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Author: NewLiberal Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1977257  
Subject: The Price of Gold is Irrelevant Date: 7/10/2013 10:12 PM
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The price of gold or silver, in terms of fiat paper, is irrelevant. What really matters is how many ounces of gold or silver you own.
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Author: salaryguru Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888299 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 10:15 PM
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What really matters is how many ounces of gold or silver you own.

That's certainly true if you're planning on making jewelry or coating some integrated circuits with contact metal.

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Author: NewLiberal Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888301 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 10:32 PM
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That's certainly true if you're planning on making jewelry or coating some integrated circuits with contact metal.

Besides use value, gold and silver have EXCHANGE value. Gold and silver ARE money. Fiat "money" is junk.

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Author: ramsfanray Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888302 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 10:34 PM
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Gold and silver are only money if you can find someone to take it. Exactly the same as fiat money.

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888303 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 10:35 PM
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NewLiberal....

You might be interested...

On Monday I took the train to Chicago for the day. Jim Sinclair was doing a Q & A session. It was pretty good.

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888304 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 10:45 PM
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Gold and silver are only money if you can find someone to take it. Exactly the same as fiat money.

Gold is quite liquid and is easily exchanged at spot price. Plus, it has a track record of being used as a store of value for thousands of years. Fiat regimes, on average, last less than 100 years before they go to 0.
A dollar in 2013 will buy about 3 cents worth of what it would buy a hundred years ago, so our dollar is well on its way to zero. An ounce of gold, however, still has the purchasing power it had 100 years ago. One could argue.. that it even has a bit more purchasing power.

Why this difference between fiat monies and gold?

Quite simple, really..... you can't print gold.

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Author: NewLiberal Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888305 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 10:49 PM
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Gold and silver are only money if you can find someone to take it. Exactly the same as fiat money.

Gold and silver can't be created at government whim, unlike fiat paper.

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Author: ramsfanray Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888306 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 10:57 PM
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None of that changes my point. In ancient Sparta, gold would buy you nothing. They used iron. Sweeden traded using copper. China at one time used cowrey shells. Rum, wine, sheep, cattle, fish, rice, barley have all been used as money by different societies at different times in history.

Gold and silver have no intrinsic vaule. They only have value because people like shiny metal.

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888307 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:00 PM
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None of that changes my point. In ancient Sparta, gold would buy you nothing. They used iron. Sweeden traded using copper. China at one time used cowrey shells. Rum, wine, sheep, cattle, fish, rice, barley have all been used as money by different societies at different times in history.

None of the above have been used as money in as widespread a fashion, or for a longer period of time- than gold.

Gold and silver have no intrinsic vaule. They only have value because people like shiny metal.

The shiny metal beats the crinkled paper that can be printed in whatever quantities the banks chose.

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Author: ramsfanray Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888308 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:01 PM
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Gold and silver can't be created at government whim, unlike fiat paper.

You need that fiat paper to buy gold and silver. Unless you plan to buy your own mine. Of course, you will be using fiat paper to buy the mine.

Face it, son. Your fantasy of a governmentless world will never come true. Which is a good thing, because if your fantasy were to come true, well, rent The Road Warrior for a glimpse of the reality your fantasy would be.

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888309 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:02 PM
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You need that fiat paper to buy gold and silver. Unless you plan to buy your own mine. Of course, you will be using fiat paper to buy the mine.

Currency is for transactions.

Gold and silver- are for savings.

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Author: NewLiberal Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888310 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:06 PM
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Gold and silver have no intrinsic vaule.

Yes, I know that's what you think, yet the value of gold and silver have long outlived you.

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888312 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:14 PM
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Not all gold advocates are in favor of returning to a gold standard. That's the piece that many don't understand. They look at an unworkable gold standard and therefore think that gold and silver are worthless.

But as a store of value- over time, it's difficult to beat gold.

Not as a short term investment or trading vehicle... but as a "store of value" over time.

You may simply refer to it as a shiny metal with no intrinsic value.

But that shiny metal with no intrinsic value has served as a store of value for thousands of years.

Above ground, there's less than one ounce of gold on the planet for every man, woman and child alive. And the amount mined adds less than population growth....

And that mining production has leveled off and is decreasing, worldwide.

Say what you want, but gold is an unencumbered asset. I'm talking about physical gold that you can hold in your hand- not a slip of paper that says you "own" X amount of gold in a bank vault somewhere, or a few shares of the GLD ETF, or a Comex contract.

It's a real asset, and unlike the debt based financial instruments floating around today.... it is not a promissory note dependent upon someone else's "promise to pay".

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Author: ramsfanray Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888313 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:16 PM
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None of the above have been used as money in as widespread a fashion, or for a longer period of time- than gold.


