Gold $1600 Oz - When?

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Forester
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Re: Gold $1600 Oz - When?

Post by Forester » Wed May 13, 2020 6:28 am

What spread were you guys paying a couple of years ago for a gold eagle/buffalo over the spot price? I've never paid attention before. In the USA it seems to be about 5% now and in the UK 10%.

I can't see a good way to shift money out of gold ETFs without getting killed on the spread. Obviously it shouldn't cost nothing to do so.

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Re: Gold $1600 Oz - When?

Post by grayfox » Wed May 13, 2020 6:40 am

Forester wrote:
Wed May 13, 2020 6:28 am
What spread were you guys paying a couple of years ago for a gold eagle/buffalo over the spot price? I've never paid attention before. In the USA it seems to be about 5% now and in the UK 10%.

I can't see a good way to shift money out of gold ETFs without getting killed on the spread. Obviously it shouldn't cost nothing to do so.
Back in Jan-2018, I was in a local coin shop, Gold was about $1300 per troy ounce and the coin dealer was selling 1 oz Gold American Eagles for $40 over spot, and buying them back at spot price. So that was 3% premium for quantity 1.
Sic transit gloria mundi. [STGM]

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Forester
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Re: Gold $1600 Oz - When?

Post by Forester » Wed May 13, 2020 9:06 pm

Probably nothing to worry about, GLD leasing gold from the BoE

https://www.bullionstar.com/blogs/rona ... gold-bars/

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Re: Gold $1600 Oz - When?

Post by Forester » Tue Jun 30, 2020 10:35 am

Disaster for the gold critics - gold soars past $1,800 to a 9 year high.

https://www.cnbc.com/quotes/?symbol=@GC.1

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Re: Gold $1600 Oz - When?

Post by willthrill81 » Tue Jun 30, 2020 11:33 am

Forester wrote:
Tue Jun 30, 2020 10:35 am
Disaster for the gold critics - gold soars past $1,800 to a 9 year high.

https://www.cnbc.com/quotes/?symbol=@GC.1
Wow. :shock:

Question: how long will it take for the proponents of the theory that gold's expected real return is zero to at least admit that the theory might be wrong?
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Gold $1600 Oz - When?

Post by alfaspider » Tue Jun 30, 2020 11:57 am

willthrill81 wrote:
Tue Jun 30, 2020 11:33 am
Forester wrote:
Tue Jun 30, 2020 10:35 am
Disaster for the gold critics - gold soars past $1,800 to a 9 year high.

https://www.cnbc.com/quotes/?symbol=@GC.1
Wow. :shock:

Question: how long will it take for the proponents of the theory that gold's expected real return is zero to at least admit that the theory might be wrong?
There's really no limit to how long the market can irrationally drive up the price of an object. Beyond it's minor value in electronics manufacturing and other industrial processes, the value of gold is based pretty much entirely on the madness of crowds and vicissitudes of sentiment.

But gold's real return has been zero for long periods of time depending on when you bought it. Someone who purchased gold in 1980 or 2011 would still be in the red in real terms. On the other hand, returns for someone holding through the 1970s to the blow off top in 1980 would have made a lot of money.

For those of us who aren't fans of gold, the fact that it has gone up recently is hardly a disaster anymore than the rise of bitcoin or a rise in tulip bulbs would be. I wouldn't short gold any more than I would hold it. I simply do not speculate in commodities.

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Re: Gold $1600 Oz - When?

Post by willthrill81 » Tue Jun 30, 2020 12:03 pm

alfaspider wrote:
Tue Jun 30, 2020 11:57 am
willthrill81 wrote:
Tue Jun 30, 2020 11:33 am
Forester wrote:
Tue Jun 30, 2020 10:35 am
Disaster for the gold critics - gold soars past $1,800 to a 9 year high.

https://www.cnbc.com/quotes/?symbol=@GC.1
Wow. :shock:

Question: how long will it take for the proponents of the theory that gold's expected real return is zero to at least admit that the theory might be wrong?
There's really no limit to how long the market can irrationally drive up the price of an object. Beyond it's minor value in electronics manufacturing and other industrial processes, the value of gold is based pretty much entirely on the madness of crowds and vicissitudes of sentiment.

But gold's real return has been zero for long periods of time depending on when you bought it. Someone who purchased gold in 1980 or 2011 would still be in the red in real terms. On the other hand, returns for someone holding through the 1970s to the blow off top in 1980 would have made a lot of money.

For those of us who aren't fans of gold, the fact that it has gone up recently is hardly a disaster anymore than the rise of bitcoin or a rise in tulip bulbs would be. I wouldn't short gold any more than I would hold it. I simply do not speculate in commodities.
You can make claims about market irrationality all day long, but those same arguments can be levied against any and all asset classes, including stocks and bonds.

We can also find long periods of time where stocks, bonds, etc. have had zero or negative returns for long periods of time.

Perhaps gold's long-term real return will indeed be zero. But so far, that theory is not well supported by the data that we have (i.e. since the unwinding of Bretton Woods).
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

alfaspider
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Re: Gold $1600 Oz - When?

