Gold

[elZorro]

Sure I do. Back testing the last 8-9 years is not a true reflection given gold has experienced its latest bull market over this time and treasuries are only there as a 'preservation of wealth' tool. This is what gold is meant to be, and can only truly be measured and compared as a preservation of wealth over the long term. In other words, short term comparisons of gold is useless given its high volatility.

I think I have already proved my point that over the long term, gold is extremely inferior in terms of risk, holding costs and opportunity costs. The long term is what most people harp on about with gold...its use as a 'wealth preservation tool.' Anything other than long term is pure speculation given it has no fundamentals behind it, just the rationale 'it just is.'

You cannot deny that in the last 10 years or so, Gold has been volatile in the upwards direction. If it dropped 30% from its current price, many mines would have very limited profitablility. It's at a fair price.

I remember a philosophy lecturer giving a talk to a general audience, and he said "Has anyone ever seen the economy?" Doesn't make it less real. Gold has a lot of perceived value, that will remain. It's almost the one constant.

[Skol]

You've got them on the ropes UU, nice work.
When the hoarding stops, that's when the bell's going to ring and a new generation of gold 'investors' are going to learn a lesson about asset allocation.

Here's an interesting article about some of the hard sell going on and a revelation that gold coins are sold by these rogues at a 35% markup.

http://www.bellinghamherald.com/2010...d-dealers.html

Supposedly in these straitened times 'real' assets, like gold and property are going to outperform, but there's no sign property is outperforming except a few world outposts. The gold hard sell harks back to the gold confiscation, the Song dynasty, Weimar Republic, etc., all old hat and no relevance to the modern economic world where billions crosses borders everyday.
If no one wants to buy beef then steers become worthless but you've still got the farm to sell or reinvent. With gold there's nothing, it's an emotional connection I fail to understand.

[elZorro]

You've got them on the ropes UU, nice work.
When the hoarding stops, that's when the bell's going to ring and a new generation of gold 'investors' are going to learn a lesson about asset allocation.

Here's an interesting article about some of the hard sell going on and a revelation that gold coins are sold by these rogues at a 35% markup.

www.bellinghamherald.com/2010/08/03/1554517/consumer-confidential-gold-dealers.html

On the ropes? You've got to be joking there Skol

That link shows a smart businessman setting up a firm to supply bullion to those who think it will be a good investment, at 5% markup. If later on they are offered some coins and add that to their investment, they surely know they are paying a bigger markup, they understand that, and they are happy with it.

Is this situation any worse than buying shares in a company using the web, where you never see the shares, never see the inside of the company, only receive glossy reports and posible dividends, and have to keep a darn good eye on its performance if you want to maximise the returns?

In many cases the shares are passed about in the ether between shareholders, and the company gets no benefit from it, unless they are looking for more funds. At least when someone invests in gold, it keeps the miners busy. Some of the technologies being used to extract low gold grades must be very useful for many other rare materials we'll be needing from the ground in future.

[Skol]

At least when someone invests in gold, it keeps the miners busy.

You keep referring to gold mining as if it's an essential industry, why is that? If the PoG plunges and gold mines cease operating, so what? Why mine something that's uneconomic, who cares about the technological advances? They'll be made anyway.

Gold has little relevance in technology today, it's main use is people hoarding it, its secondary use is jewellery and that's at a 21 year low.

[stevo1]

Sure I do. Back testing the last 8-9 years is not a true reflection given gold has experienced its latest bull market over this time and treasuries are only there as a 'preservation of wealth' tool. This is what gold is meant to be, and can only truly be measured and compared as a preservation of wealth over the long term. In other words, short term comparisons of gold is useless given its high volatility.

I think I have already proved my point that over the long term, gold is extremely inferior in terms of risk, holding costs and opportunity costs. The long term is what most people harp on about with gold...its use as a 'wealth preservation tool.' Anything other than long term is pure speculation given it has no fundamentals behind it, just the rationale 'it just is.'

Inherent nonsense people "invest" for profit,to compare anything on 100yr cycles is meaningless and not relevant to an individuals lifespan or investment time span.
Gold over the last 8yrs has been superior to any other investment I can think of with its capitol appreciation in any currency>
Whether it will continue to do so we will all find out in time and this obsessive,compulsive,have to be right argument and who is right or wrong will be come apparent with time,despite what is said here.
Economist speak good money(what ever that is gold,silver,currency) drives out bad money.

[peat]

who is right or wrong will be come apparent with time,despite what is said here.

its apparent every single day stevo
did the candle close higher or lower??
of the last 14 candles all but two have had a higher close
nearly $70 USD an oz up in that time.

[Skol]

Stevo,
What we are discussing is the goldbug fantasy that over the long term, gold is a 'store of value' and a '5000 year currency' and a few other nonsensical labels I've heard, is simply untrue, as above. It has done well over the last few years, why I don't know, but it did well in 1979 too, until 1980, when punters decided to stop buying.
The other goldbug fantasy is that 'central banks are buying gold'. It's not true. This I guess assumes the central bankers know more than anyone else which is also not true.

[stevo1]

Stevo,
What we are discussing is the goldbug fantasy that over the long term, gold is a 'store of value' and a '5000 year currency' and a few other nonsensical labels I've heard, is simply untrue, as above. It has done well over the last few years, why I don't know, but it did well in 1979 too, until 1980, when punters decided to stop buying.
The other goldbug fantasy is that 'central banks are buying gold'. It's not true. This I guess assumes the central bankers know more than anyone else which is also not true.

Skol this from CNN
" Last year, foreign central banks were net buyers of gold for the first time since 1997. India, China and Russia have been the biggest buyers. And more recently, the Philippines and Kazakhstan jumped into the fray with big purchases of the precious metal during the first quarter, according to data released by the World Gold Council Thursday"

full article here
http://money.cnn.com/2010/06/17/news...rves/index.htm

[Skol]

Stevo,
Do you know how trivial these amounts of gold are? The Chinese govt owns 1054 tonnes, so miniscule in terms of its foreign currency reserves it's hardly worth a mention.
9 tonnes, 26 tonnes, amounts so small I'm surprised it got in the news, many companies are worth more than that.

Actually, just looking at it again I do know why it got in the news - the World Gold Council. Otherwise it's a non-event.

[elZorro]

You keep referring to gold mining as if it's an essential industry, why is that? If the PoG plunges and gold mines cease operating, so what? Why mine something that's uneconomic, who cares about the technological advances? They'll be made anyway.

Gold has little relevance in technology today, it's main use is people hoarding it, its secondary use is jewellery and that's at a 21 year low.

Please supply the reference for this 21 year low Skol, so I can check it out..

Not relevant to our lives? I'm buying components every day that are gold plated. It's inside most of the techy products you buy. If you want better audio connectors at home, they'll be gold plated. If the people of Africa, India, China ever purchase the same amount of consumer gear that the western world does per capita, how much more gold would be required?