Gold? Worth it?

shaun_from_Africa

Ok, now we are going from particle physics to Star Trek

Why?
Rumour has it that It can be done, it's just that to do so requires enormous amounts of energy and money so it's not feasible to do at present.
However, in the future, who knows, maybe a way of doing the job far cheaper will be found.

Transmutation of lead into gold isn't just theoretically possible - it has been achieved! There are reports that Glenn Seaborg, 1951 Nobel Laureate in Chemistry, succeeded in transmuting a minute quantity of lead (possibly en route from bismuth, in 1980) into gold. There is an earlier report (1972) in which Soviet physicists at a nuclear research facility near Lake Baikal in Siberia accidentally discovered a reaction for turning lead into gold when they found the lead shielding of an experimental reactor had changed to gold.

King_Of_Bling

if the price of gold goes up?

sabretoothtigger wrote: »

This is confusing but in which country is the price going up.

Looks like it may hit $1600 T/Oz by the end of the week or sooner ($1591.50 at time of writing).

It was $1490 T/Oz just over a week ago.

atush

Maybe I should sell the other half of my holding then lol.

sabretoothtigger

Sell gold when you have something useful to do with it. Having 100% gold would mean you are not very imaginative Selling gold just to buy cash and have it sit there means really you are speculating on currency markets which is beyond my reckoning most of the time though the euro could rise I think.

Sterling itself seems to have ended its post election recovery, 1 year ago was a good time relatively to sell gold and buy sterling though gold is of course global (and its risen in demand) it would have at least been correct on one half of the deal.



Gold cost in hundred pound notes



Maybe if gold did pull back the 2010 election prices would be a reasonable target. Gold never pulls back that much now, regular buyers exist with large funds I think




Heres an article outlining why gold would be needed and an alternative to modern currencies


Ambrose Evans-Pritchard
Return of the Gold Standard as world order unravels

China is coy, revealing purchases with a long delay. It has admitted to doubling its gold reserves to 1,054 tonnes or $54bn. This is just a tiny sliver of its $3.2 trillion reserves. China's Chamber of Commerce said this should be raised eightfold to 8,000 tonnes.

Xia Bin, an adviser to China's central bank, said in June that the country's reserve strategy needs an "urgent" overhaul. Instead of buying paper IOU's from a prostrate West, China should invest in strategic assets and accumulate gold by "buying the dips".

Step by step, the world is edging towards a revived Gold Standard as it becomes clearer that Japan and the West have reached debt saturation. World Bank chief Robert Zoellick said it was time to "consider employing gold as an international reference point." The Swiss parliament is to hold hearings on a parallel "Gold Franc". Utah has recognised gold as legal tender for tax payments.

A new Gold Standard would probably be based on a variant of the 'Bancor' proposed by Keynes in the late 1940s. This was a basket of 30 commodities intended to be less deflationary than pure gold, which had compounded in the Great Depression. The idea was revived by China's central bank chief Zhou Xiaochuan two years ago as a way of curbing the "credit-based" excess.

Mr Bernanke himself was grilled by Congress this week on the role of gold. Why do people by gold? "As protection against of what we call tail risks: really, really bad outcomes," he replied.
Indeed.

The White house spokesman - http://www.youtube.com/watch?v=WbYflGedVic So much double speak so its fairly certain they wont reduce that deficit to zero under any deal which means debt situation is worsening


Also S&P has put USA credit ratings on negative guidance or something, obviously a bit late but thats news to fund managers who can only buy top rate debt

Ark_Welder

I should mention that I do have assets in physical gold, and that I first bought in the 1990's - but for entirely the wrong reasons. My holdings were increased in later times by using investment vehicles - but always asset-backed, never synthetic. I still hold some physical (again, for the wrong reasons), but my main exposure now is through ITs and OEICs that have holdings in asset-backed ETFs. And when I'm talking gold, I mean the heavy shiny stuff and not shares in mining companies.


Gold price in USD and GBP over a slightly longer period of time. Not adjusted for inflation:




Remember that gold is priced in USD, so holding gold in any other currency also exposes the holder to currency risk, e.g. the exchange rate begween USD and GBP.


