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It is fairly typical in the midst of economic crises like these for gold to come under attack from Keynesians economists and their amen corner in the media. The arguments against gold are usually straw men, based on a fundamental misunderstanding of the purpose of buying gold. Gold is not a typical investment. It is a defense against the predictable behavior of governments to debase a fiat currency under its absolute control. The people who run the printing presses have trouble shutting them off. In order to limit one's exposure to this reckless behavior, it is wise to exchange unsound assets for sound ones.
Gold is less stable than fiat currency? Wow, that's quite a claim. And you're basing that on what, exactly?
Gold would obviously be a lot more stable if used as the main currency.
Right now, people use gold as a hedge because it is much more stable than fiat currencies since they are so manipulated.
If you havent started already, buy Gold and buy Silver.
Campaign For Liberty — Why Governments Hate Gold **| by Ron Paul
Gold is less stable than fiat currency? Wow, that's quite a claim. And you're basing that on what, exactly?
Gold Price History
Annual Inflation Chart
Gold prices right now are based on ignorant consumers buying primarily based on the advice of various media personalities. There is nothing wrong with buying gold, but its pretty much the same as buying stock. Its a risk based investment, not some mythical hedge against currency woes.
Gold would obviously be a lot more stable if used as the main currency. Right now, people use gold as a hedge because it is much more stable than fiat currencies since they are so manipulated.
Except it never loses value. The dollar amounts attached to it are not it's essential inherent value. Other investments can completely loose their worth but gold historically has always been treated as something with worth, and often used as a medium exchange for that. Fiat currencies? Stable? Opened your eyes recently?Historically speaking, when gold was used as the main currency, the economy was far more volatile than it was today. We ditched the gold standard for a good reason.
Except so many people buying gold have caused it to quadruple in price, making it far less stable than our current dollar with low inflation. If your want a hedge, buy bonds from from Switzerland or some other stable country. Gold is simply another investment with typical risk and reward.
Common sense dictates that if everyone buys gold it creates a bubble that will burst and then those who bought at the top will become suckers.
My tip pay off your house.
Paying off your debt is the surest way to financial freedom and you can sleep better.
Except it never loses value.
Didn't you read what I wrote?
If you havent started already, buy Gold and buy Silver.
Campaign For Liberty — Why Governments Hate Gold **| by Ron Paul
Gold is seriously overvalued at the moment, and it will correct itself sooner or later. When it drops, it will be yet another lesson in why we switched. Fiat currency has its problems, but relatively stable inflation is far better than the chaos of a market driven commodity. Gold is based just as much on the illusion of value as a penny is.
Black Friday, September 24, 1869 also known as the Fisk/Gould scandal, was a financial panic in the United States caused by two speculators’ efforts to corner the gold market on the New York Gold Exchange.
Silver Thursday: Beginning in the early 1970s, Hunt and his brother William Herbert Hunt began accumulating large amounts of silver. By 1979, they had nearly cornered the global market.[6] In the last nine months of 1979, the brothers earned an estimated $2 billion to $4 billion in silver speculation, with estimated silver holdings of 100 million ounces.[7]
During the Hunt brothers' accumulation of the precious metal, prices of silver futures contracts and silver bullion during 1979 and 1980 rose from $11 an ounce in September 1979 to $50 an ounce in January 1980. Silver prices ultimately collapsed to below $11 an ounce two months later. The largest single day drop in the price of silver occurred on Silver Thursday.[1]
Hunt filed for bankruptcy under Chapter 11 of the Federal Bankruptcy Code in September 1988, largely due to lawsuits incurred as a result of his silver speculation.[1]
Sure you can say it never loses any value...but you can't prove it. In the real world, we value things on the basis of exchange. And gold's value is constantly in flux, thereby proving that Gold does lose value just as it gains value.
Furthermore, when adjusted for inflation, which knocks the chair out of your dollar argument, pricing gold at REAL unchanging dollars shows that it does lose value.
I'm never really arguing against the fact the gold does change value (again in relation to how individuals at any point in time value gold) but what I'm saying is that golds value as a precious metal makes it significantly safer than fiat currency.
You just said that gold doesn't lose value. Granted, I don't know how you are defining value, but I am on the basis of exchange. And considering the significent drop in gold prices, it may not be safer. In the long run, I'd agree that gold (barring cheap particle accelerators and replicators, then Gold is worthless) is safer then fiat, but it in no way is immune to value decreases.
Give me an original argument.
Gold's value according to how people personally value it is one thing, but what I'm referring to as value that doesn't change is the value that comes from gold's scarcity, and it's inability to be reproduced.
The way people value the dollar is effected by how much of it is in existence. When one amount of money is in circulation it is attributed a certain value, but if that amount is doubled and then the market is given time to catch on to this increase (theres a bit of a delay there) the value of the dollar just got halved.
The only possible way of decreasing the value of gold in this sense would be to mine more of it. And that is very slow compared to the inflation brought on by the federal reserve.
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