Post by alfaspider » Tue Jun 30, 2020 12:10 pm

willthrill81 wrote:
Tue Jun 30, 2020 12:03 pm
alfaspider wrote:
Tue Jun 30, 2020 11:57 am
willthrill81 wrote:
Tue Jun 30, 2020 11:33 am
Forester wrote:
Tue Jun 30, 2020 10:35 am
Disaster for the gold critics - gold soars past $1,800 to a 9 year high.

https://www.cnbc.com/quotes/?symbol=@GC.1
Wow. :shock:

Question: how long will it take for the proponents of the theory that gold's expected real return is zero to at least admit that the theory might be wrong?
There's really no limit to how long the market can irrationally drive up the price of an object. Beyond it's minor value in electronics manufacturing and other industrial processes, the value of gold is based pretty much entirely on the madness of crowds and vicissitudes of sentiment.

But gold's real return has been zero for long periods of time depending on when you bought it. Someone who purchased gold in 1980 or 2011 would still be in the red in real terms. On the other hand, returns for someone holding through the 1970s to the blow off top in 1980 would have made a lot of money.

For those of us who aren't fans of gold, the fact that it has gone up recently is hardly a disaster anymore than the rise of bitcoin or a rise in tulip bulbs would be. I wouldn't short gold any more than I would hold it. I simply do not speculate in commodities.
You can make claims about market irrationality all day long, but those same arguments can be levied against any and all asset classes, including stocks and bonds.

We can also find long periods of time where stocks, bonds, etc. have had zero or negative returns for long periods of time.

Perhaps gold's long-term real return will indeed be zero. But so far, that theory is not well supported by the data that we have (i.e. since the unwinding of Bretton Woods).
Stocks and bonds can indeed behave irrationality, but there is an underling creation of value that they represent that is absent with commodity speculation. Unlike a stock/bond, gold pays nothing and produces nothing. Stocks can be divorced from intrinsic value, but gold is inherently divorced.

For that reason, its future value can't be predicted in even a rough macro sense. I can predict that as long as the economy expands over the next 50 years, the stock market will likely follow. I can make no prediction regarding the price of gold. It could be worthless or worth 100x more in 50 years. I have no idea what future speculators will think of it.

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Re: Gold $1600 Oz - When?

Post by rich126 » Tue Jun 30, 2020 12:20 pm

This board isn't political so I'll do my best to avoid that topic but clearly there are a lot of issues in the US and the world even before the virus hit, and now it is even worse. You have a lot of economic issues world wide, lots of unemployment, the virus spikes and ebbs (not enough ebbing), you have a much stronger possibility of deflation, and just over all instability which helps gold.

In my 30+ years of investing I've seen a number of issues and large drops in the market but I've never seen anything this bad world wide. IMO too many people at this site are ignoring serious problems with the economy. Various tax cuts (unsustainable), FED intervention, etc. are only short term benefits and can't last long term. In other words at some point the credit card limits max out and you need to pay it either directly or indirectly.

And I'm far from a gold booster. I have rarely owned it in any form in my investing history but it and long term bonds just seem like a safe thing to do to preserve your wealth and ride out what I hope is only a short term issue otherwise we will have even more concerns.

I'm trying to be a bit more proactive without doing anything reckless in this situation. In past situations where I thought things were crazy (notably in 2008) I felt certain things were obvious but didn't do much to avoid it, this time I'm closer to retirement and am looking to preserve more so than shoot for high returns. If someone is in their 20s/30s then maybe it doesn't matter but those near retirement or in retirement and don't have the extreme savings (40-50X expenses) need to be more careful.

We'll see how things go.

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Re: Gold $1600 Oz - When?

Post by klaus14 » Tue Jun 30, 2020 11:41 pm

alfaspider wrote:
Tue Jun 30, 2020 12:10 pm
Stocks and bonds can indeed behave irrationality, but there is an underling creation of value that they represent that is absent with commodity speculation. Unlike a stock/bond, gold pays nothing and produces nothing. Stocks can be divorced from intrinsic value, but gold is inherently divorced.

For that reason, its future value can't be predicted in even a rough macro sense. I can predict that as long as the economy expands over the next 50 years, the stock market will likely follow. I can make no prediction regarding the price of gold. It could be worthless or worth 100x more in 50 years. I have no idea what future speculators will think of it.
Bonds nowadays return real negative.
Then the only argument is gold being too volatile.
I think a wise allocation is to hold bonds and gold inversely proportional to their volatility.
Total Bond is 4x less volatile than gold.
So if you want to do 60/40 and you are using total bond, i would move 8% to gold.
If you are using LTT, you could do 25/15 LTT/Gold.
35% US, 20 ExUS Dev, 10% EM, 10% EM Bonds, 10% Gold, 10% EDV, 5% I/EE Bonds.

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Forester
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Re: Gold $1600 Oz - When?

Post by Forester » Sat Jul 04, 2020 4:42 am

"Gold's price rose at about the same rate as monetary inflation per capita..."

"Gold's price in year-over-year terms tends to inversely correlate with the inflation-adjusted 10-year yield..."

https://twitter.com/lynaldencontact/st ... 65762?s=21

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Re: Gold $1600 Oz - When?

Post by donaldfair71 » Sat Jul 04, 2020 6:43 am

Forester wrote:
Wed May 13, 2020 6:28 am
What spread were you guys paying a couple of years ago for a gold eagle/buffalo over the spot price? I've never paid attention before. In the USA it seems to be about 5% now and in the UK 10%.

