The Future of Gold

[AGBF]

I posted a link to this story in a thread about gold designers, but I suspect it will not come to the attention of people who follow larger trends (i.e. trends about things other than the latest fashions in gold jewelry design) there. This article is really about the cost, both financial and environmental, of mining gold.

I also find it fascinating that the article states 80% of the mined gold currently goes to China and India!

Supposedly the price of gold is now high. Do you think it will skyrocket?

Here is an excerpt from the article.

"In that long and tortuous history, gold has now arrived at a new moment of opportunity and peril.

The price of gold is higher than it has been in 17 years - pushing $500 an ounce. But much of the gold left to be mined is microscopic and is being wrung from the earth at enormous environmental cost, often in some of the poorest corners of the world.

And unlike past gold manias, from the time of the pharoahs to the forty-niners, this one has little to do with girding empires, economies or currencies. It is almost all about the soaring demand for jewelry, which consumes 80 percent or more of the gold mined today."

The Future of Gold

Deb

 

[MINE!!]

I am seeing more and more of those commercials about buying gold coins and such.. to invest...

 

[AGBF]

Date: 10/24/2005 9:41:11 AM
Author: MINE!!
I am seeing more and more of those commercials about buying gold coins and such.. to invest...

On TV, Mine? Or in magazines and newspapers? Because I haven''t seen them (yet). If the price of gold is up, why would one buy now? (Unless he was uh..."sure"...gold would go higher, perhaps? That''s a scary thought! All of us rushing out to buy gold at high prices!)


Deb

 

[strmrdr]

Gold is something to buy when you have enough of everything else put away.
Guns. ammo, land, food, water, tansportation all come first.
Once you have all that then you can consider gold.
I actualy recomend silver.
silver is for buying gold is for long term wealth storage.

Remember that a lot of world goverments can smash the gold price thru the floor anytime they want too.

 

[AGBF]

Date: 10/24/2005 7:37:22 PM
Author: strmrdr
silver is for buying gold is for long term wealth storage.

Do you remember William Jennings Bryan and his Cross of Gold speech? I''ll have to go look it up! It was something to the effect of that people were being crucified on a cross of gold. He believed in bimetalism. Why am I remembering this?

Deb

 

[AGBF]

Here is an excerpt from the speech, delivered by William Jennings Bryan in 1896! The link below it will take you to a site where the reason for Bryan's support of bimetalism is explained and where the text of his speech can be found in its entirety.

"There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it.

You come to us and tell us that the great cities are in favor of the gold standard. I tell you that the great cities rest upon these broad and fertile prairies. Burn down your cities and leave our farms, and your cities will spring up again as if by magic. But destroy our farms and the grass will grow in the streets of every city in the country.

...​

If they dare to come out in the open field and defend the gold standard as a good thing, we shall fight them to the uttermost, having behind us the producing masses of the nation and the world. Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold."

Cross of Gold

Deb

 

[strmrdr]

actualy its more historical than that:

in the days of the old west
1 oz of gold or a gold eagle was a months wages $20
So buying much with gold wasnt practical it was too valuable.
Silver coins was the most common used.
From dollars to 1/8 dollars or bits.
Thats where the old saying comes from: shave and a hair cut 2 bits = $.25 and it wasnt until the 1900s that it hit that price.
from there you went down to coppers or pennies and later nickels.

What cost $20? a colt peacemaker 45 cost today $2500
A good horse could be had for $10 and a decent saddle for $5
So as you can see it wasnt practical to use silver for day to day buying only large purchases were made in gold.

The wealthy used gold to transfer money over long distances often in 10oz and 100oz bars.

Thats troy oz btw not regular oz.

 

[MINE!!]

Date: 10/24/2005 4:07:45 PM
Author: AGBF

Date: 10/24/2005 9:41:11 AM

Author: MINE!!

I am seeing more and more of those commercials about buying gold coins and such.. to invest...

On TV, Mine? Or in magazines and newspapers? Because I haven''t seen them (yet). If the price of gold is up, why would one buy now? (Unless he was uh...''sure''...gold would go higher, perhaps? That''s a scary thought! All of us rushing out to buy gold at high prices!)



Deb

Yes I have seen it on T.V. But I thought that I saw something in one of the recent New Yorkers as well... (yes I do read the New Yorker)

but I will have to go back and see if I can find the copy I saw it in.

I too thought it was strange that they would be pushing gold if the price was going up.... But who knows?

 

[AGBF]

Date: 10/24/2005 10:03:22 PM
Author: strmrdr
So as you can see it wasnt practical to use silver for day to day buying only large purchases were made in gold.

Interesting history lesson. If the economy crashed, however, why would silver be of any use?

In the Great Depression, for example, currency was still used. Its value was just very, very depressed. In other words, prices were low, but no one had any currency to buy goods. Productivity was down. The farmers weren't producing food due to drought. If you had saved currency (or silver) you would have been able to buy things at a cheap price, even though there wasn't a lot of anything, because prices were so low. People were practically giving away their goods and services. That's why at the beginning, right after the crash of the stock market, things weren't too bad. People still had money. When the money ran out, the suffering increased. Why wouldn't silver run out if it became the currency?

Deborah

 

[strmrdr]

Date: 10/25/2005 7:06:49 AM
Author: AGBF

Date: 10/24/2005 10:03:22 PM

Author: strmrdr

So as you can see it wasnt practical to use silver for day to day buying only large purchases were made in gold.

Interesting history lesson. If the economy crashed, however, why would silver be of any use?


