Gold - Commodity or currency?
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joeybananas
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which firms would be intrested in purchasing techincal analysis research?
Aspen Trading Group
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I will leave the commodity or currency question to the politicians (those bumbling fools) but in my opinion gold is acting as a quasi currency in here due to QE. My main interest is making money by trading gold - which I am still bullish on. See chart below:
metalman73
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IMO depends on the current culture. Right now I'd say it's 80% commodity (jewelry and industrial use), and 20% currency. When (you'll notice I didn't say 'if') we have an financial apocolypse, it will become about 99% currency. Actually silver will be a huge currency too. There is more of it that can be physically distributed (in theory) to make it fluid among people. Of course right now most precious metals are being horded by countries and investors.
Hello there. I see there is a question about gold to be commodity or currency. I really agree that gold is rather a commodity now, and when there is a financial apocalypse, it will become a currency. So when the financial apocalypse is going to happen and which factors make it possible?
metalman73
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With the current money printing (both paper and virtual) that the Federal reserve is doing, it is definitely making the matter worse. What you have to consider is that our monetary system and federal deficit are technically two separate matters. Recently an audit was perform (pushed by Ron Paul) on the Fed, and it was discovered that trillions of dollars were loaned to a few european countries at little or no interest. This happened a couple years ago. What has happened is simple economics...the more currency in existence, the less it's worth.
Your average person doesn't seem to realize that it's not that the price of something goes up, it's the value of the dollar goes down. Recent actions of 'quantative easing' by Ben Bernake have only made matters worse. As John Boener put it (refering to the US deficit) we're 'kicking the can down the road'. People blame prices such as gold, gas and food on Obama, but truely, the Fed (caugh...Ben Bernake...who was put in by Bush and continued by Obama)....is to blame. You can try and google how many trillion dollars are in circulation (remember...virtual too), and you'll be hard pressed to find it. That....my friend is scary. I have caught somewhere that there are $200 T worldwide but have no hard proof.
What I like is the recent QE3. As if the QE1 and QE2 helped, 'hey, lets try pumping more money into the system until it works'. Honestly, our only hope is that Romney is elected and is able to kick Ben Bernake out. Obama doesn't understand economic policies enough to know that whoever's in charge right now is making the wrong choices.
Key indicators are continuing inflation. Keep watching the price of gold. The rate at which it climbs would be a good indicator. This means the demand for gold by investors is outstripping supply. IMO, gold will continue to trickle up until the election. If Obama is elected, it will continue to climb. If Romney is elected it might level off or trickle down depending on how much pressure he and congress puts on the Federal Reserve.
Another factor is that we are on a FIAT currency system with other nations. Since no country is on the gold standard, basicly all of our currencies float against each other. It's hard to say whether this is good or bad. My recommendation is google Ben Bernake, the Federal Reserve, FIAT currency, gold investment, gold standard, and Bretton Woods system, along with other links within those wiki's. Start piecing it together and you'll understand how scary it all really is.
Your average person doesn't seem to realize that it's not that the price of something goes up, it's the value of the dollar goes down. Recent actions of 'quantative easing' by Ben Bernake have only made matters worse. As John Boener put it (refering to the US deficit) we're 'kicking the can down the road'. People blame prices such as gold, gas and food on Obama, but truely, the Fed (caugh...Ben Bernake...who was put in by Bush and continued by Obama)....is to blame. You can try and google how many trillion dollars are in circulation (remember...virtual too), and you'll be hard pressed to find it. That....my friend is scary. I have caught somewhere that there are $200 T worldwide but have no hard proof.
What I like is the recent QE3. As if the QE1 and QE2 helped, 'hey, lets try pumping more money into the system until it works'. Honestly, our only hope is that Romney is elected and is able to kick Ben Bernake out. Obama doesn't understand economic policies enough to know that whoever's in charge right now is making the wrong choices.
Key indicators are continuing inflation. Keep watching the price of gold. The rate at which it climbs would be a good indicator. This means the demand for gold by investors is outstripping supply. IMO, gold will continue to trickle up until the election. If Obama is elected, it will continue to climb. If Romney is elected it might level off or trickle down depending on how much pressure he and congress puts on the Federal Reserve.
Another factor is that we are on a FIAT currency system with other nations. Since no country is on the gold standard, basicly all of our currencies float against each other. It's hard to say whether this is good or bad. My recommendation is google Ben Bernake, the Federal Reserve, FIAT currency, gold investment, gold standard, and Bretton Woods system, along with other links within those wiki's. Start piecing it together and you'll understand how scary it all really is.
Atilla
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Gold has high transaction costs attached to it. By that I mean securing, transporting and handling etc. It is also highly speculative. Gold was around $250-500 for a long while. Has no purpose other than to have properties of a currency. imho inferior properties of a good currency.
There is nothing stopping any country in the world backing their currency with gold standard is there?
One would think yep I'd like to do that and gain all the advantages of a gold backed currency.
Doesn't it make you think why no country steps up to the line?
