The Gold Standard?

[Towncryr]

Here is a link to a VERY, VERY good full length movie on this topic/subject. It is titled The Secret of Oz. It is very professionally done and will open your eyes as to this situation we are talking about and ALL interested in. If you have an interest in your future I would HIGHLY advise you MAKE the time to start education yourself. EXCELLENT movie.. It is a few minutes under 2 hrs long

http://www.youtube.com/watch?v=swkq2E8mswI&feature=player_embedded

 

[TrevorCito]

Hmm, I think this might be the problem with Greece. i.e. it is pegged to the euro which prevents it devaluing and therefore it cannot return to any form of competitive advantage against Germany or France. Unless the destiny of Greece is 10 years of internal devaluation, which will fail as there will be civil unrest after a few years of massive unemployment and lack of prospects, then it should return to the drachma, devalue massively and go back to being a cheap holiday destination.

I don't see that it would have been any different in Greece if its currency had been backed by gold or tied to the Euro. In either case it would need to devalue to become competitive now!

Also, it is a myth that a gold backed currency would somehow prevent fractional banking. Whether you have cash or gold on your balance sheet it is the regulators that allow banks to lend multiples of their deposits.

Even though Greece cannot directly control the volume of money in circulation or print more of it, they can still play to their strengths. Of course they cannot manufacture like Germany but they can still offer those cheap holidays, manufacture locally, produce food, shrink government, stimulate exports and live normal lives (eventually). Anyway, they cooked the books to enter the euro zone and now the majority are paying the price for cock-ups made by a former government. It's sad but true.

The way I see it, being tied to the euro has the same outcome for the government as being gold backed because they cannot devalue their currency just for their country.

On the subject of fractional banking, gold backed tends to limit the money in circulation provided the government in power and central banks follow the rules. As you correctly pointed out, being gold backed does not somehow prevent fractional banking or encourage economic responsibility.

 

[flurec]

Gold costs money to store and the higher the price the more that can be profitably extracted. The major market for it is India and elsewhere to show something shiny that supposedly indicates your status.

We are in the midst of a huge run up following a financial bubble burst. Gold produces no stream of income and you are basing you investment on the hope of being able to find a greater fool. Remember the 80s? Whenever there are infomercials on TV telling you to buy something or your cousin is telling you he's making a killing in it (he was also making a killing "flipping houses" until he got stuck with twp that are in foreclosure). Buy low, sell high. You missed the boat on gold. Should have bought it back in the 80s.

I wouldn't argue with Warren Buffet and of his massive holdings, from what I have read, he has zero direct investments in gold and criticizes it as an investment.

If you really believe in the apocalypse, financial ruin and end times the best investment is food, water, weapons, and ammo. Oh and Argentinian pesos. Buy all you can get your hands on. If you do have gold cash it out for pesos.

 

[duanestorey]

Gold produces no stream of income and you are basing you investment on the hope of being able to find a greater fool.

You're missing the point - it's not supposed to provide an income stream, it's supposed to provide a store of value. Inflation here is probably like 30-40% - if you have money in pesos in the bank, you're going to lose that amount every year. In North America the official rates are between 2 and 3% usually, but unofficial rates (which take into account food/energy and also calculate it without using crazy things like hedonics) more like 6-10% per year. In Canada the "real rate" is estimated more like 7%. So if you leave money in the bank, you'll lose 7% of purchasing power each year.

People with gold generally aren't looking to flip it and make a buck, they are just trying to preserve wealth and stop the government from debasing the currency they own. Sure, some people flip gold like others flip houses, but that's not the point of a gold standard, or many people who purchase gold for their portfolio.

 

[duanestorey]

Also Warren Buffet isn't a typical investor, he owns a holding company (Berkshire Hathaway) and can invest time and resources into every single company he adds to the portfolio - the average investor doesn't have the skills or the time to do that. Of course he is going to lean towards investments that provide high rates of return for his clients, since that's what he is paid to do.

 

[Towncryr]

What is the solution?

I notice several skeptical posters on this thread. Someone talking about Warren Buffet, etc. Warren Buffet is a Rothschild agent. You can find pictures of he and Lord Rothschild taken in the Rothschild Estate garden on line. He doesn't, as NO central banker does, like gold. Or at least for the people to have it. The reason is because you CAN NOT build a speculative bubble with gold, only with fiat currency they produce for, in the U.S., .0234 cents per bill, not matter what the denomination.

May I suggest again in this reply that each of you, pro or con, view The Secret of Oz by Bill Still. This is NOT some mickey mouse production. This documentary won Best Documentary of the Year in 2010. Not exactly chopped chicken liver. You will be MUCH more educated after viewing this film.

Here is the URL again:
http://www.youtube.com/watch?v=swkq2E8mswI&feature=player_embedded

The answer to sound currency is not necessarily the gold standard. If you watch this film Still goes to the British Museum and shows, along with the curator, the Tally Sticks that ran England's money supply for hundreds of years. ON STICKS!

Abe Lincoln took the same concept and used issued the greenbacks. He printed those rather than pay the Rothschild's 25% interest or some such amount that they wanted to finance the Civil War.