In the Great Depression, for example, currency was still used. Its value was just very, very depressed. In other words, prices were low, but no one had any currency to buy goods. Productivity was down. The farmers weren''t producing food due to drought. If you had saved currency (or silver) you would have been able to buy things at a cheap price, even though there wasn''t a lot of anything, because prices were so low. People were practically giving away their goods and services. That''s why at the beginning, right after the crash of the stock market, things weren''t too bad. People still had money. When the money ran out, the suffering increased. Why wouldn''t silver run out if it became the currency?


Deborah

long term it will go to barter like it did during the depression.
silver and gold just add another means of trade.
eventualy it will go back to money of some sort.
Most people know what gold and silver are so there will be a better chance of it being worth something than paper money.
If you had something people wanted which would you rather trade for?
dollars that are going down the tubes or silver that the perception of value is going up on?
Gold and silver and US dollars by themselves are totaly worthless it is the perception of value that makes them usefull.
historicaly gold and silver have maintained the perception of value when other forms of money have failed.

 

[AGBF]

Gee, Storm...everything you said made sense to me. I didn't disagree with anything. Are you sure we are in the correct forum? I thought the rule was that in Around the World, we were supposed to be constantly at odds (except for agreeing that the Supreme Court was wrong about seizing private property).

I must be slipping! Or mellowing in my dotage.

Deb

 

[movie zombie]

yes, storm and i are agreeing more and more...its scary.

the US paper money hasn''t been backed by gold for ages. the answer to US economics has been to print more money which also isn''t backed by gold. its a very fragile situation should there be a crash.

barter for services and goods was the standard in country areas during the depression. my dad talks about those times: when you''d butchered a hog and traded some meat for dairy products if you didn''t have a cow. he also remembers people from the city coming out to the country and deliberately trying to runover chickens in order to have meat to take home...... didn''t matter that they were driviing onto private property and damaging said property as they attempted to get their chicken.

i saw a program some years ago on KQED out of san francisco. a documentary. one guy remembers being told at the age of 12 by his parents who handed him a kerchief with some bread that it was time he left home and went out on his own as they could no longer feed him. and out into the world he went......

peace, movie zombie

 

[strmrdr]

riddle me this what makes a piece of paper(frn) worth a candy bar?

becuase it is or because it can be is not an acceptable answer.

 

[movie zombie]

used to be a candy bar went for coin

.....sorry, couldn''t resist.

ok, i''ll bite: what''s ''frn''? probably something obvious but it went by me at this late hour.....

so the equation is something like this:

candy bar = paper without tangible backing like gold, silver, etc.
tangible = intangible only because of perceived worth of said intangible and perceived worth of this intangible changes as perception changes.

so, where does this leave us?

peace, movie zombie

 

[strmrdr]

frn = federal reserve note, what is incorrectly called a dollar these days..

 

[strmrdr]

The answer and the only answer is that one can trade that piece of paper for other goods and services with someone else to replace the candy bar therefore they are willing to trade.

In a lot of ways the its still based on the barter system but we use frn's to keep score.
You barter your time to your boss in exchange for frn's.
You then barter those frn's for goods and services.
As long as enough people will barter with frn's the system works but there is a wild card and what will bring the system down.

That is taxes, one is no longer getting full value from each frn on the market. The government gets over half and distributes it to others.
There for one is having to barter twice as much value out to get the same amount of goods and services.
This can work as long as government services make up enough of the difference in value.
The problem is for most people they don't therefore there is a net loss of value on every trade.
Add on to this all the jobs out there that add no value or add negative value that are becoming more common as value add jobs are going over seas.
So not only is the cost of government coming off the top of each trade the cost of wages for non value add jobs is also, not to mention inflation.

So what does one do?

Ask for more money for your time and labor?
Wont work it will just drive up costs on the other end and you lose value in your trades also.

Demand reduced taxes?
Wont happen, once people get the taste of "free" money they wont give it up.

Demand more return on your tax dollars?
Wont happen because politicians couldn't buy votes so they would just increase spending and raise taxes.

What is the answer?
The person who comes up with the perfect answer will rule the world.

econ lesson strmrdr style 2005 :}

 

[movie zombie]

we always part ways when it comes to taxes, storm!

however, the barter system whether with or without paper only works when everyone agrees on the worth of the barter medium. how many horses do you need to shoe before i''ll give you 4 chickens?

peace, movie zombie

 

[strmrdr]

well there is no denying that you have to work longer for the frn to barter for the goods and services you want/need because the goverment takes a huge chunk.
For most people that is twice as long they have to work when you figure in all the taxes.

chicken is around $3.50 for a whole chicken on sale.
horse shoes are $6.99 and up depending on size for run of the mill types.
So 4 chickens wont get you one horse done unless you have live chickens and someone really wants them.

 

[movie zombie]

yes, the point exactly: you''re still dealing using the relativity of paper $$$ as the framework to describe the worth of the chicken and the worth of the horeshoes and shoeing. and that paper by itself isn''t backed by anything. however, that piece of paper is useable anywhere in the country. it can be transported and used in california, new york, etc. but it still comes down to local economics.

i buy organic chicken at $4.00 pound.......and killed the day before i buy it.....fresh fresh fresh, can''t beat it. so i''m going to expect more horeshoeing for one of my chickens!

peace, movie zombie

 

[strmrdr]

yes the frn is the framework for most bartering in the US today.
That isnt going to last at the rate things are going.

 

[movie zombie]

geez, going to agree with you again, storm!

peace, movie zombie