Addenda: I used to favour gold but the sparkle has gone for me. I can only imagine a long drawn out war moving it substantially. If it doesn't make new highs it will fall off soon enough.
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The advantage for a gold standard is for those without political ties. Fiat favors the political class. Hence no serious policies enacted in favor of gold.
The costliness of gold shouldn't detract from its usefulness as currency/medium of exchange. That's Marx/Smith cost-theory talk.
The extraction/production would only be undertaken to the degree that gold remains useful as money. And if new mining operations aren't undertaken on account of it being too costly, the existing supply shall suffice; there is no gold supply quota to be met for its purpose as money.
Gold speculative? And fiat-based bonds aren't?
The costliness of gold shouldn't detract from its usefulness as currency/medium of exchange. That's Marx/Smith cost-theory talk.
The extraction/production would only be undertaken to the degree that gold remains useful as money. And if new mining operations aren't undertaken on account of it being too costly, the existing supply shall suffice; there is no gold supply quota to be met for its purpose as money.
Gold speculative? And fiat-based bonds aren't?
new_trader
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An intelligent post from someone who actually understands why Governments don't want to be on a gold standard.
What has been the cost since 1971 when the world has been on a completely fiat standard? It boggles my mind how anyone can think a managed currency system is superior to a classical gold standard (Pre 20th century).
Gold was chosen as money by people of the FREE-market, paper fiat money was IMPOSED on the people by Governments, that says it all!
GSTLj
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The U.S. dollar is NOT a fiat currency. I hear a lot of people say that and that's wrong. The U.S. dollar is the world's only oil based currency. You can google the petrodollar trade to find out more about this concept.
Consider that when we went into Iraq, we put Iraq oil back on the petrodollar the 3rd day we were there. People say the U.S. didn't get anything out of Iraq? Wrong.
We are the only nation in the world that can print money to buy oil. The oil producing nations trade oil in U.S. dollars only in many cases and also have agreements in place to buy a certain amount of U.S. bonds. In other words, we are the only country in the world with a license to print money to buy oil, and then the debt created by the printing is purchased by oil producing nations.
This is why people like Peter Schiff that predicted the U.S. dollar would go to zero back in 2008 when the Great Recession began were wrong. They simply didn't understand the petrodollar trade and that the U.S. dollar is an oil based currency. Research the topic yourself before flaming this post.
Consider that when we went into Iraq, we put Iraq oil back on the petrodollar the 3rd day we were there. People say the U.S. didn't get anything out of Iraq? Wrong.
We are the only nation in the world that can print money to buy oil. The oil producing nations trade oil in U.S. dollars only in many cases and also have agreements in place to buy a certain amount of U.S. bonds. In other words, we are the only country in the world with a license to print money to buy oil, and then the debt created by the printing is purchased by oil producing nations.
This is why people like Peter Schiff that predicted the U.S. dollar would go to zero back in 2008 when the Great Recession began were wrong. They simply didn't understand the petrodollar trade and that the U.S. dollar is an oil based currency. Research the topic yourself before flaming this post.
new_trader
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I think it's your understanding of the meaning of 'fiat' that is wrong. The general definition of 'Fiat Money' is currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves. It comes from the latin term -"let it be done", "it shall be".
The US dollar was once convertible directly into gold via the Federal Reserve's gold window. The $US value was fixed at 1/35th Oz/gold. When the US defaulted on its promise to pay gold in 1971, the value of the $US was not fixed to anything and became a 'managed' currency. If what you are saying is correct, the value of the $US should be fixed to a specific amount of oil...it isn't.
meanreversion
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The US is the only nation that can print money to buy oil? This is demonstrably false. Other oil importing countries (e.g. UK and Japan) have recently printed.
Am I missing something here -- please explain...
Atilla
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When the dollar drops against other currencies - price of oil (in dollars) goes up.
This fact links all your three blogs if you think about it. Truth in all of them. :smart:
Atilla
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Atilla
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Gold: 3 Essential Facts For Your Future
1. Gold is a commodity
To many people gold is something special. It’s more than just another metal that comes out of the ground. This may well be because since the dawn of time gold has been a status symbol and status is what breeds success or simply just breeds.
Whatever you feel about gold, it is just a metal. That isn’t necessarily a bad thing and it doesn’t mean it needs to be cheaper.
Gold supply has not kept up with demand so its price should rise. Where once gold was used on things that could be easily recycled. Now gold is used in things that don’t get recycled in a way that the gold is being recovered. So gold is being lost.
Looks like finally some realism is setting in about what gold really is... :smart:
1. Gold is a commodity
To many people gold is something special. It’s more than just another metal that comes out of the ground. This may well be because since the dawn of time gold has been a status symbol and status is what breeds success or simply just breeds.
Whatever you feel about gold, it is just a metal. That isn’t necessarily a bad thing and it doesn’t mean it needs to be cheaper.
Gold supply has not kept up with demand so its price should rise. Where once gold was used on things that could be easily recycled. Now gold is used in things that don’t get recycled in a way that the gold is being recovered. So gold is being lost.
Looks like finally some realism is setting in about what gold really is... :smart:
