GOLD vs Dollar

apphd

I see many here that sound pretty knowledgeable about large finance and markets so maybe someone can help me understand something.

I recently saw a show on Fort Knox gold depository and it got me thinking (which can be a very dangerous thing:p). Our economy and dollar is in the crapper, gold is going through the roof. Shouldn't this be a good thing?

Maybe not for you and me, but the U.S. in general.

wayne3burk

I'm no expert, but....

The dollar is the world standard "currency", so there is an inverse relationship between between the relative strength and weakness of the dollar and gold. So when the Dollar is seen as week, it goes down relative to other currency's on the world exchange and the price of gold goes up.

The risk is that those holding US currency futures or stockpiles loose value on their holdings and the dollar declines. As the treasury prints more money and sells Treasury Bonds, the demand for those bonds as an investment can loose their appeal, and those foreign interests who see the US Dollar as a good investment could / might stop buying US Treasury Bonds.

On the other hand, a weak dollar visa vi other currencies and gold makes the price of imported goods rise and the costs for our exports to decline on the world market - which in turn could help reverse our serious trade imbalance.

Maybe if we made more plastic toys here and imported less plastic toys from china all our troubles would go away.

ben62670

Gold can be sold in any market world wide. We haven't had to worry about the dollar till recently. Mexicans will soon be able to laugh at our dollar compared to the peso if this continues. In am not an expert by any means.
Ben

buymesome

We will be using the amero by that time

The us gave away most of the gold in exchange for imaginary money loan during the bailout and we have to pay interest in paid by gold for the fake money we borrowed

One time a smart cookie from MN bought a house from money he borrowed from a local bank . He never had gold so he put up assets against the fake money like his car etc....

He never paid back the loan and the bank said they were taking his house away "like F**K you are " he said and took the bank to court . He explained to the judge that he put his car etc up against the money and told the bank to show what assets they put up for the money they borrowed him

The bank could not prove where the fake money came from and the man got a free house

phuz

buymesome

You know for evey one dollar we borrow from the bank they can print 10 fake ones . Every time we spend a dollar we are paying 50 cents interest back to the bank FOR MONEY THATS DOESNT EVEN EXIST !!!!!

We use to be a self produced nation so when we needed money everyone would scramble to buy american DEBT bonds because you would make a fortune back on it

The fact that we buy our goods from japan and china keeps these asian friends of ours buying our debt so that millions of stupid fat lazy good for nothing americans can run up credit card bills and not pay the money back on time

Japan and china need us as much as weneed them

shack

Gold is only valuable because of it's scarcity (or lack of circulation). The gold in the vaults would be virutally worthless if it all went to circulation at the same time.

Currently the US Govt holds about 8,134 tonnes of gold...262 million ounces. At today's price of around $1,140 per ounce that comes to about $298,680,000,000 (almost $300 Billion)...only a fraction of our annual expendatures. Even if the govt decided to sell it all, exactly what currency would we accept. Dollars? Why would we do that? Selling the gold would further devalue the dollar. Printing dollars is about the same effect and we still have the gold. Chinese currency? Yen? Euros? Again of no real value. There are still vast gold reserves in US territories that could be tapped if they decided to do so. Long term there is no real value to selling the gold. BTW...IF...they could sell the gold at todays market price it would be less than a $1,000 for each US citizen.

shack

buymesome wrote:

We will be using the amero by that time

The us gave away most of the gold in exchange for imaginary money loan during the bailout and we have to pay interest in paid by gold for the fake money we borrowed

One time a smart cookie from MN bought a house from money he borrowed from a local bank . He never had gold so he put up assets against the fake money like his car etc....

He never paid back the loan and the bank said they were taking his house away "like F**K you are " he said and took the bank to court . He explained to the judge that he put his car etc up against the money and told the bank to show what assets they put up for the money they borrowed him

The bank could not prove where the fake money came from and the man got a free house

Stupid story....even as a myth.

buymesome

Its fact ??

Quit being a bozo and look it up

shack

buymesome wrote:

You know for evey one dollar we borrow from the bank they can print 10 fake ones . Every time we spend a dollar we are paying 50 cents interest back to the bank FOR MONEY THATS DOESNT EVEN EXIST !!!!!

It's all relative and has little to do with the paper or coins that are in circulation. In fact they represent only a fraction of the M1 money supply and even less of M2.

The value of the dollar (US currency) is based on the faith and credit of the US Treasury therefore the US in general. It has nothing to do with the "gold" held in the vaults. Unless is it counterfeit (not printed at the US Mint) US currency is REAL money. The only ecomomies that trade on gold as a base medium of exchange are underground economies that do so for secrecy puposes. No nation has used gold as their primary medium of exchange in over 100 years. We went from the "gold standard" in the 50s but even then that was merely a formality. The government WOULD NOT cash in your dollar for gold.

shack

buymesome wrote: »

Its fact ??

