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What no thread on Gold yet?

I see these small gold mining stores popping up all over town near me.

"We buy Gold" is the sign that is attached to a stick being held by a guy that stands in the hot sun all day long to lure people in to sell their gold stuff. I know people that are going door to door to buy your stuff so they can take it to be sold. I've hear of an uptick in theft of gold related items.

So what is gold Worth? I know it's selling for @ $1,350/ounce right now. But what is it really "Worth"?
On a historical basis, the alltime high, when adjusted for inflation was in the early 80's. It hit $750/ounce but adjusted for inflation that would be @ 2,000/ounce. We're a far shot from that now. After hitting that mark though, It promptly plunged to $350 within a year. It never even came close to that $750 mark until late 2005.

I own some. I bought it a year ago and it's done very well for me. I wish I owned more.
I'm wondering if this is the bubble du jour. I think it is.
I am expecting that it will plunge again within the next 3 weeks.

I'd love to get some thoughts on it.
 

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What no thread on Gold yet?

I see these small gold mining stores popping up all over town near me.

"We buy Gold" is the sign that is attached to a stick being held by a guy that stands in the hot sun all day long to lure people in to sell their gold stuff. I know people that are going door to door to buy your stuff so they can take it to be sold. I've hear of an uptick in theft of gold related items.

So what is gold Worth? I know it's selling for @ $1,350/ounce right now. But what is it really "Worth"?
On a historical basis, the alltime high, when adjusted for inflation was in the early 80's. It hit $750/ounce but adjusted for inflation that would be @ 2,000/ounce. We're a far shot from that now. After hitting that mark though, It promptly plunged to $350 within a year. It never even came close to that $750 mark until late 2005.

I own some. I bought it a year ago and it's done very well for me. I wish I owned more.
I'm wondering if this is the bubble du jour. I think it is.
I am expecting that it will plunge again within the next 3 weeks.

I'd love to get some thoughts on it.
I'm no expert in these matters but from what I remember in Finance class...when there is a recession people take their money out of stocks and put them in real assets like gold and oil. The price of gold is tied to the value of the dollar, so when the dollar of the value goes down people put some of their investments in gold to hedge their portfolio.
 

FullMonte

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The price of gold is tied to the value of the dollar, so when the dollar of the value goes down people put some of their investments in gold to hedge their portfolio.
I think that's simply an obvious result of supply/demand. Investors know that when the value of the dollar drops, people will invest in gold...so, as the value of the dollar begins to drop, the price of gold goes up.

Kinda like the price of gas going up around Memorial Day..it's not because production costs go up; rather it's because people typically will drive more during the summer.
 
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I think that's simply an obvious result of supply/demand. Investors know that when the value of the dollar drops, people will invest in gold...so, as the value of the dollar begins to drop, the price of gold goes up.

Kinda like the price of gas going up around Memorial Day..it's not because production costs go up; rather it's because people typically will drive more during the summer.
I don't follow this.
The price of gold isn't just priced in U.S Dollars. It's priced globally so why does only the value of the dollar matter?
 

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I don't follow this.
The price of gold isn't just priced in U.S Dollars. It's priced globally so why does only the value of the dollar matter?
the dollar replaced the gold standard.

imo, the dollar is viewed (currently ) as the most sturdy global monetary instrument. There are rumblings that some day another currency will take that spot. ( the Yen, Yuan, Euro etc ).

So if you were to take your ounce to France and sell it, you would get Euros....but only the amount of Euros that would equal what the Gold was in Dollars. ( if you get 2 euros for every dollar and gold was $1000 US Dollars per ounce, you would get $2000 euros- or you could sit on your ounce and wait for the Euros to be 4 to 1 and then sell and then hope that the euro gets back to 2 to 1 exchange. )
 

flagno

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The only way to get ourselves out of this debt crisis is to inflate...that's what the Fed is telling you now with QE2. We essentially have 0% inflation right now and the concern has been deflation. The Fed creates inflation through monetizing more US debt, which deflates the US$ and thus creates inflation.

ETA: and you use commodities, like gold, to hedge against currency deflation (as I posted above).
 

JimEverett

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The only way to get ourselves out of this debt crisis is to inflate...that's what the Fed is telling you now with QE2. We essentially have 0% inflation right now and the concern has been deflation. The Fed creates inflation through monetizing more US debt, which deflates the US$ and thus creates inflation.

ETA: and you use commodities, like gold, to hedge against currency deflation (as I posted above).
they have been trying to create inflation for some time. The real concern is if they are unabe to do so.
 

FullMonte

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I don't follow this.
The price of gold isn't just priced in U.S Dollars. It's priced globally so why does only the value of the dollar matter?
Because when the value of the dollar drops, people tend to invest in gold. This causes an increase in the demand for gold. This causes an increase in the price of gold. It's not a direct relation to the value of the dollar...It's a relation to an event that causes the demand to increase.

It's like my gas analogy. Gas doesn't cost any more to produce in the summer as it does in the winter, so why does the price go up in May/June? Because the oil companies know that demand will increase in the summer.
 

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