Gold

[yielder]

But interest in gold is still concentrated in Asia. In the United States, the demand for jewelry, measured in ounces bought, fell 0.7 percent last year, according to the World Gold Council. It dropped 5.7 percent in Italy and 3.9 percent in Britain. In contrast, jewelry demand rose by 17.6 percent in India, 11.5 percent in China, 15.2 percent in Hong Kong and 15 percent in Taiwan.

Maybe the demand for gold is more cultural than economic????


Gold Climbs, Helped by Weaker Dollar

Member ID: n0b0dy42 Password: n0b0dy42

[scomac]

You can view a replay of today's "Great Gold Debate", between Brian Acker and John Embry on ROBTV.

Last year it wasn't much of a competition with Embry winning handily, IMO. This year, I expected that Acker would present much more of a challenge as the fundamentals and returns for gold had been poor. Yet Embry continued with the upper hand as it is clear to me he has a much better grasp of the intricacies of the gold market. He continued to make a very convincing case for holding gold inspite of his claims of market manipulation by Central Banks and almost zero interest in gold stocks by equity investors.

I continue to be neutral on gold. What is clear to me is that gold mining is a very tough business based on the past 4 quarters results of most of the mid to large producers. While current gold prices seems pretty strong by historical standards, they're not nearly high enough for this to be a high profit undertaking. This is not helped by the fact that gold has little practical value which does nothing to enhance demand for the shiney metal. Constrained supplies (for the above mentioned reasons) and the potential for a spike in demand should paper assets go to hell in a hand basket (remember cash earns a negative real return, bonds are very pricey and stocks are above long term average multiples)makes a case for owning a bit of gold as insurance. At least this way, the investor will potentially have an appreciating asset that can be converted into other more traditional assets should some sort of economic and/or geopolitical disaster befall us.

Any other opinions out there?

Regards,

Scott

[Norbert Schlenker]

At least this way, the investor will potentially have an appreciating asset that can be converted into other more traditional assets should some sort of economic and/or geopolitical disaster befall us.

Any other opinions out there?

My opinion is that firearms and ammunition would prove much more useful should some sort of economic and/or geopolitical disaster befall us. If you have reloading equipment, you could always melt your gold stash for bullets too.

[dakota]

This is not helped by the fact that gold has little practical value which does nothing to enhance demand for the shiney metal.

You tell that to your wife scomac, that is if you don't mind sleeping on the couch for a few months or until you buy her some of that impractical stuff

If you have reloading equipment, you could always melt your gold stash for bullets too.

The Lone Ranger rides again! This time with golden bullets! Must be inflation.


BTW scomac I watched the show and thought it very entertaining and informative. John Embry not only had a better grasp of the gold market but far outshone Brian Acker when it came to economic issues. Loved it when Embry told Acker to stick to issues that he knows something about.

[scomac]

My opinion is that firearms and ammunition would prove much more useful should some sort of economic and/or geopolitical disaster befall us. If you have reloading equipment, you could always melt your gold stash for bullets too.

Would that be for offensive or defensive purposes?

Scott

[scomac]

You tell that to your wife scomac, that is if you don't mind sleeping on the couch for a few months or until you buy her some of that impractical stuff

I guess I'm just lucky; she's never had more than a passing interest in rocks and minerals....

Then again....she does have a thing for new cars.

[Norbert Schlenker]

It depends what you mean by offensive. Some city slickers find the thought of shooting rats with antlers, i.e. Bambi, offensive.

[scomac]

It depends what you mean by offensive. Some city slickers find the thought of shooting rats with antlers, i.e. Bambi, offensive.

Well....you wouldn't want to deprive the coyote population of a food source, would you?

My first impression of your original post was that it sounded rather Republican.

Scott

[scomac]

BTW scomac I watched the show and thought it very entertaining and informative. John Embry not only had a better grasp of the gold market but far outshone Brian Acker when it came to economic issues. Loved it when Embry told Acker to stick to issues that he knows something about.

Yah, I got a kick outa that! I've got to wonder just how much they pay Acker to take the abuse. That's twice now that Embry has made Acker look like an idiot.

Scott

[dakota]

That's twice now that Embry has made Acker look like an idiot.