I can't see a good way to shift money out of gold ETFs without getting killed on the spread. Obviously it shouldn't cost nothing to do so.
I used to pay either 1.9 or 2.9% over spot but hadn’t bought since 2015. I looked on the site of this dealer within the last year (but before Covid 19), and spreads are no longer listed on their site. So it could still have been that spread, but I bet it isn’t (and has gotten much wider) since March.

Edit: after going to their site they are now selling 1 ounce Eagles at spot+150, Rands at spot+ 100.

Not a bad deal for gold today, not great but not bad, especially since its tax free in Maryland where the dealer is located.

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Re: Gold $1600 Oz - When?

Post by aristotelian » Sat Jul 04, 2020 7:02 am

willthrill81 wrote:
Tue Jun 30, 2020 12:03 pm
You can make claims about market irrationality all day long, but those same arguments can be levied against any and all asset classes, including stocks and bonds.

We can also find long periods of time where stocks, bonds, etc. have had zero or negative returns for long periods of time.

Perhaps gold's long-term real return will indeed be zero. But so far, that theory is not well supported by the data that we have (i.e. since the unwinding of Bretton Woods).
So we have a compelling theory that gold should have zero expected return with no data to back it up, and data on gold prices with no theory as to why it should be true. I must admit, I would like to have a theory supported by data if I am going to invest in something.

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Re: Gold $1600 Oz - When?

Post by FishTaco » Sat Jul 04, 2020 7:30 am

donaldfair71 wrote:
Sat Jul 04, 2020 6:43 am
Forester wrote:
Wed May 13, 2020 6:28 am
What spread were you guys paying a couple of years ago for a gold eagle/buffalo over the spot price? I've never paid attention before. In the USA it seems to be about 5% now and in the UK 10%.

I can't see a good way to shift money out of gold ETFs without getting killed on the spread. Obviously it shouldn't cost nothing to do so.
I used to pay either 1.9 or 2.9% over spot but hadn’t bought since 2015. I looked on the site of this dealer within the last year (but before Covid 19), and spreads are no longer listed on their site. So it could still have been that spread, but I bet it isn’t (and has gotten much wider) since March.

Edit: after going to their site they are now selling 1 ounce Eagles at spot+150, Rands at spot+ 100.

Not a bad deal for gold today, not great but not bad, especially since its tax free in Maryland where the dealer is located.
You can purchase gold online at ebay and have BOA cash rewards with preferred rewards, you'll pay less than spot.

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Re: Gold $1600 Oz - When?

Post by donaldfair71 » Sat Jul 04, 2020 7:39 am

FishTaco wrote:
Sat Jul 04, 2020 7:30 am
donaldfair71 wrote:
Sat Jul 04, 2020 6:43 am
Forester wrote:
Wed May 13, 2020 6:28 am
What spread were you guys paying a couple of years ago for a gold eagle/buffalo over the spot price? I've never paid attention before. In the USA it seems to be about 5% now and in the UK 10%.

I can't see a good way to shift money out of gold ETFs without getting killed on the spread. Obviously it shouldn't cost nothing to do so.
I used to pay either 1.9 or 2.9% over spot but hadn’t bought since 2015. I looked on the site of this dealer within the last year (but before Covid 19), and spreads are no longer listed on their site. So it could still have been that spread, but I bet it isn’t (and has gotten much wider) since March.

Edit: after going to their site they are now selling 1 ounce Eagles at spot+150, Rands at spot+ 100.

Not a bad deal for gold today, not great but not bad, especially since its tax free in Maryland where the dealer is located.
You can purchase gold online at ebay and have BOA cash rewards with preferred rewards, you'll pay less than spot.
Could I do this at the dealer as well?

What’s the pre-rewards card price on eBay?

Edit: found the coins on eBay, very competitive for sure.
Last edited by donaldfair71 on Sat Jul 04, 2020 7:47 am, edited 1 time in total.

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Re: Gold $1600 Oz - When?

Post by abuss368 » Sat Jul 04, 2020 7:46 am

I recall speculating in GLD back in our stock picking days.
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Re: Gold $1600 Oz - When?

Post by Blue456 » Sat Jul 04, 2020 7:55 am

aristotelian wrote:
Sat Jul 04, 2020 7:02 am

So we have a compelling theory that gold should have zero expected return with no data to back it up, and data on gold prices with no theory as to why it should be true. I must admit, I would like to have a theory supported by data if I am going to invest in something.
But you do have data. It is up to you to interpret it accordingly.

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Re: Gold $1600 Oz - When?

Post by aristotelian » Sat Jul 04, 2020 8:27 am

Blue456 wrote:
Sat Jul 04, 2020 7:55 am
aristotelian wrote:
Sat Jul 04, 2020 7:02 am

So we have a compelling theory that gold should have zero expected return with no data to back it up, and data on gold prices with no theory as to why it should be true. I must admit, I would like to have a theory supported by data if I am going to invest in something.
But you do have data. It is up to you to interpret it accordingly.
Data without theory to me is just as unconvincing as theory without data. I still want a reason why gold should be a profitable investment.