John F. Kennedy had the same idea when, about six months before his death, started issuing Silver Certificates instead of Federal Reserve Notes, BTW, WHENEVER the word "note" is used in ANY LEGAL setting is ALWAYS means "promissory note" which ALWAYS denotes DEBT, NOT "Money."

The secret of all three of the above systems is to TAX OUT what the govt SPENDS into circulation. It puts enough of a medium of exchange into circulation to provide for commerce but you tax out the excess so avoid speculation and therefore, bubbles.

Remember when thinking about or studying about this subject. "The mind is like a parachute. It ONLY WORKS when it's OPEN!"

Suerte,

TC

 

[flurec]

You're missing the point - it's not supposed to provide an income stream, it's supposed to provide a store of value.

That is exactly my point. Stocks, bonds, and real estate do provide streams of income. Stocks beat gold over time. INCLUDING the recent gold bubble.

http://www.stocks-for-beginners.com/gold-market-price.html

Taking out the recent rise due to increased investor speculation and you will see that gold does horribly. Why is it when prices have been going higher and higher that people say it is time to buy? If you want to buy buy in the early 80s or 90s not now after you start to see the "buy gold" infomercials.

Other assets DO keep up with inflation and mostly surpass is. If the price of food inflates 5%/year you better believe that McDonald's prices will increase likewise, with their sales and profits following. Any business' sales revenue (accept for technology companies) will go up as the cost of things goes up.

Why is gold an inherently good store of value? You are counting on others to be willing to trade it with you. If society collapses the man with food and guns will survive. Try and eat gold.

Warren Buffet is not your typical investor but he is the most successful investor of our lifetime. He says gold is not a good investment and you would disagree with him. If he is such a great investor you can invest right along with him. A share is ~$80 and management expenses are nil.

 

[Napoleon]

...Warren Buffet is not your typical investor but he is the most successful investor of our lifetime. He says gold is not a good investment and you would disagree with him. If he is such a great investor you can invest right along with him. A share is ~$80 and management expenses are nil.

...ok, I see where you got that number. http://quotes.wsj.com/BRKB

You quoted their "B" stock. US$82.15

I was going to say-

"Ummm... not even close.

1 Share of Berkshire Hathaway = US$123,376.00

That's a bit more than US$80."

But it turns out that I was looking at their "A" stock. So you're correct. But it still blows me away how much a share of their A stock is.

http://quotes.wsj.com/BRKA

 

[flurec]

...ok, I see where you got that number. http://quotes.wsj.com/BRKB

You quoted their "B" stock. US$82.15

I was going to say-

"Ummm... not even close.

1 Share of Berkshire Hathaway = US$123,376.00

That's a bit more than US$80."

But it turns out that I was looking at their "A" stock. So you're correct. But it still blows me away how much a share of their A stock is.

http://quotes.wsj.com/BRKA

1500 shares of BRK.B is equal to 1 share of BRK.A but with limited voting rights. A share can be split into 1500 B shares but loses the A voting rights but you have the same liquidity.

An above poster seemed to elude to Buffet being part of some sort of secret cabal and/or global conspiracy. He IS THE CEO of a public company that you can be part owner of for a relatively cheap price. $60-$70 would be a great price but we are not going to see that again IMHO. His salary is around $100k I believe. He picks undervalued assets and buys them. He is not buying gold.

To the gold bugs- Other than some industrial uses what is gold's inherent value? If the financial system breaks down what will you do with your gold? How are you determining its worth? What is a fair price and how would you determine that?

Other than industrial use and jewelry why are we talking about gold as opposed to platinum- for purely cultural and historical reasons? If "store of value" is your primary goal then why not silver, platinum, diamonds, honey, artwork, canned food, ammo or guns or Argentinian pesos?

 

[Matt84]

To the gold bugs- Other than some industrial uses what is gold's inherent value? If the financial system breaks down what will you do with your gold? How are you determining its worth? What is a fair price and how would you determine that?

Other than industrial use and jewelry why are we talking about gold as opposed to platinum- for purely cultural and historical reasons? If "store of value" is your primary goal then why not silver, platinum, diamonds, honey, artwork, canned food, ammo or guns or Argentinian pesos?

I am not talking about gold as opposed to any other 'objective standard' for lack of a better word for noble minerals (gold, silver, platinum, etc) and other 'things' that recreate similar properties. It is the properties of gold (and silver, etc) that make it immutable, easily verified, and desired throughout time.
During the last World War (or the Depression, or China before it lifted its gold ban) some little gold accumulated by yourself or your ancestors could buy you food or even freedom when nothing else (but guns and ammo) could.

Guns, amo, food, food producing things, are not an 'interesting times' ersatz for gold, but rather a substitute for a Berkshire Hathaway stock (a composite of good-producing companies, the kinds that are halted during a crisis).

Individually, gold is not for those who predict ever-lasting disaster, nor for those who want to make a quick buck, but rather for those who plan against a predictable passing crisis.

For a whole economy, gold, or any other objective standard does the same, preserves value. I want to know, as I am VERY ignorant on these matters and only guess out loud, whether a gold (or silver, or tungsten) backed economy has greater limits to growth, and whether that might be a reason (beyond greed , etc) why fiat currencies appear during periods of grand expansion (Rome, Britain, the US)

Thanks for the above contribs