patrick.net

tatupu70 says

Maybe you can answer my main question–why does gold have value? What gives it the “intrinsic” value that others keep talking about?

If you saw a $100 bill and a 1 ounce bullion gold coin on the sidewalk and could only pick up one, which one would you pick up?

theoakman says

Gold retains its value because it is rare, easily divisible, stable in supply, and doesn’t degrade and cannot be counterfeited. You cannot find another element on planet earth that meets those specific criteria.

Well, there are a copule of problems with that as I see it. Meeting those criteria may make it a good currency, but doesn't make it valuable.

And there are several other metals that fit your profile--Rhodium, palladium are metals that come to mind.

I'll ask again--why is it valuable?

Hahaha - you claim not to know. You simply refuse to acknowledge reality. Typical liberal neurosis...a personality disorder - medically documented. Argue all you want, blah, blah, blah, whine, whine whine, but it doesn't change reality. Hahaha.

Let me suggest CESIUM as a store of value!

It's a rare metal with the wonderful quality of becoming liquid at 83F, so even a child can mint coins it's no more difficult than making popsicles, then melt it and return to original form.

(Tune, "Why don't we get drunk..."
with apologies to Jimmy Buffett)

I've got a pound of Cesium,
It's burning gently near.
The sky-blue flame looks lovely,
But it's noise I want to hear.
So darlin' bring some water,
A couple pints'll do.
And why don't we mix up the two?

Why don't we mix up the two?
'Cause Cesium and water,
Really make a wicked brew.
You say I've got a death wish,
But honey, I'm just blue.
So why don't we mix up the two?

---Songs of Cesium #29

AdHominem says

Re: OP
over the past half hour I did a little thought experiment…
.......
-this is by no means a well thought out plan

You wasted a half-hour of your life on that?

tatupu70 says

theoakman says

Gold retains its value because it is rare, easily divisible, stable in supply, and doesn’t degrade and cannot be counterfeited. You cannot find another element on planet earth that meets those specific criteria.

Well, there are a copule of problems with that as I see it. Meeting those criteria may make it a good currency, but doesn’t make it valuable.
And there are several other metals that fit your profile–Rhodium, palladium are metals that come to mind.
I’ll ask again–why is it valuable?

Rhodium, palladium? Maybe you missed that whole "stable in supply" criteria I set forth. Rhodium was in extreme shortage 2 years ago. The industrial catalytic applications of Rhodium and Palladium cause those metals to be heavily used up by industry resulting in an unstable above ground supply. Your money supply would go bonkers if it were tied to these two metals.

The fact that gold is inert (which is why people refer to it as useless) is one of the main reasons it successfully functioned as money. The market has never accepted Rhodium as money and it never will.

theoakman says

The fact that gold is inert (which is why people refer to it as useless) is one of the main reasons it successfully functioned as money.

Not at all. Inert is a good thing--that's why it is used as a contact material in electronics. You are correct about the industrial uses of Rhodium causing it to be more unstable.

Do you understand my question though--scarcity doesn't imply valuable. There has to be demand as well. I still don't see why people believe gold is valuable other than:

1. It is shiny and makes pretty ornaments
2. Historically it was used a currency

What am I missing?

says

Anything that is scarce and has a use (in this case, monetary use) will have value. You are trying to make this more complicated than it is.

But it's not used as money anymore

Gold is valuable as a store of wealth against fiat currencies. As painful as it may be, break open the ole history books and see what happens when countries go off the metal standard (gold/silver).
Gold has no debt. Fiat currency is debt. Take a bill from your pocket and at the top it clearly states
'federal reserve note' well, let me see can I now pay a note with a note. Only until the ponzi scheme implodes. Can I do the same with gold? No, it has no debt. Can't print it either. Electronic gold, sure you can trade in electronic gold. Would highly recommend you know what your doing and have enough of the real stuff to back up the contract(s) your trading. You do the math.