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Re: Gold $1600 Oz - When?

Post by All Seasons » Sat Jul 04, 2020 8:33 am

aristotelian wrote:
Sat Jul 04, 2020 8:27 am

Data without theory to me is just as unconvincing as theory without data. I still want a reason why gold should be a profitable investment.
https://www.linkedin.com/pulse/money-cr ... ray-dalio/

Ray Dalio's papers on the subject are about as compelling and coherent of a theory as you are going to find. They are really quite excellent.

TL;DR: Societies shift from hard money to claims on hard money to fiat money and back again. Most people don't see the value in gold because they see the economy too "up close" and are not aware of long-term debt cycles that stretch anywhere from 75-100 years. An analogy would be sitting in the front row of a movie theatre and not being able to see the whole screen.
The market portfolio is always a legitimate portfolio.

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Re: Gold $1600 Oz - When?

Post by alfaspider » Sat Jul 04, 2020 9:53 am

All Seasons wrote:
Sat Jul 04, 2020 8:33 am
aristotelian wrote:
Sat Jul 04, 2020 8:27 am

Data without theory to me is just as unconvincing as theory without data. I still want a reason why gold should be a profitable investment.
https://www.linkedin.com/pulse/money-cr ... ray-dalio/

Ray Dalio's papers on the subject are about as compelling and coherent of a theory as you are going to find. They are really quite excellent.

TL;DR: Societies shift from hard money to claims on hard money to fiat money and back again. Most people don't see the value in gold because they see the economy too "up close" and are not aware of long-term debt cycles that stretch anywhere from 75-100 years. An analogy would be sitting in the front row of a movie theatre and not being able to see the whole screen.
But gold is not money in modern society any more than beads, salt, or sea shells. It’s a commodity that people like to speculate on when they believe there is some sort of crisis, despite the fact that it has not particular use in a crisis. Its value is entirely psychological and is therefore subject to the whims of sentiment.

100 years ago, Gold was interchangeable with money by law at a set rate, so the relationship was a bit different. Although even then, the relationship was fraught.

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Re: Gold $1600 Oz - When?

Post by All Seasons » Sat Jul 04, 2020 9:55 am

alfaspider wrote:
Sat Jul 04, 2020 9:53 am
But gold is not money in modern society any more than beads, salt, or sea shells. It’s a commodity that people like to speculate on when they believe there is some sort of crisis, despite the fact that it has not particular use in a crisis. Its value is entirely psychological and is therefore subject to the whims of sentiment.

100 years ago, Gold was interchangeable with money by law at a set rate, so the relationship was a bit different. Although even then, the relationship was fraught.
Read. The. Paper.
The market portfolio is always a legitimate portfolio.

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Re: Gold $1600 Oz - When?

Post by firebirdparts » Sat Jul 04, 2020 10:01 am

aristotelian wrote:
Sat Jul 04, 2020 8:27 am
Data without theory to me is just as unconvincing as theory without data. I still want a reason why gold should be a profitable investment.
“Profitable” is pretty strong language.
A fool and your money are soon partners

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Re: Gold $1600 Oz - When?

Post by nisiprius » Sat Jul 04, 2020 10:20 am

All Seasons wrote:
Sat Jul 04, 2020 9:55 am
alfaspider wrote:
Sat Jul 04, 2020 9:53 am
But gold is not money in modern society any more than beads, salt, or sea shells. It’s a commodity that people like to speculate on when they believe there is some sort of crisis, despite the fact that it has not particular use in a crisis. Its value is entirely psychological and is therefore subject to the whims of sentiment.

100 years ago, Gold was interchangeable with money by law at a set rate, so the relationship was a bit different. Although even then, the relationship was fraught.
Read. The. Paper.
I did a quick glance through it looking for an answer to a particular question I had in mind, and I didn't find it. He simply asserts--repeatedly--that fiat money has no intrinsic value, but that gold does. To widen that a little, "When societies first invented money they used all sorts of things, like grain and beads. But mostly they used things that had intrinsic value, like gold, silver, and copper."

He never explains why gold has "intrinsic value." He never explains why grain does not.

He also, as is too-customary, exaggerates the ubiquity of gold as money in human geography and history. (Marco Polo wasn't looking for gold, he was looking for spices. The word "salary" is derived from salt, not gold; etc.)
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Re: Gold $1600 Oz - When?

Post by Forester » Sat Jul 04, 2020 11:14 am

Fiat money hinges on the authority & competence of a government, whereas gold is rare and cannot be printed. I suppose that's what he is driving at. Grain obviously only has fleeting value, as opposed to gold which is not perishable.

Governments have concluded that gold is important which is why effort is expended to store and safeguard it. Probably a large gold reserve is a prerequisite for Superpower status - does this gold have practical or only symbolic value - perhaps a mixture of both?

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Re: Gold $1600 Oz - When?

Post by willthrill81 » Sat Jul 04, 2020 11:24 am

aristotelian wrote:
Sat Jul 04, 2020 7:02 am
willthrill81 wrote:
Tue Jun 30, 2020 12:03 pm
You can make claims about market irrationality all day long, but those same arguments can be levied against any and all asset classes, including stocks and bonds.

We can also find long periods of time where stocks, bonds, etc. have had zero or negative returns for long periods of time.

