A queston for John T

Donald Lehman

Well-known Member
Didn't want to hijack the thread below about gold and silver investments.

Isn't the value of gold and silver constant? If you buy gold for $600 and ounce and sell it for $1,000 per ounce doesn't that simply mean that your paper dollars are worth 40% less? I know our currency hasn't been on the gold standard for many years, but doesn't the value of the currency change, rather than the value of gold? I mean an ounce of gold is an ounce of gold no matter how big a hand full of paper it takes to but it, right? You don't buy gold and silver as an investment, you buy it as insurance, correct?
 
That is an interesting take on things. Sort of goes along with what I heard once. All through history gold has never been worth nothing ! It has always had value.
 
You're right most have it backwards these days,since Gold is The Gold Standard.Paper money is the commodity that and other things have come and gone but Gold has been the standard since the beginning of recorded history.Don't read too about Federal Reserve Notes in the Bible(LOL)Gold will be around and valued long after the paper money around these days is long forgotten.
 
Not necessarily, since gold is a commodity and not the currency standard anymore, gold is also subject to supply and demand. Since the value of a dollar is measured in buying power (gold, land, food, etc), in your example if a Hamburger costs $1 when gold was $600 and $1.10 when gold was $1000, your buying power for gold decreased more than your buying power for hamburgers. Since gold has to yield to supply and demand, purchasing it is no "safer" than any other investment, and possibly even more riskier due to the higher fluctuations of the prices.
 
> Isn't the value of gold and silver constant?

No.

Gold and silver are commodities. Their prices rise and fall relative to the various currencies and relative to other commodities. Would you say the values of crude oil, soybeans and pork bellies are constant? Of course not; all commodities are subject to fluctuating supply and demand.
 
There is a reason all countries of the World want to own as much Gold as possible because it is the constant measure of wealth,when there is economic turmoil everyone turns to tried and true things of value and Gold has always been #1 anyone that thinks it will be different next time is kidding themselves.Reading any history Gold has always been the tried and true standard.Ask anyone these days in Venezuela how trusting in a paper currency is working out for them.
 
Actually paper money is the least inherently thing of value you named.The supply of none of those things can be easily increased quickly but the supply of paper(really computer generated)money
can be multiplied in an instant these days which would of course dramatically drop the value of the individual unit which in this case is value of each Federal Reserve Note people hold.Really Federal Reserve Notes are a complete fraud as they are not produced or backed by the Federal Gov't.The Gov't quit guaranteeing them back in the 1970's
 
Donald NO its NOT constant. The price of precious metals fluctuates. When I made good on silver I bought at X dollars and sold later for X + and made a sweet profit. But as I said I would NOT put all my eggs in one basket gold or silver is ONLY a small portion of Stocks n Bonds n Mutual Funds n Cash. As one gets older like me I cant stand much risk (unlike when in thirties) and I'm something like 60% Bonds n 40% stocks nowadays but tied to CONSERVATIVE income type mutual funds.

DISCLAIMER do not take investment advice from me, I'm engineering and legal trained certainly NOT a financial planner. I tend to agree with much of Dave Ramseys philosophy although I developed and practiced my own methods (of balance and diversity in investing) longggggggggg before I ever heard of him, he's a johnny come lately as far as Im concerned lol.

Its simple buy low sell high right ????

John T
 
Precious metals will have a value to someone or a nation at some price. A financial firm that I do business with prefers to invest into precious metal mutual funds. It advises that individuals not own the metals themselves for investment purposes. Over 30+ years I can only remember a very few times that such fund investments were considered a good move, and then only a very small percentage stage of total investments.
 

In addition, when there is worry, slowdowns, panics, famine, etc,,, the value of money goes down and precious metals go up...

And since the market is bubble driven,, supply and demand, confidence and other drivers, it will, and has always gone up and down. Meaning the gold has gone the other way in value.





So.. .buy gold just before the market slows.... as gold will go up......

Get out of gold and get back into the market when the growth and enconomy is at bottom and start to pick up......

As John said.. buy low, sell high.... Its not rocket science, farming or electrical engineering....
 
I always get a lot of entertainment from the companies that sell gold and silver on TV. The commercial goes something like this....

