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Politics : Welcome to Slider's Dugout
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To: bearjones who wrote (4114)12/12/2006 11:33:56 PM
From: Fun-da-Mental#1  Read Replies (2) of 50719
 
Gold is a pyramid scheme. Those who are first in and first out make money. Those who are last in and last out lose.

I'm not saying don't ever buy gold. It has been a great investment the past few years, and it may go up more, but I'm not betting on it at the moment.

A pyramid scheme is an investment that produces little or nothing of practical value, that people buy simply because they expect more people to come in and buy them out for a higher price later. Yes gold has some practical uses, but that's generally not why people buy it. Investors buy it primarily because they expect investment demand to increase.

Some consider gold to have special value as a currency. But no currency has intrinsic value, not even gold. The only thing that makes money valuable is that people are willing to believe it has value. It is an act of faith. Pacific islanders once used cowrie shells as currency. I'm sure people shed blood sweat and tears for cowrie shells at one time, but they are worthless now. Cowrie shells are a natural commodity with nothing going for them except that they're rare and pretty, and the same thing can be said of gold.

Yes, there could be a collapse of the fiat system some day and gold would be worth thousands of dollars an ounce. I know that. But it could just as easily go the other way, with gold being ignored and eventually forgotten. I feel compelled to say this because we hear one side of the gold story so often and we need some balance.

I think I've had enough of ranting now and I'd like to get back to trading discussions or just lurking for a while.

Fun-da-Mental
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