Continuing on my theme today of All The Things I Wanted To Know But Was Afraid To Ask...
I don't mean to sound like I'm doubting any claims gold fans make.
I mean, I can understand that it's something real and in short supply compared to paper and ink to make paper fiat money.
I'm not sure how safely one could store gold if push came to shove. I'm not sure if I'd be confident even if it were in a vault.
But that's just me - I'm always cautious.
But what I wonder most is why there's a promotion of gold to investors now if there is really going to be such a surge in price as some suggest. Surely, if that's the case, then why not hold on to the gold now and sell it later when it's much more valuable.
I mean, I'd be happy to borrow fiat money now if I were going to be assured of such a handsome reward for the gold I am yet to sell.
I'd really like someone to educate me here, preferably without sarcastic put-downs.
Any takers?
Full Version: What I Don't Understand About Gold Is...
Simple Terms. *Conditions Apply* 
Same reason people backed mortgages. *Investment*
To make money. A safe place to store growing wealth. Pensions/Savings/Investment vehicles. A return of interest in the greatest and safest amount.
:edit: Might want to take safest out of there. Because like gravity what goes up also comes down.
So for gold to become a serious wealth store again, our bits of paper with Her Maj on there has to have a value.
If your pound is worth a loaf of bread but the bread becomes more difficult to make (more expensive raw materials / higher energy cost) then your loaf is therefore more expensive. Thus your pound is devalued.
Now if your wages kept track at current cost of said product then we wouldn't have inflation for said goods and you would be no worse off. But now for gold to come into it's own. Gold=finite resource. Thus has value. Or a store of wealth. If many mouths want to feed on a finite resource in ever growing numbers then the cost would rise through demand for said finite resource (see the correlation with house prices "limited resource due to lax lending and *investment*" rushing in.
So you could argue that all *investment* is a gamble of some sort. Obviously a finite resource that is in demand will rise in value (thus reducing your spending power with your fiat) because you can afford less of said resource due to demand.
ala "Market Forces".
That doesn't go into the complexity of today's economies and how interest rates/fiat and resource transfer along with driving forces move markets. But in simple terms that should cover your most basic understanding.
Note to some of the more senior member's; Please correct were appropiate.
Same reason people backed mortgages. *Investment*
To make money. A safe place to store growing wealth. Pensions/Savings/Investment vehicles. A return of interest in the greatest and safest amount.
:edit: Might want to take safest out of there. Because like gravity what goes up also comes down.
So for gold to become a serious wealth store again, our bits of paper with Her Maj on there has to have a value.
If your pound is worth a loaf of bread but the bread becomes more difficult to make (more expensive raw materials / higher energy cost) then your loaf is therefore more expensive. Thus your pound is devalued.
Now if your wages kept track at current cost of said product then we wouldn't have inflation for said goods and you would be no worse off. But now for gold to come into it's own. Gold=finite resource. Thus has value. Or a store of wealth. If many mouths want to feed on a finite resource in ever growing numbers then the cost would rise through demand for said finite resource (see the correlation with house prices "limited resource due to lax lending and *investment*" rushing in.
So you could argue that all *investment* is a gamble of some sort. Obviously a finite resource that is in demand will rise in value (thus reducing your spending power with your fiat) because you can afford less of said resource due to demand.
ala "Market Forces".
That doesn't go into the complexity of today's economies and how interest rates/fiat and resource transfer along with driving forces move markets. But in simple terms that should cover your most basic understanding.
Note to some of the more senior member's; Please correct were appropiate.
QUOTE (The Last Bear @ Dec 11 2007, 11:27 PM) 
Continuing on my theme today of All The Things I Wanted To Know But Was Afraid To Ask...
I don't mean to sound like I'm doubting any claims gold fans make.
I mean, I can understand that it's something real and in short supply compared to paper and ink to make paper fiat money.
I'm not sure how safely one could store gold if push came to shove. I'm not sure if I'd be confident even if it were in a vault.
But that's just me - I'm always cautious.
But what I wonder most is why there's a promotion of gold to investors now if there is really going to be such a surge in price as some suggest. Surely, if that's the case, then why not hold on to the gold now and sell it later when it's much more valuable.
I mean, I'd be happy to borrow fiat money now if I were going to be assured of such a handsome reward for the gold I am yet to sell.
I'd really like someone to educate me here, preferably without sarcastic put-downs.
Any takers?
I don't mean to sound like I'm doubting any claims gold fans make.
I mean, I can understand that it's something real and in short supply compared to paper and ink to make paper fiat money.
I'm not sure how safely one could store gold if push came to shove. I'm not sure if I'd be confident even if it were in a vault.
But that's just me - I'm always cautious.
But what I wonder most is why there's a promotion of gold to investors now if there is really going to be such a surge in price as some suggest. Surely, if that's the case, then why not hold on to the gold now and sell it later when it's much more valuable.
