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Old 05-09-2012, 09:59   #41
arclight610
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Originally Posted by 4 glocks View Post
If we move to a barter economy Gold and Silver will have little value. What will have value is clean water, food, gas, ice, T-paper, alcohol, cigarettes guns and ammo. You can not eat, drink, or fuel a generator on gold or silver. Look at any major disaster these are the items people will need to survive.
I don't think we'll have to worry about going to a barter economy any time soon. However, hyperinflation is a real concern.

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Old 05-09-2012, 11:12   #42
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When the hype dies, eventually the price has to come down to normal market levels. That is with Housing, stocks, oil, and even gold.
Very true. The principal difference being that gold has little to no utility. At least oil is used for something. Real Estate and companies, of course, can generate positive cash flow while you wait for another cycle. Good companies produce even in the bad times. Gold is a shiny rock, and one oz is no different from the other; they have the same valuation.

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Originally Posted by Ronaldo View Post
Anyone crazy enough to still be in stocks or mutuals will deserve what happens. PM's are the safest long-term investment. With the rampant corruption in all the banking houses, physical PM's are a safety net you can count on. I prefer silver because it allows smaller increments of value, vital if we move into a barter economy.
See my comment re. the 1970's.

In 1979 BusinessWeek published a cover story titled "The Death of Equities". The article, like you, pointed out that you'd have to be crazy to invest in equities. This, of course, was on the eve of probably the greatest bull market in history. Oops.

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Warren Buffett's advice is always peculiarly. One day he says silver is a horrible investment, then he buys 120 mil ounces. It's almost like he's trying to shake people out, so he can sweep in on the cheap to get it.

Maybe he's just a little butthurt at PM's in general. He bought that 120 million oz of silver at $5 an oz, it went up to $7 and he thought it was a bad investment so he dumped it. It later shot up to $45 oz as we all know.
He bought silver in 1998, when it had an attractive valuation. That's what he does. He buys things for less than they are worth and sells them for more than they are worth. He bought for $5, sold shortly thereafter for $7, and then the price retreated back below $5. He would've had to hold that silver for 12 years before it climbed, very briefly, to $45. His money was employed much more effectively in productive assets over that 12 years, which is one of the reasons he's one of the richest men in the world.

You think he's butt hurt because he made $240 million in a few months?

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I don't think we'll have to worry about going to a barter economy any time soon. However, hyperinflation is a real concern.
Stocks are also a hedge against inflation.
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Old 05-09-2012, 11:20   #43
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"The problem with commodities is that you are betting on what someone else would pay for them in six months. The commodity itself isn’t going to do anything for you….it is an entirely different game to buy a lump of something and hope that somebody else pays you more for that lump two years from now than it is to buy something that you expect to produce income for you over time."

"Gold is a way of going long on fear, and it has been a pretty good way of going long on fear from time to time. But you really have to hope people become more afraid in a year or two years than they are now. And if they become more afraid you make money, if they become less afraid you lose money, but the gold itself doesn’t produce anything."

"I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion dollars – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion dollars…you could have all the farmland in the United States, you could have about seven Exxon Mobils, and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils."

"[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."
I don't agree with the part in bold. Gold is used heavily in electronics. I've got a pair of headphones with a gold coated jack. You could also say that it has utility in the fact that it is highly desirable for jewelry. It gives people pleasure to wear, helping to maximize their utility in the same way driving a sports car would give someone pleasure.

From my econ dictionary:

Utility
1. An economic term referring to the total satisfaction received from consuming a good or service.

If people receive satisfaction from owning gold or jewelry made with it, then it does provide utility.
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Old 05-09-2012, 11:25   #44
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I don't agree with the part in bold. Gold is used heavily in electronics. I've got a pair of headphones with a gold coated jack. You could also say that it has utility in the fact that it is highly desirable for jewelry. It gives people pleasure to wear, helping to maximize their utility in the same way driving a sports car would give someone pleasure.

From my econ dictionary:

Utility
1. An economic term referring to the total satisfaction received from consuming a good or service.