Yes in all probability gold will become fixed in price as a partial reserve to the world reserve currency which will consist of a basket of currencies, no longer exclusive to the us dollar. I have no current conclusion where this fractional value of an IMF or world currency will be, guestimate between 10 & 30%
Can't be more than 30% not enough bullion on the planet. Other alternative back to serfdom and can kiss the feet of the 'nobleman' who owns the castle because he has the gold.

The days of everything for nothing built on credit are over; they were over when they started it just takes a while for cycles to run their term.

Someone earlier said 'you can't spend it' try this. Go to your local auto dealer and talk to the dealer or general manager (someone who understands money) pick out a 35k vehicle and offer him 29 1oz gold eagles with a current spot price of 1160. Guess who just purchased a depreciable asset with an appreciable asset?

Gold has no debt? Amazing. Therefore fractional reserve lending did not exist in the Golden Days prior to 1971. Obviously my texts are wrong.

Your text's wern't wrong - your understanding of fractional reserve lending is.

Since fractional reserve lending was invented, "printing money" i.e. manufacturing more debt/credit out of thin air has been common practice. Whether you pretend you are backing all that paper with gold or not is at best a quibble. The sum total of gold and/or dollars in circulation in 1970 was FAR FAR less than than the sum total of all the assets and debts that represented our national "wealth".

Backing paper money with gold is the specifically the point. If more paper money is issued than an equal amount of gold reserves available to redeem them - then a crime has been committed. So how is gold a debt ???

Is it any different if a priest molests someones son than if the government steals from someones son ??

Honest Abe says

Backing paper money with gold is the specifically the point. If more paper money is issued than an equal amount of gold reserves available to redeem them - then a crime has been committed. So how is gold a debt ???

It's a good question. Paper money only accounts for a small fraction of the money supply. Are you proposing to eliminate fractional reserve along with re-adopting the gold standard?? How about bringing back the outhouse? Or horse drawn carraiges?

CNBC also had similar story and comments. The majority of the contruction is upscale Condos priced $100K well above normal salaries of Chinese consumers $3500-7500/year. Lots of money coming from the US to China as well.

tatupu70 says

Honest Abe says

Backing paper money with gold is the specifically the point. If more paper money is issued than an equal amount of gold reserves available to redeem them - then a crime has been committed. So how is gold a debt ???

It’s a good question. Paper money only accounts for a small fraction of the money supply. Are you proposing to eliminate fractional reserve along with re-adopting the gold standard?? How about bringing back the outhouse? Or horse drawn carraiges?

You seem to think paper money is a symbol of the progression of society. Paper money is an example of the degradation of society. It has already been tried before and has always failed.

says

It has monetary use. That’s why central banks have refused to sell it despite the fact that they haven’t used it to back the currencies for 40 years

First off--central banks have been selling gold. I posted a link to an article about Britain which talked about how their central bank had sold off almost all of its gold because they wanted the money "working" for them-ie earning interest.

Second--What do you mean by monetary use? You can't really use it to buy anything, so I don't follow.

tatupu70 says

says

It has monetary use. That’s why central banks have refused to sell it despite the fact that they haven’t used it to back the currencies for 40 years

First off–central banks have been selling gold. I posted a link to an article about Britain which talked about how their central bank had sold off almost all of its gold because they wanted the money “working” for them-ie earning interest.
Second–What do you mean by monetary use? You can’t really use it to buy anything, so I don’t follow.

store of value.
Like I said, stop trying to make this so complicated.
Obviously, the market has been buying gold steadily for 8 years now to use as a store of value.. So, if I were you, I'd stop trying to argue.

says

since britain sold their gold the nominal price of gold has more than quadrupled. How is that “money” working for them?

They made a poor decision--no doubt

You're joking right?? Is debasing and corrupting your own currency a symbol of the progression of society ? Debasing your own currency IS an example of the degradation of society. Debasing one's own currency has been tried before...and unfortunately it always works. The result is monetary and economic disaster.

