On Oct 3, 9:15*am, John Smith wrote:
On 10/2/2010 10:28 PM, Nickname unavailable wrote:

...
* it sure is. the owners of gold will gladly sell you their gold for
little green pieces of paper. now who is the fool

That is probably how children see things, I will give you that.


are you saying that children can identify a scam quicker than a adult
can

*But no,
the owners of gold, which want to buy something, will trade you a
portion of their gold for dollars so they can go get a home, a car, a
yacht, an island, an airplane, etc.



BINGO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!! gold is
not money. you figured it out!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! now what
happens when money is in short supply? why, the owners of assets sell
said assets, to raise scarce cash to pay bills. and they snicker at
those who over pay for a asset in deflationary times. like gold bugs,
who are being goosed into over paying for a commodity used in
electronics and jewelery.


The gold mines will gladly sell you gold, it is their business.


then little green pieces of paper, mean more to them than gold

*Gold,
for the most part, stays in places such as fort knox (yeah, I know, it
is empty, or else someone elses gold is stored there) or the large
holdings in china, middle east, etc. in large storage areas. *Just like
people with money, people with gold have to trade part of their wealth
for things they purchase. *People also go broke on large gambles, and
supplies of gold come onto the market.


you are making my arguments, thank you so very much.


Gold is a way to secure and hold wealth in a stable form, where years,
decades, centuries, etc. it can be liquidated and spent and used.



that is not true. it can hold wealth sometimes, sometimes it leads to
massive wealth loss. and it pays no income or dividends, its a very
poor way to hold wealth. anyone who bought gold in the early 80's can
testify to that.

this article says it all, you still have not beaten a checking
account.

gold is a lousy investment, cash is scare in a deflating economy, cash
is king:since 1980:Gold Can’t Beat Checking Accounts 30 Years After
Peak, average U.S. checking account rose at least 92 percent. On an
inflation-adjusted basis, gold investors are still 79 percent away
from getting their money back



http://www.bloomberg.com/apps/news?p...xBrQ9JTg&pos=3


Gold Can’t Beat Checking Accounts 30 Years After Peak (Update1)