Quit being a bozo and look it up

I'm sure you read this on the internet...right? :rolleyes:


Quit talking about stuff you don't have a clue about.

dorourke07

The weak dollar concept is to balance against the artificially low Chinese yaun and other importers for teh most part. By being cheaper to invest in and export from, the idea is to balance out trade with China as they drain our wealth. For the most part other countries, besides China, are playing fair with us. Japan and China would rather loan us the money, by buying treasuries, and they recouping the money through imports to the US (keeping the jobs) and charging the US interest on the borrowing. Fort Knox has hundreds of billions in gold but it won't really help the trillions in debt. Also, we are not tied to the dollar so it won't correct the currency valuation. Finally, no one wants to sell it because its only going up and who wants to be the guy who sold gold low.

exalted512

buymesome wrote: »

You know for evey one dollar we borrow from the bank they can print 10 fake ones .

I need to go work for a bank that prints money! Shack, does yours do that? Hook a brother up!
-Cody

buymesome

The fedral reserve is were the moneys at and its a privately owned non fedral establishment .

How come we dont know where money comes from
How come we dont ask where it comes from

shack

buymesome wrote:

The fedral reserve is were the moneys at and its a privately owned non fedral establishment .

How come we dont know where money comes from
How come we dont ask where it comes from

What? More Federal Reserve conspiracy theories from the internet? Imagine that?

We know exactly where the money comes from. Try to study a little finance regarding the money supply. It is really a quite simple theory. The size makes it complicated..but still a relatively simple principal.

And as to your stupid story. If a judge so decreed (assuming there was a coherent story in all of that garbled text) it would be swiftly overturned....

According to the "Legal Tender Statute" (section 5103 of title 31 of the U.S. Code), "United States coins and currency (including Federal Reserve notes and circulating notes of Federal Reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues." This means that all U.S. money, as identified above, when tendered to a creditor legally satisfies a debt to the extent of the amount (face value) tendered.

apphd

shack wrote: »

Gold is only valuable because of it's scarcity (or lack of circulation). The gold in the vaults would be virutally worthless if it all went to circulation at the same time.

Currently the US Govt holds about 8,134 tonnes of gold...262 million ounces. At today's price of around $1,140 per ounce that comes to about $298,680,000,000 (almost $300 Billion)...only a fraction of our annual expendatures. Even if the govt decided to sell it all, exactly what currency would we accept. Dollars? Why would we do that? Selling the gold would further devalue the dollar. Printing dollars is about the same effect and we still have the gold. Chinese currency? Yen? Euros? Again of no real value. There are still vast gold reserves in US territories that could be tapped if they decided to do so. Long term there is no real value to selling the gold. BTW...IF...they could sell the gold at todays market price it would be less than a $1,000 for each US citizen.

That's what I don't understand. The Fed should have about $102 Billion more today than 1 year ago @ $750 per ounce. Not that that is close to how fast it is being spent, but as a whole, not counting irresponsible spending, isn't that a good thing.

sTiLlLeArNiNg

buymesome wrote: »

We will be using the amero by that time

The us gave away most of the gold in exchange for imaginary money loan during the bailout and we have to pay interest in paid by gold for the fake money we borrowed

One time a smart cookie from MN bought a house from money he borrowed from a local bank . He never had gold so he put up assets against the fake money like his car etc....

He never paid back the loan and the bank said they were taking his house away "like F**K you are " he said and took the bank to court . He explained to the judge that he put his car etc up against the money and told the bank to show what assets they put up for the money they borrowed him

The bank could not prove where the fake money came from and the man got a free house

YUP! If you have some time and haven't already check these out http://www.zeitgeistmovie.com/ May help explain how it all "work's"

They can't enslave us with chain's & shackle's so they use the next best thing!

dorourke07

shack wrote: »

Stupid story....even as a myth.

+1 for sure

buymesome

You guys should check stillearnings link posted

shack

Ohhh...another internet conspriacy link.

Just another big load of crap...

shack

apphd wrote:

That's what I don't understand. The Fed should have about $102 Billion more today than 1 year ago @ $750 per ounce. Not that that is close to how fast it is being spent, but as a whole, not counting irresponsible spending, isn't that a good thing.

The US gold reserves are carried on the "offical books" of the treasury at a fixed price of $42 dollars an ounce which was set in the 70s. Flucuations of the gold prices has no economic effect on the US reserves. The reserves do not change and are not spent. They are not used for any type of commerce. At one time in the past, nations would used their gold when trading with other nations...but that hasn't happend for centuries.

agfrost

buymesome wrote: »

You guys should check stillearnings link posted

You're hitching your cart to the wrong wagon.

buymesome

shack who said anything about a conspiracy ?

Why are you so rude and snappy ?

Hope all iwell with you

cnh

I kind of lost track of this argument...wouldn't it be a good idea to have some of your money in GOLD not treasuries or any other paper form as a hedge if, in fact, the dollar continues to get weaker and weaker...that means Gold would continue to HOLD its value and increase in dollars....hence you would lose less real value than having all monetary instestments accounted for in U.S. dollars....no..

Example...You have 10 ounces of Gold....a few years ago it was worth 3000 dollars....today it is worth over 11000 yet inflation does not account for that 'increase' as there has been no real inflation of any consequence for a while and certainly not 100s of percent.

