Gold = real estate = bubbles -> wet eyes :)

[ChalengeGuyFan]

Remember when everyone said that "they stopped producing land", that there will always be a demand for real estate and so on?
Those were mostly true statements, but people misunderstood the real worth of those things.
Was a sh!tty shed really worth hundreds of thousands of $$? Of course not!

But if you bought the sh!tty shed for half a million, you are not going to resell it today at its real worth (which is 5 bucks), are you? So you're holding tight on it and hope that things will "straighten" out, right?


Likewise with gold.
People think it's some kind of etalon, a safe haven, the absolute truth, or something.
Naturally, its price soars to space and, stupidly, people think it's ok. So they buy it and then buy some more.

But let's fast forward a few years: my suitcase of $$ now buys a plate of food. In this case, the bullions of gold that I bought in the past should be worth a truck of $$, right? Or the equivalent: a truck of food.
But will the food supplier, John, agree to give me a truck of food in return for a bullion of gold?
He also has expenses: to the ingredients suppliers, to his workers, to the utility companies, etc. Will those accept the gold that John offers, that he ultimately got from me and you?
Not likely, because there is a huge network of suppliers and consumers, most of which do _not_ have actual gold to give in exchange for the services others provide.
And if they do they will expect a lot of things in return, because they paid a ridiculous amount of money on it, way back in 2011.

Things look stuck...
Slowly, I have no choice but to ask for less in exchange for my gold. Hell, I need to eat, don't I?
As time passes, I will ask for less and less for my shiny bullions, until, eventually, things balance out. I will discover that I actually came out negative from my little gold investments...


So is buying gold a mistake? Currently, I don't know. Its price seems to have stalled after soaring to almost $1900, then dropping almost $200 and then rising again by $50.
Soon enough, people will have to realize what is actually important. Gold isn't among those things, so I don't expect much from it in the long run.

It was certainly not a bad move to buy gold until this summer and then sell it for much more.
But that is called speculation and is not real economics, just like real estate and mindless loans. And speculation is a bubble and bubbles burst, eventually.


Prove me wrong.

 

[Bible_Belt]

But that is called speculation

Any guessing about the future is speculation. Everyone with wealth has to do it.

If we had drastic hyperinflation, it would be currency that no one would take, not gold.

But I also think people who hoard gold without making any plans to be able to feed themselves are silly, too.

 

[Vice]

Making money through real estate is much more complex than waiting for appreciation to happen. This is why so many people lost money on it.

As for gold, the whole purpose of gold is to serve as a token of value so that we can speed up the bartering system.

 

[metoo]

other people will take your gold, no problem, and give you something that you can trade for whatever else you want. I'll take all that "worthless" gold that you want to send me. Sure, you also have to have real survival preps FIRST, but once you have that and the skills to go with the preps, gold is next on the list of acquistions that you should make. Gold is concealable, portable, divisible, real estate is not.

 

[ChalengeGuyFan]

@Bible_Belt: 'speculation' is not 'any guessing about the future', in a financial context.

@Vice: In my country, real estate implied a bunch of owners and builders asking unreasonable amounts of money for regular houses and idiots taking loans over 30 years in order to buy those regular houses. It was not waiting for appreciation to happen (not that I ever said it was) but it wasn't complex, either.
What was so complex in the US?

@metoo: I'm saying that the price of gold is artificially pumped, not that it's worthless, sheeesh
I started this thread because people keep on relating the value of the dollar to the current, fake value of gold.

 

[Falcon]

You can't look at gold like housing. You can't even look at it solely as a commodity. It's a hybrid commodity/currency. It's hard for the average investor to see its worth because they don't know how to analyze it. You always analyze gold relative to something else, then you will know it's worth. Sure, it isn't optimal to store gold, but do you feel safe storing dollars, euro, etc.... If you are saving cash somewhere you are losing due to current fiscal and monetary policy, period.

Of course, anything can be in a bubble, but to single out gold when the economy is weak in so many other areas make no sense. You know what is looking more and more like a devastating bubble... student loans! Like housing, people are encouraged to take out extraordinary debts and get a degree. Many cases these degrees aren't even providing any return in this economy. Talk about a horrible investment. The stock market and bonds are also at a much greater risk of being in a bubble, yet why do people like to pick on gold? When people go in to gold, they are not leveraged as badly as people who went into housing or student loans. I took out no debts to attain my gold.

And of course, when something is in a bubble, a hallmark is that everyone gets into it. Out of everyone I know, I'm the only one who owns gold. Everyone who I talk to about gold tells me to sell now and not to invest in it. How many people do you know own gold (for saving purposes)? I'm willing to guess a very small percentage. During the housing boom, every adult I knew practically owned a house. I knew three people flipping houses too. I knew people who owned multiple houses. Now that's a sign of a big bubble! So try not to compare it to any other bubble like the housing bubble. Completely different dynamics.

