Where Is Gold Going In This Market

[RedFxTrade]

Yes I would agree that in *reality* somethings are backed & others are not.

When it comes to paper currencies they are only backed by a future promise of taxation. That may or may not be possible due to employment being available. Even if it is will there be enough to keep pace with the inflating debt?

a "back-up" means nothing. what counts is acceptance. presently the acceptance of paper money is higher than the one of precious metals. period!

Yes acceptance of money that is losing value...until they don't. Remember the acceptance is forced through governments legal tender laws, so they can control and tax what is not theirs. I wonder if the government lifted all laws on money and what constituted legal tender, would we see a shift away from USD, GBP within their own borders...? We are already beginning to see it across border...

If you need to make something accepted through force, coercion and collusion through an interconnected relationship of central banks and government bodies then it is not really acceptance. If the governments think their paper money system is so good, then why are they do they need to force it into acceptance. That which is forced is never forceful. I have a feeling they might know what would happen if they let other species and monies float freely with their own money....What are they so scared about? We do not need to force people to buy Ipods, Sony TV's, Toyota cars, etc etc...Imagine trusting people to decide for themselves what car and laptop to use...what a novel idea ...why force them to use government money?

Edited May 24, 2011 by RedFxTrade

[Naam]

force? what force Red? i never met anybody whom i had to force to accept my "fiat" money. everybody is taking it gladly

joke aside, anybody who thinks it is technically possible to replace light "paper" with heavy "weight" has wet dreams.

i am not talking about "paper" which is backed by "weight". but even with the latter one ends up using faith and believing that the "weight" which backs the paper really exists, ergo a fiat zero sum game.

[midas]

Yes I would agree that in *reality* somethings are backed & others are not.

When it comes to paper currencies they are only backed by a future promise of taxation. That may or may not be possible due to employment being available. Even if it is will there be enough to keep pace with the inflating debt?

a "back-up" means nothing. what counts is acceptance. presently the acceptance of paper money is higher than the one of precious metals. period!

and to use your words -anyone with a fair capability of rational thinking must realise that

such acceptance could disappear in the blink of an eye we already have 600

demonstrations/riots going on in different parts of the world. The problem with paper

is TPTB just can't control spending and printing and as the likes of

Max Kieser spreads his message wider and wider the sheeple will realise the insignificance

of what they are holding

Edited May 24, 2011 by midas

[gregb]

force? what force Red? i never met anybody whom i had to force to accept my "fiat" money. everybody is taking it gladly

joke aside, anybody who thinks it is technically possible to replace light "paper" with heavy "weight" has wet dreams.

i am not talking about "paper" which is backed by "weight". but even with the latter one ends up using faith and believing that the "weight" which backs the paper really exists, ergo a fiat zero sum game.

The difference between fiat and gold "backed" money is convertibility. Gold backed money will be accepted as long as it is freely convertible to gold at a fixed price. So long as that price doesn't move, you have acceptance by default. No faith required. If you do change the price or close the window for convertibility, then you have a fiat currency again. At the moment the window is closed, you will again be stuck with useless fiat paper.

The answer is simple. Rejoice in a gold "backed" currency, and then convert your paper savings into physical at every opportunity. Then, you never have to worry about the problem. Everybody wins....for a while. I don't believe for an instant any government will be able to resist the temptation to cheat and print more money than they have gold to back it. But if you convert continuously, then you can limit your exposure to that problem.

I don't have any trust in the guys running the printing press. And with a gold "backed" currency, I don't need it. I won't be holding their paper long enough to care.

