Why on earth would anyone buy gold. What can you do with it and just Why really?

kennyboy66_2

Gold is great for misers who hoard it. They can be like Golum and cradle it, and say "my precious".....

It like most other commodities is prone to speculative bubbles and with gold it is usually justified by rants against FIAT currencies, and claims that it is a great hedge against inflation.
This usually ignores the fact that most tangible assets that don't deteriorate are also hedges against inflation. In the long term land, housing & equities have proved to be much better hedges against inflation.
The only advantage gold has is that it is portable & easily traded.

WTF?_2

kennyboy66 wrote: »

Gold is great for misers who hoard it. They can be like Golum and cradle it, and say "my precious".....

I've been accused of 'hoarding cash' (ie. having savings) by one of our increasingly crazy 'bulls' here

It's also been suggested by another poster that I've been disadvantaging builders by saving my money instead of paying tens of thousands of quid too much for a house :rolleyes:

If you think the banking system is unstable (it manifestly is at risk right now) or you are worried about monetary inflation (I certainly am) then it makes sense to have some of your savings as gold. Just because hedge funds turned out to be a load of **** doesn't mean that hedging your own finances is a bad idea.

Or are you perhaps suggesting that people should be forced to either hold all their wealth with those ever-so-responsible banks or else buy property and MEW against it to stimulate the economy :rotfl:

real1314

Gold has value beacuse of it's properties.

It is relatively inert, does not corrode, is not damaged by numerous substances that damage all other metals / elements.
It is highly ductile and malleable, can be stretched incredibly thin whilst maintainting strucural ability.
It is highly conductive and used in many electronic applications. If it weren't so expensive/rare it would be used far more commonly. Flymo would love to use it in lawnmowers, but it would cost too much.

If you had a field of spuds, or lambs or gold, but had no money to maintain any of them, and no-one had any money to buy any of them, what state would your spuds or lambs be in a year later?
Dead lambs and rotten spuds? That's why gold can hold it's value more than any other investment.

Oh, and you can eat it - it gets used in high end dining as gold leaf amongst other things. And you could re-claim any gold you eat and re-use it!

lotto-dreamer

I've always believed that gold was the asset to have in hard times but never really understood why.

Having done a little googling it seems that America adhered to the 'silver standard' while Britain had the 'gold standard'. I know Britain sold off most of its gold reserves at some point.

I can't find much more in way of articles to read - can anyone point to one perhaps to help me understand this a bit more please.

(I sold my one and only 1oz kruggerand on eBay some years ago for £250 which was about what a troy oz was going for at that time...._pale_ but I do still have one 1oz 1888 gold sovereign - so not exactly geared up to take advantage of gold as an investment- but would really like to understand this better)

mewbie_2

landlord:sorry guys, can't take a cheque, and no credit given.
blokeinpub1: I've got this paper that relates to *tranches of CDO acquisitions of Alt-A securities graded AAA+ by the securities commission, and parcelled into tiny little pieces all over the world and sold on to people like me.
blokeinpub2: I've got some gold.

* I know this is probably nonsense - but then the whole scam was, wasn't it?

Andrew_McP

There are plenty of excellent points made here already, on both sides of the argument.

Personally I increasingly -- and somewhat reluctantly -- see gold, and perhaps silver, as being the only viable, reliable global currencies. Yes, the dollar used to be fill that role, but these days the dollar's doing a great job of giving itself a very bad name indeed. I'm sure the pound is heading the same way.

Obviously you can argue that gold is only valuable because people say it's valuable. Welcome to the wonderful world of human psychology. :-) So I prefer to think of everything in terms of energy. If we had infinite amounts of cheap/free energy, pretty much everything would be worthless because we could mine as much gold as we wanted, have 10 litre car engines, ride lifts to the top of Everest, make houses on a production line and helicopter them into location, have a small hadron collider in the cellar.... you name it, with enough cheap energy pretty much anything is possible.

But energy isn't cheap. In fact it's expensive and will get much more expensive unless someone comes up with a miraculous way of powering the UK using old credit card statements (virtually the only thing we manufacture these days ;-). Now, making a ten pound note takes relatively little energy. It's worth ten pounds because we all agree with the Bank of England that it's worth ten pounds. It has no intrinsic value at all.

Gold, on the other hand, is pretty, almost indestructible, very rare and requires *huge* amounts of effort and energy to turn into something useful to jewellers, goldbugs, or Bond villains. That, just as with a barrel of crude oil, accounts for a large portion of its cost. The rest is a combination of psychology and market forces. You can't just wake up one day and print a load more (besides, have you seen the price of yellow ink cartridges these days?!) you have to buy it off someone, or go pan an awful lot of Welsh mud.

It's very interesting that gold has surfaced in the mainstream media this week. Part of me thinks we're in shoe-shine boy territory. When everyone's thinking about gold (not necessarily buying) then it's probably time to get out. But then I look at the shocking state of our local, debt-laden economy, and at the wider consequences of US and UK endebtedness, and I think that this, most definitely, is no ordinary situation. Gold may well fall in value from here. But so will the dollar, and so will the pound IMO. Pick a currency, any currency... which will be most worthless in the long term as governments try to shrink this debt burden?

You only have to look at the last year to see that nobody in power has the answers to anything. Quite the opposite if you study public statements on all credit crunch related matters. So IMO we're all in this on our own, and we each have to decide how best to protect ourselves from the uncertainties ahead.

However I suspect buying £500's worth of beer might be more use to most people than buying a gold coin. It'd certainly make the credit crunch go away for a quite a while. :-) Just be careful though. You can soon turn £500 of beer into £0's worth of urine. Gold, on the other hand, will still be gold when the Sun is old and cold and the last human being has long since crumbled into dust (or been hoovered up in the Rapture, if Palin and her chuckle buddies are right).

Andrew McP

Realy

The only thing I could think of against holding gold would be when it's held for financial Armageddon, the chances are the times would be lawless and desperate.
In which case you may be killed or beaten for it.
Also if you had not had a drink of water for three days when you come to buy a bottle of water they might want all of your gold. In that situation preservation would take over so although your gold is far from valueless, it is to you if you want to survive.

Gangstabird

I have a gold wedding ring that I can't wear anymore. Does anyone think I might get a goat for it?

Gangstabird

I am currently brewing my own wine and beer and have told friends that if it continues, they will have to drop into an honesty box t keep it going. I can't supply everyone with booze and expect to keep doing it.

If you want to take a bottle of wine, drop a £1 coin into the honesty box. I am not being mean. It will all go back into the brewing of it.


It's very hard right now as everyone wants a bottle but they are not ready yet?

Gangstabird

Wine is gold by the way............!