DOW Drops, Gold Soars - Polidicks

[QUOTE=cecilbdemodded;31618605]What I don't get about stockpiling gold is this: If shiat really goes down and paper money is next to worthless so people start trading in gold, how are you going to buy anything? Those of you who have gold, the first time you go out in public to buy something everyone who doesn't have gold is going to rob you of it. If you manage to buy something then you'll be robbed of your purchase on the way back home. Those of you who buy gold on paper but don't actually have the gold, when it goes down the people who have the gold aren't about to let you have any, assuming you can even travel to where it is. So what's the point?[/QUOTE] If you bought a gold certificate you would be able to use that certificate as money. On a gold standard, this is essentially what is happening. Your note is represents some amount of gold that you are selling to someone else in exchange for their good. I think you are under the notion that a gold based currency would involve only trading with physical gold.

Only stupid people are buying gold right now. You're supposed to buy gold when the dollar is strong, and then sell it during a recession when the dollar is weak. That way you get more dollars back than you put in, which you can have stockpiled when the economy improves. The only way buying gold right now would make sense is if the American economy were to collapse tomorrow.

[QUOTE=Sega Saturn;31619201]Only stupid people are buying gold right now. You're supposed to buy gold when the dollar is strong, and then sell it during a recession when the dollar is weak. That way you get more dollars back than you put in, which you can have stockpiled when the economy improves. The only way buying gold right now would make sense is if the American economy were to collapse tomorrow.[/QUOTE] It's certainly make sense if you don't think the dollar is going to ever be strong again, and in that case you'd be making quite a good decision. If you assume the dollar is going to regain its strength then what you are saying is true, but if not, then it's perfectly rational.

I think we are just going through the circle of life with the crisis, give it any where from a year to about 10 and the US dollar will be alive and well.

[QUOTE=Zambies!;31619434]I think we are just going through the circle of life with the crisis, give it any where from a year to about 10 and the US dollar will be alive and well.[/QUOTE] No it won't.

[QUOTE=Sega Saturn;31619201]Only stupid people are buying gold right now. You're supposed to buy gold when the dollar is strong, and then sell it during a recession when the dollar is weak. That way you get more dollars back than you put in, which you can have stockpiled when the economy improves. The only way buying gold right now would make sense is if the American economy were to collapse tomorrow.[/QUOTE] a lot of people are pretty worried it could collapse tomorrow, thats why they are buying gold

I own gold. [editline]9th August 2011[/editline] Not WoW gold either

[QUOTE=yawmwen;31619469]a lot of people are pretty worried it could collapse tomorrow, thats why they are buying gold[/QUOTE] The economy will not collapse tomorrow.

[QUOTE=Sega Saturn;31619804]The economy will not collapse tomorrow.[/QUOTE] that doesnt matter if investors are worried it will

Nothing will happen to anyone who isnt an insane old person. [editline]9th August 2011[/editline] huh the source is down how mysterious

Looks like Glenn Beck was... [sp]right[/sp] YEAAAAAAAAAAHHH

*Looks in step-mother's jewelry box* "Sorry babies you have to go now..."

huh the source is down how mysterious

[QUOTE=Judas;31619919]huh the source is down how mysterious[/QUOTE] Meh. OP should've gotten multiple sources, but meanwhile I'll just provide another: [url]http://www.cnbc.com/id/44058141[/url]

[QUOTE=Pepin;31619184]If you bought a gold certificate you would be able to use that certificate as money. On a gold standard, this is essentially what is happening. Your note is represents some amount of gold that you are selling to someone else in exchange for their good. I think you are under the notion that a gold based currency would involve only trading with physical gold.[/QUOTE] But that's the point of my question. If people are buying gold on paper because they want a hedge in case paper money collapses in value, why do would you think that paper will be honored any more than paper money? If economies collapsed, no one who actually has physical control of the gold will allow any of it to leave their hands(unless they're trading it) no matter what that piece of paper says. Who is going to enforce your gold certificate? Who guarantees it?

[QUOTE=Fippe;31619980]Meh. OP should've gotten multiple sources, but meanwhile I'll just provide another: [url]http://www.cnbc.com/id/44058141[/url][/QUOTE] when i posted it there were only 3 stories available and the one i chose was the only one mentioning the gold prices

[QUOTE=cecilbdemodded;31620076]But that's the point of my question. If people are buying gold on paper because they want a hedge in case paper money collapses in value, why do would you think that paper will be honored any more than paper money? If economies collapsed, no one who actually has physical control of the gold will allow any of it to leave their hands(unless they're trading it) no matter what that piece of paper says. Who is going to enforce your gold certificate? Who guarantees it?[/QUOTE] Because one piece of paper is backed by something physical that is also of value, and a fiat currency can only be backed by the government which can easily falter. Fiat currencies work as long as the public believes the currency has value. Currencies that are backed by something are quite different because the value is much more rooted. I'm not really understanding what you're saying in the second paragraph.

