Traktion

if more customers are coming to them as buyers than sellers then they raise their prices.

 

if more customers are coming to them as sellers than buyers then they lower their prices.

 

if more customers are doing business with their competitors then they narrow their spread (or go bust or somehow offer a higher value service).

 

pretty simply stuff really.

 

the eggs futures market was closed down in the '40s. I haven't had any trouble aquiring eggs lately.

I believe BullionVault have its own internal bidding system too (although I have only used GoldMoney so far).

You encourage people to be short term traders. I think most people will not be successful at this and fail and lose their shirts. Or do you want them to follow your own lead (a certain image comes to mind...)?

I do think this is a good point. I don't have the time or the skill to be a good short term trader and I think many others don't too. I am more interested in the long term POV, likely over years rather than months and certainly over weeks.

Maybe it would help all involved if calls on what was to happen was framed with a time scale? This would help everyone understand whether it is a short term position or a long.

Interesting discussion this,... and for its ramifications on why we should buy a bit of gold.

 

We seem to have completely different visions of the political sphere. I'm "pro" government because I think government provides order where otherwise we would have chaos. Many on the right today are "anti" government in that they see it as an illegitimate, or exploitive, power where otherwise we would have freedom and independence. The first vision contrasts civilization to barbarism while the second contrasts society to nature.

 

Ask yourself how order could emerge from chaos without government. How could free markets [beyond barter] exist without some form of government, law and order? And isn't government the only thing stopping us now from lapsing into chaos? Or is everyone so perfectly rational that we don't need government [the myth of the economists].

 

Won't, and shouldn't, governments do everything to stop an economic collapse? I think they should and will and what is most likely, should the global economy deteriorate, is that governments will resort to institutionalizing gold as an international currency. This would go towards resolving many of the problems facing the international monetary and trading system today.

 

As soon as you go beyond thinking abstractly about an isolated economy, and consider real world circumstances at the international level, the institutionalization of gold makes a lot of sense. It would be very interesting to hear what James Turk, being a banker, has to say about a coming standard. Though he is a hyper-inflationist, he seems a lot more sensible than Sinclair.

Yes, crystal ball gazing can be a lot of fun, especially if the solutions could actually be a lot better than what we have used up until now. However, using PMs in a more direct way is probably coming full circle in what we consider money to be.

My view on the government and its role has changed hugely in recent years. I put this mostly down to personal reading and research, made easy by the Internet. At the very least, I get the feeling that not everything is done in the interest of the majority and the focus on "the economy" as a actor in this world seems strange, imo (isn't the economy just a model of individual behaviour?).

I am not an anarchist in my viewpoint. I can understand the argument for total free market, anarcho-capitalism, but I remain to be convinced that mafia thugs wouldn't replace the role of government thugs. Therefore, I sway to the need of some government. However, imposing majority rule and leaving many a life changing decision up to a few "experts" strikes me as both unfair and unreliable. Therefore, I sway towards the need for a government as small as possible, with people free to make as many decisions as possible. Going a bit OT, but I want to explain my viewpoint, to help explain my thoughts.

With the above in mind, any denationalised currency would be subject to the national law, where applicable. Laws regarding contract would be the most obvious. However, they would not be controlled and/or manipulated by a government, which IMO, has caused many of the major imbalances and "beggar thy neighbour" policy. While moving to an independent central banking model, money is less politicised, but clearly there are problems:

1. Governments can manipulate CPI or whatever the measurement the CB is using to adjust interest rates.

2. Commercial banks care not how much the currency is debased (profit is what they care about).

I agree that framing gold in a international trade view makes a lot of sense, but then I would argue it makes equally good sense at the national level. Without currency borders or boundaries, world trade becomes easy with denationalised currencies, but why stop there? I would say there are benefits for everyone if our currency is not being blown about at the whims of profit seeking bankers and imperfect governments.