By Nicholas Larkin and Millie Munshi

Dec. 7 (Bloomberg) -- Gold’s best year in three decades has yet to
match the returns of an interest-bearing checking account for anyone
who bought the most malleable of metals coveted for at least 5,000
years during the last peak in January, 1980.
Investors who paid $850 an ounce back then earned 44 percent as gold
reached a record $1,226.56 on Dec. 3 in London. The Standard & Poor’s
500 stock index produced a 22-fold return with dividends reinvested,
Treasuries rose 11-fold and cash in the average U.S. checking account
rose at least 92 percent. On an inflation-adjusted basis, gold
investors are still 79 percent away from getting their money back.
“You give up a lot of return for the privilege of sleeping well at
night,” said James Paulsen, who oversees about $375 billion as chief
investment strategist at Wells Capital Management in Minneapolis. “If
the world falls into an abyss, gold could be a store of value. There
is some merit in that, but you can end up holding too much gold
waiting for the world to end. From my experience, the world has not
ended yet.”
While gold’s nine-year bull market is attracting hedge-fund managers
John Paulson, Paul Tudor Jones and David Einhorn, strategists and fund
managers at Barclays Plc, HSBC Holdings Plc, SCM Advisors LLC and
Brinker Capital Inc. say buy-and-hold investors shouldn’t always own
bullion. The accumulation of gold is part of a record $60 billion
Barclays estimates will flow into commodities this year.
Hoarding Bullion
The SPDR Gold Trust, the biggest exchange-traded fund backed by
bullion, has amassed more metal than Switzerland’s central bank,
spurred by a plunging dollar and concern that the at least $12
trillion of government spending to lift economies out of the worst
global recession since World War II will spur inflation. The collapse
of U.S. real estate in 2007 froze credit markets and left the world’s
biggest financial companies with $1.72 trillion of losses and
writedowns, data compiled by Bloomberg show.
The U.S. Mint suspended production last month of some American Eagle
coins made from precious metals because of depleted inventories. The
U.K.’s Royal Mint more than quadrupled production of gold coins in the
third quarter. Harrods Ltd., the London department store, began
selling gold bars and coins for the first time in October.
Those sales contributed to a 30 percent rally in gold this year,
beating the 25 percent gain in the S&P 500, with dividends reinvested,
and a 2.4 percent drop in Treasuries. Investors bought gold as the
U.S. economy, the world’s biggest, shrank 3.8 percent in the 12 months
ended in June, the worst performance in seven decades. Gross domestic
product expanded at a 2.8 percent annual rate in the third quarter.
Longest Winning Streak
A weakening dollar also contributed to bullion’s longest winning
streak since at least 1948. The U.S. Dollar Index, a measure against
six counterparts, dropped in six of the last eight years, including a
6.6 percent decline in 2009, bolstering demand for a hedge. Gold fell
1.6 percent to $1,143 an ounce by 11:08 a.m. in London. Before today,
the metal had risen 32 percent this year, the most since 1979.
Buy-and-hold investors may not have done so well. One dollar put into
a U.S. checking account in 1983 would be worth at least $1.92 today,
based on annual average interest rates from Bankrate.com. The Federal
Reserve target rate from 1980 to 1982 was 8.5 percent to 20 percent.
Banks were paying 5 percent on the accounts in January 1981, according
to a report in the New York Times.
Dividends Reinvested
The S&P 500 returned 2,182 percent from the beginning of 1980 through
the end of the third quarter this year, according to data compiled by
Bloomberg. The calculation assumes dividends reinvested on a gross
basis. Treasuries returned 1,089 percent through the beginning of this
month, according to Merrill Lynch’s Treasury Master Index.
“Gold is a useless asset to hold long term,” said Charles Morris, who
manages more than $2 billion at HSBC Global Asset Management’s
Absolute Return fund in London. “I’m not a gold bug who believes that
you want to own this thing in your portfolio at all times. We should
own it when the going is good, and the going right now is great.”
Those who bought gold when it reached a two-decade low of $251.95 in
August 1999 have seen a 387 percent return, more than four times the
82 percent gain in Treasuries. An investment in the S&P 500 lost 0.4
percent through the end of last month. Interest on checking accounts
shrank to 0.14 percent this year from 0.89 percent in 1999.
Since the S&P 500 peaked in October 2007, investors in the index lost
25 percent, holders of Treasuries made 16 percent and gold buyers are
up 64 percent.
‘Very Conservative Investments’
“There are people that just stayed in very conservative investments in
cash and government bonds,” said Larry Hatheway, global head of asset
allocation at UBS AG in London, who recommends investors hold about 1
percent of their assets in bullion. “Surely they would have been a lot
better off being in gold.”
Buying bullion at $35 when U.S. President Richard Nixon abandoned the
gold standard in 1971 would have given a 35-fold return, about the
same performance as the S&P 500.
Gold will average $1,070 next year, according to the median in a
Bloomberg survey of 19 analysts. The metal may jump to $2,000 in the
next five years, said HSBC’s Morris. Ian Henderson, manager of $5
billion at JPMorgan Chase & Co., said he’s adding to his gold-related
holdings because of “the momentum behind it.” Jim Rogers, the investor
who predicted the start of the commodities rally in 1999, has said
bullion will surge to at least $2,000 over the next decade.
Touradji Capital
“Our sense is that this bubble is more at the beginning stages than on
the brink of collapse,” said Thomas Wilson, head of the institutional
and private client group at Brinker Capital in Berwyn, Pennsylvania,
which manages about $8.5 billion.
Touradji Capital Management LP, the New York hedge fund founded by
Paul Touradji, bought 2.23 million shares of Barrick Gold Corp., the
world’s biggest producer, during the third quarter, according to a
Nov. 13 filing with regulators. The stake, Touradji’s biggest equity
holding, is worth $95 million.
Paulson & Co., the hedge-fund firm run by billionaire Paulson, will
start a gold fund on Jan. 1 investing in mining companies and bullion-
related derivatives, according to a person familiar with the plan.
Einhorn, who runs New York-based Greenlight Capital Inc., told a
presentation in New York in October that he’s buying gold to bet
against the dollar.
Paul Tudor Jones, in an Oct. 15 letter to clients of his Tudor
Investment Corp., said gold is “just an asset that, like everything
else in life, has its time and place. And now is that time.”
Net Gold Buyers
Central banks will become net buyers of gold this year for the first
time since 1988, according to New York-based researcher CPM Group.
India, China, Russia, Sri Lanka and Mauritius have all added to their
reserves.
Gold should be held when governments cease to function and currencies
are worthless, or when inflation is surging, said Brian Nick, a New
York-based investment strategist at Barclays Wealth, which manages
$221 billion. He doesn’t recommend increasing gold holdings, which are
a “very small” part of commodity allocations.
Inflation has yet to accelerate. U.S. consumer prices will rise 2
percent next year, the smallest expansion since 2002, according to the
median estimate of 63 economists surveyed by Bloomberg. Prices will
shrink 0.4 percent this year.
‘Knee-Jerk Reaction’
“People have this knee-jerk reaction and say that you want gold as a
hedge against inflation,” said Maxwell Bublitz, who helps oversee $3.5
billion as the chief strategist at San Francisco-based SCM Advisors
LLC and recommends investors hold no more than 5 percent of their
assets in the metal. “But the history of gold in regard to inflation
shows that it’s not a great hedge.”
Investors seeking to protect themselves against inflation should buy
commodities, which are cheaper than gold, said Wells Capital’s
Paulsen. Copper, after more than doubling this year, is still 28
percent away from the record $8,940 a metric ton reached in July 2008.
“Theoretically, it does have a spot in portfolios, a small one,”
Bublitz said. “You’re probably going to get entry points that are a
lot better than where gold is now.”
To contact the reporters on this story: Nicholas Larkin at
; Millie Munshi in New York at
.
Last Updated: December 7, 2009 06:48 EST


You logic of "people with gold would hang on to their gold" is only as
valid as "people with dollars would hang on to their dollars." *Both of
these statements are correct, you only get gold or dollars when they are
spent ...



but cash is king in a deflating economy, and you may have to sell
your gold at a reduced price, to raise scarce cash to pay your bills.
we are not facing hyper-inflation at the moment, and have not been
facing it for a couple of years now. in fact, we are facing deflation.
in deflation, cash is scarce, and cash is king. what is everybody
short of right now, well, its cash. so spend your scarce cash on gold.

Regards,
JS