Gold is a safe haven if you look at what is happening relative to it in other currencies. It is a currency, every country on earth recognizes it as value and even central banks store it. It may be a little overpriced, but try to put it in perspective to all the other currencies and bubbles that exist before you single it out and bash it.

 

[Alle_Gory]

On the other hand soaring gold prices means that gold mines reopen, the ones where it wasn't cost effective before to mine the gold. Increased supply. This would depress prices or at least cause them to hit an equilibrium based on how many people demand gold versus how much new gold is produced.

 

[Julius_Seizeher]

There is so much paper money swirling around this planet that any increase in gold supply is only a blip compared to its demand.

Gold is not the fear or doomsday investment, it's the reality trade. Literally--gold is real, paper is not. What we are seeing in the US and Europe is not the end of the world, it's the death throes of Keynesian economics. Hell, we've only been on a full paper system for 40 years and all it has achieved is one boom/bust after another (for which the gold standard was always blamed) and above all else, astronomical amounts of debt. Deficit spending is going to end, one way or another--either we get smart and link the dollar back to an objective standard of value (gold) or we turn into the Weimar Republic where it took a wheelbarrow of paper money to buy a loaf of bread.

And gold has barely begun it's move, you can count on that. Relative to the amount of US dollars in circulation, there are some economists calling the real inflation-adjusted price of gold to be north of $500,000 an ounce. Is that crazy? No. Never-ending printing of Keynesian cash is crazy, and when gold goes spastic, it will just be reality catching up with all the worthless money out there.

We went through this just 35 years ago, you know. Most of us were not around in the 1970s, so it behooves us to study history. Debt crisis, hyperinflation, high interest rates (not seen yet), a worthless liberal President, turmoil in the Middle East, disruptions in the oil supply: break out your bell-bottoms and Bad Company 8-tracks, boys; the 70s are back. The late 70s hyperinflation sent gold running from $35 to $850 an ounce, but the gold miners and explorers made astronomical capital gains. It was the only safe place to put your money, for a time. That's why all the kids are running around on the internet whining "It's all over, man!" while the adults are saying, "I've seen this movie before."

I am an investor in mineral explorers and I am positioned for the return of hyperinflation and obscene gold prices, I think hyperinflation necessarily has to happen before we can get this monetary back in check (and hopefully find the good sense to fix the dollar to gold and achieve subsequent 0% inflation with a stable, non-dilutive currency).

The statists, the drooling navel-gazers in the colleges, and the ivory tower economists (all of whom pride themselves on being smarter than everyone else) are going to look very stupid when their fiat money ponzi scheme fails and gold comes back with a vengeance to end their faggotry.

 

[Poonani Maker]

You must understand, that, I strongly believe that the banks will call a bank "holiday" in the near future (one of their higher-up goons actually mispoke or leaked it late last year) and when they do this, you can't get YOUR money out. They do not even have your money and everybody else's money on hand - it's all digital. During this "bank" "holiday" they Will Devalue the Dolla - by as much as 40% I believe thus making Everything you buy at least twice the cost. They've confiscated gold in the past (didn't have to take it cause everybody thought gold was safe in a bank and kept it there), then when the banks opened back up they re-pegged gold much higher (but it was no longer YOUR gold).

So, if you decide to buy gold (I'd wait for another downturn to buy up as much as I can probably at around 1600 - 1650), you'd better house it offshore, or buy silver instead of gold.

 

[metoo]

why not just have gold coins in concealed caches, scattered all over the woods, put there at night? Banks are not the place for caches, guys. Silver is not a good idea. since they quit using it for photography, there's too much of it, and it's many times bulkier than gold. Don't send much offshore, especially to any one place or country. They can't be trusted.

 

[metoo]

YOU go offshore, then it's different, but I'd still leave some gold cached here, if I maintained US citizenship, that is.

 

[Mr.Positive]

Lot's of posts I agree with in this thread, so I'll add a couple additional thoughts...

Regarding gold becoming a bubble. You can't compare gold to real estate. Real estate values internationally vary extremely, a house in San Francisco may cost you 600K, but that same house in a third world country may only cost 10K. Huge differences, so bubbles are localized to countries and certain economies mostly. There's folks on islands in the South Pacific who never even knew about the bubble.

It's important to think about gold, not priced in US dollars, but internationally. All forms of society recognize gold in value, and it's priced internationally and traded much like an international currency.

If gold ever does become a bubble, things are very very bad worldwide, such as in an international currency crisis.

Also, regarding other points. You know how we always say ignore what a gal says, but pay attention to her actions?

Apply that logic here. Governments bash gold owners in the media, but what do they do? Governments hoard gold. Governments also stockpile food, think FEMA, for disasters. Governments hate us owning guns, but what do they do? Invest billions into creating more and more damaging weapons to wage wars.

We should just do what they do, on a small scale, imo. Follow their actions, not words. Have some food, guns, and a little bit of gold too.