold coins. That sounds like a terrible idea.
I wonder if any of those places are linked to those "cash for gold" operations that were popping up after the economy broke.
3Door4G wrote: I'd buy gold assets, but I'd stop short of buying stamped gold coins. That sounds like a terrible idea. I wonder if any of those places are linked to those "cash for gold" operations that were popping up after the economy broke.
Likely. Those places were maybe the worst ripoff I've ever seen. They made pawn shops and payday loans look like something Dave Ramsey would endorse.
Gold will drop again in short order. It is way too high to by right now. Only fools buy gold right now. Smart money is on silver right now in my opinion.
If you're going to buy it, get coins like the Maple Leaf, Krugerrand, US whatever it is. They will be 1 oz (Troy) of 999 (99.9%) Gold. You should not be paying more than maybe 3% over the spot price. That means, you look at the spot price online right now and add 3% plus shipping (if applicable) and that's what you should be paying. Anything else is a rip.
Gold had been used as money as long as recorded history has been, and likely before that. The discovery of the touch stone, a rock that when rubbed with gold would give a different color for different levels of gold or non-gold, if I recall, "standardized" the metal and was a boom for commerce, as after that, you could tell if that was real gold or not.
The thing most people don't realize about gold is you pay more than it's worth at that moment to buy it (see quote above about being careful not to pay more than 3% over the spot price) and you have to sell it below the then present value.
stuart in mn wrote: It's too bad that whoever the first person was who decided gold was valuable didn't pick something else, like mud...then we'd all be millionaires. :)
We'd be Italian millionaires.
If mud was money, then we would all die of starvation. The richest soils are the best for plant growth, and why would anyone ruin their money with filthy, nutrient leeching plants?
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