BOE Gold SI --0.21 to 13.85 (-.1%)
BOE Euro SI --169.30 to 8423.36 (-2%)
Today, you might have noticed that gold is falling with the market. It's rather counter intutitive, you would expect gold would have gone up. I was wondering why, so I talked to some of my friends who like to buy gold. I got a most interesting answer.
They said, why should be buy gold? All you can convert it back into is dollars, and I don't want more dollars". I thought about it for a while and it occured to me that people are really abandoning dollars if they don't want more dollars. While gold can be converted in other countries, it's a lot of hassle to get gold somewhere it can be converted into another currency.
Let's watch gold. I'm still on the fence, prefering food or real goods over precious metals.
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9 comments:
That is Totally incorrct about gold john.You can convert gold into what ever currancy you want,you can sell it make your money and convert to oil stock ,wheat or what ever you want,so who ever said that is dead wrong.
Gold went down a little as expected for profit takes,this is cyclical,The end of the month will see it really take off ,feb gold will be skyrocketing.The jap carry trade is unwinding ,euro central bank interest rates are heading down and the Bank Of England,these knock on unwindings are all looking to hedge into gold silver and commodities such as wheat,Chine has massive inflationary issues which all adds to gold continuing skyward,not to mention the Soc Sec and Med Care fiat printing that will continue.Remember 70 million Baby Boomers go on social sec this month in America.
Thanks John ,look forward to your next post.
and it's not just china that is facing inflationary issues, it's pretty much every country in the world. all the citizens in these countries are going to want to protect themselves, and they will do this by buying food, real goods, precious metals, and other commodities.
no matter what happens in the next months / years, gold will always have purchasing power to get other commodities. therefore, i still see it as a safe bet.
Gold may be down a little bit, but people still want to retain their purchasing power. As I write, gold is down about 20bucks, you may say is down but on the long term we are touching the 1000 USD per ounce...
Gold is the most universal currency of the world. You can convert pure Gold into any good or currency you like. It's easy, I proved that many times. Gold is by itself getting more and more precious because natural deposits of Gold are becoming scarce worldwide. As long as Gold cannot be purified from seawater or is being mined from asteroids, it will surely stay the most universal currency of the world.
The relative value of Gold in relation to the US-dollar will rise as long as the uncertainty is growing concerning US-Dollar's future. A currency with a huge debt-deficit is prone to further devaluation and has little store value, everyone understands that.
Moreover we have the peak oil event which threatens especially all fiat currencies because their real value is only based on economic growth and a promise of an issuing bank. Gold in contrast has an intrinsic (real) natural value and it is rare. That makes the difference.
Many greetings...
Bernd
Gold may fall with the market. This is simply an overall devaluation of a highly inflated value system worldwide. Look at what happened to the price of gold during the depression. The overall system devalued including gold. Everyone is expecting hyperinflation and not a devaluation. The opposite may happen. Devaluation of everything. So, either we get hyperinflation and cash is worthless or we get devaluation and cash is king. Take your pick.
Gold represents a seemingly practical solution to currency devaluation, but when its price behaves erratically, the gold bugs wax theoretical. Everything goes up and down. Even the US Dollar. What if elliott wave is right, and social mood is the single causal factor for price movement? Of course the gold bugs will be right..., eventually. But why gold moves may be less important than when, if you are really thinking about buying it. see: www.tradingwellandliving.blogspot.com
Currently in Swedin and Russia everyone is advising their clients to buy gold, because they expect hyper-inflation in the US. The down dropped 300 points and gold lost only 30 bucks!
Gold will retain it's purchasing power as it has done throughout history. The mistake people make is that when buying gold they compare it with a Fiat currency and when the dollar goes up or down they believe that gold is going up and down.
If gold hit's $250 that would be a good thing because that would meanthe economy is good and the dollar has appreciated and that same $250 gold price will buy the same goods and services as if gold where $5,000. So do not get focused on Fiat values!
Your labor is your profit and you can control that, money should never make you a profit only appreciate and always retain it's purchasing
The only reason that cash wash King during the Depression is because it was gold currency not Fiat, learn history.
The purchasing power of the money grew stonger becuase less gold dollars where in circulation. China has 1 Trillion US dollars, not to mention, UAE, Russia, Japan, the problem is not cash. Do not be fooled, if not for the Central Bank's minupulating the gold markets, gold would be well over 5,000 dollars in every currency!
Gold is an asset -- a home for instance.
To me its value is portability and the fact its not in the bank. So, the gld etf invalidates why you should buy gold.
Many people who sold their homes to rent put the money in a bank. And it was probably lent out in the fractional reserve system with a multiplier effect. When I sold my home and rented a year, suddenly all the apartment complexes in my area where conversion for sale. Wonder where the money came from? Where they going to lend them my dollars and give me my measly interest return less inflation? :) After a year I just moved and purchased in a cheaper area out of CA.
Even if the price of gold goes down from its inflation high thats fine. Its not in a failing bank. Its likely to decline. If it sky rockets then the price of my home should start to rise again too.
So, having a small gold position is fine. Say 10-20% for a draconian situation.
I think some people are confused. Because if we expect the price of homes to decline then thats like saying gold will decline too. Though, a home is still going to have value but not be as portable.
Plus, gold bugs say the government prints money out of thin air. Not sure thats accurate. It creates debt and sells it for the new money. Though, I guess if nobody wants to buy the debt it has to sell more. Or possibly the third world country buying the debt really is printing money out of thin air. :)
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