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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (101415)	2/17/2009 12:03:57 AM
From: TH	2 Recommendations Respond to of 110194

HM, <Four calls in three days from people who have never owned gold and have decided they may want to change that. And that doesn't tickle your "contrarian" DNA?> No, because I've expected this and it is part of the "roapmap". Four informed investors does not a joe-six-pack move make. And, we have not had our parabolic event. I mean no offense, but did you ever considered if you could be a contrarian indicator? <g> Diamonds and gems are supported markets. Nice in bullmarkets or wars, but poor performers the rest of the time. Again, gold is not just a shiny metal with no value. Gold has a job and it is a not a buy and hold forever. History has proven time and time again what this job is and why. I'm talking about the value of bullion and what it does. Who made money when it was extracted has nothing to do with the reasons to own gold now. And, you realize that gold has performed extremely well over the past five or six years, but it would appear that this fact is perhaps a reason for you to believe the run is near the end. I heard the same thing in 05, 06, 07, and last year. I'll hear it this year and next. Maybe in the following year, assuming something has happened to change my fundamental outlook, I'll consider this idea of top. Might you have any idea what that reason might be that gold would become less attractive to me? For if you understood that, then you would also understand why holding gold now is the right move. Last, maybe you are not looking at the right <bubble>. You ever think what motivated people who never owned gold to start buying it in 2002 and 2003? I never owned a single ounce before 2003, but in that year (and early 2004) I converted the majority of liquid assets to bullion. Why? What did we see to pick the best performer of the next five years (that is still standing)? GT TH

To: Hawkmoon who wrote (101415)	2/17/2009 4:09:13 AM
From: Skeeter Bug	Read Replies (1) \| Respond to of 110194

>>But you might be completely correct if those "animal spirits" get riled up. But I'll tell you what.. if it gets that bad, I'd be stocking up on long-storage food and ammunition before I thought about gold. If you think about the gold rush, it wasn't the miners who made fortunes, it was the merchants who sold them everything they needed to survive and mine another day.<< just for example... ask a zimbabwe merchant whose assets are in zimbabwe currency how it worked out for him. i bet he wishes he had gold. i'm kind of like you in that i don't "get" gold intuitively. my problem is that i do "get" the idea the dollar is going to zero much faster than before and i'm looking for plan B outside of trusting the dollar or any other weakened fiat currency. i think i might make a bigger play for silver, though, as i see silver as more of a currency that can buy stuff vs gold as more of a store of value. i can see how others got gold throughout history, so i will likely defer to the lessons of history above my own intuition. gold holds value - it is worth almost $1000 per ounce right now. name one fiat currency that has held its value over the last 100 years. the dollar is down about 94% in 75 years - and accelerating towards $0.00.

To: Hawkmoon who wrote (101415)	2/17/2009 12:37:28 PM
From: RJA_	Respond to of 110194

Old lessons that would have been much easier and cheaper to learn in high school or college. That thing about history and study of same... From: William Stanley Jevons, Money and the Mechanism of Exchange [1875] oll.libertyfund.org Page 234 Inconvertable paper money: Finally we come to the undisguised paper money money issued by government and ordered to be received as legal tender. Such inconvertible paper notes have in all instances been put in circulation as convertible ones, or in the place of such, and they are always expressed in terms of money. The French mandats of 100 francs, for instance, bear the ambiguous phrase "Ben pore" cent francs." The wretched serape of paper which circulate in Buenos Ayres, are marked "Un Peso, Moneda Corriente," reminding one of the time when the peso was a heavy standard coin. After the promise of payment in coin is found to be illusory the notes still cirulate, partly from habit, partly because the people must have some currency, and have no coin to use for the purpose, or if they have, carefully hoard it for profit or future use. There is plenty of evidence to prove that an inconvertible paper money, if carefully limited in quantity, can retain its full value. Such was tlle case with the Bank of England notes for several years after the suspension of specie payments in 1797, and such is the ease with tile present notes of the Bank of France. The principal objections to an inconvertible paper currency are two in number. 1. The great temptations which it offers to over issue and consequent depreciation. 2. The impossibility of varying its amount in accordance with the requirements of trade. Over Issue of Paper Money. It is hardly requisite to tell again the well-worn tale of the over issue of paper money which has almost always followed the removal of the legal necessity of convertibility. Hardly any civilized nation exists, excepting some of the newer British colonies, which has not suffered from the scourge of paper money at one time or other. Russia has had a depreciated paper currency for more than a hundred years, and the history of it may be read in M. Wolowski's work on the finances of Rlussia. Repeated limits were placed to its issue by imperial edict, but the next war always led to further issues. Italy, Austria, and the United States, countries where the highest economical intelligence might be expected to guide the governments, endure the evils of an inconvertible paper currency. Time after time in the earlier history of the New England and some of the other states now forming parts of the American Union, paper money had.been issued and had wrought ruin. Full particulars will be found in Professor Sumner's new and interesting "History of American Currency." Some of the greatest statesmen pointed to these results; and Webster's opinion should never be forgotten. Of paper money he says, "We have suffered more from this cause than from every other cause or calamity. It has "killed more men, pervaded and corrupted the choicest interests of our country more, and done more injustice than even the arms and artifices of our enemy." The issue of an inconvertible money, as Professor Sumner remarks, has often been recommended as a convenient means of making a forced loan from the people, when the finances of the government are in a desperate condition. It is true that money may be thus easily abstracted from the people, and the government debts are effectually lessened. At the same time, however, every private debtor is enabled to take a forced contribution from his creditor. A government should, indeed, be in a desperate position, which ventures thus to break all social all contracts and relations which it was created to preserve.