IMO he is an idiot! I remember him a few years ago pontificating that NOBODY should buy "value stocks" NOBODY should buy "dividend stock" the thing was you buy "GROWTH"
I remember him saying that if a stock had dividends, he would not buy it!
Well he got burnt in the bust and lost a lot of his accounts!
Now he is advising everyone that they should buy "dividend stocks" because " in the long run divividend stocks have outperformed all other stocks" No...really?

Would I take any advice from a person like that? What do you think scomac

[scomac]

I wasn't aware of Brian Acker's history. I think that's what Mike would call a classic case of style drift.

Scott

[dakota]

I wasn't aware of Brian Acker's history. I think that's what Mike would call a classic case of style drift.

Scott

How about a quick turn around

BTW I phoned the "Market Call' show last year to ask about his change of investment style and he refused to accept my call. You go through an intermediary so the guest can refuse to talk about a topic.
I was going to mention a different topic but in the past I've been cut off, they told me I was "off topic" or words to that effect.

[Gus]

You can't help wondering about a commodity that is only valuable for being valuable.

On the other hand, there are not many products where both producer and consumer unite in wanting to keep prices high. Maybe real estate is another...

[c emptor]

John Embry completely lost his temper with Brian Acker and was
shouting at him .It was not the usual polite phoniness one sees
on television. Embry dominated Acker: it was amazingly frank.
He hardly held anything back.

Embry thinks that gold is kept artificially low by the most powerful men in the world .
He subscribes to a conspiracy theory. He also thinks we may see spike oil prices and agreed
with the Goldman Sachs report.This could lead to a recession.

He said that the world is awash with paper money .
He even said a depression could be possible . Embry said the US
economy is being hollowed out by China and when the time is right
China will drop the US. He said Greenspan will go down as one
of the worst
Fed Chairmen ever. It was quite a performance.

[yielder]

You can view

I did and now I remember why I don't watch ROBTV. It did, however, confirm one of my other biases though - whenever you listen to the talking heads, apply a discount rate that is inversely proportional to their age/years in the business .

Mike

[dakota]

You can view

I did and now I remember why I don't watch ROBTV. It did, however, confirm one of my other biases though - whenever you listen to the talking heads, apply a discount rate that is inversely proportional to their age/years in the business .

Mike

That only apply to "talking heads"? Just curious.

[Norbert Schlenker]

We haven't had a good argument about owning gold so I'm just going to tack this on here. Some think precious metals are a way of making money, and I see a rebuttal to that posted early today.

I know others think it's insurance against doom. They should read this out of the Sunday WashPost.

... After Mitchell and 10 members of her extended family took refuge in the convention center downtown, she was grateful to be on dry land but quickly realized they had another problem: Aid workers were giving out water and food, but there wasn't anything for her infant niece. The only thing Mitchell had that she thought might be of value was the silver necklace she was wearing around her neck, so she wandered around the convention center for hours trying to trade it for milk.

There were no takers. The last thing anyone wanted was something whose sole value was that it looked good.

... A clean pillow and blanket, or even a sheet, could buy you practically anything, be it diabetes medicine or a piece of meat. Office chairs with wheels, to ferry around the ill and weak, were worth more than DVD players and laptop computers.

Cigarettes and liquor were initially valuable commodities, a comfort in miserable conditions. But after looters flooded the market, there was so much of the stuff that people started giving it away.

... The ones in the most difficult situations were people such as Mitchell who had nothing but the shirt on their back.

But Mitchell was resourceful, and it took her only a few hours to figure out the rules of the new economy. After scrounging in some trash bins, she found T-shirts someone had dumped. She went to people who were evacuated in their pajamas or were wearing wet clothes and bartered until she got not only milk, but also a bag of Huggies diapers.

... Robert Thomas, 46, a day laborer who used to cut the grass in a city park ... knew exactly what he wanted: his mountain bike and a baseball bat.

His decision was prescient: As chaos descended on the convention center this week, with reports of rapes, kidnappings and murders, he knew he had made the right choice. The bike helped him "to get around fast," Thomas said. And the bat to make sure nobody can "mess with me."

[Bylo Selhi]

Some think precious metals are a way of making money, and I see a rebuttal...

... Cigarettes and liquor were initially valuable commodities, a comfort in miserable conditions. But after looters flooded the market, there was so much of the stuff that people started giving it away.

