Debunking Anti-Gold Propaganda
derryb
Posts: 36,779 ✭✭✭✭✭
Doug Casey
"The bottom line is that gold and its friends are again cheap, and they have a long way - in both time and price - to run. Until they’re done, I suggest you be right and sit tight."
"The bottom line is that gold and its friends are again cheap, and they have a long way - in both time and price - to run. Until they’re done, I suggest you be right and sit tight."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
0
Comments
opportunities. Best to be aware, balanced and cautious. Cheers, RickO
Let me first disclose that I’ve always been favorably inclined toward gold, simply because I think money is a good thing.
The author makes the assumption that gold is "Money" rather something that money is made out of. Gold itself has always been a commodity, not a currency, which he glosses over when he states:
More importantly, people have gotten into the habit of giving the price of gold in dollars, rather than the value of the dollar in gold. But that’s another subject.
That is the entire subject - A commodity is priced by a currency.
Of course anyone that disagrees with him is a knave, a fool, or uninformed. That type of rhetoric is always used to disparage critics, regardless of how right they are. He even uses it in his title.
Most people have no idea what really happens when a currency collapses, let alone how to prepare…
Buy canned goods. But seriously, our economy flourishes on our productivity (and access to money in the form of bank loans - debt), it is not slowed by the debt our nation (or any nation) carries, unless productivity slows. A quick way to stop productivity is to try and reign in the debt. It would mean less loans, less business, less productivity.
I suspect central banks throughout the world see gold as physical money and their vaults are full of it to protect them from their huge holdings of paper money and it's related paper products.
The advent of fiat currency removed the need for gold money in modern public commerce. This does not mean it is not still money. Central bank gold holdings tell us that they realize something that most of the public does not. Otherwise their vaults would be full of other "commodities."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
years... likely it will continue. There are points on both sides....I will continue to follow the
discussion and stack some gold - and currency.
Just keep buying gold with cost-averaged dollars. You'll acquire wealth.
Our debt-managed economy works well if we are all working. The only way it collapses is if we as a society collapse. How could that happen? Likely by putting too many constraints on the management of the economy. Try to reign in the debt too much and you'll drastically slow the economy. You would create the problem you are trying to prevent.
The average person has no clue as to this linkage. They don't even know it exists or what it means. It might as well be pie in the sky. The US govt-approved debt-money dollars and treasuries didn't fail in 1998, or 2008. It was the debt-money banker otc derivatives that did. That's the issue. Imagine if bankers had their hands on otc derivatives 10X that of the sovereign debt back in the 1850-1939 period. They really could have blown up the system. Otc derivatives were a tiny factor prior to 1989. But, they've grown from $1 TRILL then to over $1,000 TRILL today. Anything else in the world economy "growing" by 1,000X since 1989?
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
FWIW, IMHO gold is no longer a leader, but a follower of economic changes. At times it is a great investment, at other times, not so much. Not bashing it, just saying it is not the underpinning of financial economics anymore.
And hasn't been for some time. I will continue to purchase it as a potential gain of investments, just like any other security.
Gold is a refuge during times of economic turmoil. As the national debt continues to balloon and interest rates increase there will be a day of reckoning when the tax revenues are no longer sufficient to pay both the interest on this debt and all the entitlements promised to the American citizens.
Also:
Global debt has to either be serviced or be defaulted upon. If the service cost cannot be met with sound money then an attempt will be made to meet it with devalued money. The bond market is now the largest in history and the percent of marginal investment grade paper is at all time highs. As defaults rise, downgrades will follow begetting more selling and more price collapse. Equities will tank in concert or be supported by massive money printing. When the panic rush to safety from bad money begins, even a tiny fraction of currency seeking a place in gold will be like trying to push the contents of Hoover Dam through a garden hose (Doug Casey). It was never a matter of if, only a matter of when
Not my words, but, I don't disagree. Debt has to be serviced one way or the other.
Tell that to China, Russia, India, Iran, Turkey and the IMF, which has re-classified gold as a Tier 1 Asset.
I knew it would happen.
Precious metals are a commodity. They have no earnings or dividends. They are not investments.
Commodities not an investment? What world are you living in? Earnings and dividends are only marketing tools to make some investments more attractive than others; they are not a requirement to qualify something as an investment.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Good article, which summarizes the reasons many of us own gold (and, similarly, why we own stuff besides gold)
However, can opinions be "de-bunked" by different opinions?
No one knows the future.
Liberty: Parent of Science & Industry
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
PMs are typically a hedge held for a variety of reasons. Assets can increase or decline in value, and thus they are an investment of your capital by your choice to hold them in your portfolio, regardless to category of asset.
Precious metals are a commodity. They have no earnings or dividends. They are not investments.
PM items can have dividends. ETF's GDX and GDXJ give off dividends. And they certainly are investments. Investing in cash/currencies, real estate, collectibles, rare art, etc. are quite popular methods...and they don't give off any dividends. You'd almost wonder why the very wealthy "bother" with rare art, antiques and collectibles.
In reality, everything you put your money into that isn't going to the cost of basic living is a form of speculation, and not necessarily an investment....as it should be. In many forms of speculations, the price of the items can appreciate so quickly that a lack of dividends can be meaningless. The best US rare coins appreciated 16X from 1975 to 1980. Do you think anyone that took part in that felt slighted because they had no 1-3% in annual dividends?
sort....payback can take many forms. Cheers, RickO