The presumption that its purchasing power remains constant is what I would contend is potentially incorrect. Gold today is 20% higher than last year. What is 20% more expensive today than last year?
Gold is essentially the same as it was in 2011. Has there been 0% inflation?
Frankly, why should gold's purchasing power remain constant? Would not innovation in mining make it cheaper to obtain? Does not an increasing supply make it easier to obtain?
A constant purchasing power of gold REQUIRES that economic growth globally be exactly the same as the growth in the gold supply. That seems both illogical and ridiculously restrictive. It would suggest that the industrial revolution was not a revolution at all, unless accompanied by a gold mining revolution of equal magnitude,
So I take it you do not believe gold is a good store of value. I believe gold charts prove you're wrong. While gold does protect against price inflation, it is excellent protection from true inflation (increases in the money supply), which leads to price inflation. A look at increases of the money supply (inflation) will show that the price of gold keeps step with such inflation.
The purchasing power of any hard asset does not remain constant. It fluctuates with its own supply and demand dynamics as well as the supply and demand dynamics of what it is priced in. What makes it a good store of value is it's ability to compensate for the loss of purchasing power of it's alternative(s). Dollars are a store of value, but over time are they a good store of value? Inflation says "no." So what is relevant to this whole discussion is a defined period of time, not one moment in time when the price of gold briefly matches what it was nine years ago.
I also realize that you like to have the last word in any of your discussions on the forum so rather than spending wasted hours debating with you I'll let you have final word.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
@2ndCharter said: $26.5 billion would be much better than the trillions.
Yeah, you're right - perhaps I should have just skipped ahead to quadrillion. At the rate they're spending, it won't take that long to get there.
Quadrillions? Did you notice that the Reparations crowd recommended $6 QUADRILLION in reparations for all the sins of the past few hundred years. I wonder if they know that the entire world's physical wealth (including unearthed mineral and resources wealth) is probably only $4 QUAD. And you thought $4 TRILL in recent spending was a lot.
@abcde12345 said:
If gold had never existed from the beginning of time your life today would not change one iota.
If not for a gold standard in the US that backed the dollar until 1971, the US would have probably become economically ruined much, much earlier than it eventually will. Gold kept the gov. spenders and bookkeepers temporarily honest.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
@abcde12345 said:
If gold had never existed from the beginning of time your life today would not change one iota.
Not by a long shot.
Each of the great empires of the past 600 years did it on the backs of great mineral and natural resource wealth....with sea/air power thrown in. Most recently the Brits in the 1700's to 1800's and then the US from around 1870 through 1970. That gold backing drew many immigrants to the US in the 1870-1920's while European currencies and economies were struggling. A stable and gold backed currency brings in and produces wealth....people were drawn to it. We would never have been able to draw in all those people on only paper-backed fiat and promises. While this may not work quite the same way for the world going forward, as no gold backed currencies have existed since 1971, it still works in other ways. The USA still carries the most gold in their currency reserves (8100 tonnes). Today's value around $510 BILL....more than the next 3 countries combined. Without the will to hold gold, the US would not became the super power they did....at least not in the same way or time frame. Asset backed currencies have much more strength and economic power to wield than those w/o it. Maybe down the road wealth will be judged by bytes/computing power and AI capabilities. For now, gold is still a key player.
The next super power of the world looks to be China. And they've been accumulating gold since 2003...and seriously ramping it up since 2013. And there's a good reason for that. Unlike the USA the Chinese citizens buy lots of gold. It is suggested that China has far more gold in their official reserves than what they state. And that as a total nation, China is holding around 20,000 tonnes of gold, or $1.25 TRILL in gold. That's a nest egg to bring industry and wealth into their country. It's basically following the same concepts of the past 500 yrs. As much as the naysayers have been saying gold is dead....clearly it's not. The Chinese and Indian cultures still have a lively gold bartering trade going on....basically money.
The UK sold off half their gold back in 1999 to bail out failing Gold Swaps of one unhealthy European Bank. They were chosen because they were no longer a true world power. Someone had to bail out the gold bank. Gold does matter. And manipulating it's price at the wrong time has consequences, even for the TBTF banks and huge brokerages. Recall Bear Stearns getting taken down on the wrong side on the markets (silver included) back in early 2008.
@abcde12345 said:
If gold had never existed from the beginning of time your life today would not change one iota.
I was born in Northern CA. If gold didn't exist, who knows whether CA would even be a state of the US. Furthermore, if gold didn't exist, it would mean the laws of chemistry and physics would be different, at which point all bets are off regarding the forms of life on earth.
If gold didn't exist and seashells were "rare" (we all know gold along with seashells are not rare) societies would worship ownership of these shells instead.