I never said they were. I'm just saying that the only reason gold is valuable is because people say it is. If you were in the middle of the Saraha, how much gold would you want in your canteen?

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Author: richieds Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888314 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:19 PM
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"A dollar in 2013 will buy about 3 cents worth of what it would buy a hundred years ago"

If you told that to someone 100 years ago, they would have shuttered in fear and have imagined a world of pestilence and utter decay...

yet hear we are 100 years later and even on a relative basis, we are all far wealthier than most were 100 years ago. Doesn't really matter much as long as inflation results in higher wages and higher investment values.

My guess is it will be the same result in another 100 years.

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Author: WuLong Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888315 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:20 PM
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I think gold is a great thing to sow in to your garments if you're a Jewish family in Vienna in 1939 but I think civilized people don't buy gold.
http://www.youtube.com/watch?v=TUpFTM5s4UA

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Author: NewLiberal Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888316 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:20 PM
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If you were in the middle of the Sahara, how much gold would you want in your canteen?

Gold is scarce everywhere, not only in the Sahara.

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888317 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:23 PM
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I never said they were. I'm just saying that the only reason gold is valuable is because people say it is. If you were in the middle of the Saraha, how much gold would you want in your canteen?

Same goes for dollars, of course. I'd want neither in my canteen.

But if I was in the middle of the Sahara, I'd rather have an ounce gold coin in my pocket; I might get lucky, run across a passing caravan, and could buy a canteen full of water, along with a camel and provisions for a couple of weeks.

They like gold in the Sahara.... they know what it looks like and it is universally accepted there. They might not take a dollar.

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888318 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:27 PM
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Charlie Munger deals in debt based instruments, of course.

The Chinese, the Russians, the Indians, the Turks, the Indians (in spite of their government trying to halt the purchase of gold by its citizens), the Omanis, and wealthy Europeans- all currently buying gold hand over fist... must not be civilized.

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Author: ramsfanray Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888319 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:31 PM
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Same goes for dollars, of course.

Exactly. Gold or dollars. They only have the value that people are willing to place on them.

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Author: NewLiberal Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888321 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:37 PM
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Gold and silver can't be created at government whim, unlike fiat paper.

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Author: ramsfanray Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888322 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:39 PM
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You say that like it means something profound.

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888323 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:39 PM
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Same goes for dollars, of course.

Exactly. Gold or dollars. They only have the value that people are willing to place on them.

Let me restate what I said earlier, by putting it in the form of a question....

Granted, your canteen is empty, and no one suggests that you can drink gold, any more than you can drink a dollar.

Whether through poor planning, or just dumb luck, you are stuck in the middle of the Sahara with no water in your canteen....

Which would you rather have in your pocket? An ounce of gold, or 1282 U.S dollars?

Or... because gold doesn't just come in 1 ounce coins, and because silver is also a "store of value".....

Take your pick....

1/10 ounce of gold or 128.20 U.S. dollars?

or

1 ounce of silver or 20.00 US dollars?

Remember that you are in the middle of the Sahara. There's no guarantee that you'll be found by anyone.... but if you are... which would you rather have?

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888324 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:41 PM
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You say that like it means something profound.

What NL said actually is profound.

It simply means this:

Nobody can devalue your gold by printing more gold.

The same cannot be said of government fiat paper.

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Author: ramsfanray Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888325 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:42 PM
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Just to make you happy, I'll say gold, even though your question has nothing to do with what I'm saying.

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Author: NewLiberal Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888326 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:49 PM
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Just to make you happy, I'll say gold, even though your question has nothing to do with what I'm saying.

Generous

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888327 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:51 PM
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Just to make you happy, I'll say gold, even though your question has nothing to do with what I'm saying.

You said:

If you were in the middle of the Saraha, how much gold would you want in your canteen?

And I agree. You might end up dead if you had gold in your canteen rather than water. Nobody disputes that. (Of course, you'd be just as dead if you had dollars in your canteen)

But people do not save gold in order to put it in their canteens. They save gold because it has been a reliable store of value for millenia.

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Author: NewLiberal Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888328 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/10/2013 11:53 PM
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They save gold because it has been a reliable store of value for millenia.

Cheers!

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Author: ramsfanray Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888329 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/11/2013 12:01 AM
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Nobody can devalue your gold by printing more gold.

What about 16th century Spain?

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888330 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/11/2013 12:13 AM
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Nobody can devalue your gold by printing more gold.

What about 16th century Spain?

The opening of the New World certainly did flood Spain's treasury with a new source of gold (and silver). Both took a tumble, for precisely the reason you are hinting at; suddenly, there was new supply.

But where is new supply to come from? Conventionally speaking, at least, nobody sees any new supply coming online anytime soon. They find small deposits now and again, but few real big deposits are found anymore.

