Comments on: Why I will probably never buy gold http://www.gatherlittlebylittle.com/2009/10/why-i-will-probably-never-buy-gold/ Proverbs 13:11 - "...he who gathers money little by little makes it grow." Thu, 09 Feb 2012 17:31:49 +0000 hourly 1 By: Jack_of_all_tradeshttp://www.gatherlittlebylittle.com/2009/10/why-i-will-probably-never-buy-gold/#comment-144421 Jack_of_all_trades Sat, 06 Aug 2011 12:21:48 +0000 http://www.gatherlittlebylittle.com/?p=2302#comment-144421 Talking about the disadvantages of buying gold, there are some major ones I may add. When purchasing gold the investor has to forget about the interest that his money the bank could have paid for his money. Quite the opposite, he has to dig some money out of his pocket, to pay for storage costs or a management fee for his gold, which is sometimes referred to as negative carry. But today’s market environment, the interest foregone is minimal and For example, instead of <a href="http://www.financialcrisisblog.org/finance/Investing/Investing-in-gold-26405.htm" rel="nofollow">investing in gold</a> , one could have instead bought a risk free asset such as US Government Bond. But this isn't really a deal, with 0.35% in two years. But I strongly disagree with the ones who sustain that gold is useless because it has no utility. While oil can be used as fuel, corn can be eaten, steel can build bridges and buildings, all gold is really good simply because it's hard to destroy, looks good and can be used in a few dentistry applications. But the very fact that it doesn’t have many uses makes it a suitable currency substitute. Oil cannot be a currency, as one day we will run out of it. Corn cannot be a currency, as we grow and consume corn so there is not a stable amount in circulation. Metals such as steel, copper are not suitable, as they are often “used up” in industries such as construction. Gold’s value derives from the same principles from which other currencies derive their value. The paper on which the dollar or the euro is printed has no value in itself. Gold can even be thought of as a currency where the central bank that controls it has set interest rates are zero forever and fixed the money supply forever. In an uncertain world, the certainty surrounding gold makes it a strong currency. Other currencies may pay interest, but they interest is minimal in the current environment. Another reason in gold's favor as a stronger currency than paper currencies is that all the other currencies are designed so that they can be manipulated by central banks. The central bank controls the supply of and interest rate earned on the currency. Gold has no interest rate, so cannot be manipulated in this way. Gold is also in limited supply and cannot be printed at will by central banks. Talking about the disadvantages of buying gold, there are some major ones I may add. When purchasing gold the investor has to forget about the interest that his money the bank could have paid for his money. Quite the opposite, he has to dig some money out of his pocket, to pay for storage costs or a management fee for his gold, which is sometimes referred to as negative carry. But today’s market environment, the interest foregone is minimal and
For example, instead of investing in gold , one could have instead bought a risk free asset such as US Government Bond. But this isn’t really a deal, with 0.35% in two years.
But I strongly disagree with the ones who sustain that gold is useless because it has no utility. While oil can be used as fuel, corn can be eaten, steel can build bridges and buildings, all gold is really good simply because it’s hard to destroy, looks good and can be used in a few dentistry applications. But the very fact that it doesn’t have many uses makes it a suitable currency substitute. Oil cannot be a currency, as one day we will run out of it. Corn cannot be a currency, as we grow and consume corn so there is not a stable amount in circulation. Metals such as steel, copper are not suitable, as they are often “used up” in industries such as construction. Gold’s value derives from the same principles from which other currencies derive their value. The paper on which the dollar or the euro is printed has no value in itself. Gold can even be thought of as a currency where the central bank that controls it has set interest rates are zero forever and fixed the money supply forever. In an uncertain world, the certainty surrounding gold makes it a strong currency. Other currencies may pay interest, but they interest is minimal in the current environment.
Another reason in gold’s favor as a stronger currency than paper currencies is that all the other currencies are designed so that they can be manipulated by central banks. The central bank controls the supply of and interest rate earned on the currency. Gold has no interest rate, so cannot be manipulated in this way. Gold is also in limited supply and cannot be printed at will by central banks.

]]> By: Financial Independencehttp://www.gatherlittlebylittle.com/2009/10/why-i-will-probably-never-buy-gold/#comment-62138 Financial Independence Mon, 25 Apr 2011 16:20:55 +0000 http://www.gatherlittlebylittle.com/?p=2302#comment-62138 On the last point - yes, barter is the most preferred method, when worst comes. But most of the people do not have land nor skills to grow food. While gold is a highly liquid asset, inflation proved. There has been so many "sudden" downgrades from "AAA" rating to junk recently, that one are struggle to maintain faith in them. I am not suggesting or advocating for gold. But there has been always advisable to keep annual salary as an emergency fund. Why not keep in gold / precious metals? On the last point – yes, barter is the most preferred method, when worst comes. But most of the people do not have land nor skills to grow food.