Gold not existing from the beginning of time simply means we would be on another- probably better- trajectory with our lives.
Gold is more evil than it is good and is certainly not a necessity for wholesome and happy lives.
>
_The presumption that its purchasing power remains constant is what I would contend is potentially incorrect. Gold today is 20% higher than last year. What is 20% more expensive today than last year?
Gold is essentially the same as it was in 2011. Has there been 0% inflation?
Frankly, why should gold's purchasing power remain constant? Would not innovation in mining make it cheaper to obtain? Does not an increasing supply make it easier to obtain?
A constant purchasing power of gold REQUIRES that economic growth globally be exactly the same as the growth in the gold supply. That seems both illogical and ridiculously restrictive. It would suggest that the industrial revolution was not a revolution at all, unless accompanied by a gold mining revolution of equal magnitude,_
>
==================
Lots of things are 20% (or more) more expensive than last year. Just look around a little bit. Prices fluctuate wildly due to supply/demand/manipulation. Check out commodities and currencies for starters. Lumber for one. Rice was way above 20% above last year's price until a very recent crash. Gold reacts to other important factors besides the bogus CPI...another red herring.
Innovation in mining? Not a whole lot. They dig deeper holes but at the same time it costs a lot more to do identical tasks at 1000-5000 ft deep than near the surface. Mining is still pretty archaic. And the 2011-2015 drop in gold prices effectively crushed the gold industry with layoffs, mine shutterings, bankruptcies and buyouts, not to mention govt confiscation of mines on permit debates. What a mess. Gold's supply growth has been pretty steady at 1.5 to 2% per year for 20 yrs or more. Price has a lot to do with mines being built and expanded. And mine growth tends to peak 4-6 yrs after the last price peak. Not too efficient. An increasing supply may or may not make gold easier to obtain for Joe Public. Most of the mined supply each year is spoken for in contracts or commitments. And the vast majority of the world's gold 85% is held by regular people, not banks or govt's. So you have to pry it loose from the people via price changes since the national gold reserves haven't been routinely sold off since the European gold sales of the previous decade.
@abcde12345 said:
If gold didn't exist and seashells were "rare" (we all know gold along with seashells are not rare) societies would worship ownership of these shells instead.
Gold not existing from the beginning of time simply means we would be on another- probably better- trajectory with our lives.
Gold is more evil than it is good and is certainly not a necessity for wholesome and happy lives.
I sort of see the point you're trying to hammer home, but can't really get on board with it. Many people (such as myself) can see the value of gold without "worshiping" it. You undercut your own argument that gold is evil and we'd be better off without it by saying we'd find something else to worship in its place. Sounds like the problem is with us, not gold, in that case.
One day when the belt is mined (one asteroid (article / photo on google news) 400 mi diameter (what’s left of proto planetary core) has gold, PM x many multiples world economy) gold will plummet to what $35, $5? It’s even visible on the surface heck just shovel it in your space craft.....We have 50 mill Folks out of work in USA. No end in sight.... take y gold profits now. Unless rich investors are going to fall over themselves not exactly bullish. When that space mining co starts buy their stock!
But until then I think gold a good thing to have in any numismatic investment portfolio. Take profits as necessary. I recommend PCGS coins. Love their tools - CF and inventory app super.
Friend in (show contact) blew out about 15 nice slabbed US coins last 30 days - walkers, dollars, Commems. Fed up they not going up. Nice coins too held them about 5 years - he got at end of day about CDN bid plus 5 pct, essentially broke even cost wise. Then after 15 pct eBay costs loss.
Watching bitcoin hit $50,000, SoftBank’s stock price surpass its dot-com boom high and even silver catch a bid from retail traders must be particularly difficult for holders of gold. Many had expected that the original speculative asset would prosper under the unusual market conditions of the past year.
Bank of America commodity analysts announced an 18-month gold price target of $3,000 in April, before paring it back later in 2020. That forecast was made on the reasonable-seeming assumption that the bulging balance sheets of major central banks and huge fiscal rescue packages would be a boost to the asset most traditionally favored by investors worried about government profligacy.
But it simply hasn’t worked out that way. The metal’s recent performance should be confirmation, if any were really needed, that buyers of gold are really just buying inflation-protected government bonds under a different name. Since 2005, the yield on 10-year TIPS—inflation indexed U.S. government bonds—has had an R-squared relationship of 0.81 with the daily price of gold, meaning the moves in one explain the majority of moves in the other.
A plethora of other explanations for gold prices, like physical demand, flows from central banks and the rising popularity of exchange-traded funds may have some meaning, but those have been minnows in terms of their impact on the direction of prices. If real interest rates aren’t falling, it is hard for gold to sustain any meaningful gains. If they aren’t rising, it is hard for gold to fall much. Beyond that, there isn’t much going on except to the most committed and involved analysts.
So what happens to the price now mostly depends on your view of the Federal Reserve’s actions and the capacity of the U.S. economy: 10-year market inflation expectations are at their highest levels since mid-2014, but bond yields have risen to match.
Investors who have a strong view on whether inflation is coming and if so whether the Fed would react quickly against it might make a bet on gold. Otherwise it is hard to see the appeal.
Seated Half Society member #38 "Got a flaming heart, can't get my fill"
Comments
So I take it you do not believe gold is a good store of value. I believe gold charts prove you're wrong. While gold does protect against price inflation, it is excellent protection from true inflation (increases in the money supply), which leads to price inflation. A look at increases of the money supply (inflation) will show that the price of gold keeps step with such inflation.
The purchasing power of any hard asset does not remain constant. It fluctuates with its own supply and demand dynamics as well as the supply and demand dynamics of what it is priced in. What makes it a good store of value is it's ability to compensate for the loss of purchasing power of it's alternative(s). Dollars are a store of value, but over time are they a good store of value? Inflation says "no." So what is relevant to this whole discussion is a defined period of time, not one moment in time when the price of gold briefly matches what it was nine years ago.
I also realize that you like to have the last word in any of your discussions on the forum so rather than spending wasted hours debating with you I'll let you have final word.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
Quadrillions? Did you notice that the Reparations crowd recommended $6 QUADRILLION in reparations for all the sins of the past few hundred years. I wonder if they know that the entire world's physical wealth (including unearthed mineral and resources wealth) is probably only $4 QUAD. And you thought $4 TRILL in recent spending was a lot.
If not for a gold standard in the US that backed the dollar until 1971, the US would have probably become economically ruined much, much earlier than it eventually will. Gold kept the gov. spenders and bookkeepers temporarily honest.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
Not by a long shot.
Each of the great empires of the past 600 years did it on the backs of great mineral and natural resource wealth....with sea/air power thrown in. Most recently the Brits in the 1700's to 1800's and then the US from around 1870 through 1970. That gold backing drew many immigrants to the US in the 1870-1920's while European currencies and economies were struggling. A stable and gold backed currency brings in and produces wealth....people were drawn to it. We would never have been able to draw in all those people on only paper-backed fiat and promises. While this may not work quite the same way for the world going forward, as no gold backed currencies have existed since 1971, it still works in other ways. The USA still carries the most gold in their currency reserves (8100 tonnes). Today's value around $510 BILL....more than the next 3 countries combined. Without the will to hold gold, the US would not became the super power they did....at least not in the same way or time frame. Asset backed currencies have much more strength and economic power to wield than those w/o it. Maybe down the road wealth will be judged by bytes/computing power and AI capabilities. For now, gold is still a key player.
The next super power of the world looks to be China. And they've been accumulating gold since 2003...and seriously ramping it up since 2013. And there's a good reason for that. Unlike the USA the Chinese citizens buy lots of gold. It is suggested that China has far more gold in their official reserves than what they state. And that as a total nation, China is holding around 20,000 tonnes of gold, or $1.25 TRILL in gold. That's a nest egg to bring industry and wealth into their country. It's basically following the same concepts of the past 500 yrs. As much as the naysayers have been saying gold is dead....clearly it's not. The Chinese and Indian cultures still have a lively gold bartering trade going on....basically money.
The UK sold off half their gold back in 1999 to bail out failing Gold Swaps of one unhealthy European Bank. They were chosen because they were no longer a true world power. Someone had to bail out the gold bank. Gold does matter. And manipulating it's price at the wrong time has consequences, even for the TBTF banks and huge brokerages. Recall Bear Stearns getting taken down on the wrong side on the markets (silver included) back in early 2008.
I was born in Northern CA. If gold didn't exist, who knows whether CA would even be a state of the US. Furthermore, if gold didn't exist, it would mean the laws of chemistry and physics would be different, at which point all bets are off regarding the forms of life on earth.
Anybody who owns long term bonds be it Municipals corporates
or Us treasury bonds have made a
FORTUNE
Bond prices this high has impacted the stock market in a most positive way.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
If gold didn't exist and seashells were "rare" (we all know gold along with seashells are not rare) societies would worship ownership of these shells instead.
Gold not existing from the beginning of time simply means we would be on another- probably better- trajectory with our lives.
Gold is more evil than it is good and is certainly not a necessity for wholesome and happy lives.
>
_The presumption that its purchasing power remains constant is what I would contend is potentially incorrect. Gold today is 20% higher than last year. What is 20% more expensive today than last year?
Gold is essentially the same as it was in 2011. Has there been 0% inflation?