So having some GOLD is not a bad idea..I would not tie everything up there. Nor would I sell it unless it was absolutely necessary.

cnh

tonyb

Gold going higher in price only benefits those who own it,not the economy. Gold usually rises as the dollar declines. Only the dollar declining will have more to do with the state of the economy and goods and services you buy due to inflation. Gold doesn't play a part in that which will effect your life. I believe there is talk of the world markets moving away from the dollar as the staple to a basket of different currency's though. Don't think for one second the time will come when you have to buy that new HD TV with little gold bars,maybe euro's and yens,but not gold. It's just a commodity bought and sold like oil and gas.

cnh

tonyb wrote: »

Gold going higher in price only benefits those who own it,not the economy. Gold usually rises as the dollar declines. Only the dollar declining will have more to do with the state of the economy and goods and services you buy due to inflation. Gold doesn't play a part in that which will effect your life. I believe there is talk of the world markets moving away from the dollar as the staple to a basket of different currency's though. Don't think for one second the time will come when you have to buy that new HD TV with little gold bars,maybe euro's and yens,but not gold. It's just a commodity bought and sold like oil and gas.

Agreed...and since 'owning' gold would be a hedge against a declining dollar--the gold could be 'converted' into ANY currency that took over.....Euro, Yen, Yuan, etc. Of course this does not help the American Economy it only helps, as you say and I agree...those who OWN gold. The American Economy needs a bandaid of a different color. What that is...I haven't the faintest.

cnh

shack

The value of gold itself has little to do with its actual use and is a "perceived" value placed on it by society because in part because of its scarcity and beauty. If you want a true precious metal you might consider Rhodium ($1,600 per ounce) or Lutetium ($5,300 per ounce). Their value is determined by the demand for them to be used in real applications vs the cost of providing the metal. In reality gold is merely a commodity with a value that fluctuates for reasons other than its true intrinsic value or value in use. As with many "investments" of the modern world, the historical trends as to how and when and why the value of an item like gold changes don't seem to hold true to form. A lot of people have been burned investing in precious metals because the values fluctuate wildly for many reasons, many of which have no basis in fact.

Gold seems to be a perfect medium for the anarchists or survivalists who believe that it will always hold its mythical value. IMO they are fools. If Armageddon truly comes, I want guns, bullets, water, food, medicine and batteries as commodities and/or medium of exchange. Those items will be worth more than all the gold in Fort Knox.

I always remember the Twilight Zone episode where 3 robbers steal an armored truck load of gold and then figure our how to hide out in a desert cave in suspended animation for 100 years so they can wake and spend their fortune free from the law. They go to great extremes to haul their gold out of the desert only to find that it no longer has value as huge quantities were found making it worth less than scrap iron.

IMO items like gold, silver and gem stones have value going back to our early ancestor’s fascination with shiny baubles. They were pretty and not easily found so they must have great value. Funny how little we have evolved in some areas.

bigaudiofanatic

^^ too much reading for me. But I was watching a history channel show that said the standard way back was gold for exchanging goods. That way we could not "produce it" as we do with the dollar. We have hurt ourselves with the "oh lets just make more money problem"

shack

bigaudiofanatic wrote:

^^ too much reading for me. But I was watching a history channel show that said the standard way back was gold for exchanging goods. That way we could not "produce it" as we do with the dollar. We have hurt ourselves with the "oh lets just make more money problem"

Then you should read more.

cnh

shack wrote: »

The value of gold itself has little to do with its actual use and is a "perceived" value placed on it by society because in part because of its scarcity and beauty. If you want a true precious metal you might consider Rhodium ($1,600 per ounce) or Lutetium ($5,300 per ounce). Their value is determined by the demand for them to be used in real applications vs the cost of providing the metal. In reality gold is merely a commodity with a value that fluctuates for reasons other than its true intrinsic value or value in use. As with many "investments" of the modern world, the historical trends as to how and when and why the value of an item like gold changes don't seem to hold true to form. A lot of people have been burned investing in precious metals because the values fluctuate wildly for many reasons, many of which have no basis in fact.

Gold seems to be a perfect medium for the anarchists or survivalists who believe that it will always hold its mythical value. IMO they are fools. If Armageddon truly comes, I want guns, bullets, water, food, medicine and batteries as commodities and/or medium of exchange. Those items will be worth more than all the gold in Fort Knox.

I always remember the Twilight Zone episode where 3 robbers steal an armored truck load of gold and then figure our how to hide out in a desert cave in suspended animation for 100 years so they can wake and spend their fortune free from the law. They go to great extremes to haul their gold out of the desert only to find that it no longer has value as huge quantities were found making it worth less than scrap iron.

IMO items like gold, silver and gem stones have value going back to our early ancestor’s fascination with shiny baubles. They were pretty and not easily found so they must have great value. Funny how little we have evolved in some areas.

Quite true...man appropriates nature, transforms her into usable products and commodities....history, culture, society can make 'anything' valuable or worthless.

cnh

shack

cnh wrote:

and societies that existed before money and economics proper...didn't worry about the 'value' of most things 'economics' proper did not exist for most of human history.

I disagree. Since the earliest recorded history there has been value placed on items...moreso because of their function and usefulness...but value none-the-less.