TBH though, I think people may speak with their feet, as the free market expects. Unless the government takes steps to prevent the movement towards embryonic, but growing denationalised currencies (like GoldMoney - real full reserve banking), I think it may happen all on its own. Of course, failing currencies would likely speed the process up!

I would be interested in hearing more about this sort of thing from James Turk too. I had an email exchange with someone at GoldMoney asking about payment gateways (al la PayPal etc) and he confirmed such ideas had/were being considered. I suppose they need a critical mass of users, but a gram of gold is a gram of gold (same for silver, platinum etc), no matter who is storing it, which would bode well for future competition entering the market place.

Yes, you are misunderstanding me. Notice I "interrogated" free-markets, which was denoting something quite different... with the absence of law and government.... a kind of anarchic state of nature that some find ideal. It is in this sort of environment where barter would be the rule.... and anything might serve as money. No doubt silver and gold would quickly establish themselves also.

 

Yet I do not think civilization will collapse and that we will we go back to bartering. Or that this would be desirable. It seems to me there is a mythology of sorts towards the "free market" today where it is thought to somehow solve all our problems [i'd suggest that real free markets, beyond barter, are only made possible by certain political and social developments.... laws, rights etc..., and do not exist in a "state of nature". There we would have barter.... or plunder].

 

I think money will remain institutional with a good chance a gold exchange standard will be re-institutionalized in order to resolve some of the difficulties we face. This was discussed a bit in last month's gold thread:

 

http://www.greenenergyinvestors.com/index....st&p=146953

At first there would likely be barter, but then something(s) common would emerge as money (the most liquid item(s)). Order would make its own way out of chaos, without (despite?) government decree. IMO, the Internet and mobile technology could be the game changer, along with traditional stores of wealth (gold and silver would be a good bet, IMO).

If the "free market" were to reign you would have effectively denationalized currencies which would essentially involve bartering for goods with gold or silver or whatever. A near Cormack McCarthy view of the future.

 

On the other hand, we have the continual reign of governments with the institution of an international currency, that is, a gold exchange standard.

 

Which do you think more likely? I'd suggest the first is more attractive to those who view the world along the lines of freedom versus power. Those that view the world along the lines of order versus chaos find the second more attractive. However corrupt we think government is, it is their job to maintain law order... and accordingly it will involve a new international currency/ system.

Having denationalised currencies, doesn't mean barter and chaos - it just means the monies are not controlled by governments, but instead private entities. The private entities would have all the powers of a nationalised currency's central bank, except in an equivalent system, the central bank would do doing the lending too (i.e. there wouldn't be the two tier system). The take home point is that the private entities issuing the currency would have a VI in keeping the supply limited; debasing it would lose customers willing to use it. Currently, the commercial banks don't give a fig about the quantity in the search for profit, leaving the central bank in a pickle - bailouts or collapse being the CB's choice.

For world trade, the idea of choosing a popular currency, which is known world wide (pan-national) could be a compelling one. Maybe competition would whittle the options down to a handful of options (like with national currencies), but the currencies would not be effected by political whims, regional inflation/deflation challenges etc either. A strong currency, with a good, stable reputation would see people holding and trading with it. If we consider that the international reserve currency was based around gold for this very reason and the USA has proved untrustworthy in being "as good as gold", the arguments are obvious:

1. You need something of international value (PMs, commodities?).

2. You can't trust a national currency to remain true to any backing (gold or otherwise).

3. Without backing, a national currency's worth can be manipulated for national gain.

With the dawn of the Internet and the digital wallet coming of age, we start to have new choices, beyond which were available at the time of the Bretton Woods. We don't need to carry gold about, nor do we need to carry bits of paper about - we can just access a digital representation of "money", both at the local and international level. With the dawn of these technologies we have:

1. A way to pass payment from one end of the world to another in milliseconds (no need to ferry gold or paper).

2. A facility to do this on both Internet enabled computers and now modern mobile phones (which, IMO, could become digital wallets).

3. Because of the Internet, we (or rather our "banks") can now trade between monies extremely easily, using the very liquid currency markets.