Then there's this rebuttal of the rebuttal

LONG BEACH, Miss. - Soda, Gatorade, chips and detergent line the shelves at the Pineville Mart, but it's beer and cigarettes that residents in this coastal town are snapping up. The shop reopened a few days ago with no power and no storefront, just an empty space leading from the parking lot into the aisles. "They come in and they say, 'Is there any beer, cigarettes?'" said 9-year-old Thomas Nguyen, who, with his 8-year-old brother Chris, helps his mother run the shop. "Now we have to say we don't have any left," Chris said Monday. "We sold all of it."

I think the point of all these anecdotes is that certain things will suddenly be in demand and their values will quickly escalate, but it's not always obvious ex ante what those items will be. Also I imagine their values may fluctuate wildly as the catastrophe develops (e.g. certain supplies like food and water may arrive first but perhaps not medicine, soap or clean clothes.)

As for gold and other precious items, there are ample stories about how people in (for instance) war time have used family jewelry or even gold teeth salvaged from the dead to bribe their way to safety. Why couldn't that happen again?

[Shakespeare]

I imagine their values may fluctuate wildly

IIRC, cigarettes were viable currency in post-war Germany.

It's interesting here [i.e. in New Orleans] that the value reportedly dropped "when looters flooded the market". However, with limited incoming supply, that must be a temporary phenomenon.

Gold is only valuable longer-term, once immediate needs are taken care of. You can't eat it, drink it, or smoke it, and it makes a poor blanket.

[martingale]

From what's happened in New Orleans I think it's pretty clear what sorts of things retain their value in a catastrophe. Gold wasn't among them.

The things that were in high demand in New Orleans over the past while:

Water, or a means of purifying dirty water. Food products with long-shelf lives. A car with gasoline. Soap and laundry detergent. Hand sanitizer. Antibiotics. Portable chemical toilets. Guns and ammunition. Clean underwear, socks. Ice. A good stiff drink.

Gold wasn't on anybody's list.

[beaverlodge]

The following became important?

Water, or a means of purifying dirty water. Food products with long-shelf lives. A car with gasoline. Soap and laundry detergent. Hand sanitizer. Antibiotics. Portable chemical toilets. Guns and ammunition. Clean underwear, socks. Ice. A good stiff drink.

Those who pioneered in Alberta and Saskatchewan (and other Canadian places) had none of the above.

It helps to have perspective..

[martingale]

The following became important?

Water, or a means of purifying dirty water. Food products with long-shelf lives. A car with gasoline. Soap and laundry detergent. Hand sanitizer. Antibiotics. Portable chemical toilets. Guns and ammunition. Clean underwear, socks. Ice. A good stiff drink.

Those who pioneered in Alberta and Saskatchewan (and other Canadian places) had none of the above.

It helps to have perspective..

Sure. I meant to give a list of things you could barter with effectively in New Orleans last week. In a wilderness situation the list would differ a bit. Some of those things like chemical toilets, antibiotics, hand sanitizer, and soaps are absolutely critical in an urban setting but not that useful in the wilderness.

In any case they didn't need gold either in the wildnerness.

[Bylo Selhi]

From what's happened in New Orleans I think it's pretty clear what sorts of things retain their value in a catastrophe. Gold wasn't among them.

In any case they didn't need gold either in the wildnerness.

Gold (silver, diamonds, et al) are useful as a substitute for currency when the fiat money system breaks down. It didn't break down in Nawlins and that's hardly a surprise. But when it does -- as it most assuredly will again sometime, someplace -- then gold, etc. will resume their historic role as a de facto currency in that location.

I agree that that's not likely to happen in the US (or Canada) any time soon. But then again, many Europeans felt the same way in the years prior to WW2.

[Shakespeare]

Gold (silver, diamonds, et al) are useful as a substitute for currency when the fiat money system breaks down.

Hard currency from another country is also useable. [Example: Deutschmarks in the former Yugoslavia just before it broke up; I paid in dinar on the ferry to Italy from Split and the cashier referred to it as "toilet paper" and just threw it into a drawer without sorting it.]

[moonman]

Move Over, Adam Smith: The Visible Hand of Uncle Sam Too bad this stuff is always written by the gold bugs.