GOLD

**Aussie** · 24-11-2009, 11:04 PM

Originally Posted by blackcap

Im still not convinced on the gold story. After all what is it really when one gets down to it.... yes a metal, but what is it used for and why is it so important.... what can you make from gold.....

Respectfully, you should study the history of money and what it actually is. It's not little pieces of plastic. Then get some understanding of the balance sheets of most of the governments of the western world and the political policies they are pursuing.

India just bought 200 tonnes (of their 400) from the IMF at $1,045 oz and will buy the remaining amount if given the opportunity. After a decade of selling, CB's are now net buyers of gold and will be for some time to come.

I have more gold reserves than the RBNZ. The RBNZ has NO gold on it's balance sheet. None! The NZD is backed by the reserve value of the government paper issued by other western nations (most notably the long-term bonds issued by the USA) and it's ability to continue taxing us at ever increasing levels. That should give you a clue about the possible future of the Kiwi if things go south in a big way.

The NZD is "money" only because the NZ government says so and will prosecute you if you try and use anything else for the payment of good and services.

From Bill Buckler at The Privateer . . .

"Up until August 15, 1971, there has never in history been an era when no paper currency was linked to Gold. The history of money is replete with instances of coin clipping, printing, debt defaults, and the other attendant ills of currency debasement. In all other eras of history, people could always escape to other currencies, whose Gold backing remained intact. But since 1971, there is NO escape because NO paper currency has any link to Gold.

All of the economic, monetary, and financial upheaval since 1971 is a direct result of this fact.

The global paper currency system is very young. It depends for its continued functioning on the BELIEF that the debt upon which it is based will, someday, be repaid. The one thing, above all others, that could shake that faith, and therefore the foundations of the modern financial system itself, is a rise (especially a sharp rise) in the U.S. Dollar price of Gold."

In the next few years, Ben Bernanke may go down in history as the greatest "coin clipper" in history.

Cheers

**blackcap** · 25-11-2009, 08:13 AM

Aussie,

Im not saying "money" in paper form is any better.... but as a medium of exchage when it gets nasty and dirty, I can see more um valuable mediums of exchange. What can gold be used for in manufacturing, production and or keeping one alive? That said I could be far off the mark here and maybe Gold is not just a luxury good?

**Aussie** · 25-11-2009, 10:15 PM

Originally Posted by blackcap

Aussie,

Im not saying "money" in paper form is any better.... but as a medium of exchage when it gets nasty and dirty, I can see more um valuable mediums of exchange. What can gold be used for in manufacturing, production and or keeping one alive? That said I could be far off the mark here and maybe Gold is not just a luxury good?

As Alan Greenspan once said, "Gold is money par excellence . . ."

Fiat money (money by decree) is simply a form of government debt that is traded between people on a daily basis. It doesn't have any backing, it does not have a use or become a complete a transaction until you exchange it for something else that is desirable or tangible. Holding cash in a bank account is simply storing short-term purchasing power and only has value as long as people have confidence in it. The volatility in FX markets highlight this perfectly. And the world is full of countries who's people have been made poor by currency collapses.

Gold and silver on the other hand have held their value across time. They have intrinsic worth due to their rarity, the effort, investment and the cost that has gone into finding it, permitting, building a mine, mining it refining it and retailing. You cannot create gold and silver with a few strokes on a keyboard.

As a ready, portable and easily divisible medium of exchange, generally speaking - only gold and silver are complete. If I buy a property and pay for it in gold, the seller has truly received payment in full - there are no contingencies related to that payment. If he receives paper money or digits in a computer the ultimate value is contingent on the continuing solvency of the government or bank that issues that money. If he does not exchange that money for another house or other goods, the transaction is not really complete, he is just holding potential buying power. A lot of banks and other institutions recently learned this lesson that hard way. They "thought" they held dollar assets - but suddenly found they didn't have any future value.

**TTrader** · 26-11-2009, 12:18 PM

The United States Mint has suspended sales of their popular one ounce American Gold Eagle and one ounce American Silver Eagle bullion coins. The suspension was announced in a memo sent to the US Mint's authorized bullion purchasers.

"The United States Mint has depleted its current inventory
of 2009 American Eagle 1-ounce gold bullion coins due to the
continued strong demand for this product," the Mint told its
authorized dealers in a memorandum on Wednesday.

November sales to date were at 124,000 ounces, higher than
the 115,500 ounces sold in each month of September and October,
the Mint said.

The Mint said it expects to resume sales in early
December.

**Laxmi** · 27-11-2009, 08:41 AM

A reoccuring pattern is occurring. When the market becomes rattled by rumours of serious debt default such as was recently announced by Dubai; there is a rush to buy US dollars.

This pattern can be explained by simply stating that this is normal since the US dollar is the worlds reserve currency when it comes to filial currencies. It is nothing more than a temporary flight to safety.

I guess the question that is remaining is for how much longer? 80 billion dollars at stake for Dubai is chicken feed compared to what has happened recently in companies such as Lehman Bros, Bank of America and AIG.

The US financial system would be bankrupt a long time ago if it were not for something called 'quantitative easing' A time of reckoning is approaching and you can guarantee that the US government will not let its economy fail.

In my opinion this can mean only one thing. The risk of inflation at some time in the future is huge.

Gold price closes in on $1,200
http://www.thisismoney.co.uk/markets...9&in_page_id=3

**ScrappyO** · 27-11-2009, 08:49 PM

Wow look at gold..what a dive $1138.

http://www.kitco.com/charts/livegold.html

**Laxmi** · 27-11-2009, 10:26 PM

Yep risk aversion does strange things. all in a less than an hour!

It is hardly a surprise. The Dubai World project was ever going to make it through the financial crisis unscathed. Property values in Dubai have reduced by upwards of 50% from peak. Some properties are now virtually worthless, certainly any vacant titles are. A time bomb waiting to happen for the financial markets.

Certainly, Dubai World is hardly the place to invest if you are risk averse to the threats posed by climate change. Perhaps this is the real reason why the project is in so much trouble. It is like having a lease that only lasts for a certain time. In the beginning it is 100 years. Then the time is reduced as each year passes. I imagine the lease has already been reduced by ½ by official estimates.

Quite clearly a bailout is required, similar to what happened in the US, yet Dubai is not the US. Who is going to be stupid enough to lend it any more money?