Sell my gold now?

[Prince]

Originally Posted by Prince [You must be logged in to view images. Log in or Register.]

just as a note for any observers, please take any investment advice that basically says "IT'S GONNA GO UP FAST OR GO UP SLOW BUT NO WAY IT CAN FALL" with a giant, giant grain of salt

[Raavak]

I originally bought gold as a way of shorting the dollar after Obama was elected, and its done me well to this point (but I'm afraid of a bubble burst, hence the thread). A friend is big into silver and that has outperformed gold, as has like platinum and palladium i think. Even commodities like copper and aluminum are up good I think, due to all the construction in China & India.

[Messianic]

Yeah, Feachie - I was agreeing with you. I just quoted you to save us all redundancy.

Gold's performance is directly related to central bank activity worldwide. At the moment, most major players refuse to allow any deflation because of how much reality it would bring to the world. They have to keep the economy in a constant state of delusion to keep the debt game going.

It's like if every time you feel like sleeping to rest and recover, you just slammed a red bull. Eventually a single red bull isn't enough - you need two, or three, or four. The US has been playing this game for some time, and every time the Red bull wears off and the markets need to sleep, they just slam another one - this occurred on a small level in the early 90s and in the early 2000s - and the most recent incarnation is the equivalent of hooking up the guy with a buttload of speed:

http://research.stlouisfed.org/fred2...%5Bid%5D=AMBNS

Eventually it'll stop. Red bulls can't keep you awake forever. And the longer you've been awake, the more damage you've done to yourself and the longer you'll need to rest when you finally do.


So, that means most of the currencies worldwide are in a race to the floor as long as people are as overleveraged as they are. Once individuals and governments start changing course and reducing their debt in real terms, Gold will probably stabilize. Where it stabilizes, no one knows.

It might be or could become a bubble...but just because it's up nominally as much as it is doesn't mean it's currently a bubble. I don't really think it is, yet. It's simply not high enough.

[Tewaz]

Most people invest in companies through mutual funds, but with the stock market plummeting, people are investing in physical things like land, gold, platinum, or my favorite, barrels of oil. I say hold it. If the economy completely crashes and the dollar becomes worthless, gold speaks in any country.

[nalkin]

Isn't it kind of weird how gold has value?

[Skope]

Originally Posted by nalkin [You must be logged in to view images. Log in or Register.]

Isn't it kind of weird how gold has value?

I strictly barter. coins/currency has no value to me

[Messianic]

Originally Posted by nalkin [You must be logged in to view images. Log in or Register.]

Isn't it kind of weird how gold has value?

Gold always emerges as a voluntary money in civilization - i.e. when legal tender laws or their equivalent do not exist. Always - it may emerge among competing currencies (and this is usually the case), but it's always one of the monies people prefer to use in a free system.

Often some king or ruler gets control of the money, starts shaving off the edges of coins and reducing their weight so he can pay for something they want but doesn't want to pay the exact amount requested...So he pays for it in diluted money. Since he's the first person to use this and individuals haven't had time to realize it, he gets addicted to it and does it until a crisis unfolds.

The odd thing isn't why Gold has value - it's why Gold has been so low in perceived value, or why people trust paper money (a notion people laughed at 150 years ago) based on the promises of an institution that has the power to make as many of that paper money as they want without even having to print it or tie that money to some kind of solid standard.

Since the 1970s the US was able to twist or break the trend of a few millenia of history...My guess is it's probably because oil continued to be denominated in dollars so there was kind of a de facto oil standard...

[Raavak]

Originally Posted by Messianic [You must be logged in to view images. Log in or Register.]

... why people trust paper money (a notion people laughed at 150 years ago) based on the promises of an institution that has the power to make as many of that paper money as they want without even having to print it or tie that money to some kind of solid standard.

Whenever I think about this it kinda blows my mind. The only reason paper money (fiat) has a value is because of a perception, and everyone is on board with it. Or even worse, money in the bank: Its just a number on a register or a computer, yet someone will give me real stuff for this vaporous number. Its kind of a big system of trust.

Scary part is when the trust goes away (i.e. faith in US or any currency) so does that perceived value. You could conceivably be a multimillionare and wake up one day and not be able to buy anything if the system crashed overnight.

[Messianic]

Originally Posted by Raavak [You must be logged in to view images. Log in or Register.]

Whenever I think about this it kinda blows my mind. The only reason paper money (fiat) has a value is because of a perception, and everyone is on board with it. Or even worse, money in the bank: Its just a number on a register or a computer, yet someone will give me real stuff for this vaporous number. Its kind of a big system of trust.

Scary part is when the trust goes away (i.e. faith in US or any currency) so does that perceived value. You could conceivably be a multimillionare and wake up one day and not be able to buy anything if the system crashed overnight.

Notice that the kind of system you're recognizing only exists as a post-gold standard system. It usually doesn't grow organically among voluntary transactions (and if it does, it dies quickly) - gold has always emerged as one of the primary competing currencies when people are allowed to use whatever they want as currency. Fiat money always emerges via coercion and legal tender laws. So enshrining it as the only currency people may trade with ultimately creates imbalances.

And it only works for a short time - because it relies on the goodness of those in power not to abuse the awesome power they have (essentially free money to spend on whatever you want for a short time, since you're spending dollars you just created). I can't say i'm surprised that the privilege was abused. After you abuse the privilege of creating the world's currency enough, it gets taken away (if over a period of time) and given to someone else. It happened to Britain before the US - now it happens to us. And the living standard of Americans will dramatically decrease when that happens.

Hence China's recent statements, echoing Russia's sentiment for some time...

[Feachie]

Looking @ markets

Aren't you glad you didn't sell your shinies? [You must be logged in to view images. Log in or Register.]