QUOTE:
"The U.S. dollar is unstable and could collapse at any time! Gold and silver are stable and has stood the test of time.
So what we want to do is have you purchase gold or silver! We will take your WORTHLESS American money and give you some gold or silver in its place!
Yes, that's right! Gold and silver will always be worth something! Your American money will NOT!
So give us your unstable American dollars and we'll send you some gold or silver!"
UNQUOTE

Okay, so I paraphrased it a little bit, but just take a minute or two to think about what they are saying about the American dollar, BUT YET, they want it so bad.
 
I've got a cousin who owns some physical gold. I haven't seen it personally,but he was telling me about it one time. He said it's packaged and sealed somehow so that it's certified as to quality and quantity. He said as long as the seal isn't broken,he can sell it for cash as it is. He says if the seal is broken,it has to be tested for weight and purity before it can be sold and he'd have to pay for the testing.

That's all I know about owning it and having actual physical possession of it.
 
> Actually paper money is the least inherently thing of value you named.The supply of none of those things can be easily increased quickly but the supply of paper(really computer generated)money can be multiplied in an instant these days which would of course dramatically drop the value of the individual unit which in this case is value of each Federal Reserve Note people hold.Really Federal Reserve Notes are a complete fraud as they are not produced or backed by the Federal Gov't.The Gov't quit guaranteeing them back in the 1970's

And what does that have to do with the price of tea in China? The US dollar is neither an investment nor a commodity; it is currency. And without currency, you would find it excruciatingly difficult to buy investments, commodities or anything else.

As for your assertion that the value of the greenback is ephemeral, that is easily disproven. Take a look at <a href="https://www.minneapolisfed.org/community/financial-and-economic-education/cpi-calculator-information/consumer-price-index-and-inflation-rates-1913">this table</a>, which reports the Consumer Price Index since 1913 (when the Federal Reserve was founded). You can see that since 1991, the rate of inflation has not exceeded 5 percent. And since 1913 it has exceeded 10 percent only a few times. Why has inflation remained so constant? It's exactly because the Federal Reserve Board is able control it by its manipulation of interest rates.

Now the seventies were a period of relatively high inflation, but what brought inflation down after Gerald Ford's WIN buttons failed to do the job? It was the Federal Reserve Board, which put the brakes on inflation (and threw the economy into a recession) by increasing interest rates. Hurray for the Fed!
 
You must not understand what inflation is,inflation is the increasing of the money supply and the result is higher prices.You are giving the Fed credit for solving a problem they created.
 
I would never buy bulk Silver or Gold too many ways to rig it plus if you did need to use it as currency people would be leery of it for good reason.I buy US Mint Gold and Silver
Eagles they are protected by US Treasury laws and rarely conterfitted.Plus people easily ID them and trust them.The US Mint coins can be bought for a few dollars over
spot price so to me they are the way to go if you want to buy Gold or Silver.Canadian Maple Leaf coins are also very trustworthy.
 
I would never buy 'paper' metals,one they may not really exist, and if the holding company were to go bankrupt my Gold may be gone too.I want my Gold and Silver physically in my possession so in the case of some sort of economic breakdown I would be able to
use it to buy or barter.If its not in my possession and somewhere half way across the country I'd say being able to actually gets my hands on it would be slim.
 
One way to look at it is that gold, silver, diamonds etc are just as much a fiat currency as paper. They only have value because people generally agree they have value. If you're hungry and cold, gold itself won't feed you and shelter you. It takes someone else to accept that gold has a value and that is willing to take it in trade for food and shelter. If you start thinking about this stuff too much, it's either going to depress the heck out of you or make you wonder if all mankind is nuts! Diamonds are a common rock. Only by manipulating the market and controlling the supply (and with the help of foolish, shallow women who think shiny rocks mean something) are
 

sorry, continuing my post-

diamonds worth anything at all. Paper currency, coins that aren't even silver, nickle or copper anymore? That's just people agreeing they represent something they don't.

And some people scoff at faith in a higher power at that same time they believe electrons have "value"?!!! We're all nuts!
 
A few things on gold. It has never been completly worthless. Look at Enron/leeman brothers and many failed stocks/paper currency. Gold can not be counterfeited or made out of thin air. Try to fake it and see how well that works. Paper money can be printed enmass or counterfeited. Gold can be divided into smaller segments as needed. Gold is nearly indestructible if left outside in the rain for a 1000 years and it will survive. Just as an aside though all the people on the Titanic would have given all the worlds goal for a coast guard cutter to have picked them up so at that point I guess it was worthless!!!
 
