Gold is not money (but it might be a good investment)

phil_b_2

I dont really see where gold has to go from here. Most gold bugs I hear from generally think gold will rocket upwards as the economy and our currencies capitulate. It seems to me though that we've had the worst of it and may limp along for a while before the worlds cogs turn again and things improve. So where does gold go from here? Can only see it stagnating or dropping in the near future.

If the gold history charts repeat themselves it looks like we are due a significant drop.

DiggerUK

phil_b wrote: »

............If the gold history charts repeat themselves it looks like we are due a significant drop.

What makes you think, that the history of 40 years ago, will repeat itself in an identical fashion today?

After all, the Russians have not just invaded Afghanistan, the Ayatollahs have not overthrown the Iranian regime, the oil cartel have not boosted the price of oil through the roof, and the Cold War has been over for twenty years now.

Malcolm.

DiggerUK wrote: »

Hamish, I've put this question to many people, many times, including yourself.

Why was it, that whilst all other assets were bubbling in the boom, gold didn't?

Why is it, that now we are in the bust, gold is bubbling, but all other assets aren't?

Because investments in gold reflects a lack of confidence in governments, or more specifically, government money.

I'll have my prize now, cheers.

HAMISH_MCTAVISH

DiggerUK wrote: »

Hamish, I've put this question to many people, many times, including yourself.

Why was it, that whilst all other assets were bubbling in the boom, gold didn't?

Why is it, that now we are in the bust, gold is bubbling, but all other assets aren't?

Because gold is normally a poorly performing commodity with little use or returns, and in normal times it is outperformed by almost anything else.

It's not the currency of last resort..... it's the speculative commodity of last resort and so it behaves countercyclically. It's where speculators go to play as a last resort because nothing else is worth taking a punt on.

Gold will bubble up in a bust, and then crash in an almighty fashion afterwards when the economy recovers. Which is fine as far as it goes, it's perfectly acceptable to make money on a speculative commodity in a bubble....

Where goldbugs go wrong is assuming it's not a bubble.... And that gold is somehgow an intrinsic store of value, or true currency, or some other such nonsense.

It will crash, and crash hard, when the wider economy recovers, and goldbugs will blindly see it as a buying opportunity...... all the way down for a decade or two as their wealth is destroyed.

HAMISH_MCTAVISH

DiggerUK wrote: »

What makes you think, that the history of 40 years ago, will repeat itself in an identical fashion today?

After all, the Russians have not just invaded Afghanistan, the Ayatollahs have not overthrown the Iranian regime, the oil cartel have not boosted the price of oil through the roof, and the Cold War has been over for twenty years now.

What makes you think the history of house prices from 20 years ago will repeat itself in an identical fashion today?

After all, we don't have a housing surplus, we don't have double digit interest rates, but we do have massive immigration and population growth, record low house building, and a shortage of a million units.

Malcolm.

HAMISH_MCTAVISH wrote: »

Because gold is normally a poorly performing commodity with little use or returns, and in normal times it is outperformed by almost anything else.

It's not the currency of last resort..... it's the speculative commodity of last resort and so it behaves countercyclically. It's where speculators go to play as a last resort because nothing else is worth taking a punt on.

Gold will bubble up in a bust, and then crash in an almighty fashion afterwards when the economy recovers. Which is fine as far as it goes, it's perfectly acceptable to make money on a speculative commodity in a bubble....

Where goldbugs go wrong is assuming it's not a bubble.... And that gold is somehgow an intrinsic store of value, or true currency, or some other such nonsense.

It will crash, and crash hard, when the wider economy recovers, and goldbugs will blindly see it as a buying opportunity...... all the way down for a decade or two as their wealth is destroyed.

I assume you've sold all your gold to 'cash4gold' then - help you meet your overdue mortgage repayments...

Speaking seriously for a change, are you shorting gold?

DiggerUK

HAMISH_MCTAVISH wrote: »

Because gold is normally a poorly performing commodity...... all the way down for a decade or two as their wealth is destroyed.

And the answer to my question is ??

DiggerUK

HAMISH_MCTAVISH wrote: »

What makes you think the history of house prices from 20 years ago will repeat itself in an identical fashion today?........

I am not asking about the history of house prices.
I am asking about the history of the price of gold.

So, the answer to my question is?

Malcolm.

DiggerUK wrote: »

I am not asking about the history of house prices.
I am asking about the history of the price of gold.

So, the answer to my question is?

I answered one of your questions in post 14.

So, where is my prize? :mad:

HAMISH_MCTAVISH

Malcolm. wrote: »

I assume you've sold all your gold to 'cash4gold' then - help you meet your overdue mortgage repayments...

:rotfl:

We actually still own some gold and silver that we had left over from our time overseas, a few krugs and a couple of large silver ingots, but I'm under no illusion they won't fall in value.

The krugerrands live in a safe deposit box at the bank, the silver is used for paperweights on our desks.

They're trinkets that we'll give to the neices and nephews when they graduate Uni or turn 21. But that's all they are.

Speaking seriously for a change, are you shorting gold?

If I had any I considered an investment, I'd have sold it by now.

I don't short markets out of principle.