I mean, I'd be happy to borrow fiat money now if I were going to be assured of such a handsome reward for the gold I am yet to sell.
I'd really like someone to educate me here, preferably without sarcastic put-downs.
Any takers?
In simple terms.
The sheeple are being fooled - goldman sachs says short it, government backed agencies claim it as a barbarous relic, or too volatile, or no dividends, or too risky.
The sheeple have not invested in it - the market is so small if the sheeple were in it already it would have already hit the moon, the smart money is already in it.
The smart money is not selling gold - the cartel and its 'friends' are and they are shorting it.
The sheeple will wake up - as the reinfaltion hits and sheeple become 'smarter' the sheeple will buy gold - watch out for $1000 gold this will be the first wave of realisation.
This is in the most simple form.
check some sources and read hard and long if you want to enter the market.
sources:
www.financialsense.com
www.jsmineset.com
www.goldseek.com
www.dollarcollapse.com
www.goldmoney.com
www.bullionvault.com
www.gold-eagle.com
www.moneyweek.com
www.silverseek.com
UK Equities: www.minesite.com
DO NOT EVER EVER forget SILVER!!
In any system there must be a base level.
In the metric system there are 1 kilogram blocks that are used to set a standard for other things to be measured against, one on each continent (I believe one on each continent, might be one per country). There are also 1 gram, 1 metre etc equivalents. It's just a measure close enough to be objective that can be agreed upon by all parties as a baseline which can then enable eperimentation, everyone knowing results, communication of commonalities etc
Gold is inert, doesn't corrode, hangs around forever and there is not much of it and is completely and utterly useless for almost any other purpose than being a dead weight to measure things against. It's kinda pretty I guess and the church used to create a sort of fiat currency style demand for it because you needed a ring to get married and had to get married to meet the churches requirements in order to have a family.
Anway..this useless inertia makes it an excellent standard to measure against as regards the relative values of everything else. It's as close to a null value that can be found in the world of trade. People in london agree that they will measure in troy ounces, and this has an equal value in boston, dehli and frankfurt. This is the gold standard.
What counts, however, is the "agreement" part of the set up. No gold standard has ever survived for very long, the temptation to lie and make a profit is just far, far too great. It's rather like if one guy holding the kilogram baseline could tell a few fibs with his block and be able to buy parliaments, fast cars, strippers, in fact pretty much anything he wanted.
Basically some people think that gold is worth something because it is used as this barometer (I guess it's an assoication thing) and this in turn gives it a speculative value.
In the metric system there are 1 kilogram blocks that are used to set a standard for other things to be measured against, one on each continent (I believe one on each continent, might be one per country). There are also 1 gram, 1 metre etc equivalents. It's just a measure close enough to be objective that can be agreed upon by all parties as a baseline which can then enable eperimentation, everyone knowing results, communication of commonalities etc
Gold is inert, doesn't corrode, hangs around forever and there is not much of it and is completely and utterly useless for almost any other purpose than being a dead weight to measure things against. It's kinda pretty I guess and the church used to create a sort of fiat currency style demand for it because you needed a ring to get married and had to get married to meet the churches requirements in order to have a family.
Anway..this useless inertia makes it an excellent standard to measure against as regards the relative values of everything else. It's as close to a null value that can be found in the world of trade. People in london agree that they will measure in troy ounces, and this has an equal value in boston, dehli and frankfurt. This is the gold standard.
What counts, however, is the "agreement" part of the set up. No gold standard has ever survived for very long, the temptation to lie and make a profit is just far, far too great. It's rather like if one guy holding the kilogram baseline could tell a few fibs with his block and be able to buy parliaments, fast cars, strippers, in fact pretty much anything he wanted.
Basically some people think that gold is worth something because it is used as this barometer (I guess it's an assoication thing) and this in turn gives it a speculative value.
Thank you Injun, Ursus, and especially Impartial for taking the time to write all that out. Reading it with interest, trying to get my head round it.
QUOTE (The Last Bear @ Dec 12 2007, 12:09 AM)
Thank you Injun, Ursus, and especially Impartial for taking the time to write all that out. Reading it with interest, trying to get my head round it.
anytime
you will always have sellers in any given market.
right now there are plenty so gold hasn't soared.
think about it like housing.
most of the people buying and selling all thought that they would "go up forever"
that didn't stop there from being plenty of sales.
even though gold is finite, there is still new amounts coming onto the market, for some people, making the profit on the selling of it is where they make their money, like EAs.
eventually, if it really doesnt catch hold, there will be a lot less sellers around, that's exactly why it would go up in price.
right now there are plenty so gold hasn't soared.
think about it like housing.
most of the people buying and selling all thought that they would "go up forever"
that didn't stop there from being plenty of sales.
even though gold is finite, there is still new amounts coming onto the market, for some people, making the profit on the selling of it is where they make their money, like EAs.
eventually, if it really doesnt catch hold, there will be a lot less sellers around, that's exactly why it would go up in price.
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