Perhaps gold's long-term real return will indeed be zero. But so far, that theory is not well supported by the data that we have (i.e. since the unwinding of Bretton Woods).
So we have a compelling theory that gold should have zero expected return with no data to back it up, and data on gold prices with no theory as to why it should be true. I must admit, I would like to have a theory supported by data if I am going to invest in something.
As would I, though if the data don't match the theory, we would be remiss in not admitting that the theory may be flawed.

Some find the last ~45 years of data compelling enough to justify a relatively small allocation to gold. Bogle did in at least one situation. But others don't find the data compelling. This is also true of factors, the U.S./ex-U.S. debate, etc.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Gold $1600 Oz - When?

Post by grayfox » Sat Jul 04, 2020 11:25 am

nisiprius wrote:
Sat Jul 04, 2020 10:20 am

He never explains why gold has "intrinsic value." He never explains why grain does not.
I will try and answer that.

All matter has intrinsic value. Some matter has higher intrinsic value and some matter has low intrinsic value. Even dirt has intrinsic value.

So Gold has intrinsic value because it is matter. It is not a representation of matter in computer bits or a picture of matter on a piece of paper or promise to deliver matter at some future date. It is the actual matter made from protons, neutrons and electrons. In other words, it is real. The nucleus of each gold atom is made from 79 protons plus 118 neutrons. (Gold-197 is the stable isotope.) The electrons are included free of charge.

Furthermore, Gold atoms are hard to find because they are rare, and they are extremely difficult to create. Gold is made in supernova nucleosynthesis or maybe in collisions of neutrons stars. The amount of energy required to build Gold nuclei is enormous.

Grain is also matter and has intrinsic value. But grain has a very small intrinsic value for its weight. Grain, e.g. wheat, corn, or barley is easily produced and is abundant. I can go and buy a metric ton of wheat for about $186. Not too convenient for use as currency. Your monthly rent would be 10 metric tons of wheat.

Grain is organic, made primarily from Carbon, Oxygen, Hydrogen, Nitrogen, plus small amounts of other elements like phosphorous, iron, just like you and me. Hydrogen is the most abundant element in the universe, making up 74% of the mass of the universe. Oxygen is the most abundant element in the earth's crust (46.1%). Carbon is the 6th most abundant element in the solar system. All abundant elements.

Observe where Gold is on this chart--7th from the right

Image
from Abundance of the chemical elements
Sic transit gloria mundi. [STGM]

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Re: Gold $1600 Oz - When?

Post by willthrill81 » Sat Jul 04, 2020 11:41 am

grayfox wrote:
Sat Jul 04, 2020 11:25 am
nisiprius wrote:
Sat Jul 04, 2020 10:20 am

He never explains why gold has "intrinsic value." He never explains why grain does not.
I will try and answer that.

All matter has intrinsic value. Some matter has higher intrinsic value and some matter has low intrinsic value. Even dirt has intrinsic value.

So Gold has intrinsic value because it is matter. It is not a representation of matter in computer bits or a picture of matter on a piece of paper or promise to deliver matter at some future date. It is the actual matter made from protons, neutrons and electrons. In other words, it is real. The nucleus of each gold atom is made from 79 protons plus 118 neutrons. (Gold-197 is the stable isotope.) The electrons are included free of charge.

Furthermore, Gold atoms are hard to find because they are rare, and they are extremely difficult to create. Gold is made in supernova nucleosynthesis or maybe in collisions of neutrons stars. The amount of energy required to build Gold nuclei is enormous.

Grain is also matter and has intrinsic value. But grain has a very small intrinsic value for its weight. Grain, e.g. wheat, corn, or barley is easily produced and is abundant. I can go and buy a metric ton of wheat for about $186. Not too convenient for use as currency. Your monthly rent would be 10 metric tons of wheat.

Grain is organic, made primarily from Carbon, Oxygen, Hydrogen, Nitrogen, plus small amounts of other elements like phosphorous, iron, just like you and me. Hydrogen is the most abundant element in the universe, making up 74% of the mass of the universe. Oxygen is the most abundant element in the earth's crust (46.1%). Carbon is the 6th most abundant element in the solar system. All abundant elements.

Observe where Gold is on this chart--7th from the right

Image
from Abundance of the chemical elements
To add a bit to your good points, gold has a history of value spanning cultures, geography, and time that virtually nothing else (aside from possibly silver and copper), including stocks and bonds, can hold a candle to.

Further, gold is fungible, which is not true of most other valuable items like precious stones or art. Increasingly, even commodities like grain, pork bellies, etc. are starting to lose some of their fungibility (e.g. organic, farm raised, free range, grass fed, pesticide free). People are even willing to pay incredibly huge premiums for certain types of water.
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Re: Gold $1600 Oz - When?

Post by FishTaco » Sat Jul 04, 2020 12:26 pm

donaldfair71 wrote:
Sat Jul 04, 2020 7:39 am

Could I do this at the dealer as well?

What’s the pre-rewards card price on eBay?

Edit: found the coins on eBay, very competitive for sure.
It would depend on if your dealer takes CC. With the BOA Cash rewards card and preferred rewards, you get over 5% cashback up to 2500/quarter on online purchases. I'm not aware of any rewards that would match that at brick and mortar.