[Naam]

and to use your words -anyone with a fair capability of rational thinking must realise that

such acceptance could disappear in the blink of an eye we already have 600

demonstrations/riots going on in different parts of the world. The problem with paper

is TPTB just can't control spending and printing and as the likes of

Max Kieser spreads his message wider and wider the sheeple will realise the insignificance

of what they are holding

these demonstrations and the rioting have nothing to do with paper money or holdings. people demonstrate for democracy, for employment, for food on the table, against reduction of social pampering and what not.

and NO! the acceptance of some printed paper will never disappear for the simple reason that a feasible alternative does not exist. even devout Muslims in Kelamantan will have to buy "Sharia Dirhams" with the paper Ringgit salaries and wages they earn and the same applies to the citizen of Utah when he/she wants to use "Mormonic Dollars" when shopping.

the sheeple are sheeple they are holding nothing. if they held something of significance they wouldn't be sheeple demonstrating or rioting. besides, some of the sheeple (in the PIIGS states) are rioting because they can't retire at age 50 or 55 and have to work like other Europeans till 65 (in case of Germany till 67). they are also rioting because [sHOCKS!] their governments have made it more difficult to cheat on taxes and they are pissed off that they can't get loans for 2½% to buy real estate which went up 20% p.a. but are near worthless now because neither buyers nor tenants exist.

[churchill]

I imagine quite a few in Greece are already withdrawing Cash and converting to Gold

What happens when Greece defaults

http://blogs.telegraph.co.uk/finance/andrewlilico/100010332/what-happens-when-greece-defaults/

[Naam]

At the moment the window is closed, you will again be stuck with useless fiat paper.

yeah right! Mrs GregB does not use "useless" fiat paper when she shops. she pays with "useful" nuggets at the cashier.

next fairy tale please!

[Naam]

I imagine quite a few in Greece are already withdrawing Cash and converting to Gold

What happens when Greece defaults

http://blogs.telegraph.co.uk/finance/andrewlilico/100010332/what-happens-when-greece-defaults/

if and when Greece defaults a window will open again (not as long as in 2008/09) but long enough to rake in fat profits for those who hold "useless fiat cash". the precious metal aficionados will rake in fair profits too, but because they are not flexible enough they can't participate in the big bonanza.

all afore-said of course based on my personal [not so] humble opinion :jap:

[jcon]

There will be no trading in gold for good and services on a large international scale (non-delusional reality only please). Period. The end. Full Stop.

If anybody believes in a future where we are paying with cars and jets and houses in gold coins and shavings please get a grip. It will not happen. Please do not cite examples of insignificant nobodies calling for trinket-trading or one-offs paying for xxy in .000999999 oz of gold.

The future will be even more digital than you can imagine, so get used to it or watch Kevin Costner in Waterworld and have a proper wet dream.

- This was told to me by Jesus himself during this past weekend's Rapture, though I decided to return to Earth to ensure that my cat is housed and fed. Priorities.

I'm game for having a discussion about the price of gold as a commodity, just like any other commodity - but to elevate it to some global end-game zombie-apocalypse currency is just ridiculous, and if you can't see that then I guess we'll just have to agree to disagree.

[midas]

There will be no trading in gold for good and services on a large international scale (non-delusional reality only please). Period. The end. Full Stop.

If anybody believes in a future where we are paying with cars and jets and houses in gold coins and shavings please get a grip. It will not happen. Please do not cite examples of insignificant nobodies calling for trinket-trading or one-offs paying for xxy in .000999999 oz of gold.

The future will be even more digital than you can imagine, so get used to it or watch Kevin Costner in Waterworld and have a proper wet dream.

- This was told to me by Jesus himself during this past weekend's Rapture, though I decided to return to Earth to ensure that my cat is housed and fed. Priorities.

I'm game for having a discussion about the price of gold as a commodity, just like any other commodity - but to elevate it to some global end-game zombie-apocalypse currency is just ridiculous, and if you can't see that then I guess we'll just have to agree to disagree.

are you talking here about the concept of Bitcoins?

If so you can't compare this either to fiat money because this would also represent

a real revolution and there would also be an element of scarcity with these also?

Edited May 24, 2011 by midas

[badge]

Once bullish, contrarian Jim Grant likes cash now

Once bullish, famed contrarian Jim Grant sees trouble in rising markets. His advice: Hold cash

http://finance.yahoo...-265701620.html

me like Jim Grant too mutt!

Yes, he talks sense btw if your get his GRO feel free to fwd a copy

[RedFxTrade]

force? what force Red? i never met anybody whom i had to force to accept my "fiat" money. everybody is taking it gladly

joke aside, anybody who thinks it is technically possible to replace light "paper" with heavy "weight" has wet dreams.

i am not talking about "paper" which is backed by "weight". but even with the latter one ends up using faith and believing that the "weight" which backs the paper really exists, ergo a fiat zero sum game.

Haha, yeah I know it feels like that sometimes doesn't it...

I m not sure what you mean though.You talking about paper back by weight? So your talking about actual physical holdings of gold,ie, coins, bars etc etc.

If we had a true free banking system, and not this cartel where banks by law have to hold accounts with the FED, which is akin to nothing more than a cartelisation then it need not be backed by faith that "the weight backing the paper actually exists"...

Banks in a free market would be nothing more than warehouses, custodians with gold in their vaults. They would be able to issue paper notes based against the gold you own in the vaults of the bank. The problem as you point out is that when the banks are tempted into issuing certificates against that gold that does not exist. So If I take a receipt for 50 ounces of gold to buy a car, the receipt for the gold would end up in the bank of the car seller. It is not my job to move the gold. It is part of the service of the warehousing company or bank. Once the receipt ends up in the car sellers bank, that bank would then redeem the gold from my bank and the actual gold would have to be moved to the car sellers bank. So my bank would have to redeem the gold on demand.

However, a bank could only issue fake receipts on their gold holdings to the extent of its customer base. If you have one bank in a country then inflating is easy as there will be no redemptions called upon due to the fact their are no other banks. However, in a free banking system, you would have many such small and local banks that could only inflate to the extent of their client base, as each bank would lay claim to the gold from the receipts of gold.

If you had 4 or 5 major banks in a country, who were custodians to all the gold holdings in the country, then they could inflate easily as many of the citizens would have accounts at the same bank. It would be much easier to inflate as the gold is never redeemed from customers who are at the same bank.

If a country has many many banks with a smaller customer base at each, then the flow and movement and circulation of gold would be in essence more free, and more redemptions would take place between the banks. So it goes a bank with a smaller customer base could only inflate if it so wanted to the extent of its client base/gold holdings in its vault as many smaller banks mean more cross banking redemptions. The more redemptions happening mean the less ability to inflate.

Sadly we do not have that, we have an extreme Pareto law situation, where we have one central bank who a few large banks in each country who own 90% of the assets. In the Uk for example Lloyds banking group hold about 29% of the current account market, and a huge percentage of the mortgage market. This is not a free banking system. Its a cartel enshrined in law.

A true system of free banking and money would have a much more autonomous banking system, many smaller banks, more competition and natural laws of the market that would prohibit large inflations due to a much more fractionalise client base where each bank could only inflate to the extent of its client base.

[flying]

quite the unexpected surge in Silver today

up 4.28% today in USD terms as I type

Gold also making highs in Euro terms today

Edited May 24, 2011 by flying

[Naam]

I m not sure what you mean though.You talking about paper back by weight? So your talking about actual physical holdings of gold,ie, coins, bars etc etc.

If we had a true free banking system, and not this cartel...

i am talking about replacing 'faith/fiat' money with either physiscal gold (as insinuated by some participants here) or 'faith/fiat' money backed by gold. one is technically impossible the other one would be no less "fiat" than what we have now because there is no way continously verifying whether the backing exists plus the price of gold would have to rise to heights that people would be scared to wear a wedding ring in public.

[cloudhopper]

The difference between fiat and gold "backed" money is convertibility. Gold backed money will be accepted as long as it is freely convertible to gold at a fixed price. So long as that price doesn't move, you have acceptance by default. No faith required. If you do change the price or close the window for convertibility, then you have a fiat currency again. At the moment the window is closed, you will again be stuck with useless fiat paper.

