GOLD

[G0ldfinger]

...

Guess which one is more likely to have its price affected by peak/depletion issues?

Agreed. However, oil as a fuel will be replaced at some stage, while gold and silver as money can not be replaced.

[Magpie]

Agreed. However, oil as a fuel will be replaced at some stage, while gold and silver as money can not be replaced.

 

Fiar point, but I think my argument still means that expecting the gold/oil ratio over the next decade or so to be at historical levels may be rather misleading. Likely that oil will cost more in terms of gold than in the past over that period at least.

 

[Magpie]

...while gold and silver as money can not be replaced.

 

Oh, and didn't you notice, we already replaced gold as money with paper.

[ConvertedGoldBug]

Agreed. However, oil as a fuel will be replaced at some stage, while gold and silver as money can not be replaced.

Although I'm heavily invested in precious metals, I've also got food and energy related investments as well.

 

I always keep in the back of my mind that, worse case scenario, people need food and energy, but they don't need gold or silver.

 

However, any other financial crisis or loss of confidence in fiat is also beneficial to PM's, so consider these as a hedge in more than one respect.

[G0ldfinger]

Fiar point, but I think my argument still means that expecting the gold/oil ratio over the next decade or so to be at historical levels may be rather misleading. Likely that oil will cost more in terms of gold than in the past over that period at least.

My calculations of implied gold prices from the gold-oil ratio always used the average (14.72), not any of the spikes (up to a factor of 32). I think this takes account of your considerations, and in a gold spike I would see no reason not to bring the ratio up to 14-15.

 

Do I see a head and shoulder pattern here?

[G0ldfinger]

Biggest head and shoulders ever.

 

[Steve Netwriter]

John Rubino

Moody's Gets The Blues *AUDIO*

Computer glitch... or criminal behavior? And a look at the latest PPI shocker

http://www.howestreet.com/audio/johnrubino_2008_0521.mp3

 

1. Moody adjusts model to "cover up" AAA rating error. Oops.

 

2. We might have a new wave of downgrades coming.

 

3. The prospect of lawsuits.

 

4. I'd say we're at the end of the first phase.....the next stages are still to come...commercial real estate, debts related to consumer spending......they are yet to implode, but they are going to.

 

5. We're kind of in the lull between those two stages

 

6. PPI - Mish dug into PPI and found the prices of raw materials are way up but the prices of finished goods aren't. The implication is a major contraction of profits.

 

7. Bad times for the stock market. Contraction of consumer side of economy.

 

8. If they tried to do a Volcker, it would collapse the structure.

 

9. There is no policy that can save us.

 

10. People who bet on financial stocks expecting things to improve now realise they were wrong. That's why they are now falling again.

 

11. Go long precious metals.

 

http://benbittrolff.blogspot.com/

http://globaleconomicanalysis.blogspot.com/

http://www.dollarcollapse.com/

 

[Pixel8r]

Yes, we have sort of peak everything. Gold and silver are good examples with gold production going down over the past years (I think more than oil). Has anyone the numbers?

 

Not sure it has been going down as much as you think. Found this article shows production has been increasing, but has slowed over the last few years.

 

 

Gold production is flat with higher prices ahead in 2007

 

 

 

[G0ldfinger]

Good chart, thanks. Could be a temporary or permanent top there in 2000.

[Pixel8r]

Agreed. However, oil as a fuel will be replaced at some stage, while gold and silver as money can not be replaced.

 

Hate to disagree with your posts Goldfinger, but believe gold & silver do regularly get replaced by Fait currencies. What they need to do to make that happen is raise interest rates, so that the fait currencies gain strength again. The only trouble is that they can't do that at the moment due to the massive financial problems. This is what happened at the end of the 1980s bull run, Volcker raised interest rates and people started to move back to the dollar.

 

Gold & silver although are money, that don't pay interest. The dollar is currently paying negative interest rates, hence the strength in PMs. Once they move to a real strong fait policy, things will reverse, just I am unsure as to when, if ever, they will be able to do that again.

 

[ologhai]

Not sure it has been going down as much as you think. Found this article shows production has been increasing, but has slowed over the last few years.

 

 

Gold production is flat with higher prices ahead in 2007

 

As I think I've mentioned before, to loosely quote something I picked up listening to Mike Maloney, the amount of gold available grows at about the same rate as the population, and has done so for a looong time...

 

In fact, Maloney says that the amount of gold per capita has remained more or less unchanged (at about half an ounce per person) since Roman times.

[G0ldfinger]

Hate to disagree with your posts Goldfinger, but believe gold & silver do regularly get replaced by Fait currencies. What they need to do to make that happen is raise interest rates, so that the fait currencies gain strength again. The only trouble is that they can't do that at the moment due to the massive financial problems. This is what happened at the end of the 1980s bull run, Volcker raised interest rates and people started to move back to the dollar.

...

On a 100 year horizon, I would expect oil to play a much less important role than today. The world will be on nuclear, wind, water, hydrogen fuel. However, there will still be gold in central bank vaults. Or, if central banks don't exist anymore because of the Great Depression of 2007-2027 that was caused by too much paper money, gold will be the world currency of choice.

[Magpie]

As I think I've mentioned before, to loosely quote something I picked up listening to Mike Maloney, the amount of gold available grows at about the same rate as the population, and has done so for a looong time...