4. GoldMoney seems to be realising this potential (not so familiar with BullionVault), by allowing cheap transactions between holders, rather than just selling/buying PMs. Their voyage into iPhone apps illustrates their view on this. How long before they have an online payment gateway (a bit like PayPal), I wonder?

With the above in mind, if the governments continue to play games with their currencies, people may choose the above, without government encouragement (in fact, I would expect the opposite of governments). Which brings me back to my original point - why do we need state money numbers on PMs? Why wait for a new national reserve currency? PMs have their own worth, as could denationalised private currencies.

If major currencies start to show signs of collapse, people may gravitate to such free market solutions. Once their, the governments would have to make strong arguments to return to their "this one will be better than the last" fiat currencies. At which point, we may be covering new ground... I at least hope we end up with something better and less politicised than the current system.

Is it good or bad that my thoughts were quoted there?

To point out, denationalised currencies needn't be just PMs, but could be backed by promises, commodities or anything else. If there was demand for such things, I'm sure a free market in money would provide a product.

It's interesting to ponder how things will develop in the long term though.

Why have a national reserve currency at all? Why not have denationalised currencies? Indeed, why not just trade in gold/silver weight - it doesn't need a number attached to it (pound, dollar etc) to measure its worth.

The argument for dealing with notes, rather than coins can now be side lined. With mobile phone technology edging ever closer to giving us all a digital wallet (even if most don't realise it yet), why do we need notes or coins at all? All we need to know is that whatever "thing" is backing that digital representation is really there. GoldMoney already have an iPhone applet and I noticed an RBS advert for their new iPhone applet too. How long will it be before people start cutting out the ATMs and EPOS and just swap money via their Internet connected phones?

There is no reason for governments to be involved in money and I can imagine a world far less manipulated without them involved. A gram of gold cannot be manipulated and has international value. The same can be said for many other PMs too. All the governments need be involved in is the regulation of the companies holding the PMs, if they are needed at all (private audits are likely enough).

I can envisage a future where we can simple swap our e-gold/silver as money. Vaults could be distributed around the world, with PMs delivered on demand. Open, clear and simple. People could even choose to let the "bank" lend out some of their money to others. Fractional reserve lending could work fine too, as long as people are aware of the risk of losing their money (no lending is risk free).

Hayek discusses such options here: http://www.iea.org.uk/record.jsp?type=book&ID=431. He takes the idea further of having competing currencies of all sorts of types, all operating outside of government control. Whether "hard" currencies would push out the others would only be known from trying it out, but I think a multi-polar, denationalised money world could work very well.

Thanks for letting us know.

 

I already have a lot of silver at GM so probably won't buy at BV. Nice to see that their commission will be only 0.8% to buy or sell silver, the same as gold.

0.8% on silver too? That's very good compared to GM - I think that's worth opening a BV account for, in fact! I was having a chat with my father about which is best and this may swing it for BV.

BTW, is their a thread comparing the two anywhere? I have a GM account and I'm very pleased with it, but would be good to know about other experiences.

Taken recently from a Reuters article:

 

Goldman Sachs said it sees prices at an average $1,265 an

ounce in 2010, rising to $1,425 an ounce in 2011. It said low

U.S. interest rates will support gold.

 

This seems quite a moderate forecast predicting it will only go up some $50-60 from here for all of next year. GS trying to signal to investors that the high is in, ulterior motives?

Didn't they say it was going to stay at $950 throughout 2010 in a document posted here just a few weeks ago too?

For anyone that is interested the piece on Gold was on the One Show last night between 04.18 - 07.14 mins

 

http://www.bbc.co.uk/iplayer/episode/b00p3...how_25_11_2009/

 

Adrian Ash from BullionVault interviewed

 

Lou

The start of phase 3?

I'm not sure if this has been posted here, but I have just seen it on HPC: http://www.realclearmarkets.com/video/2009.../8000_gold.html

$8,000 an ounce anyone?