Certainly that is a risk... but the amount of money spent by mining companies prospecting for new deposits has gone through the roof over the past ten years or so.... and yet mine production, after an anemic rise from 2002 to 2010, production leveled off, and last year saw an actual decline.

There is the disruptive possibility of a huge new deposit being found, but most geologists say that is unlikely.

And disruptive technological advances.. such as finding a cheap way to extract the minute quantities of gold in seawater... are cost prohibitive now, and will remain so for the foreseable future.

Are there risks to owning gold? Of course! But as I see them, the risks are less likely than the risks associated with owning Apple stock or putting my money in US bonds or a savings account.

Now.... I do own stocks. And I do have a savings account. But I also have gold and silver... and when I look at the financial house of cards we've built, they enable me to sleep a bit better than I would otherwise.


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Author: NewLiberal Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888331 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/11/2013 12:17 AM
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Nobody can devalue your gold by printing more gold.

Governments will try.

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888333 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/11/2013 12:43 AM
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Nobody can devalue your gold by printing more gold.

Governments will try.

Oh, they already are! And to some degree, they've been successful.

Except they cannot print real gold (yet, at least). They employ "paper gold".. creating the illusion that a paper contract for gold delivery is the equivalent of actual physical gold. That's the basis of the COMEX, most of the gold ETFs, and bank promissory notes for unallocated (and even some "allocated") gold.

But that game is coming to an end. COMEX warehouse inventories of physical gold are plummeting. So too at GLD warehouses, as well as the LBMA. What gold remains in the west is being bought and shipped east to China, Russia and the central banks of the BRICS. It's turned into quite a profitable arbitrage. And when the COMEX can no longer make delivery, their paper promises will be worthless and acknowledged as such. At that point, the paper price of gold will become meaningless.

Mao once said that he would one day sell the rope to the capitalists with which they would hang themselves.

I never thought I'd live to see the day when that prediction came true. Sadly it seems to be happening right in front of our eyes.

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Author: salaryguru Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888342 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/11/2013 1:45 AM
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Besides use value, gold and silver have EXCHANGE value. Gold and silver ARE money. Fiat "money" is junk.

Mostly I buy stuff at the grocery store, the gas station, . . . places like that. I've never tried, but I'm pretty sure they wouldn't know what to do with an ounce of gold.

And I've actually been in the Sahara desert before. I'm not certain, but my guess is that the nomads that I saw there would also prefer dollars to gold.

In fact, as far as I know . . . in my whole life . . . in my parents whole life . . . even in my grandparents whole life, there has never been a time when any of us could have been able to spend bulk gold easily. It would have required significant effort (and probably fiat money) to find someone who could convert gold into useful currency or commodities.

So have I missed something, or are you saying, "this time it's different"?

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Author: WuLong Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888348 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/11/2013 7:56 AM
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Charlie Munger deals in debt based instruments, of course.
Charlie Munger deals in businesses that create value.
The Chinese and Russians have historic reason not to trust that they can keep their businesses.

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888354 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/11/2013 8:40 AM
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Besides use value, gold and silver have EXCHANGE value. Gold and silver ARE money. Fiat "money" is junk.

Mostly I buy stuff at the grocery store, the gas station, . . . places like that. I've never tried, but I'm pretty sure they wouldn't know what to do with an ounce of gold.


I disagree with NL here.... although you can probably barter gold for stuff at a flea market, the primary use of gold is as a store of value

And I've actually been in the Sahara desert before. I'm not certain, but my guess is that the nomads that I saw there would also prefer dollars to gold.

Increasingly that is not the case. Within a few years, the Chinese yuan may replace the dollar as the currency desired by folks in the Sahara.

But they've always known what gold is- and you could buy yourself out of a jam with it.

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888358 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/11/2013 8:52 AM
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So have I missed something, or are you saying, "this time it's different"?

No, I am not planning on this time being different. I am planning on the failure of the US dollar. It has already outlived the average lifespan of a fiat currency, and all (as in 100%) fiat currencies go to zero in the end. So I am planning on what has so far proven to be an historical inevitability.

People don't, and won't go out on the street and use gold in day to day transactions... and they probably never will. I don't anticipate the disappearance of governments anytime soon, and as long as there are governments, they are going to figure out a way to impose fiat currencies as a way to skin the average citizen Perhaps silver will be used as currency, as it was here until 1964, but there's really too little of that left to form the basis of any broad currency regime.

Gold has always been seen as a store of value, and historically, only intermittently has it been used as a currency.

You save in gold... and then convert it to currency as you need it... or pass it on to your kids.

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Author: ramsfanray Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888359 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/11/2013 8:59 AM
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They save gold because it has been a reliable store of value for millenia.