 

In fact, Maloney says that the amount of gold per capita has remained more or less unchanged (at about half an ounce per person) since Roman times.

 

That might be very approximately true historically, but it's a big logical leap from "the amount of gold per capita has remained more or less unchanged (at about half an ounce per person) since Roman times" to the much stronger "the amount of gold available grows at about the same rate as the population" - the latter implies it's a consistent growth (clearly untrue as there have been various surges such as gold rushes etc) and that there is something inevitable about it.

 

I suspect it's a notion that has been wheeled out in the course of some 'gold is money' debate, thus. Gold-sceptic points out that the gold standard can be problematic as it prevents expansion of the money supply with population. So goldbug comes up with "the amount of gold available grows at about the same rate as the population" to vindicate continued faith in gold's perfection as money.

 

Dodgy history, dodgy theory...

 

 

[Magpie]

And why do all these goldbug myths refer to history going back to Roman times, I wonder. There's this one, then there's the old chestnut about how a gold coin would buy you a suit and a pair of shoes in the twentieth century and in Roman times.

 

I suspect it's just far enough back to be impossible for people to check the historical facts easily, so you can make up any old crap you want about what gold was worth in Roman times.

[enrieb]

Oh, and didn't you notice, we already replaced gold as money with paper.

 

Can I borrowed your lawnmower and replaced it with an IOU

[Magpie]

Can I borrowed your lawnmower and replaced it with an IOU

 

No, but I'll sell it to you for fifty quid.

 

If you're selling a lawnmower on ebay do you demand buyers pay in gold? Must make life very difficult...

[wren]

And why do all these goldbug myths refer to history going back to Roman times, I wonder. There's this one, then there's the old chestnut about how a gold coin would buy you a suit and a pair of shoes in the twentieth century and in Roman times.

 

I suspect it's just far enough back to be impossible for people to check the historical facts easily, so you can make up any old crap you want about what gold was worth in Roman times.

There's a lot of detailed information known about the costs of things (in silver and gold) from ancient times (Ancient Egypt, Greece and Rome) as well as the Medieval Ages.

 

[lowrentyieldmakessense(honest!)]

And why do all these goldbug myths refer to history going back to Roman times, I wonder. There's this one, then there's the old chestnut about how a gold coin would buy you a suit and a pair of shoes in the twentieth century and in Roman times.

 

I suspect it's just far enough back to be impossible for people to check the historical facts easily, so you can make up any old crap you want about what gold was worth in Roman times.

Time-relative value

 

 

 

The value of $1 over time, in 1776 dollars.

 

[Magpie]

There's a lot of detailed information known about the costs of things (in silver and gold) from ancient times (Ancient Egypt, Greece and Rome) as well as the Medieval Ages.

 

So why always bang on about Rome in particular? Just wondering. Maybe because the use of gold in the Roman Empire is nice and clearcut for comparison so it always sounds good.

 

Also, values of all sorts of thing vary against each other over time, gold, clothes, wheat, whatever. So that particular anecdote about a suit of clothes in Roman times and now is balls. Plus I'm unconvinced that we have detailed info on how much gold had been mined 2000 years ago.

 

These myths may have a real point to make, but I'm always sceptical about such obvious debating points.

 

[Magpie]

Time-relative value

 

 

 

The value of $1 over time, in 1776 dollars.

 

Yes, but there is frequently an attempt to go beyond the obvious truth (fiat tends to decline over time) to unverifiable theories about gold (eg it always buys the same value of goods, or the supply always expands conveniently in such a way as to avoid constricted supply being a problem with a gold standard).

 

[G0ldfinger]

No, but I'll sell it to you for fifty quid.

 

If you're selling a lawnmower on ebay do you demand buyers pay in gold? Must make life very difficult...

Only because the central banks of the world force their paper upon you.

[G0ldfinger]

Two things I have just catched on the news:

 

(1) China will build 1,000,000 houses (of wood & steel) for the quake victims.

 

(2) Italy will go nuclear again from 2013 on.

 

All this adds up. More inflation in commodities.

[lowrentyieldmakessense(honest!)]

Yes, but there is frequently an attempt to go beyond the obvious truth (fiat tends to decline over time) to unverifiable theories about gold (eg it always buys the same value of goods, or the supply always expands conveniently in such a way as to avoid constricted supply being a problem with a gold standard).

tis true some are a bit blinkered

 

Gold always keeps it value (long term perhaps - medium term not always so)

 

Houses only ever go up

 

would rather be holding gold than paper at the moment though - but it is a sad state of affairs when gold is a good investment

[Magpie]

Only because the central banks of the world force their paper upon you.

 

Balderdash. People accept IOUs for all sorts of reasons that are nothing to do with central banks, and have done throughout history.

 

Random examples from now and the past: babysitting tokens (eg swapping services), early bankers certificates (before fractional banking and central banks). I use Paypal because I trust it enough. You accept IOUs from Bullionvault and Goldmoney because you trust them. The key thing that makes IOUs or tokens work is trust. People (mostly) trust money that is government backed because they believe it is enforceable in a society that is too big to operate on the basis of local babysitting tokens or whatever.

 

 

[Magpie]

tis true some are a bit blinkered

 

Gold always keeps it value (long term perhaps - medium term not always so)

 

Houses only ever go up

 

would rather be holding gold than paper at the moment though - but it is a sad state of affairs when gold is a good investment

 

Totally agree with that post.