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GOLD-an explanation of Value rather than price..?
C_Mababejive
Posts: 11,668 Forumite
Read this article...
http://goldmoney.com/is-gold-in-a-bubble.html
I am struggling with this as ,i am sure,are many others.
I have backtracked and read the various articles on Gold..should i buy/should i not/is there a bubble/how should i hold gold/who should i buy it from etc..
When the layman thinks about buying>selling>profit>loss he just thinks,buy low>sell high >talk profit.
In those terms,surely then it would be high risk to buy into gold now as you would have largely missed the boat and the higher upside.
Gold as a store of value....Well im still struggling to get my head round this.
Surely if i buy a block of gold for say £1000 now becuase i am in a blind panic about the state of the economy, and then in five years time when Cameron has sorted it all out..the perceived threat recedes..the price of gold goes down...so the chunk of gold i bought for £1000 can now be sold for say..£600. In what way have i gained? Surely i have spent £1000 to get £600 and a bar of gold was the vehicle by which i did that transaction?
Can someone please explain to me in clear,plain English how holding gold preserves my wealth/value/whatever??
Surely until the day comes when i can directly trade gold for other tangible assets,we are forever reliant on paper money and coinage?
I'm also just reading this...
http://en.wikipedia.org/wiki/Gold_as_an_investment
http://goldmoney.com/is-gold-in-a-bubble.html
I am struggling with this as ,i am sure,are many others.
I have backtracked and read the various articles on Gold..should i buy/should i not/is there a bubble/how should i hold gold/who should i buy it from etc..
When the layman thinks about buying>selling>profit>loss he just thinks,buy low>sell high >talk profit.
In those terms,surely then it would be high risk to buy into gold now as you would have largely missed the boat and the higher upside.
Gold as a store of value....Well im still struggling to get my head round this.
Surely if i buy a block of gold for say £1000 now becuase i am in a blind panic about the state of the economy, and then in five years time when Cameron has sorted it all out..the perceived threat recedes..the price of gold goes down...so the chunk of gold i bought for £1000 can now be sold for say..£600. In what way have i gained? Surely i have spent £1000 to get £600 and a bar of gold was the vehicle by which i did that transaction?
Can someone please explain to me in clear,plain English how holding gold preserves my wealth/value/whatever??
Surely until the day comes when i can directly trade gold for other tangible assets,we are forever reliant on paper money and coinage?
I'm also just reading this...
http://en.wikipedia.org/wiki/Gold_as_an_investment
Feudal Britain needs land reform. 70% of the land is "owned" by 1 % of the population and at least 50% is unregistered (inherited by landed gentry). Thats why your slave box costs so much..
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Comments
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You have to understand that people who buy physical gold ( as opposed to ETCs and other forms of paper gold ) are roughly divided into two sorts; those who see it as insurance for a portfolio of other investments, who don't intend ever to sell, and those who are vehement that fiat money is a con which will sooner or later be found out. The former would hold only a small amount and probably wouldn't buy at these levels. The latter see gold going to $5000+ and think that it's still the only game in town.
That's where the insurance part comes in. Think of it as an insurance premium - if the economy improves, your portfolio benefits, if it doesn't, the value of the gold should balance things out. If you insure your house and nothing happens, was the insurance premium wasted?Surely if i buy a block of gold for say £1000 now becuase i am in a blind panic about the state of the economy, and then in five years time when Cameron has sorted it all out..the perceived threat recedes..the price of gold goes down...so the chunk of gold i bought for £1000 can now be sold for say..£600. In what way have i gained? Surely i have spent £1000 to get £600 and a bar of gold was the vehicle by which i did that transaction?
Which is what James Turk says in the article - the time will come when we pay for things with gold. FWIW I think that should that ever come about your gold would be confiscated anyway!Surely until the day comes when i can directly trade gold for other tangible assets,we are forever reliant on paper money and coinage?
FWIW I think that Bill Bonner is a rather more sensible writer on the subject. Still a gold bug, of course...0 -
The theory of gold holding its value is that what it could buy in the distant past is the same as what it could buy today.
As this article (written Nov 2009) says its value today is about the same as it was in the 13th century. So in theory buying gold protects you against times of turbulence in currency and stock markets. In the long term it will not go up in value but it won't go down either.
But - and there are a lot of buts - that does not mean it stays stable which weakens its role as a safe haven. For example as that article says it doubled in value in the late Medieval then crashed 90% for the next 500 years as large gold reserves were found.
Given it is not such a store of value as some claim another reason to buy it is speculation as for any other commodity. i.e. you believe it is currently under valued or high demand will push the price up in the short or medium term. As such you must look at the economics of supply and demand before deciding whether it is a good or bad gamble.
Unfortunately researching gold on the internet is clouded by gold evangelists.
There is a noisy minority who believe the world economies are doomed and gold will be the only currency worth anything in a few years. Personally I would discount them.
Then you have the gold nuts who think it is a fantastic opportunity as have been saying so for years. Confused by the fact gold has failed to rise as much as they predicted they come up with conspiracy theories that the people in charge are manipulating gold prices to stay low. Personally I would discount them too.
If you are interested in gold stick to articles by level headed speculators who are as willing to call "Sell" as they are to call "Buy".0 -
Hi reaper..
Yes,i had formed the same views as you but in the face of such vociferous voices from those who say buy buy buy..its hard not to doubt yourself sometimes.Feudal Britain needs land reform. 70% of the land is "owned" by 1 % of the population and at least 50% is unregistered (inherited by landed gentry). Thats why your slave box costs so much..0
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