Bullion,is that what they call them? That's what he has. Small bars is what they are I guess.
 
> And some people scoff at faith in a higher power at that same time they believe electrons have "value"?!!! We're all nuts!

Brett, if you're referring to cryptocurrency that's a gross oversimplification. Let's make an apples-to-apples comparison.

Suppose you're in the business of making and selling gold coins. You have various expenses that go into each coin: the gold itself, the dies, electrical power, labor, and so on. You make your coins and you market them. If you're lucky, you can sell those coins for more than it cost you to mint them and you net a profit. Presumably buyers see something of value above and beyond the value of the actual material in the coins. For example, in the case of coins minted by the US Mint, they're fairly liquid because you can almost always find a buyer for them and they're easily identifiable.

Now let's consider the nnalert "miner". The miner has two major expenses: the computer hardware that executes the algorithms that "mine" for crypto-coins, and the electrical power needed to operate that hardware. Electricity is a big expense for nnalert miners, just as gold is a major expense for a mint. It currently costs around a thousand bucks to mine a single nnalert, depending of course on local electricity costs. At current prices, the miner can turn a profit of two or three grand per nnalert, because buyers are willing to pay a premium over the cost of production. Why? Supply and demand, of course. Miners can't create cryptocurrency fast enough to meet the demand. Presumably at some point in time the price will stabilize; otherwise cryptocurrency is doomed as a form of currency, which is its ostensible reason to exist.

But why do folks think cryptocurrency has value? Well for the same basic reasons other folks think a particular gold coin has value: 1) Its authenticity is easily verified, and 2) there are other folks willing to fork over other things of value in exchange for cryptocurrency. Of course you can't melt down a nnalert to make earrings, but on the other hand nobody has figured out how to teleport a US Eagle halfway around the globe in a few hundred milliseconds.
 

No Mark, I'm just commenting on people in general thinking that just because a "deposit" was tot heir checking account that they are somehow actually benefiting and comparing that with people that scoff at the idea of faith in a higher power. Electrons, be they representing bit coin, US currency, stocks, bonds, whatever, are just electrons. That's a couple steps removed from paper money and even more removed from precious metals and that's a step away from having a hungry guy in front of you with an axe he made wanting to trade for the chicken in your hand. It's almost all dependent on at least one person thinking another person has something he wants. But we do it on a world wide scale. I get the idea of crypto currency. I get the idea of all of it. I'm just pointing out that real value, something tangible comes in the form of or comes from the soil or sea. Everything else is Tulips in Holland in the 17th century!
 
The inflation rate is manipulated by those who want to control us by it. According to them inflation was low for much of Barry's terms in office, but the price of fuel spiked as did costs for electricity, food, medical, and other things we consider necessary to live. The BLS determines what they want to have in the basket used to calculate inflation. Those items change according to what they want to report. They also choose what years they want to use as a base when they make those calculations.
 
(quoted from post at 00:26:11 12/13/18) The inflation rate is manipulated by those who want to control us by it. According to them inflation was low for much of Barry's terms in office, but the price of fuel spiked as did costs for electricity, food, medical, and other things we consider necessary to live. The BLS determines what they want to have in the basket used to calculate inflation. Those items change according to what they want to report. They also choose what years they want to use as a base when they make those calculations.

Thats a whole 'nuther can of worms. People would go nuts if they really understood some of what is done. Same with the unemployment rate, it's smoke and mirrors depending on who wants what to be claimed.

Little story about inflation. In the 30's, FDR outlawed the private ownership of gold. (Yeah, consider that for a second all you folks that think gold is foolproof!) So everyone had to turn in their gold at whatever the going rate was, except for a few rare coins. Shortly after getting ahold of the nations gold., FDR manipulated the gold price by devaluing US currency by about 60%!!!!! IOW, he manipulated the gold price by more than double and it had a worldwide effect. And gold is supposed to be the ultimate hedge? Horse pucky!
 
The people in the USA are not the same as they were back in FDR's day,these days a law like that would largely be ignored at best for the Gov't or could turn out like France is now
or even worse.Plus they'd have to find it(LOL)If my wife and myself died today good luck on anybody else ever being able to find it either.
 

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