Gold.

"Cash my gold"....lol

Yon cant eat it, but you can manufacture lovely teeth in it...

Speculators, desperate to extricate themselves from falling gold prices, make a mad dash for the edible tubers futures market, and cause a million deaths in Ireland.

What have you done, Mowog?

G

About 20 years ago, I had the dubious role of writing promotional material for a major Scottish fund manager. Brochures for their investment "vehicles" usually compared the performance of their product with the price fluctuations of gold over time. This was an attempt to undermine any notion that gold was the safest investment. In all cases, their investment products outperformed gold, often spectacularly. This may no longer be the case, but I suspect it is.

Al

Inflation affects everything not just gold.

And FIAT currency does not? A real meltdown where a wheelbarrow full of notes can't even buy a loaf of bread in 1930s Germany or 2000s Zimbabwe.

You presumably have some great recipes to cook up those wads of paper money when the meltdown comes?

I have no blushes to amplify, but OK Mr Smartarse join my forum and point out those gaps in my knowledge. You're more than welcome.


I will agree with you one point however, and that's those who either predict or manipulate the business/economic cycle are the one's the profit on both boom and bust.

UKIP? You haven't really read my forum have you? If you had you'd know that UKIP is one the last things I'd ever support.

and lastly


This is complete contradiction. how can it now be falling yet not continuing to doing so?

Gold has more than tripled in value over the last 10 years. Even with inflation, which is a benchmark of the value of paper money, you cannot say that "In real terms, the price is now falling"

In fact this goes beyond the discussion at hand and is basically aimed at a personal vilification. Such a macho posturing says more about it's author than anything else. As I say you are welcome to bring such posturing to Smeggy's to avoid plaguing this forum with it.

I have just been told that all the gold that has ever been mined in the history of the world, amounts to about 150,000 tonnes.
At today's price of around £900 an ounce, that's.... Far too complicated for me to work out. But I suspect that whatever the figure, it will be only a very small fraction of the developed nations defecits, today.

So I guess that's why gold is so popular at the moment. Gold is reasonably finite (very little is mined every year). Cash on the other hand, can be printed in limitless quantities, and that's what is happening now, the world over.
Just think... All that paper money, frantically chasing just 150,000 tonnes of shiny yellow metal. Madness!

That is undoubtedly a - perhaps important - factor driving psychology at present, but in all seriousness this is due to a widespread inability to understand the abstract subtleties of the modern money creation process, even in the financial community, I’m sorry to say.

The way you tend to think of it is like this: somebody gives you £1,000=Wohooo, you’re rich, time to spend, spend, spend.

But this is not how the wildly extravagant sums for central bank money printing frequently bandied about in the media work. Instead they are products of double entry accounting. The correct analogy is that you go to the bank and borrow £1,000. You now have plenty of cash but also a corresponding debt; your net wealth is unchanged and if you are suddenly feeling flush it is because you are a financial dunce, that the bank should never have lent money to in the first place.

In fact all money in the modern world comes into existence as debt, which is the basic if misunderstood fact underlying much of the more hysterical goldbug rhetoric in widespread circulation.

I go to the bank and borrow £1,000. The cash is - to put it in sensationalist terms - created out of thin air by the Bank of England. The double entry is as follows:

Me: + Cash, -debt to HSBC
HSBC: +Outstanding Loan to me, -debt to BoE for cash advance
BoE: +Loan to HSBC, -IOU in the till/increase in bank notes in circulation (a Central Bank liability).

At this stage the plusses and minuses all cancel each other out and no wealth whatsoever has been created. That only occurs if I am able to somehow generate a positive return with the cash from the loan and/or I repay the loan with interest, in which case that is wealth created for the bank and its shareholders.

However, if I default on the loan, the cash I received that was created by double entry is lost in the real world because HSBC’s liability to the BoE is not cancelled. To be clear, the lending bank is putting its capital on the line to guarantee the money created out of thin air, that then correspondingly vanishes from the real world in the event of default.

Unfortunately, pursuant to the most recent financial crisis it emerged that banks en masse had lent vast amounts of money to large numbers of financial morons, exposing themselves as individually and institutionally incompetent in the process. As a consequence banks’ capital has been largely wiped out, even in those jurisdictions where accounting regulations have been altered to keep up appearances,

The policy response so far has been to go into full blown ostrich mode, and flood the system with more debt in the hope that the market will somehow save us through a mechanism as yet to be divined.

However, for those here that believe ‘long term’ stock market investment is the business, it is worth noting that on an inflation adjusted basis the notional FTSE (/UK) All Stocks Index didn’t regain its 1820s peak until 1999 and we all know what happened after that

talking about gold being a commodity & can be accounted for unlike money whiccan be printed.

i read recently the gold bullion exchange has sold certificates gold for 3 times the amount of gold they actually own...

Mowog, very little money is chasing gold, and very little gold is actually on the market. If all the money in the world were chasing gold, the price would be millions per ounce, if not billions.

But by all means buy a Krugerand and keep it under the mattress.

Incidentally, the price of gold peaked in 1980, when it was more than twice the price it is today in real terms. And in today's money, the average price of gold since 1947 is £776.45, and the lowest price, in 2000, was £345.18. That's when Brown was selling it.

Smeggy, you are promoting on this forum a website which is clearly a commercial venture with only a tangential connection to photography. If people accept your invitation to visit the site, you must accept that they may comment on what they find, and some of those comments may not be entirely to your liking.

G

Come, come, Shaky. You can't pick the bubble caused by Latin American mining in the 1820s (which coincided with an outbreak of peace) to suggest that stock market investment is a bad idea generally.

But I agree with much of the rest of your post. It's one thing for Smeggy to have misconceptions about financial matters, but for the heads of banks (and the UK chancellor) to be no better informed is quite shocking.

G

The only gold I have invested in was the liquid version, a part share in cask of 10 year old Springbank single malt whisky. Over the 10 years it was in bond, taking into account the storage costs, it worked out at the same rate of return as if the money had been put in a building society. The divedend was ten bottles of my own unique single cask whisky.

If the world's financial markets had collapsed at least I could have drunk the stuff. Tangible and much more fun.

Excellent website Smeggy!

Good grief.

G

Thank you for that valuable insight.

I said a REAL meltdown, when ALL forms of money are worthless.

It would take years, and since I found your incessant bad language, silly conspiracy theories, and anti-semitism to be rather wearing, I shall have to decline your offer.

I read as much of it as I could take.

There is no contradiction at all. Read it again, and if you still can't understand it, consider a remedial reading class. Hint. The word "IS" is present tense, and the word "WILL" is future tense. They occupy different places in time.

Oh dear. I said the price is NOW falling. I didn't say it HAS BEEN falling ever since the year 2000. According to your own figures, the inflation-adjusted value of gold has fallen over the past year.



G

Look.

1] My forum isn't a commercial venture. Membership is free and any advertising on there doesn't even cover the server costs.

2] I haven't a problem with people challenging any of my personal views or claims of knowledge. Nor any of the views/knowledge of the members of my forum. In fact that's one of the reasons for the forum's existence... debate

but to vaguely say ...

[quote="George Lazarette"]I must say that there are a number of quite serious gaps in your knowledge[/quote].... is nothing more than a personal denigration. And I know why you've done it. It's because I took a contrary stance to one of your posts in a thread here.

Of course if you'd like to convert your obvious personal denigration into points of substance and list this 'number of gaps in my knowledge' and discuss it then you are more than welcome. Otherwise it's just hot gas.


My offer stands.