In other news, time to buy some stocks

[QUOTE=Pepin;31620277]Because one piece of paper is backed by something physical that is also of value, and a fiat currency can only be backed by the government which can easily falter. Fiat currencies work as long as the public believes the currency has value. Currencies that are backed by something are quite different because the value is much more rooted. I'm not really understanding what you're saying in the second paragraph.[/QUOTE] except those times gold standards collapse because of "futures markets" and people buying and selling gold certificates that represent gold that doesnt actually exist. gold standard is incredibly insecure way to back your money in the modern economy. your money is always worth what gold is worth so it is incredibly susceptible to rapid inflation and deflation as the market shifts. the only countries that generally use gold for their currency are little undeveloped countries with horrible currency, so they peg it to gold to give it some semblance of competitiveness in the global market

[QUOTE=yawmwen;31620362]except those times gold standards collapse because of "futures markets" and people buying and selling gold certificates that represent gold that doesnt actually exist. gold standard is incredibly insecure way to back your money in the modern economy. your money is always worth what gold is worth so it is incredibly susceptible to rapid inflation and deflation as the market shifts. the only countries that generally use gold for their currency are little undeveloped countries with horrible currency, so they peg it to gold to give it some semblance of competitiveness in the global market[/QUOTE] Loaning out more than you have reminds me of fractional reserve banking. I'm not really trying to provide a case for a gold standard, but more trying to clarify why people would put more trust in a gold certificate than in a fiat currency. I'm not really sure what type of currency would be best, I think all sides make pretty good arguments. One thing I've heard of is a digital currency, and the person explaining it made some really good points such as the ability for fine tuned statistics, but it also would also be really sketchy.

Only a fool would buy gold. The price is way too high. If you wanted to buy gold, you should've done it in the early days of the crisis. It's too late now.

[QUOTE=TheTalon;31609554]That's the point though. Steel can be found everywhere, it has more uses than Gold could dream of, yet Steel or Iron is cheap cheap cheap. Iron is less than $400 a Ton I believe[/QUOTE] Because iron is orders of magnitude more common in Earth's crust.

Anyone here old enough to remember when gold jumped way up to around $4k an ounce?

[QUOTE=Pepin;31620277]Because one piece of paper is backed by something physical that is also of value, and a fiat currency can only be backed by the government which can easily falter. Fiat currencies work as long as the public believes the currency has value. Currencies that are backed by something are quite different because the value is much more rooted. I'm not really understanding what you're saying in the second paragraph.[/QUOTE] What I'm saying is if you have actual gold in your possession, in theory I understand how that helps. If paper money loses its value then you can trade in gold, buy your food and so on with your gold. Meanwhile everyone who just has paper money can't buy squat since the paper money is worthless in an economic collapse. The only problem is in a situation like that, the guy who has gold or the guy who can actually trade for something(with gold) becomes a huge target for everyone else who is broke and starving. But the people who only own gold on paper, these people don't have gold they have certificates and so on. So let's say there is an economic collapse and paper money becomes next to worthless. So there you are feeling pretty good because you have gold certificates. The only problem is those certificates only have value cause they are backed by gold...IF you can actually exchange them for the gold. In an economic collapse though, you have no guarantee that the people holding the gold will honor any of those certificates. Why would they? They have the gold, you have the paper, who is in a better position?

[QUOTE=yawmwen;31620362]gold standard is incredibly insecure way to back your money in the modern economy. your money is always worth what gold is worth so it is incredibly susceptible to rapid inflation and deflation as the market shifts.[/QUOTE] This actually isn't true, I mean the current fiat system is just a way "around" the "problems" with the gold standard, which most of the time was a result of shitty government regulation of the money representing the gold. Letting banks not repay loans for a couple years, letting banks lend vastly more than they had in reserve and so on. Money backed by gold however, is hardly ever a 1:1 ratio, so for example $1 wouldn't be worth the $1,718.20 it is in the article but dependent on the amount of money the reserve holds and how much money is actually in circulation. Inflation/deflation could still be controlled by expanding or contracting the money supply, because each dollar would be worth a fraction of the gold represented in the reserves. I don't really advocate the gold standard, but it's not as horrible a system as economists make it out to be in that most of the time it was government mismanagement of their own currency which was the problem, not money being backed by a resource necessarily. Needless to say, in a proper resource-backed currency we wouldn't be able to run up the deficits we do now, I don't see that as a problem.

[QUOTE=yawmwen;31609167]close to the time to sell it.[/QUOTE] I've only taken 3-4 Economic classes at a community college, but based off that information, now would be the worst possible time to sell. Because prices simply keep rising like mad because everyone is buying it. You want to sell it when the prices slow down. I'll take corrections off the air. :v:

oh hey look the market just rebounded [editline]9th August 2011[/editline] like almost completely

[QUOTE=POLOPOZOZO;31632949]oh hey look the market just rebounded [editline]9th August 2011[/editline] like almost completely[/QUOTE] [url]http://www.bloomberg.com/apps/quote?ticker=INDU:IND[/url] It's getting there.