patrick.net

Bellingham Bill says

2:30 (GLOBAL GOLD PRODUCTION IS FALLING) is wrong in that video

Over long term, if you look at the past decade.. it's been falling.

http://gregor.us/economics/global-gold-production-how-sustainable-a-rebound/

And guess what will happen when oil shoots to $150 a barrel?

Why PHYSICAL gold? Because you have no way of knowing you should own it or not, as an investment class. Hedge your bets and cover your bases -- get some.

Same goes for PHYSICAL silver.

uomo_senza_nome says

And guess what will happen when oil shoots to $150 a barrel?

"The other side of the coin is that rising costs have not prevented producers from posting record margins. In the first quarter, margins rose from $758/ounce to $767/ounce."

http://247wallst.com/2011/06/22/rising-gold-production-cost-very-uneven-from-miner-to-miner-abx-nem-au-gfi-hmy-gdx-gdxj-gld

E-man says

I believe real estate is a much better hedge compared to gold, and it pays dividend too (monthly positive cashflow from your tenants).
In a hyper-inflation scenario, your rent technically should go up a lot while your monthly payment stays to same. In a deflation environment, rent should go down, which means your profit margin gets compressed; however, interest rate should also go down during deflation period. By refinancing, you should be able to lower your monthly payment. If your property goes down in value, your property tax is reassessed lower too. Therefore, it expands you margin and puts you in a decent position too.

In the US rentals are a highly regulated industry. We have leases and real estate law for a reason, and the social benefits of these, particularly in protecting the poor from price gouging, are enourmous. However, these laws make it harder to adjust rents in response to inflation or deflation. A lease prevents such increases or decreases during its term and some states and munipalities have rent stabilization and rent control laws which further limit the price control power of the landlord.

While I still think rentals are a great investment, they don't have the immediacy against inflation or deflation that gold does as hyper inflation tends to be a short term deal. To prevent anarchy, governments comes in, replace the currency, and within a few weeks the crisis, where deals of a lifetime are to be found, is over. Savings have been lost but nobody is trading real estate for medicine or cars anymore. Gold, silver, and tangible goods are better for this purpose.

If however you want a reliable revenue stream, rentals are generally a good bet.

Gold is Money. Period.
An item must have six characteristics to be considered as money:

Durability
Portability
Divisibility
Uniformity
Limited Supply
Acceptability

Of all the other currencies known to man, no other currency fits the bill (pun intended) as well as gold does.

swebb says

Anyone care to explain why gold is considered to be some universal store of wealth?

The real questions are... Should gold be used as the official currency? What is the criteria for deciding what to use as currency?

There are four important properties for a good, reliable, efficient, and social just currency -- what Ben Franklin called "honest money".

1. It's a medium of exchange.
2. It's a store of constant value.
3. It's a unit of measurement for evaluating worth over short and long periods.
4. It's a unit of accounting for short and long periods.

How do various strategies fulfill the above properties?

Gold - Gold backed currency. Paper or electronic.
Silver - Gold backed currency. Paper or electronic.
Metal/Stone - Use a conglomeration of precious and semi-precious metals and stones.
Commodities - Use a large range of commodities including metal/stone and non-durable goods that generally don't fluctuate over long periods of time like wheat and sugar.
SQ Fiat - The currency system we use right now. (Status Quo)
Colonial Scrip - A fiat currency like Colonial Scrip. Ben Franklin's honest money. The Money Masters from 00:34:14 to 00:40:00.
Single Dollar - The solution I've proposed here.

Gold fails to maintain value of short periods and Status Quo Fiat fails to maintain value of long periods. Other commodity-based currencies do better, ones that are harder to manipulate because the market is too large.

However, the Single Dollar solution works best. It's value as a fraction of all wealth is mathematically held at a constant. And the number of monetary units can be expanded arbitrarily, but no expansion would result in a transfer of wealth. The Single Dollar solution requires no trust in monetary policies or central banks.

Furthermore, long-range economic comparisons even spanning millennia would be meaningful and easy. Accounting units would be consistent. The only other currency system that comes close is Colonial Scrip and even that isn't as good.

The ultimate problem with gold is that anything that is a good investment cannot be a good currency. A currency should not fluctuate in value. It should not rise or fall. The fact that gold has been becoming more valuable than other goods is why it isn't currency material. Similarly, Federal Reserve notes fail for the exact opposite, but equally bad, reason. Contrary to some opinions, inflation is theft from savers and it harms the economy.

Why was silver bad for the bankers and gold good? Simple. Because silver was plentiful in the United States and elsewhere. So it was relatively hard to control. Gold was, and always has been scarce. Throughout history it has been relatively easy to monopolize gold, but silver has historically been 15 times more plentiful.

http://tinyurl.com/6w3x4n8

the melt value of the silver coinage of 1964 is 24X of face value today.

But if you had taken those coins and bought an index fund you'd be up 64X today.

E-man says

I believe real estate is a much better hedge compared to gold, and it pays dividend too (monthly positive cashflow from your tenants).

Yep. That is the difference. You can trade your cash flow for food and you still have your property. dunross cannot do something like that with his gold.

My investing gains 85% in the last 2 years:
January 2010: 1.0
January 2012: 1.85

Gold for comparison 42%
January 2010: ~$1,120
January 2012: ~$1,600

Plenty of sharpies & connected players that did WAY better. And I'm sure there's PM futures & options players that did better than that. However I'm still not seeing "magic" here if you are just some person buying a few bars and stashing them in a safe.