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Re: Gold $1600 Oz - When?

Post by aristotelian » Sat Jul 04, 2020 12:37 pm

grayfox wrote:
Sat Jul 04, 2020 11:25 am

I will try and answer that.

All matter has intrinsic value. Some matter has higher intrinsic value and some matter has low intrinsic value. Even dirt has intrinsic value.

So Gold has intrinsic value because it is matter. It is not a representation of matter in computer bits or a picture of matter on a piece of paper or promise to deliver matter at some future date. It is the actual matter made from protons, neutrons and electrons. In other words, it is real. The nucleus of each gold atom is made from 79 protons plus 118 neutrons. (Gold-197 is the stable isotope.) The electrons are included free of charge.

Furthermore, Gold atoms are hard to find because they are rare, and they are extremely difficult to create.
There is still no intrinsic reason why someone should want to own gold themselves and/or expect that gold will be worth more in the future. It still seems to me that the value of gold is derived from social recognition that gold is valuable, and secondarily it also has properties that make it suited for use as currency. That does not mean that the gold is itself valuable. If for some reason people stopped believing that gold has any value, or that better alternatives exist (crypto, or some other metal?), I could imagine it going to zero.

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Re: Gold $1600 Oz - When?

Post by Dudley » Sat Jul 04, 2020 12:47 pm

aristotelian wrote:
Sat Jul 04, 2020 12:37 pm
If for some reason people stopped believing that gold has any value, or that better alternatives exist (crypto, or some other metal?), I could imagine it going to zero.
Yes, but isn't that true for any currency, incl USD. Money only has value due to consensus.

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Re: Gold $1600 Oz - When?

Post by nisiprius » Sat Jul 04, 2020 1:37 pm

willthrill81 wrote:
Sat Jul 04, 2020 11:41 am
...To add a bit to your good points, gold has a history of value spanning cultures, geography, and time that virtually nothing else (aside from possibly silver and copper), including stocks and bonds, can hold a candle to...
I have the impression that this idea is exaggerated. We go along with it because we don't pay a lot of attention, and of course we grew up on stories like "The Tinder-Box" that teach us the names and ranks of the precious metals, the first dog was big and guarded the copper coins, the second was huge and guarded the silver coins, the third had eyes as big as the Round Tower and guarded the gold coins... so the precious metals belong to the eternal land of Once Upon a Time, not the land of 1830s Denmark.

People wave their hands and say throughout the entire globe, gold has been the standard of value for 5,000 years and we just go along with it because Burger King's cardboard crowns are shiny "gold." No matter that peppercorns were the standard of value in Genoa or Venice or wherever it was in whatever century it was.

One factor behind the exaggeration is that any culture that did not value gold as having some special status--beyond just being one of many valuable things--is defined as not "counting." The civilizations of the Americas were more or less well developed--it was an eye-opener to me to realize that the population of Cahokia Mounds was not that different from that of London--but since they were conquered, enslaved, and decimated by the introduction of disease we tend not to consider them as "mattering."
Last edited by nisiprius on Sat Jul 04, 2020 1:45 pm, edited 1 time in total.
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Re: Gold $1600 Oz - When?

Post by alfaspider » Sat Jul 04, 2020 1:44 pm

grayfox wrote:
Sat Jul 04, 2020 11:25 am
nisiprius wrote:
Sat Jul 04, 2020 10:20 am

He never explains why gold has "intrinsic value." He never explains why grain does not.
I will try and answer that.

All matter has intrinsic value. Some matter has higher intrinsic value and some matter has low intrinsic value. Even dirt has intrinsic value.

So Gold has intrinsic value because it is matter. It is not a representation of matter in computer bits or a picture of matter on a piece of paper or promise to deliver matter at some future date. It is the actual matter made from protons, neutrons and electrons. In other words, it is real. The nucleus of each gold atom is made from 79 protons plus 118 neutrons. (Gold-197 is the stable isotope.) The electrons are included free of charge.

Furthermore, Gold atoms are hard to find because they are rare, and they are extremely difficult to create. Gold is made in supernova nucleosynthesis or maybe in collisions of neutrons stars. The amount of energy required to build Gold nuclei is enormous.

Grain is also matter and has intrinsic value. But grain has a very small intrinsic value for its weight. Grain, e.g. wheat, corn, or barley is easily produced and is abundant. I can go and buy a metric ton of wheat for about $186. Not too convenient for use as currency. Your monthly rent would be 10 metric tons of wheat.

Grain is organic, made primarily from Carbon, Oxygen, Hydrogen, Nitrogen, plus small amounts of other elements like phosphorous, iron, just like you and me. Hydrogen is the most abundant element in the universe, making up 74% of the mass of the universe. Oxygen is the most abundant element in the earth's crust (46.1%). Carbon is the 6th most abundant element in the solar system. All abundant elements.

Observe where Gold is on this chart--7th from the right

Image
from Abundance of the chemical elements
Gold may be rare, but the value of a thing depends on both supply and demand. There are plenty of rare things that are worthless. A mint condition Yugo is pretty rare these days, but it’s not worth much. The future value of gold depends on the societal value of it. Some cultures have historically valued gold, others not so much. Since it’s usefulness is limited outside of jewelry, there’s no guarantee future cultures will place the same value as past cultures.

