Current Gold Price

[ujoni08]

I didn't buy gold in order to make a profit. I bought it because I worry about fiat currency inflation and collapse. Gold is just another survival prep for me. I specifically chose British Sovereigns, as they are valid currency in the UK, and VAT free. I accept that, if all goes pear-shaped, the sovereigns may be useless, but I have diversified into other things, too.
Jon

[adam2]

Agree, gold should be considered as a disaster prep and not as an investment.
Despite the recent increase in the gold price, a decline is entirely possible.
And at least part of the recent increase could be described as a fall in the dollar, rather than a rise in gold.

In a bad crash, paper money and related investments could be rendered valueless.
Gold should still retain some value, no previous disaster has rendered it valueless.
Stocks of food, fuel, clothes, boots, seeds, tools, and other items are more likely to be of use post crash than gold.
If however one is already well stocked with doomer supplies, then gold is worth considering.
It does have the merit of being non-perishable, readily concealed, and in modest amounts easily portable.

By some measures gold is over valued at present.
Since ancient times an ounce of gold has been on average worth about 300 loaves of bread. No great accuracy can be claimed for this statment since loaves vary a lot in price depending on size, qaulity, and where purchased.
At present though gold is at about £1,000 an ounce, and bread is about £1.50 a loaf. One can buy a loaf for less than £1 in a discount supermarket, or pay £3 or more in some shops, but £1.50 seems a fair average at present.

An ounce of gold has traditionaly been about the price of a basic hand made gents suit. (presuming UK manufacture, not virtual slave labour overseas)
Hand made suits by be purchased for about £500 at present, from local tailors in the UK.

[Lord Beria3]

Gold is for me my future pension/insurance policy in case of total collapse.

Silver is an investment - I think it is quite likely that it will go up alot in the coming years - my plan is to swap it for hard assets like property and/or land at some point.

Some here say you should buy land rather than gold or silver. They ignore the fact that for many of us, buying land is not feasible financially - buying kilos of silver is relatively cheap in comparison.

Regarding silver hitting $1000 - I don't that this is unreasonable. Why? Because the bond market is $100 trillion - if even 5% of that moved into silver and gold, it would wipe out the physical within days, and lead to a frantic parabolic move up.

At the moment only a few pension holders/big institutional guys have put even a tiny amount of their holdings into gold and silver - when they big time into PM's, that is when we could see sudden huge jumps in the price.

[Lord Beria3]

http://www.financialsense.com/financial ... own-crisis

Chris sees a crisis ahead, and explains why massive fiscal stimulus (QE3) is coming along with gold heading to even greater heights.

Chris is the author of a popular website, ChrisMartenson.com. His Crash Course video series explores the intertwining significance of the "three E’s"—the economy, energy, and environment and offers articulate, dynamic insight into the workings of our monetary system

http://www.financialsense.com/financial ... cial-storm

Technician Bert Dohmen of the Wellington Letter sees a coming crisis in China, the US heading into recession, a massive Fed policy response, and gold going much higher. Ryan Puplava discusses the European credit crisis and shaky global markets this week

[UndercoverElephant]

Why would silver rise so much, but gold only 5-fold?

I'm not predicting this will happen, but it might.

The price of silver has been kept artificially low for a long time. The same is true of gold, and for the same reasons (protecting the credibility of the US dollar and the fiat money system), but there's a major difference between the two metals because gold isn't actually used for very much and silver is used for all sorts of things. Silver is the best conductor of electricity and heat and the most reflective metal.

The ratio of gold to silver in the Earth's crust is about 1:12, but the vast majority of the silver ever mined is now back underground, in landfills. Nearly all of the gold is still owned by somebody. Over the last twenty years, stockpiles of silver have been dwindling from an enormous pile to hardly any, but because the price has been artificially held down it has not been profitable to open new mines specifically to produce silver.

Add all of this together and you end up with a shortage of physical silver at a time when it is in high demand both by industry and people who see it as monetary metal, which will in turn lead to massive price hikes.

[biffvernon]

Gold is for me my future pension/insurance policy in case of total collapse.

Gold will have no value in a total collapse. There will be several thousand tonnes of the stuff looking for a home.

Lead would be more use; you could set up a rainwater goods business.

[UndercoverElephant]

Gold is for me my future pension/insurance policy in case of total collapse.

Gold will have no value in a total collapse. There will be several thousand tonnes of the stuff looking for a home.

Lead would be more use; you could set up a rainwater goods business.

There is not going to be a "total collapse". There are seven billion humans on this planet. If at least one out of every hundred of those survive the transition, gold will retain its value.

[Catweazle]

Gold is for me my future pension/insurance policy in case of total collapse.

Gold will have no value in a total collapse. There will be several thousand tonnes of the stuff looking for a home.

Lead would be more use; you could set up a rainwater goods business.

People need a currency.

I don't think it will be worth what it is now, as trade dries up goods will become harder to obtain whereas the gold will still exist unchanged. A currency can only exist by consensus, and preferably with a "value" stamped on it.

The biggest advantage is that when people have lost all faith in the Bank of England they will know that the bank can't just print more gold.

[biffvernon]

People need a currency.

I don't think it will be worth what it is now, as trade dries up goods will become harder to obtain whereas the gold will still exist unchanged.