If people receive satisfaction from owning gold or jewelry made with it, then it does provide utility.
The utility of gold is minimal. Gold is the most malleable metal. It can be hammered so thin, it becomes translucent. 1 oz of gold can be hammered into a 100 sq ft sheet. What this means is that it doesn't take alot of gold to plate something or make gold foil.
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Old 05-09-2012, 11:54   #45
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Originally Posted by arclight610 View Post
The utility of gold is minimal. Gold is the most malleable metal. It can be hammered so thin, it becomes translucent. 1 oz of gold can be hammered into a 100 sq ft sheet. What this means is that it doesn't take alot of gold to plate something or make gold foil.
I know this and agree, but wouldn't you also agree that most married women gain more utility or satisfaction from a gold wedding ring than they would from a silver one? I know it is that way because of societal norms, but it holds true none the less.
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Old 05-09-2012, 12:18   #46
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The last 10 years WERE great. I bought three gold eagles in 2002 and 2003 when it was under $320 an ounce. Sold two of them in 2008 for a hair over $1000 when gold spiked at $ 1084 and started going down, then the 2008 crash happend and gold spiked again and I so sold the last ounce of about $1700.

That is how I profited with gold. Pure luck buying low and selling high. However, I would have made money buying Apple Stocks around the same time, because 10 years ago Apple sucked and the stock were cheap and now look at them.

The problem people are having is everyone is screaming "Buy Gold" and the ones who are making money with it are the ones selling it. How do you expect to turn a profit when you are buying ANYTHING high and selling low. Those who bought gold at +$1700 are finding that out the hard way right now.
Here's the rub. What is the next Apple stock? Anyone can say they would have made more money with Apple looking at the past, but going forward from today, tell me what one stock is going to outperform gold? Just one stock. Just give me the one stock that will outperform gold over the next ten years. I mean, it's easy right? Just like Apple. So tell, me. What is that stock?

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When the hype dies, eventually the price has to come down to normal market levels. That is with Housing, stocks, oil, and even gold.
What you think is hype, I think is a paradigm shift in the world's reserve currency from US Dollars to gold. Once the world's Central Banks decide that the US dollar is no longer wanted as the world's reserve currency, a substitute needs to be found. Yep, back to gold. And that will cause gold to skyrocket. You obviously don't understand or see or think that will happen, but the writing is on the wall.
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Old 05-09-2012, 12:20   #47
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Here's the rub. What is the next Apple stock? Anyone can say they would have made more money with Apple looking at the past, but going forward from today, tell me what one stock is going to outperform gold? Just one stock. Just give me the one stock that will outperform gold over the next ten years. I mean, it's easy right? Just like Apple. So tell, me. What is that stock?
You have it entirely wrong. Picking one stock is insanely difficult. But that's not the point.

The point is that you don't HAVE to pick one stock. On average, the performance of the entire market will beat gold.
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Old 05-09-2012, 12:25   #48
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Here is what Warren Buffet thinks of gold. Can't really argue with one of the richest men in the world.
Actually you can. Buffet is clueless when it comes to gold. He has a vested interest in bashing gold as he benefits from our current printing to infinity fiat system.

He has done extremely well for some year, but the last ten his stock has tanked.
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Old 05-09-2012, 12:32   #49
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Originally Posted by devildog2067 View Post
You have it entirely wrong. Picking one stock is insanely difficult. But that's not the point.

The point is that you don't HAVE to pick one stock. On average, the performance of the entire market will beat gold.
Stop poking the inmates.



It's like those rubes on the radio that talk about the "Custom suit" comparison. If you bought a custom suit in 1920, it would cost you about an ounce of gold. If you bought one today, it would cost around an ounce of gold. Ergo, Gold is a great investment because it holds value.

Of course, if you invested in the S&P500 back then. . . your gold would need to be worth $67,000 per ounce to even start to compete, and you could buy 40-50 suits.
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Old 05-09-2012, 12:34   #50
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Actually you can. Buffet is clueless when it comes to gold. He has a vested interest in bashing gold as he benefits from our current printing to infinity fiat system.

He has done extremely well for some year, but the last ten his stock has tanked.
Tanked???

Not a Buffett fan by any means, but 10 years ago, his stock was worth HALF of what it is today.

From my estimation, that's a double. But I could be wrong.
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Old 05-09-2012, 12:41   #51
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Actually you can. Buffet is clueless when it comes to gold.
Warren Buffett has a very specific talent--he can look at something and figure out what it's worth.

It's a limited talent, and he's the first to admit it. But to think it doesn't apply to gold is simply insane. He's made money moving in and out of precious metals many times.

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He has done extremely well for some year, but the last ten his stock has tanked.
Uh...
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Old 05-09-2012, 12:46   #52
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You have it entirely wrong. Picking one stock is insanely difficult. But that's not the point.
One stock is the point if people are going to compare gold versus Apple the last ten years.