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Re: Gold $1600 Oz - When?

Post by All Seasons » Sat Jul 04, 2020 5:09 pm

Regarding gold and the question of intrinsic value. I have pondered this question quite a bit myself and have come to a conclusion that satisfies me via my research.

Gold has intrinsic value because it is money par excellence. It deserves its place as the ultimate money because it's the only thing that truly fits the definition and function of good money.

Gold is durable, portable, divisible, fungible, rare but not too rare, stable, non-poisonous, non-radioactive, can't be printed, a unit of account, a medium of exchange, and a store of wealth.

Let's consider the alternatives that could be used or have been used. Paper is too common and tends to get printed ad infinitum. Same thing is true for digital fiat currencies. Iron is too common and corrodes. oxygen is gaseous. Sea shells are too common and not fungible. Diamonds are not fungible. plutonium is radioactive. Aluminum is too common. Arsenic is poisonous. You get the idea.

Gold's sister metals come close, so they have often been used alongside gold, but they tend to fall a little short of gold's nonpareil status. Silver tarnishes, platinum is difficult to work with metallurgically speaking, etc. Gold also has the advantage of having its distinctive and readily identifiable color in comparison with these other metals.

So, again, gold has intrinsic value because it's money. It's the best money we've ever had because it's the only thing that satisfies the conditions of the above. Sure, other things CAN be used as money, but they tend to fall by the wayside.
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Re: Gold $1600 Oz - When?

Post by All Seasons » Sat Jul 04, 2020 5:17 pm

A final thought. People often scoff at gold and say it doesn't have intrinsic value because it doesn't produce cashflow. Why should it? It's money. Investment assets produce cashflow. Why should money itself produce cashflow?

It's the one asset that isn't someone else's promise, so gold requires different thinking than the usual discounted cash flow model we all have in our heads from business school.

Before anyone pipes up with the objection that money in your bank account produces cash flow, you must remember that your chequing account isn't money. It's actually an unsecured liability of the bank. With your chequing account you are taking risk with what is essentially a bond, which is why you are receiving interest. The hundred dollar bill in your wallet (literal money, although a bad form) doesn't produce anything.
The market portfolio is always a legitimate portfolio.

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Re: Gold $1600 Oz - When?

Post by GRP » Sat Jul 04, 2020 5:47 pm

Not to belabour All Seasons' point, but for those of you still thinking those T-bills are riskless, this may make for fruitful viewing. :D

https://9gag.com/gag/a2WZDd1

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Re: Gold $1600 Oz - When?

Post by All Seasons » Sat Jul 04, 2020 6:01 pm

GRP wrote:
Sat Jul 04, 2020 5:47 pm
Not to belabour All Seasons' point, but for those of you still thinking those T-bills are riskless, this may make for fruitful viewing. :D

https://9gag.com/gag/a2WZDd1
What a harrowing sight. Many will try and chime in and say it can't happen in America. Well, it already has happened. The history of the Continental dollar isn't something to be swept under the rug willy nilly.
The market portfolio is always a legitimate portfolio.

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Re: Gold $1600 Oz - When?

Post by klaus14 » Sun Jul 05, 2020 1:06 am

The floor for gold price is the production cost, which is around $1000. Source.
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Re: Gold $1600 Oz - When?

Post by nisiprius » Sun Jul 05, 2020 5:28 am

All Seasons wrote:
Sat Jul 04, 2020 5:09 pm
...can't be printed...
But it can be discovered and mined. The quantity of gold bears no relationship to the quantity of goods and is subject to wild fluctuations. The Spanish economy was destroyed when the discovery of gold in the New World resulted in a sudden large increase in the amount of gold available in Spain. Then the inability to "print gold" worsened and extended the effects of the Great Depression in the 1930s. It was obvious then, and mentioned by Benjamin Roth in The Great Depression: A Diary that the nations that abandoned the gold standard first were the ones that recovered the first.

What is ideal for money is not a fluctuating, volatile supply that is not under government control. The ideal is a supply that has a rational relationship to the quantity and intrinsic value of goods themselves, and gold does not provide that.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Re: Gold $1600 Oz - When?

Post by Forester » Sun Jul 05, 2020 8:13 am

'Is It Crazy To Own Gold?' - possibly unwise to trust that government instruments will protect an investor from government inflation: https://valuestockgeek.com/2020/07/05/ ... -own-gold/
I previously had TIPS in my asset allocation as my inflation protection, but this is flawed because TIPS rely on official government statistics on inflation.

If the US government wanted to hurt TIPS investors, it could simply manipulate the inflation statistics and change the inflation yardstick. I’m not going full “shadow stats” and don’t think the government is currently doing this, but I don’t think it it outside of the realm of possibility in the future.

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Re: Gold $1600 Oz - When?