"There is no subtler or surer means of overturning the existing basis of society than to debase its currency"...OOPS

"Paper money always returns to it's original value - zero"...OOPS

"If Americans ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations will deprive the people of their property"...OOPS

"Governments hate gold because it prohibits them from turning a free society into a tyrannical, economic dictatorship"...OOPS

"In a society with a fiat currency, all roads lead first to inflation, then to collapse"...OOPS

"Gold is the money of Kings
Silver is the money of Gentlemen
Barter is the money of peasants
Debt is the money of slaves"...OOPS

Aw shucks, just because things like this happened throughout history does NOT mean they will happen in America - right? History doesn't repeat itself - does it??? These things can't happen here, can they ???

Honest Abe says

Aw shucks, just because things like this happened throughout history does NOT mean they will happen in America - right? History doesn’t repeat itself - does it??? These things can’t happen here, can they ???

A bunch of quotes does not equal history. Just one man's opinion...

Honest Abe says

OK, I’ll ask you a question. How did the world operate when we WERE on the gold standard? Low inflation, fiscal responsibility, no currency debasing? I don’t know - thats sounds good to me.

When everyone is on a gold standard, it works.

If the US went back on the gold standard alone, we'd be royally screwed.

And, of course, since the US doesn't really have much gold anymore, it really doesn't seem like going back to a gold standard would make any sense. So we have all of this debt that we have to repay in gold now, but we don't have gold?

Why on earth would anyone intentionally persue such a strategy?

Kevin says

Honest Abe says

OK, I’ll ask you a question. How did the world operate when we WERE on the gold standard? Low inflation, fiscal responsibility, no currency debasing? I don’t know - thats sounds good to me.

When everyone is on a gold standard, it works.
If the US went back on the gold standard alone, we’d be royally screwed.
And, of course, since the US doesn’t really have much gold anymore, it really doesn’t seem like going back to a gold standard would make any sense. So we have all of this debt that we have to repay in gold now, but we don’t have gold?
Why on earth would anyone intentionally persue such a strategy?

Actually, the US has plenty of gold. And yes, paying our paper debt back in physical gold is a stupid idea. That's why you float it as an independent currency and let the dollar crash on its own.

justme says

Carey

Going DOWN! Buy buy buy!!!
http://www.redfin.com/CA/Concord/1130-Carey-Dr-94520/home/1580724

Exactly how much gold do we have Oakman? Last I recall we haven't even done a physical account of the storage in Fort Knox in decades. There's also quite a bit on ZeroHedge about the Gold ETF having pretty much no direct connection to actual physical gold. I have read that the entire world above-ground gold amounts to about 20 cubic meters. Looking at this chart:

We don't seem to have very many highly-productive mines.

1130 Carey is a tear down. I’m surprised they are asking that much.
Last refi was courtesy of World Savings Bank in 2006 (the 2002 refi was for $255k). Already a NOTS on this property so the clock is ticking...

He who has the gold sets the standards. I'm full of priceless gems today.

we looked at a lot of "Needs TLC. Fixer. Diamond in the rough. build sweat equity. " houses... most were tear-downs or in need of a complete gut/remodel

A tear down, really? Is it infested with termites or condemned due to mold? Seriously, unless it's condemned for some environmental reasons I doubt really a "tear down". Our house wasn't touched since 1949 except the roof, which was leaking...it was nowhere near a tear down, nothing that a roof, gutters, paint and flooring didn't fix.
It's funny how when it's a house you buy in the area for too much money it's a light fixer. When it's a house that shows prices are still falling, it's a tear down.

Vicente says

Exactly how much gold do we have Oakman? Last I recall we haven’t even done a physical account of the storage in Fort Knox in decades. There’s also quite a bit on ZeroHedge about the Gold ETF having pretty much no direct connection to actual physical gold. I have read that the entire world above-ground gold amounts to about 20 cubic meters. Looking at this chart:

We don’t seem to have very many highly-productive mines.