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The point is that you don't HAVE to pick one stock. On average, the performance of the entire market will beat gold.
Well it hasn't over the last twelve years. Now, what does the future hold? That is the question. I'll stick with the hot hand, gold.
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Old 05-09-2012, 12:46   #53
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Sure you can. Just like $3 gas can be sustained forever. It ain't ever going back to $1.50 again. Gold is priced in dollars, just like gas is. The dollar is going to continue to fall, not magically rise. Been to the grocery store lately?
I'm sure they said that about $2 gas in during Jimmy Carter's term

For crying out loud, 2009 even in the Obama administration where the national aver gas was well under $3 a gallon. 2009 it was $1.84, 2010 it was 2.78.

You want it $3 gas for another 4 years, don't vote for Romney. Pretty much LIKE GOLD people look at the current big numbers and not what the price was just a few years ago and historically over time.

Gas was under $2 between 1981 and 2007, then it spiked near the end of GW Bush's term, and it spiked again in 2010 to present.

Just a few years ago gas was selling for $1.60 and gold was $400 an ounce.....but ,but....you should put your money in Oil and Gold last year because Oil was selling for $120 a barrel and Gold was selling for $1800 an ounce.

Now where are you

If you bought a Barrel of Oil and a ounce of gold last year you would be down about $320. Way to protect your wealth.

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Old 05-09-2012, 12:49   #54
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Yeahbut, they tell me that when bad economic news comes out, gold ALWAYS goes up. Now you've introduced ANOTHER sub-rule to me. It's almost like you are saying that it depends on what investors want or fear and that it might not accurately represent the true cost.

Nahhhh, can't be. Buy gold - it always goes up.
I just made up that rule like the talking heads do every day on TV to explain the daily market moves when in reality they have no idea unless they are Soros or Niederhoffer.

The rule is there is no rule.

Gold is money but to invest you want your money circulating; gold is the exact opposite as it just sits there.

I salute those who went all in gold at $289; it is all so crystal clear now but I did not predict that the Government would act in such a fiscally reckless manner.

To the gold bugs if Romney wins dump gold. Romney likes to fire people. Expect fiscal restraint.
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Old 05-09-2012, 12:50   #55
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Well it hasn't over the last twelve years.
But it has over the last fifty, and hundred, and two hundred. Why are you looking at only the last twelve years? Why not some other arbitrary time period?

Gold is down three dollars in the last 30 minutes!
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Old 05-09-2012, 12:50   #56
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"but going forward from today, tell me what one stock is going to outperform gold?"

The way gold is going now - down - any stock will outperform gold.

The way the Euro is going, the dollar will be in favor for quite some time.

I know one thing, my father and I began seriously saving scrap silver/coins in the '50s and '60s and added some gold along the way and you know what, it's still sitting there and has not produced one penny of income. It just sits and I'm too lazy to sell it.

Now that CD rates are near zero, I think some days that I should take my mother's CD money and buy gold. Let's see, call it $1600 an ounce divided into $500,000 equals what, about 20 pounds? Geez, think of the storage fees. But then if I needed the money for her nursing home bills I'd take a beating on the sales commission. Her yearly bill is right at $100,000. This is year six.

It was a good first quarter for the stock market. I have some index funds that nearly doubled gold's 52-week performance.

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Old 05-09-2012, 12:59   #57
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Well it hasn't over the last twelve years. Now, what does the future hold? That is the question. I'll stick with the hot hand, gold.
It's amazing to me how your brain wraps itself around this one.

You realize that in the history of the world, the hot hand has eventually always failed? Be it real estate, stocks, oil, gold, tulip bulbs, what have you. Again, the difference being that real estate and stocks are productive.

"Chase what's hot, get burned"

What is smart at one price is foolish at another.
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Old 05-09-2012, 13:02   #58
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You guys dont have a couple pounds of gold and platinum laying around?

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Selma Hayek is bathing in my solid gold bathtub as we speak. Wait... she's calling. Gotta run!
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Old 05-09-2012, 14:14   #59
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Uh...
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Looking at the performance of gold vs. Berkshire since the start of 2000 shows that the value of gold has increased considerably more than the value of Berkshire Hathaway. In fact, with a gain of 466% since the start of 2000, gold's gain has been nearly four times the return of BKR.A (466% vs 120%).

No wonder the old man hates gold.
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Old 05-09-2012, 14:15   #60
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It's amazing to me how your brain wraps itself around this one.

You realize that in the history of the world, the hot hand has eventually always failed? Be it real estate, stocks, oil, gold, tulip bulbs, what have you. Again, the difference being that real estate and stocks are productive.

"Chase what's hot, get burned"

What is smart at one price is foolish at another.
Looking at the history of the world, gold has always lasted as money. Paper, not so much. The US dollar is getting ready to be abandoned as the world's sole reserve currency. Prepare for it or get hammered. Pretty simple.
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