The answer is simple. Rejoice in a gold "backed" currency, and then convert your paper savings into physical at every opportunity. Then, you never have to worry about the problem. Everybody wins....for a while. I don't believe for an instant any government will be able to resist the temptation to cheat and print more money than they have gold to back it. But if you convert continuously, then you can limit your exposure to that problem.

I don't have any trust in the guys running the printing press. And with a gold "backed" currency, I don't need it. I won't be holding their paper long enough to care.

Greg - isn't all fiat freely convertible to gold now? The rates at which this takes place is set by the free markets every day and reflect the perceived value of that currency. I personally feel much better about this than some "fixed" rate by a "backed" currency.

[gregb]

Greg - isn't all fiat freely convertible to gold now?

Not at a fixed price. This is the difference between a gold backed currency and a fiat currency, and why Naam is incorrect in his continuing statements that a gold backed currency is simply another form of faith. It is not. It is only faith based when the currency floats against the price of gold, or alternatively, is fixed against gold but it can not be freely converted.

As long as I can freely exchange one for the other without hassles, then there is no difference to me. That doesn't mean I trust the printers though. I will hold the physical form, and simply change to paper when I need to transact business. But that means I can price goods and services in a paper currency without worrying about the gold exchange rate. That is what gold backing does for you.

Edited May 25, 2011 by gregb

[Naam]

Greg - isn't all fiat freely convertible to gold now?

Not at a fixed price. This is the difference between a gold backed currency and a fiat currency, and why Naam is incorrect in his continuing statements that a gold backed currency is simply another form of faith. It is not. It is only faith based when the currency floats against the price of gold.

please read what i said:

there is no way continously verifying whether the backing exists...

[cloudhopper]

But that means I can price goods and services in a paper currency without worrying about the gold exchange rate. That is what gold backing does for you.

Well I don't really see the utility of that. The price of bakeries in Krugerrands would still always fluctuate.

[Naam]

Greg - isn't all fiat freely convertible to gold now? The rates at which this takes place is set by the free markets every day and reflect the perceived value of that currency. I personally feel much better about this than some "fixed" rate by a "backed" currency.

that's one version. the other version is "the rates reflect the perceived value of that commodity". strong indications exist that "version one" does not apply.

-at the peak of the 2008 crisis (oct 2008) less fiat money was required to buy Gold than at the beginning (mar 2008) meaning "in times of crises printed paper is more valuable than an otherwise highly respected commodity?".

-the price of Gold fluctuated during the last year 35% respectively 25% depending whether calculated down/up or up/down. did the prices for Argentine steaks, NZ lamb, imported German sausage in Foodland and Friendship fluctuate that much? if not, what "perceived value" is applicable?

[cloudhopper]

-the price of Gold fluctuated during the last year 35% respectively 25% depending whether calculated down/up or up/down. did the prices for Argentine steaks, NZ lamb, imported German sausage in Foodland and Friendship fluctuate that much? if not, what "perceived value" is applicable?

Yes the value of anything is highly dependent on the circumstances. But as far as money goes gold bullion is a particularly universal form of wealth storage even though not a generally useful medium of exchange. Price fluctuations (of everything) are going to be more volatile in this pseudo market driven far more by unlimited futures positions, naked puts and all other manner of high frequency manipulation instead of fundamental supply and demand.

[Naam]

-the price of Gold fluctuated during the last year 35% respectively 25% depending whether calculated down/up or up/down. did the prices for Argentine steaks, NZ lamb, imported German sausage in Foodland and Friendship fluctuate that much? if not, what "perceived value" is applicable?

Yes the value of anything is highly dependent on the circumstances. But as far as money goes gold bullion is a particularly universal form of wealth storage even though not a generally useful medium of exchange. Price fluctuations (of everything) are going to be more volatile in this pseudo market driven far more by unlimited futures positions, naked puts and all other manner of high frequency manipulation instead of fundamental supply and demand.

if the value of anything, and that includes Gold, is highly dependent on the circumstances then how can Gold be a universal storage of wealth?

and how "universal" was Gold in this respect in the early to mid 1980s when an investor could buy 30 year maturity U.S. Treasuries yielding in excess of 15% per annum?

