GOLD

[nicejim 0]

"The supply of scrap gold...has remained surprisingly slow"

http://www.ft.com/cms/s/0/16f72c6c-c73d-11...144feab49a.html

[romans holiday 0]

That's ononistic intellectualism - this sort of thing means nothing to most people, it's a circle jerk abstraction.

One man's intellectualism is another's macro-economics.... a most practical science.

[Steve Netwriter 0]

The topic of "what is money?" seems to crop up a lot.

After recent discussions with FOFOA, I realise it's really quite complicated.

 

One aspect I've learned is that maybe it's best to start by defining "money", or maybe better still, to talk in terms of the separate functions of money.

So first it's possible to say money performs the functions of:

 

1. Medium of exchange

2. Store of wealth

3. Unit of account

 

For any particular "money", we can then discuss the merits of it by looking at how well it performs each function.

 

For example, the GBP is legal tender in the UK, so it performs the function of medium of exchange, and seems to do it well.

But, in another country that function may well be rather limited.

It doesn't seem to perform the function of "store of wealth" very well.

 

Gold in the UK does not currently perform the function of medium of exchange very well. It's mainly necessary to convert it into the local currency first.

But, as a store of value, it has performed very well since 2000.

 

If I understand FOFOA correctly, he sees gold in a "freegold" situation performing the "store of wealth" function in parallel with a currency performing the "medium of exchange" function.

Thus the inflation of the currency does not devalue savings, and the freely floating gold store of wealth allows the free market to keep a check on the currency.

 

It's a complicated subject, this is the discussion, I hope I've represented it fairly:

 

Bill Buckler Discusses The Last Price Standing Of "True Money", Answers The Only Question Relevant To Gold Bugs

http://www.neuralnetwriter.cylo42.com/node/3536

[Steve Netwriter 0]

"The supply of scrap gold...has remained surprisingly slow"

http://www.ft.com/cms/s/0/16f72c6c-c73d-11...144feab49a.html

 

 

http://spot-gold-price.org/gold-supply-and-demand/

Hence as prices rise, so does supply coming onto the market. If we add these two effects together then the market price is the point at which the two graphs meet and is where the level of demand will meet the level of supply, as shown in the chart alongside. So does the same model apply to the price of gold when you are trading spot futures or indeed trading in the physical commodity itself. The answer is categorically and emphatically NO, and the reason for this is very simple and very logical.

 

Gold, unlike many other commodities is not consumed, and therefore the traditional models and theories of supply and demand simply do not apply!

[aardvark 0]

soooooo close to $1300

[nicejim 0]

"Gold, unlike many other commodities is not consumed, and therefore the traditional models and theories of supply and demand simply do not apply!"

 

Ditto houses!

[nicejim 0]

Just $7 more to go on BV...

 

sorry, $6.

$0 in the London vault just now.

[bazmercer 0]

come on 1300...

[alexreeve 0]

That's ononistic intellectualism - this sort of thing means nothing to most people, it's a circle jerk abstraction.

Maybe on mumsNet that would be true, but not on an investment forum, in a thread specifically dedicated to speculation in gold; defining gold as a) money or a commodity or c) something else entirely, has important consequences in terms of expected behaviour.

It is what is, that is most important now and not what could or may be.

Not if you're speculating to try and increase your wealth. What is most important is current price vs future price, and so the ability to accurately predict the difference. Whether I can spend gold or dollars (or scottish £100 notes) in Tescos this morning, is irrelevant. Whether gold behaves as a currency or a commodity (or neither) in a deflationary environment is extremely relevant.

 

[nicejim 0]

defining gold as a) money or b) a commodity or c) something else entirely, has important consequences in terms of expected behaviour.

I think it's the other way round. You can't define gold as money and expect people to change their behaviour. You can only define it as money if you expect people to behave as if it is money.

[The Mad Hatter 0]

come on 1300...

 

Geneva's there to buy, although I tend to use the sell price.

 

Only $4 more to go.

[HPCsoYESTERDAY 0]

Hey ladies, what are going to do with your precious? hahhahaha

 

I have 10,000 acres which I bought cash! I sold 20,000 to the Koreans hhahahaha.

 

I live in QLD, my father an Irishman(Dublin- Galway), my mother a great woman!-German) Maybe

 

Dr Bub? mr goldfinger ako isipin ang iyong mga sobra-pagpintog teorya ay walang kahalagahan Herr Goldfinger Ich denke, Ihre Hyperinflation Theorie ist kein Verdienst

 

is there some sort of on-line guide available for understanding your posts?

[alexreeve 0]

I think it's the other way round. You can't define gold as money and expect people to change their behaviour. You can only define it as money if you expect people to behave as if it is money.

Indeed. Not sure why you think I meant anything else.

[romans holiday 0]

Indeed. Not sure why you think I meant anything else.

Yup, the practical world is primary... any theory worth its salt should recognise this.

 

This is why I focus on the actions of countries and CBs towards gold because these are the players which will re-monetize it in the end. A process informally underway at the moment imo.

[nicejim 0]

Indeed. Not sure why you think I meant anything else.

Because I'd have expressed that sentiment as

 

"expected behaviour, has important consequences in terms of defining gold as a) money or a commodity or c) something else entirely."

[alexreeve 0]

Because I'd have expressed that sentiment as

 

"expected behaviour, has important consequences in terms of defining gold as a) money or a commodity or c) something else entirely."