Post by Robot Monster » Sun Jul 05, 2020 9:11 am

Forester wrote:
Sun Jul 05, 2020 8:13 am
If the US government wanted to hurt TIPS investors, it could simply manipulate the inflation statistics and change the inflation yardstick. I’m not going full “shadow stats” and don’t think the government is currently doing this, but I don’t think it it outside of the realm of possibility in the future.
If they wanted to fake the CPI data TIPS use, wouldn't they also need to fake the other inflation measurements that social security and the Fed itself uses, otherwise wouldn't there be such a schism between the measurements that it would cry out fakery? How many people in the U.S. Bureau of Labor Statistics would need to be involved in this fakery scheme, anyway? Wouldn't there be whistleblowers? A lawsuit?

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Re: Gold $1600 Oz - When?

Post by ohboy! » Sun Jul 05, 2020 10:12 am

Gold is on a good run and so is the dollar. If the dollar falls gold is really poised to take off. The eastern world loves precious metals.

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Re: Gold $1600 Oz - When?

Post by firebirdparts » Sun Jul 05, 2020 12:51 pm

nisiprius wrote:
Sat Jul 04, 2020 10:20 am
I did a quick glance through it looking for an answer to a particular question I had in mind, and I didn't find it. He simply asserts--repeatedly--that fiat money has no intrinsic value, but that gold does. To widen that a little, "When societies first invented money they used all sorts of things, like grain and beads. But mostly they used things that had intrinsic value, like gold, silver, and copper."

He never explains why gold has "intrinsic value." He never explains why grain does not.

He also, as is too-customary, exaggerates the ubiquity of gold as money in human geography and history. (Marco Polo wasn't looking for gold, he was looking for spices. The word "salary" is derived from salt, not gold; etc.)
Yeah, I don’t understand the appeal of all this mythology, but I guess I should. I talk to people all the time, and I have certainly been heavily exposed to that desire to have a systematic matrix around you. People could desperately long for a feeling they get from Thinking there is something about gold (that word “intrinsic”) that requires you to think gold is money.

I think gold is likely to remain collectible in the near future. It’s a guess.
A fool and your money are soon partners

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Re: Gold $1600 Oz - When?

Post by finite_difference » Sun Jul 05, 2020 6:43 pm

alfaspider wrote:
Tue Jun 30, 2020 11:57 am
willthrill81 wrote:
Tue Jun 30, 2020 11:33 am
Forester wrote:
Tue Jun 30, 2020 10:35 am
Disaster for the gold critics - gold soars past $1,800 to a 9 year high.

https://www.cnbc.com/quotes/?symbol=@GC.1
Wow. :shock:

Question: how long will it take for the proponents of the theory that gold's expected real return is zero to at least admit that the theory might be wrong?
There's really no limit to how long the market can irrationally drive up the price of an object. Beyond it's minor value in electronics manufacturing and other industrial processes, the value of gold is based pretty much entirely on the madness of crowds and vicissitudes of sentiment.
What’s the bottom on the value of gold if it was only used for electronics? Like 1000x the price of copper, which is $0.17 per ounce, so that would be $170 per ounce?
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

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Re: Gold $1600 Oz - When?

Post by finite_difference » Sun Jul 05, 2020 6:48 pm

Forester wrote:
Tue Jun 30, 2020 10:35 am
Disaster for the gold critics - gold soars past $1,800 to a 9 year high.

https://www.cnbc.com/quotes/?symbol=@GC.1
Still below the 2011 price of $1,900.

But gold has definitely had a good run in the past year though.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

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Re: Gold $1600 Oz - When?

Post by alfaspider » Sun Jul 05, 2020 8:34 pm

klaus14 wrote:
Sun Jul 05, 2020 1:06 am
The floor for gold price is the production cost, which is around $1000. Source.
If gold as a speculative commodity were abandoned, the price could go much lower than the price of production because there’d be significant excess inventory. Gold can be recycled, so it is not quickly consumed.

Also, like oil, cost of production is not the same among all assets. Some supplies can be produced quite cheaply, while each additional amount of supply costs more. For example, Saudi oil can be produced for under $10 a barrel, but some Canadian oil sands costs nearly $100. There’s also the question of full asset lifecycle costs vs immediate production. A new gold mine adds startup and survey costs while an old one just has production costs.

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Re: Gold $1600 Oz - When?

Post by willthrill81 » Sun Jul 05, 2020 9:34 pm

nisiprius wrote:
Sat Jul 04, 2020 1:37 pm
willthrill81 wrote:
Sat Jul 04, 2020 11:41 am
...To add a bit to your good points, gold has a history of value spanning cultures, geography, and time that virtually nothing else (aside from possibly silver and copper), including stocks and bonds, can hold a candle to...
I have the impression that this idea is exaggerated. We go along with it because we don't pay a lot of attention, and of course we grew up on stories like "The Tinder-Box" that teach us the names and ranks of the precious metals, the first dog was big and guarded the copper coins, the second was huge and guarded the silver coins, the third had eyes as big as the Round Tower and guarded the gold coins... so the precious metals belong to the eternal land of Once Upon a Time, not the land of 1830s Denmark.
Based on what I said, I don't think that it's exaggerated at all.

Of course not all civilizations throughout history, both recorded and otherwise, used gold as currency. But far more used gold than used seashells, cattle, small knives, rope knots, or anything else. Abraham didn't use any of that to buy the cave of Machpelah around 2,000 B.C.; he used silver, which many ancient cultures used in conjunction with gold (and copper) for currency.

That you would seem to dispute this puzzles me greatly.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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