Gold Market-Coin Market-Great Depression
mrearlygold
Posts: 17,858 ✭✭✭
Anyone have actual evidence to show what gold prices did during the great depression? How the coin busines did? I thought I saw once upon a time that Stacks did a study on coin prices in general during the great depression and that the rare stuff did well although I don't remember where I saw it or even if my memory is correct. Anyone else know?
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
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Comments
I thought Gold held steady as it was artificially pegged.
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<< <i>They took all the Gold Coins, so I don't think we can get that data!
[/L] >>
The US government stole the gold from Americans. What about the world?
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
think of mining techniques that changed after 1850 for example.
what used to take back breaking labor turned into strip mining
turned into.. etc...
another way to think about it is the value of a computer.
in 1950 you had to be a govt or the largest of corporations.
in 1970 you had to be wealthly.
1980 you had to be well off.
1990 savy enough to want one and have a few spare thousands.
2000 mass market has been reached.
well the same thing goes for gold in my mind. what was once scarce
and difficult to reach is now brought out of the ground enmasse.
what was once hard currency/money is now a commodity.. just like
a PC.
gold will always have a value based on how much work it takes to
bring new metal out of the ground and allow those people to make
a reasonable profit.
anything after that is pure speculation driving the price. it aint
money anymore. (would be neat if it was. US dollars backed by gold
or silver, but it isn't anymore).
eventually when gold loses its glitter speculation wise, the old equilibrium
of it being a commidity will come back and supply/demand factors
will take over for the companies who use it. jewelry, industry, etc...
think of gravel for roads. since it is not speculated on.. it is a commodity with a stable price depending on factors that revolve
in the industry who provides it. gold will end up that way.
that appears to be the upcoming nature of our society.
thoughts off.
gold will always have a value based on how much work it takes to
bring new metal out of the ground and allow those people to make
a reasonable profit.
anything after that is pure speculation driving the price. it ain't
money anymore. (would be neat if it was. US dollars backed by gold
or silver, but it isn't anymore).
eventually when gold loses its glitter speculation wise, the old equilibrium of it being a commidity will come back and supply/demand factors will take over for the companies who use it. jewelry, industry, etc...
think of gravel for roads. since it is not speculated on.. it is a commodity with a stable price depending on factors that revolve
in the industry who provides it. gold will end up that way.
that appears to be the upcoming nature of our society.
thoughts off.
I come to a totally different conclusion with the same data. The computer analogy is the exact opposite of what is occuring to gold. Whereas the computer is being made common by huge production, and constant leaps in technology, hence it's price is falling. As gold's annual production is dwarfed by fiat increases it's value can only rise. Very few people can afford an ounce of gold anymore because it's value has risen. Silver seems to become the people's choice.
Comparing 1850's gold mining technology to today's is not that much different. It's still slow and back breaking work. However comparing 1850's pencil-based banking with today's cyberspace-derivatives technology is like Star Trek. Gold mining has largely been unchanged over the past few decades with little to no money being pumped into a decaying infrastructure. Why would you (as a mine owner) bother investing further in gold mines in the 1990's when the gold-carry trade made you a risk free 5-8% on your money? Those guys shorted forward production for years and spent little on mining. The bankers loved it and the CB's were only so happy to lend out the gold at 1% interest rates. This kept gold down in price and bouyed paper financial assets. Everybody won....well everyone except those investing real gold mines. They lost big time. Meanwhile the banking industry went ballistic in the 1990's to the point that real risk couldn't even be measured anymore, and still can't be even today.
Gold is becoming scarcer per capita as the price goes up and the world's economies mature. In the 1970's gold was held much more widely by the US public than it is today. Many of my friends as kids had gold coins in their possession that they had received from their parents/grand parents. Much of that gold was leftover from the 1920's and 1930's and passed down. At $35/oz it was much more buyable by the public. Not so today at $900/oz. The average guy on the street doesn't own any, and doesn't care too when $900 can get him a new flat screen TV. And if any was handed down to them over the past decades, it's already be pawned or sold off since the 1980-1982 peaks. Gold bullion (ie not common jewelry), like the best art, the best rare coins, the best of any hard assets, is ending up with the rich, those capable of affording it, or those capable of understanding it (ie Asians). I have no doubts that the very richest of people are socking away gold. You can include the Bushes, Gates', Buffets', Greenspans', Cheneys', Clintons', Kennedys' etc. And that's something you'll never see posted in the media.
What's coming out of the ground is pitiful actually and dropping over the past decade, a seeming contraction to supply-demand bugs who can't seem to understand why. Gold is currently being mined at 1.5-2.5% per year, a number falling short of actual physical demand for several years running. Gold's modest annual production increase is probably a reasonable rate to balance increases in population and true (ie real) economic growth, not contrived, derivatives-based economic "growth." Contrarily, monetary expansion has been running 10-20% per year for the past 12 years, with credit expansion positively dwarfing gold's meager gains. Gravel isn't gold, not by any means. 5,000 years of demand shows gold's role as money. If gold were not money then why don't the Central Banks continue to wind down their core gold holdings to stabilize their currencies as they did in prior years? What's the allure in them keeping gold if it's only gravel? The answer to that question will be quite obvious over the next 5 years. What's also obvious from the events of 2008 is that credit and debt are not money. As the FED and Co. start to reliquify the economy (they pumped in $1 TRILL last week w/o approval), people will realize that fiat is not money either.
I would concede that the American public doesn't see gold as money yet, but that's a view in sharp contrast to the rest of the world and its Central Banks.
FDR fixed the price of gold to $35/oz in 1933. That was the official price. The only way for the public to trade or play in gold was to buy gold stocks. Those did fairly well at the time. Homestake Mining (today called Newmont) went up 6X in price. Apparently gold held it's own quite nicely.
roadrunner
I look at it this way:
1.) The production of fiat currency and credits dwarfs any efficencys ever gained in gold extraction.
2.) The ability of central banks to create (by a keystroke) money at a 10 to 1 ratio will never by matched for Gold Producers who must create physical money by physical extraction. Once the gold is sold to a central bank, the bank multiplys it 9 times.
In honor of the memory of Cpl. Michael E. Thompson
relic called gold. (other people's words used before, not mine).
in the future it could be compared to gravel, lime, and salt.
very few or ?no? people speculate in that very often.
but after reading your post i will have to rethink my thoughts.
thanks.
very few or ?no? people speculate in that very often.
I speculate whether or not it's time to add a load of gravel to my driveway before the winter, but I've not bought a pile of it on speculation for resale in the future.
Gold speculation, OTOH seems to be based upon whether or not the government can guarantee its own money. If gold were "just another commodity" then I would expect a gold market that responds to supply vs. demand like gravel does. But that's apparently not happening.
If gold were "just another commodity" our government accounting for gold would be open and transparent for all to see. Nobody's even seen the government's gold accounting summary lately, have they? There's really no reason not to make it public. The accounting for gold is even easier than the accounting for gravel or salt, and I know that gravel or salt is quantified by the companies that use them.
If the government thought of gold as "just another commodity", they wouldn't be so sensitive about releasing the data. If the gold in Ft. Knox and West Point is such a small fraction of the total value of the credit markets and such an insignificant asset, then why isn't it being treated as just another commodity?
The fact is that governments around the world and most people around the world would very much like to own gold. Gold is fungible money everywhere in the world. It's value is self-evident, unlike paper money that can change into "something else" overnight.
I knew it would happen.
They took all the Gold Coins, so I don't think we can get that data!
They didn't take *all* the gold coins. Individuals were permitted to own up to $100 face value, and eventually all U.S. gold coins dated 1932 and earlier were considered to have numismatic value and were legal to collect in any amount. They did sell at a premium to their gold value, but not a huge one.
My Adolph A. Weinman signature
What do they say about something that looks, walks, and sounds like a duck?
roadrunner
sorry i don't have any facts, just an anecdotal that gold was 'valuable' then as well.
of gold was raised 10 dollars and then the price was frozen
world wide by international agreement to about 35 dollars
an ounce.
Camelot
Camelot