One reason why Sterling has been falling recently is because it is the latest currency to be used for carry-trade purposes, i.e. borrowing in a currency with low interest rates and investing it in another currency that has higher interest rates. However, foreign holdings of gilts has been increasing over the last decade, in nominal amount and percentage terms: there were dips 2008/9 coinciding with the credit crisis, but the trend for both recently has been upwards. The time to worry about Sterling is when the exchange rate is dropping and foreign holdings of gilts is declining, i.e. GBP assets are being sold and the cash moved offshore.

http://www.dmo.gov.uk/docs/publications/quarterly/jan-mar11.pdf


A few points to take into consideration about gold standards is that they have not prevented banking crises in the past, nor did they prevent the causes of the stock market crash of 1929. For something that is put forward a successful economic model, gold standards and their surrogates have repeatedly been abandoned.

http://en.wikipedia.org/wiki/List_of_banking_crises
http://en.wikipedia.org/wiki/Gold_Standard


Conveniently glossed over by the article in the Telegraph, and for the benefit of those with 'Swiss safe-haven' inclinations:

http://www.pcgs.com/articles/article_view.chtml?artid=2425&universeid=105&type=1
http://www.marketoracle.co.uk/Article21283.html


News about the potential downgrade of US Treasuries has been around for months. This has not stopped foreign buying, though - even since the Fed stopped its money-printing purchases. US investment house Pimco sold out of Treasuries some months ago citing the end of QE, has seen their prices rise and has recently started to make new purchases.


Therein lies the problem: since QE began, the prices of stocks, bonds, gold and other commodities have all risen in price. (FT article The Long View of a few weeks ago: March 2009 to end June 2011, gold +63%, S&P500 +67%). So both defensive and 'risk' assets have risen. The taps may have been turned off for now, but why should one asset perform better than another when the plug is finally pulled out?


As with any type of asset, understand the risks of making - or keeping - an investment before buying. Nothing is a one-way bet. And treat cash as you would any other asset - risks and benefits.

Jegersmart

sabretoothtigger wrote: »

Judging the price as bad or good right now is personal judgement I guess but I clearly see why gold demand will rise in future. I see the world changing greatly

What changes do you see?

Jegersmart

Ark_Welder wrote: »

As with any type of asset, understand the risks of making - or keeping - an investment before buying. Nothing is a one-way bet. And treat cash as you would any other asset - risks and benefits.

Nice post, as you probably know by now I largely agree.

You should update that graph there, when I look at mine it reminds me of a dot.com share price graph at that time........:shhh:

atush

Sell gold when you have something useful to do with it.

I always have something 'useful' to do with my money. I have one boy starting his last year at Uni and twins starting lol. the last lot I sold paid for this years rent for him at Uni.

sabretoothtigger

I hope he realises he is competing against gold as a good investment now, motivation not to slack

Jegersmart wrote: »

What changes do you see?

In the article above

Mr Bernanke himself was grilled by Congress this week on the role of gold. Why do people by gold? "As protection against of what we call tail risks: really, really bad outcomes," he replied.
Indeed.

So its not that I see exact changes but the potential for change is gigantic.
Its more then it has been for decades and its relates to events in those decades like Nixon changing the basis of modern currency, he is dead now but his influence remains.

And so on, you can take whatever views you like on plus or negative but the differences over decades have been accumulating in their effects not depreciating or being adjusted throughout the world.
It could related to tectonic plates and pressure building, its not that change is wrong but the lack of correct movement between great sections can build up


so what is kinda ironic is Mr Ben B doesnt appreciate that price of gold is correct.
If anything gold could be said to be cheap, he isnt stupid he knows why its valued and that risk of really bad outcomes is there. He thinks his words and government value is greater then gold and he thinks nixon was right and 30 years of greater debt is a normal occurance and I dont know what else but its being based on their own egos not a blackbox view (ie. without prejudice to personal bias in the relationship)


Im not qualified to point out which events are the significant but it does strike me as an obvious disparity to have the worlds largest communist country backing the capital value of the worlds largest capitalist countries.
Can you imagine if those people were free. If their currency value was not sent abroad


My general view is extreme events (in finance at least) are building and this is not coincidental to a rise in gold price despite it being a fairly useless thing
The net gain to the world of investment in gold will be zero . Maybe that is what Soros is saying about it being the biggest bubble

Technology on the other hand allows for exponential growth




http://www.economist.com/node/21011544

On the positive side we have alot of technology change. We also have alot of people without electricity still, this represents gigantic potential for change.
Those people represent growth far more then we do or the rest of the west just because the distance between zero to something is greater for them






The price Markets charge for risk ^^

http://zengold.com/uk/wp-content/uploads/2011/05/Gold-Chart11.jpg

Thats a good one, value of sterling halved since 1990. Making 200 then 400 now and price gain not as great as it appears

greenbubble

just in case people missed it.

Ron Paul vs Ben Bernanke: Is Gold Money?


i'd suggest watching it all , but the bits that make me giggle start at about 4 mins in.

i especially love benocide ben's uncomfortable pause before he answers