Frankly, why should gold's purchasing power remain constant? Would not innovation in mining make it cheaper to obtain? Does not an increasing supply make it easier to obtain?
A constant purchasing power of gold REQUIRES that economic growth globally be exactly the same as the growth in the gold supply. That seems both illogical and ridiculously restrictive. It would suggest that the industrial revolution was not a revolution at all, unless accompanied by a gold mining revolution of equal magnitude,_
>
==================
Lots of things are 20% (or more) more expensive than last year. Just look around a little bit. Prices fluctuate wildly due to supply/demand/manipulation. Check out commodities and currencies for starters. Lumber for one. Rice was way above 20% above last year's price until a very recent crash. Gold reacts to other important factors besides the bogus CPI...another red herring.
Innovation in mining? Not a whole lot. They dig deeper holes but at the same time it costs a lot more to do identical tasks at 1000-5000 ft deep than near the surface. Mining is still pretty archaic. And the 2011-2015 drop in gold prices effectively crushed the gold industry with layoffs, mine shutterings, bankruptcies and buyouts, not to mention govt confiscation of mines on permit debates. What a mess. Gold's supply growth has been pretty steady at 1.5 to 2% per year for 20 yrs or more. Price has a lot to do with mines being built and expanded. And mine growth tends to peak 4-6 yrs after the last price peak. Not too efficient. An increasing supply may or may not make gold easier to obtain for Joe Public. Most of the mined supply each year is spoken for in contracts or commitments. And the vast majority of the world's gold 85% is held by regular people, not banks or govt's. So you have to pry it loose from the people via price changes since the national gold reserves haven't been routinely sold off since the European gold sales of the previous decade.
Too many GCE's here to address all at once.
I sort of see the point you're trying to hammer home, but can't really get on board with it. Many people (such as myself) can see the value of gold without "worshiping" it. You undercut your own argument that gold is evil and we'd be better off without it by saying we'd find something else to worship in its place. Sounds like the problem is with us, not gold, in that case.
One day when the belt is mined (one asteroid (article / photo on google news) 400 mi diameter (what’s left of proto planetary core) has gold, PM x many multiples world economy) gold will plummet to what $35, $5? It’s even visible on the surface heck just shovel it in your space craft.....We have 50 mill Folks out of work in USA. No end in sight.... take y gold profits now. Unless rich investors are going to fall over themselves not exactly bullish. When that space mining co starts buy their stock!
But until then I think gold a good thing to have in any numismatic investment portfolio. Take profits as necessary. I recommend PCGS coins. Love their tools - CF and inventory app super.
Friend in (show contact) blew out about 15 nice slabbed US coins last 30 days - walkers, dollars, Commems. Fed up they not going up. Nice coins too held them about 5 years - he got at end of day about CDN bid plus 5 pct, essentially broke even cost wise. Then after 15 pct eBay costs loss.
FYI
https://www.kitco.com/news/2021-02-18/Warren-Buffett-exits-GOLD-entirely.html
WSJ - Everything's Glittering Except Gold
Watching bitcoin hit $50,000, SoftBank’s stock price surpass its dot-com boom high and even silver catch a bid from retail traders must be particularly difficult for holders of gold. Many had expected that the original speculative asset would prosper under the unusual market conditions of the past year.
Bank of America commodity analysts announced an 18-month gold price target of $3,000 in April, before paring it back later in 2020. That forecast was made on the reasonable-seeming assumption that the bulging balance sheets of major central banks and huge fiscal rescue packages would be a boost to the asset most traditionally favored by investors worried about government profligacy.
But it simply hasn’t worked out that way. The metal’s recent performance should be confirmation, if any were really needed, that buyers of gold are really just buying inflation-protected government bonds under a different name. Since 2005, the yield on 10-year TIPS—inflation indexed U.S. government bonds—has had an R-squared relationship of 0.81 with the daily price of gold, meaning the moves in one explain the majority of moves in the other.
A plethora of other explanations for gold prices, like physical demand, flows from central banks and the rising popularity of exchange-traded funds may have some meaning, but those have been minnows in terms of their impact on the direction of prices. If real interest rates aren’t falling, it is hard for gold to sustain any meaningful gains. If they aren’t rising, it is hard for gold to fall much. Beyond that, there isn’t much going on except to the most committed and involved analysts.
So what happens to the price now mostly depends on your view of the Federal Reserve’s actions and the capacity of the U.S. economy: 10-year market inflation expectations are at their highest levels since mid-2014, but bond yields have risen to match.
Investors who have a strong view on whether inflation is coming and if so whether the Fed would react quickly against it might make a bet on gold. Otherwise it is hard to see the appeal.
"Got a flaming heart, can't get my fill"
I personally don't think anyone at this point in time can figure anything.