Edited May 25, 2011 by Naam

[cloudhopper]

if the value of anything, and that includes Gold, is highly dependent on the circumstances then how can Gold be a universal storage of wealth?

and how "universal" was Gold in this respect in the early to mid 1980s when an investor could buy 30 year maturity U.S. Treasuries yielding in excess of 15% per annum?

In that it is relatively easy to store, transport and exchange for currency anywhere in the world. I understand that fiat has this characteristic too, whether in paper or electromagnetic form, however fleeting. All those presently loaning the US money for 30 years at 4% or whatever must have faith that all will be well. I don't, and think that gold will serve its holders particularly well as the tragedy of the commons that is fiat currency in a popular klepto-democracy unfolds.

[badge]

In the year or two Ive read TV Naam I have to say Ive got to commend your resolve to keep addressing the same theories and answering the same questions again and again; on Gold, on Credit, on THB etc.

Im not sure however if this should earn you a medal for your contributions, or a white jacket that does up at the back.

[midas]

In the year or two Ive read TV Naam I have to say Ive got to commend your resolve to keep addressing the same theories and answering the same questions again and again; on Gold, on Credit, on THB etc.

Im not sure however if this should earn you a medal for your contributions, or a white jacket that does up at the back.

on the basis that Naam classifies Max Keiser as a " looney " , i know which

i would choose for him

Edited May 25, 2011 by midas

[Naam]

In the year or two Ive read TV Naam I have to say Ive got to commend your resolve to keep addressing the same theories and answering the same questions again and again; on Gold, on Credit, on THB etc.

Im not sure however if this should earn you a medal for your contributions, or a white jacket that does up at the back.

in principle the white jacket with those long decorative tassels applies

but i have a few reasons why i am repeating myself. primarily my postings are not meant for those whom i am addressing. they are meant for the poor souls who have no freaking idea as far as investments are concerned and therefore look for advice and guidance. in order to prevent them from trusting blindly the (quite often ridiculous) mantras spread by the goldbugs, currency prophets and a variety of other wet dreamers somebody has to point out that gold and precious metals did and do not always shine, the Baht and the Thai economy will most probably not crash and other potential negative developments can happen.

i owe that in return to most valuable and various advice i received in various other respects than investing since i am a member of Thaivisa.

[jcon]

Naam's CPU is a neural net processor, a learning computer....

http://www.youtube.com/watch?v=h8ZaH5zLLvw

Keep it up Naam, I would go nuts having to go over the same stuff over and over and over so I share badge's thumbs up.

[Naam]

if the value of anything, and that includes Gold, is highly dependent on the circumstances then how can Gold be a universal storage of wealth?

and how "universal" was Gold in this respect in the early to mid 1980s when an investor could buy 30 year maturity U.S. Treasuries yielding in excess of 15% per annum?

In that it is relatively easy to store, transport and exchange for currency anywhere in the world. I understand that fiat has this characteristic too, whether in paper or electromagnetic form, however fleeting. All those presently loaning the US money for 30 years at 4% or whatever must have faith that all will be well. I don't, and think that gold will serve its holders particularly well as the tragedy of the commons that is fiat currency in a popular klepto-democracy unfolds.

rebuttal completely off discussed topic which was "universal storage of wealth when UST yielded 15% p.a."

but i am willing to jump on it and claim that

- is not easy at all to store precious metals safely,

-it is quite difficult to transport precious metals and when a certain value/volume is exceeded transportation is nearly impossible,

-it cannot be exchanged easily for currency anywhere in the world because it can't be transported easily to "anywhere in the world" plus prevailing laws and regulations (money laundering / terrorist financing, etc.) highly restrict physical movement of monetary instruments.

as far as the latter is concerned the usual suspects who present fairy tales of "legal tender = free movement" et al are kindly asked to refrain from commenting.