That's an important point. When we get to the so far mythical almost but not quite total collapse, there will be a shortage of useful goods and a surplus of gold.

The advantage in investing in goods now rather than in gold is that come almost total collapse time you will already have the goods and won't have to go to market with bags of gold, and in the mean time (especially if it turns out that the collapse is still a way off) you can get on with enjoying the goods.

[UndercoverElephant]

People need a currency.

I don't think it will be worth what it is now, as trade dries up goods will become harder to obtain whereas the gold will still exist unchanged.

That's an important point. When we get to the so far mythical almost but not quite total collapse, there will be a shortage of useful goods and a surplus of gold.

The advantage in investing in goods now rather than in gold is that come almost total collapse time you will already have the goods and won't have to go to market with bags of gold, and in the mean time (especially if it turns out that the collapse is still a way off) you can get on with enjoying the goods.

You still don't get it, and I'm not sure why.

The fiat money system is collapsing. It does not follow that we go from a fiat money system to a situation where there is no such thing as money. There will be a new type of money, this time backed by commodities (not necessarily just gold and silver, but certainly including them). When this happens, there will no longer be any point in people holding gold and silver, so they will be exchanged for large amounts of the new money. This in turn can be used to buy property and land.

What about that do you not understand???

[Lord Beria3]

+1 UE

I don't get why such a simple thing is lost with nominally intelligent people like Biff.

[Catweazle]

When this happens, there will no longer be any point in people holding gold and silver, so they will be exchanged for large amounts of the new money. This in turn can be used to buy property and land.

What about that do you not understand???

Why do you assume it will be exchanged for "large amounts" of a new currency ? If gold is buying a loaf of bread it will be exchanged for the amount of new currency that will also buy a loaf of bread.

[UndercoverElephant]

When this happens, there will no longer be any point in people holding gold and silver, so they will be exchanged for large amounts of the new money. This in turn can be used to buy property and land.

What about that do you not understand???

Why do you assume it will be exchanged for "large amounts" of a new currency?

Because it will return to something like its historical value. At the moment, you need far more gold to buy a house than you would have done during the majority of recorded history when currency was backed by gold and silver.

One of the most common objections I hear is this one:

http://goldprice.org/gold-news/2008/01/why-gold.html

There's not enough gold around to be a currency today

Response: Not at today's gold prices there isn't. But then there is no reason for gold to remain at today's prices.

If gold is buying a loaf of bread it will be exchanged for the amount of new currency that will also buy a loaf of bread.

Eh?

[UndercoverElephant]

Catweazle,

I think that it is going to be gold which drives the final nail in the coffin of the fiat money system.

For most of recorded history, the value of gold in terms of currency was fixed, apart from when it was intentionally changed by governments. A British gold sovereign was worth precisely twenty shillings.

For a lot of the times when there have been fiat currencies, people weren't allowed to own gold. This was true in the US up intil the early eighties, and was true in China until 2005.

Also, since we went to a completely fiat money system in 1971 the price of gold has been manipulated. For the first 20 years it was manipulated by central banks selling off all the gold they previously needed, more recently it has been manipulated by the invention of vast amounts of "paper bullion". Central banks have been buying back gold for the last three years. Nobody can control the price anymore, just as nobody can control the price of oil.

The situation we have now is a completely globalised, computerised, instant, (supposedly) free market system where anybody with an internet connection can monitor both global newsfeeds and the spot price of gold by the second. They can buy or sell gold with a few mouseclicks. We also have a globalised fiat money system - nobody is on the gold standard. This situation is therefore completely new - nothing like this has ever happened before. So long as it remains legal and practically possible to buy gold then it looks absolutely inevitable that as it becomes ever-more obvious that the fiat money system is collapsing, it will become ever-more attractive to own gold. The result of this will be that the ever-rising price of gold which finally kills off any pretence that the US dollar is still the world's reserve currency. Gold will automatically become the world's reserve currency. Nobody has to change any laws for this to happen. All they have to do is continue printing money, and I believe they will have no choice but to do exactly that.

[biffvernon]

intelligent people like Biff.

Now let's not get personal and start calling each other names like 'intelligent'.

Actually I really do understand your arguments, UE and LB3, it's just that there are some counter-arguments that I have put, maybe with a touch of devil's advocacy.

I don't think it's safe to make assumptions about the real value of gold in the post-climacteric world. It might turn out the way you guys are suggesting but it might not. The past is certainly no sound guide. Gold has certainly been a good hedge against the inflation of a particular currency, but we are now looking towards a global financial event. One must also consider government's response. If the currency goes belly up will the government allow those holding gold to profit? Maybe all gold stocks will be nationalised without compensation. Ok, you could say the same about land so that's not the greatest of arguments, but at least with land you'd be in the company of many others so it might be politically less easy. And then there's the issue that digging up gold is just another rape of the Earth, and the workers who do it tend to be at the bottom of the heap. And then there's the issue that we've already got tens of thousands of tons of the stuff sitting doing nothing in bank vaults. Is that really worth all the pain and disease? Basically, it's a system that stinks and I'd rather not be a part of it.

So my advice is that you might be financially sensible to gamble a part of your wealth on precious metals, but don't buy more than you are willing to take a loss on.

Gold, or any form of money, is only of use in trade and not of use in itself. Buying stuff that is useful now and will still be useful in several years time has some real advantages.