While gold is a highly liquid asset, inflation proved. There has been so many “sudden” downgrades from “AAA” rating to junk recently, that one are struggle to maintain faith in them.

I am not suggesting or advocating for gold. But there has been always advisable to keep annual salary as an emergency fund. Why not keep in gold / precious metals?

]]> By: jazzy famehttp://www.gatherlittlebylittle.com/2009/10/why-i-will-probably-never-buy-gold/#comment-21007 jazzy fame Thu, 26 Aug 2010 19:20:19 +0000 http://www.gatherlittlebylittle.com/?p=2302#comment-21007 What about the fact that prices dont really go up, its just the value of the dollar dropping. Every time the government ask for more money (usually in the billions) to do something, it makes the feds have to print more money that has no backing, making the federal deficit greater and therefore decrease the value of the dollar, which I was told is currently worth about 2 cents...So when everything hits rock bottom, will your 10k, be worth 200.00?? Hard to tell, but if you have a bunch of green paper, why not invest some of it into gold or SILVER to protect against the dollar plummeting...and if the Almighty dollar is done, will the value of Euro's still be ok, or does it effect that as well... I personally think silver , which is about 18.00/oz is a better investment, cuz soon after the gold goes up to high, people will buy silver, and you can then sell ur silver shares to take advantage of the price increase while investing in real silver bars as well for times of inflation like these... Only the real Elite scumbags of the world know when and why to invest....so best bet , spread your chips out into numerous outlets and you have to make out somewhere... What about the fact that prices dont really go up, its just the value of the dollar dropping. Every time the government ask for more money (usually in the billions) to do something, it makes the feds have to print more money that has no backing, making the federal deficit greater and therefore decrease the value of the dollar, which I was told is currently worth about 2 cents…So when everything hits rock bottom, will your 10k, be worth 200.00?? Hard to tell, but if you have a bunch of green paper, why not invest some of it into gold or SILVER to protect against the dollar plummeting…and if the Almighty dollar is done, will the value of Euro’s still be ok, or does it effect that as well… I personally think silver , which is about 18.00/oz is a better investment, cuz soon after the gold goes up to high, people will buy silver, and you can then sell ur silver shares to take advantage of the price increase while investing in real silver bars as well for times of inflation like these… Only the real Elite scumbags of the world know when and why to invest….so best bet , spread your chips out into numerous outlets and you have to make out somewhere…

]]> By: sean kduggenhttp://www.gatherlittlebylittle.com/2009/10/why-i-will-probably-never-buy-gold/#comment-17206 sean kduggen Tue, 13 Apr 2010 11:32:13 +0000 http://www.gatherlittlebylittle.com/?p=2302#comment-17206 gold as an investment carries no counterparty risk, cannot go bankrupt and will never be worth zero - it has also outperformed every asset class over the last decade. as an inflation hedge, it has kept up with inflation for over 5000 years. your point of “Gold cannot be eaten, it cannot grow food, it will not cure disease, it cannot provide transportation by itself” is a fallacy as neither can guns, bullets or tools and you wouldn't argue their usefulness - food cannot be stored at any temperature, would require warehouses to store large amounts and cannot be broken down into equal units of value, but i wouldn't argue against having some. gold as an investment carries no counterparty risk, cannot go bankrupt and will never be worth zero – it has also outperformed every asset class over the last decade. as an inflation hedge, it has kept up with inflation for over 5000 years. your point of “Gold cannot be eaten, it cannot grow food, it will not cure disease, it cannot provide transportation by itself” is a fallacy as neither can guns, bullets or tools and you wouldn’t argue their usefulness – food cannot be stored at any temperature, would require warehouses to store large amounts and cannot be broken down into equal units of value, but i wouldn’t argue against having some.

]]> By: ALEXhttp://www.gatherlittlebylittle.com/2009/10/why-i-will-probably-never-buy-gold/#comment-12611 ALEX Fri, 06 Nov 2009 00:13:22 +0000 http://www.gatherlittlebylittle.com/?p=2302#comment-12611 Look the fact of the matter is that gold has gone from 250/ounce in early 2000 to over 1100 now! Thats clearly not a return of 1%/year... its a lot more...and 10x that amount if you were a speculator and bought it as a futures trade. Look the fact of the matter is that gold has gone from 250/ounce in early 2000 to over 1100 now! Thats clearly not a return of 1%/year… its a lot more…and 10x that amount if you were a speculator and bought it as a futures trade.