That's because people have wanted gold for a millenia.

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888361 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/11/2013 9:02 AM
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Charlie Munger deals in businesses that create value.

Point taken. And so do I- whenever I buy shares of companies that make stuff, turn a profit and grow.

But I also have savings... that portion of my assets that I don't wish to put at extreme risk. And one place I don't want to put any money is in sovereign/municipal/corporate bonds or preferred stocks right now. There may come a time (as there was in the early eighties) when that would make sense. At that time, I might sell gold and buy bonds.

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888365 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/11/2013 9:20 AM
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That's because people have wanted gold for a millenia.

I'm not disagreeing with you at all, ray. And that's why, in former times, it was also used as a currency- because it was a thing of beauty, was desired, and made nice jewelry. Silver- the same way.

It can be argued, however, that gold and silver do have some intrinsic value... gold- only a little bit.. it's used in computer technology, space technology, and it is the best conductor of electricity at room temperature on earth. Plus, it doesn't oxidize as silver or copper does.

Silver, it can be argued, has tremendous intrinsic value, and its use in industry is growing in leaps and bounds... in electronics, in solar panel construction, in medicine as a biocide that remains effective even against antiobiotic resistant bugs, and in textiles. I am wearing a pair of socks right now that have a minute amount of silver woven into the fabric... My running socks all have it.... I hate to admit my slovenliness at this point... but I can wear those socks for several days in a row without worrying about grossing out my locker-mates at the gym.

And because silver has such value in industry, it is doubtful that it will ever be used as a currency again... but it is quite valuable, and its use by industry has already destroyed most above ground supplies (the US government used to have a few billion ounces of it in storage... no more) ... and unlike gold, which can profitably be recycled... the same cannot be said for silver. Most silver that is mined, ends up in landfills after a few years- because it doesn't make economic sense to recycle it..... at least at current prices.

Did you know that every cruise missile contains about 33 pounds of silver? Whereas... every new television may contain 1/10 of an ounce... but when you produce millions of televisions, and millions of iPads, and millions of cell phones a year... plus more and more solar panels... and those other uses I mentioned above, which are only increasing.... pretty soon, you're talking about real silver, Jake.

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Author: wzambon Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888367 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/11/2013 9:25 AM
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One more thing,

It is estimated that the current price that a mining company pays- to extract one ounce of gold from the ground- is between 1200 and 1300 dollars. That's a rough estimate, and the specific costs involved can be debated, but you get the point.

How much does Bernanke have to pay to flip a switch and create a billion bucks?

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Author: NewLiberal Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888545 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/11/2013 9:42 PM
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Bill, I'm impressed ... and truly cheered at your comments!

Gold is a definitely a superior store of value, but that value is a consequence of the fact that gold is the market economy's preferred medium of exchange.

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Author: NewLiberal Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888547 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/11/2013 9:57 PM
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(Let me say that again)

Bill, I'm impressed ... and truly cheered at your comments!

Gold is definitely a superior store of value, but that value is a consequence of the fact that gold is the market economy's preferred medium of exchange.

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Author: salaryguru Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1888559 of 1977257
Subject: Re: The Price of Gold is Irrelevant Date: 7/11/2013 11:12 PM
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No, I am not planning on this time being different. I am planning on the failure of the US dollar. It has already outlived the average lifespan of a fiat currency, and all (as in 100%) fiat currencies go to zero in the end. So I am planning on what has so far proven to be an historical inevitability.

It doesn't impact me if you want to invest in gold, but you've made this statement about lifespan of fiat currency a couple of times and I just don't see how it's relevant. Sure, the Euro displaced several other kinds of currencies. Back in the 90's I remember when Mexico replaced old pesos with new pesos. They could just as easily have chosen to replace old pesos with new Mexican dollars. But in none of those cases would holding gold have done you any good. In fact, it is expensive to purchase gold, to keep gold, then to sell it again. It was much easier in these cases to swap your old currency for new at no extra price.

Gold has always been seen as a store of value, and historically, only intermittently has it been used as a currency.

Yeah . . . that's a nice phrase that gold bugs like to use. It sounds comforting, but it doesn't really have much meaning does it? In general, things, skills, knowledge and access hold value.

Lots of things hold value . . . wood, cement, marble, works of art, . . . all hold value. It's not just gold. And you can make money from all of them. Buy when demand is low and sell when demand is higher.

Being able to fix a car or the plumbing holds value. Understanding how to make things work, in general, holds value. Having specialized access to things, skills, and knowledge holds value. If you're worried about some apocalyptic collapse of the currency system, then you might think about diversifying beyond a stack of gold.

You save in gold... and then convert it to currency as you need it... or pass it on to your kids.

Shares in a broad index fund seems more practical.

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