I see an animal with some obvious characteristics of a duck. I expect it to display other ducklike qualities. Is this, as a consequence of internally categorising it as a duck, or have I categorised it as a duck because I expect it to display these additional ducklike qualities. Both. However, the idea that the assignment to generic type informs the expectation, is the point I was making, so I'm happy with my phrasing, thanks.

[nicejim 0]

I see an animal with some obvious characteristics of a duck. I expect it to display other ducklike qualities. Is this, as a consequence of internally categorising it as a duck, or have I categorised it as a duck because I expect it to display these additional ducklike qualities. Both. However, the idea that the assignment to generic type informs the expectation, is the point I was making, so I'm happy with my phrasing, thanks.

Are you saying that your view of gold changes the way you expect people to behave?

[Mabon 0]

Maybe on mumsNet that would be true, but not on an investment forum, in a thread specifically dedicated to speculation in gold; defining gold as a) money or a commodity or c) something else entirely, has important consequences in terms of expected behaviour.

 

Lol. Elitism over MumsNet. Maybe this will start a MumsNet vs GEI war. Maybe we'll pull.

 

As MumsNet or The Sun etc represent the vast majority of the population (rightly or wrongly), I'll stick with their definitions of what is money.

 

GEI definitions would well be regarded as esoteric knowledge by most folks and probably rejected as such (rightly or wrongly).

 

Money is Money.

 

You can use it to buy things - I can't currently do that with my Gold. I can however use my Gold as Payment.

 

But Payment doesn't necessarily have to be in money. Payment can be anything that is agreed between two parties (a point Underling made nicely in another thread).

 

I could offer to pay you for a year's shopping for my family, with a cheap house. If you accept the trade, that is payment.

 

You can save it - Hmm can't really 'save' gold. Although you could save in in gold. You could also be saved by gold, although this isn't doing Portugal any favours right now.

 

You can invest it to generate an income - nope Gold not generating any income as such, although it is gaining 'value' in comparison to other currencies. That may be subjcet to change. I can only guess at the future.

 

And you can give it away. (I wouldn't advise this last course of action).

 

A currency BTW is, to me, a 'marque' or a 'brand'. It's a commonly accepted way of each nation defining their idea of what money is within their defined territory, whether through imposition or routine acceptance.

 

Not if you're speculating to try and increase your wealth. What is most important is current price vs future price, and so the ability to accurately predict the difference.

 

I tend to start getting very twitchy when people start mentioning 'accurately predict the difference'.

 

Gold is a bet, like anything else. It could be the wrong bet.

 

Whether I can spend gold or dollars (or scottish £100 notes) in Tescos this morning, is irrelevant.

 

Good luck with buying eggs then.

 

Whether gold behaves as a currency or a commodity (or neither) in a deflationary environment is extremely relevant.

 

Yes and? What happens if we are not in deflationary environment? Then what?

[alexreeve 0]

Good luck with buying eggs then.

If you came to the gold thread on an investment forum to ascertain the best form of payment for eggs at Tesco, then no gold is not money, presumably won't be in the forseeable future. If you came to the gold thread on an investment forum for opinions to inform speculation and/or trading in gold it is useful to consider it as a form of money. I'll leave it there.

[DoctorSolar 0]

From the June Gold thread when gold was at 1256:

 

http://www.cnbc.com/id/15840232?video=1525161532&play=1

 

are "these markets perverse" yet?

 

I think its fair to say big Tommy O failed in his "we'll see 200 down before 50 up" price projection. I look forward to hearing him saying "listen folks these markets are perverse" I wonder if that will be any consolation to his subscribers who he "piped" out of their positions. At least big bobby hoye has the good grace to say yep I've made a whole lot of trading errors in my career (see last howestreet interview). I have a lot more respect for him because of that

[d2thdr 0]

I would really like to see Tom Obrien admit that he got it a bit wrong. In many ways, it is thanks to these traders that gold is still affordable. God forbid what the price it will be sold for when traders become buyers. Got rid of even more fiat today. Feels good.

[Mabon 0]

If you came to the gold thread on an investment forum to ascertain the best form of payment for eggs at Tesco, then no gold is not money, presumably won't be in the forseeable future. If you came to the gold thread on an investment forum for opinions to inform speculation and/or trading in gold it is useful to consider it as a form of money.

 

Apologies am I not allowed on your thread? But hey no matter, I will 'consider' your point of view in more detail.

 

I'll leave it there.

 

You'd better. You've run out of ideas.

 

[Steve Netwriter 0]

Oh dear, I see the same old arguments.

Maybe some facts would add to this thread.

 

 

[Steve Netwriter 0]

"Gold, unlike many other commodities is not consumed, and therefore the traditional models and theories of supply and demand simply do not apply!"

 

Ditto houses!

 

nicejim,

House deteriorate and also get destroyed, as I've recently experienced. They also get created.

The market is also elastic, supply and demand varying with price in the elastic market way.

 

Maybe this would help in understanding the gold market:

 

Gold Supply and Demand Dynamics. Does the supply fall when the "price" rises? by Steve Netwriter

http://neuralnetwriter.cylo42.com/node/3552

 

 

[romans holiday 0]

nicejim,

House deteriorate and also get destroyed, as I've recently experienced. They also get created.

The market is also elastic, supply and demand varying with price in the elastic market way.

 

Maybe this would help in understanding the gold market:

 

Gold Supply and Demand Dynamics. Does the supply fall when the "price" rises? by Steve Netwriter

http://neuralnetwriter.cylo42.com/node/3552

Not to mention houses are assets, and gold is money... currency... the most powerful symbol of money.*

 

 

*I know, it's a mouthful.... but it does help to avoid the metaphysical disputes.