]]> By: Carnival of Personal Finance #229: candy edition — the centsible lifehttp://www.gatherlittlebylittle.com/2009/10/why-i-will-probably-never-buy-gold/#comment-12535 Carnival of Personal Finance #229: candy edition — the centsible life Mon, 02 Nov 2009 17:39:18 +0000 http://www.gatherlittlebylittle.com/?p=2302#comment-12535 [...] Why I will probably never buy gold: Mike shares that gold is generally a bad investment, and why he will never buy it. [...] [...] Why I will probably never buy gold: Mike shares that gold is generally a bad investment, and why he will never buy it. [...]

]]> By: Doug Digger Eberhardthttp://www.gatherlittlebylittle.com/2009/10/why-i-will-probably-never-buy-gold/#comment-12323 Doug Digger Eberhardt Thu, 22 Oct 2009 14:55:45 +0000 http://www.gatherlittlebylittle.com/?p=2302#comment-12323 Mr.GoTo, I've been replying to gold articles for quite some time. You are the first person to ask that question. I give you credit. My book will answer that question for you. I'm releasing it on Amazon soon. I've been selling the book for $97 at present but am lowering the price to the $20 range, combining it with my silver book. I just want more people to understand what's going on. In a few weeks or so, Google "Amazon" and "Buy Gold and Silver Safely" and it should be there. Disclosure: I don't sell gold. I write about it. I was a financial advisor who left the business to criticize it as well as take on economic and political issues of the day. Mr.GoTo,

I’ve been replying to gold articles for quite some time. You are the first person to ask that question. I give you credit.

My book will answer that question for you. I’m releasing it on Amazon soon. I’ve been selling the book for $97 at present but am lowering the price to the $20 range, combining it with my silver book. I just want more people to understand what’s going on.

In a few weeks or so, Google “Amazon” and “Buy Gold and Silver Safely” and it should be there.

Disclosure: I don’t sell gold. I write about it. I was a financial advisor who left the business to criticize it as well as take on economic and political issues of the day.

]]> By: Doug Digger Eberhardthttp://www.gatherlittlebylittle.com/2009/10/why-i-will-probably-never-buy-gold/#comment-12322 Doug Digger Eberhardt Thu, 22 Oct 2009 14:50:23 +0000 http://www.gatherlittlebylittle.com/?p=2302#comment-12322 The dollar index has been approaching its all-time low of just under 72 and gold broke out to a new high. It's not rocket science. Since 2000 the gold/dollar dynamic has changed. Just look at the charts. Could we get a bounce in the dollar here and a fall in the price of gold? Sure. I wrote an article explainging why on my blog http://fedupbook.com/blog called "Is Gold Peaking For Now?" The dollar index hasn't broken its March 2008 lows and until it does, gold shares are a risky trade at present. Nothing goes straight up or down eh? Will the dollar index at some point break below 72 again and gold break out to new highs? You can "bank" on it. The dollar index has been approaching its all-time low of just under 72 and gold broke out to a new high. It’s not rocket science.

Since 2000 the gold/dollar dynamic has changed. Just look at the charts.

Could we get a bounce in the dollar here and a fall in the price of gold? Sure. I wrote an article explainging why on my blog http://fedupbook.com/blog called “Is Gold Peaking For Now?”

The dollar index hasn’t broken its March 2008 lows and until it does, gold shares are a risky trade at present. Nothing goes straight up or down eh?

Will the dollar index at some point break below 72 again and gold break out to new highs? You can “bank” on it.

]]> By: Stewhttp://www.gatherlittlebylittle.com/2009/10/why-i-will-probably-never-buy-gold/#comment-12310 Stew Thu, 22 Oct 2009 05:30:28 +0000 http://www.gatherlittlebylittle.com/?p=2302#comment-12310 CCC, maybe I wasn't clear, my point was not that an indirect purchase of gold was a bad investment. It might be a good investment . . . but as a hedge against an economic collapse, ETF's probably aren't going to do much good. IMHO CCC, maybe I wasn’t clear, my point was not that an indirect purchase of gold was a bad investment. It might be a good investment . . . but as a hedge against an economic collapse, ETF’s probably aren’t going to do much good. IMHO

]]> By: ZPhttp://www.gatherlittlebylittle.com/2009/10/why-i-will-probably-never-buy-gold/#comment-12309 ZP Thu, 22 Oct 2009 05:26:02 +0000 http://www.gatherlittlebylittle.com/?p=2302#comment-12309 I am happy to have gold instead of dollars, and you? I am happy to have gold instead of dollars, and you?

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