[cloudhopper]

rebuttal completely off discussed topic which was "universal storage of wealth when UST yielded 15% p.a."

but i am willing to jump on it and claim that

- is not easy at all to store precious metals safely,

-it is quite difficult to transport precious metals and when a certain value/volume is exceeded transportation is nearly impossible,

-it cannot be exchanged easily for currency anywhere in the world because it can't be transported easily to "anywhere in the world" plus prevailing laws and regulations (money laundering / terrorist financing, etc.) highly restrict physical movement of monetary instruments.

as far as the latter is concerned the usual suspects who present fairy tales of "legal tender = free movement" et al are kindly asked to refrain from commenting.

The topic is gold. But how did the wealth storage thing work out for the guy who bought his 30 year bonds a few years before that guy?

Anyway to paraphrase Nixon we're all speculators now. If the cold war turns hot or some virus wipes out the crops then whoever holds the Mars Bars will be making the rules.

http://www.youtube.com/watch?v=DBbJufztxeg&NR=1

[RedFxTrade]

rebuttal completely off discussed topic which was "universal storage of wealth when UST yielded 15% p.a."

Don't worry Naam, I m sure you ll get a chance to buy T-Bonds at 15% again...and if you do not want to wait, you could always buy a Greek 10 year at 17%, even better...surely that must be good value...why would anyone want to own Gold when you can get a Greek 10 year at 17%...great value

It is east to cherry pick a certain year and its looks smart with hindsight, with the wholly hypothetical proposition of the word "if" I had bought then, and sold that now etc....The hallmark of a good trader/investor is what does one do now, in the here and now. My sole aim each year is to make some money, and the money that I make goes up in purchasing power each year. Basically my goal is to have a persistent lowering in the cost of living year after year....Now there are many ways to do that...I do not care whether it means selling USD, then buying USD, buying gold, selling silver, selling gold, buying silver, buying Japanese Yen, or Japan stocks or selling them...anything will do as long as it looks attractive for a sufficient period of time to make some money, that could be a a couple weeks or a few years.

The question to you is what do you do to protect your money in there here and now with regards to the near and medium term future?

Edited May 25, 2011 by RedFxTrade

[churchill]

rebuttal completely off discussed topic which was "universal storage of wealth when UST yielded 15% p.a."

Don't worry Naam, I m sure you ll get a chance to buy T-Bonds at 15% again...and if you do not want to wait, you could always buy a Greek 10 year at 17%, even better...surely that must be good value...why would anyone want to own Gold when you can get a Greek 10 year at 17%...great value

It is east to cherry pick a certain year and its looks smart with hindsight, with the wholly hypothetical proposition of the word "if" I had bought then, and sold that now etc....The hallmark of a good trader/investor is what does one do now, in the here and now. My sole aim each year is to make some money, and the money that I make goes up in purchasing power each year. Basically my goal is to have a persistent lowering in the cost of living year after year....Now there are many ways to do that...I do not care whether it means selling USD, then buying USD, buying gold, selling silver, selling gold, buying silver, buying Japanese Yen, or Japan stocks or selling them...anything will do as long as it looks attractive for a sufficient period of time to make some money, that could be a a couple weeks or a few years.

The question to you is what do you do to protect your money in there here and now with regards to the near and medium term future?

Agreed - that is the point to try to ride the Gold/Silver price up and to begin to sell before it reaches its top - to sell a % on the UP and then to reinvest .... Trading in and out is very difficult on a short term basis - Many have been calling for a correction at the end of QE before the next leg up - but the Euro crisis is not going away and interest rates in the West are not going up any time soon - so I think for now, the next 6 months or so , better to be in rather than out - and I think this is when the Miners may get a bid from those that see value there in relation to the present price of gold -and I think even with a market correction the HUI could outperform /

see Play After You Have Prepared http://www.gold-speculator.com/stewart-thomson/56306-play-after-you-have-prepared.html