I'm assuming it's still in Fort Knox and the Fed isn't lying about it's balance sheet. As far as GLD, GLD does has tons of physical in vault. They just don't have enough to pay out the holders of GLD.

Forgive me for jumping in with all that preceded this. I've only scanned through the comments. My question is "how much of this is mental?" I had that discussion with a sub-vendor of mine earlier today. Everyone wants to believe that things will go up to, but few are willing to put their $$$ where their mouth is. Many RFQ's, few orders. The bottom line is we are all "cautiously optimistic" but no one is willing to make that fist move into the unknown. If suddenly we collectively say "the worst is over, it's save to spend again" then things will stake off, and we will have two - three years of growth, and "recovery" independent of the fundamentals behind said growth. In short believing things will get better is almost as good as things actually getting better.

If suddenly we collectively say “the worst is over, it’s save to spend again” then things will stake off, and we will have two - three years of growth, and “recovery” independent of the fundamentals behind said growth. In short believing things will get better is almost as good as things actually getting better.

This assumes the collective in question is entirely comprised of savers with stable employment/stable and/or growing salaries, all waiting to spring from the sidelines. I don't see that, for the most part. You cannot spend what you don't have, and what the banks aren't lending, and I think the money-for-nothing paradigm is a thing of the past.

I guess the question is - why would anyone fork over 1850 a month in rent when they could buy the same property with zero down for what you paid and have less overhead every month? It doesn't make good sense - unless, of course, your renters are on a temporary contract or something.

pkennedy and thomas,
Well here is how I look at it.
50/50 change, either I meet the dinosaur on the street or not (c. joke)
But if what's the worst case scenario: for me, is that it is a double dip. Hence I'd rather wait it out for example.
It is all a matter of perception, is the cup half full or half empty.
You both looking it at it from two opposite directions.
I think I am with thomas, because if dips the 2nd time I can be screwed. If it does not, well, for now I will save, and will have ability to put an even bigger down payment (dollar and % wise to cover), but risk will be less.
Just my 2 cents

theoakman says

I’m assuming it’s still in Fort Knox and the Fed isn’t lying about it’s balance sheet.

Fort Knox has not has an audit for over 50 years. As far as the Fed is concerned, to the best of my knowledge, they've never had an audit. As far as "lying" by the Fed? I'm sure that they are absolutely trustworthy and would never, ever deceive anyone.

Interesting, "no cars on the street" policy. So If it is a 4/2 house where there are two adults and 1 kid over 18, i.e. 3 cars in the household, where should they store their 3rd car (provided there is space carport or garage for two cars)
As far as rent for 1800, well, area is not so great in that part of Concord. I can see how renters credit may not be so good either, hence they are somewhat forced to pick this community over living in an apartment for example.

You can't get 100% financing on investment properties, more like 75%, and only then if your ratios and credit score are pristine. Claiming that, puts the BS meter on high for one poster on this thread, its been a good while since any bank would offer anything close to that.

Honest Abe says

OK, I’ll ask you a question. How did the world operate when we WERE on the gold standard? Low inflation, fiscal responsibility, no currency debasing? I don’t know - thats sounds good to me.

You are perhaps somehow not aware that there was a major financial crises in America roughly every 20 years from the signing of the Declaration of Independence up to and including the great depression. Here are some hints:1797, 1819, 1837, 1857, 1873, 1893, 1901, 1907. These were just the biggies, there were smaller economic hiccups also. Widespread business collapses, stock market collapses, massive bank failures, high poverty, 20% unemployment, credit collapse, real estate collapses, high foreclosures. All of which happened on the gold standard. Sounds familiar to me. Explain again how this is utopia.

Rose colored glasses are always a good thing. Nothing changes.

So why is it that the DOLLAR has gone into a death spiral since the US has went off the gold standard in 1973?

How is it again that inflation, fiscal irresponsibility, deficit spendig, and the debasing of our currency is a good thing? Nothing changes, the result is always the same, economic chaos. Well -DAH.

Why are you yelling at us?