I still chuckle when I hear people talk about GOLD/SILVER as a profitable investment

[agaiziunas]

The only folks that will always profit from GOLD/SILVER trades are the brokers and dealers, with their 20-30% spread.

It's not a true for-profit investment vehicle, guys.. it's a wealth preservation vehicle.

Under the rule of the Roman Empire at the time of Christ (1st Century AD), one ounce of gold would have purchased a Roman citizen his toga (suit), a leather belt, and a pair of sandals. Today two millennia later in the west, one ounce of gold will still buy a man a suit, a leather belt, and a pair of shoes.

Nothing has changed.

As Ron Paul pointed out, a $0.25 coin, when they were made of Silver, in the 40's would buy you 1 1/2 gallons of gasoline. The same silver content would get you just over 2 gallons today, but a lot of that can be attributed to efficiencies gained in mass production.

Nothing has changed.

The attraction is to preserve your purchasing power, not to increase it. And when you begin to participate during wild speculative swings, you run the risk of actually losing, in the event an artificial demand is created.

Again, speculatory bubbles & short swings excluded.. the price should really be closer to around $500/oz right now.

Only my two cents (which are actually 1/10th oz. Krugerrands)

[dannno]

Yes, but as the inflationary pressure devalues our currency, there will be high demand for the few things that can in fact preserve value. That will drive the demand, alright.

Your buying power won't increase as the "value" (in falling dollars) of your gold investment increases, but you will be able to convert it back to more dollars to pay off old debt, and keeping your money in dollars or the stock market is just a losing proposition.

Feel free to keep chuckling, though.

[ronpaulblogsdotcom]

OP - Why do you think gold should be around $500 an ounce?

[agaiziunas]

That will drive the demand, alright.

I don't doubt that, not saying there isn't a large upside to owning gold (I do), but again as a value/wealth preservation vehicle. So that $100 you put away today will still buy you the same kinds of things tomorrow. It may be $1,752 fiat dollars, but it will still buy you a new pair of slacks just like $100 will get you that today.

The point I was trying to make was that there is a speculative bubble on Gold because of it being a crisis-hedge. The 80's saw this, inflation-adjusted gold prices were well over $2,000/oz. If you bought in during the upswing for a long-term wealth preservation vehicle, you lose out. Might as well keep your fiat dollars and save the 20-30% broker spread.

[acptulsa]

If you're looking for gold to pay dividends, you're as stupid as Joseph the Libertine.

If you speculate and buy gold and the value goes up relative to not just the sheer dollar total but real inflation (an elusive number these days, since the government only reports their newfangled emasculated inflation numbers) then you've made a profit on it. What do you think a profitable investment consists of?

Silver in particular has not been a profitable investment. This could easily change--and if we get our way and we return to real money, it will change in a big way.

[Xenophage]

That's some expensive clothing! Today's clothes are of higher quality and much cheaper relative to the value of gold, specifically because of technological advancement. I can buy myself clothes in far greater quantity and of far greater quality for an ounce of gold than any Roman could have. So, quite a bit *has* changed.

The assertion, also, that gold never fluctuates in absolute value is quite wrong and will harm your argument for a gold standard. It is subject to the same forces of supply and demand that any scarce resource is. The gold supply increases yearly as more of it is mined, and its practical uses beyond a medium of exchange are quite numerous.

Essentially, gold maintains a more consistent value than most other commodities over the years, but it is by no means immune to fluctuations. Its also important to note that all of the things that make gold attractive as the basis for a currency can also be said of other rare metals.

[FrankRep]

Chuckle away my friend.

[Swmorgan77]

The only folks that will always profit from GOLD/SILVER trades are the brokers and dealers, with their 20-30% spread.

It's not a true for-profit investment vehicle, guys.. it's a wealth preservation vehicle.

Under the rule of the Roman Empire at the time of Christ (1st Century AD), one ounce of gold would have purchased a Roman citizen his toga (suit), a leather belt, and a pair of sandals. Today two millennia later in the west, one ounce of gold will still buy a man a suit, a leather belt, and a pair of shoes.

Nothing has changed.

As Ron Paul pointed out, a $0.25 coin, when they were made of Silver, in the 40's would buy you 1 1/2 gallons of gasoline. The same silver content would get you just over 2 gallons today, but a lot of that can be attributed to efficiencies gained in mass production.

Nothing has changed.

The attraction is to preserve your purchasing power, not to increase it. And when you begin to participate during wild speculative swings, you run the risk of actually losing, in the event an artificial demand is created.

Again, speculatory bubbles & short swings excluded.. the price should really be closer to around $500/oz right now.

Only my two cents (which are actually 1/10th oz. Krugerrands)

First of all, yes. The motivation should be as a preservation of wealth not as a speculative investment. If you're trying to trade at index, then the natural moves higher in metals that SHOULD be expected given dollar weakness has been very supressed.

However, I think there's profit to be made taking possession and selling privately right now. The index prices are not reflecting actual trading prices at all. Every local dealer I called today is out of supplies in silver and many gold bullion coins.

Its clear that the index prices are clearly manipulated, but you can find buyers right now at much higher than index.

The local shop I spoke to is buying gold american eagle's at 909 right now.

[socialize_me]

The only folks that will always profit from GOLD/SILVER trades are the brokers and dealers, with their 20-30% spread.

It's not a true for-profit investment vehicle, guys.. it's a wealth preservation vehicle.

Under the rule of the Roman Empire at the time of Christ (1st Century AD), one ounce of gold would have purchased a Roman citizen his toga (suit), a leather belt, and a pair of sandals. Today two millennia later in the west, one ounce of gold will still buy a man a suit, a leather belt, and a pair of shoes.

Nothing has changed.

As Ron Paul pointed out, a $0.25 coin, when they were made of Silver, in the 40's would buy you 1 1/2 gallons of gasoline. The same silver content would get you just over 2 gallons today, but a lot of that can be attributed to efficiencies gained in mass production.

Nothing has changed.

The attraction is to preserve your purchasing power, not to increase it. And when you begin to participate during wild speculative swings, you run the risk of actually losing, in the event an artificial demand is created.

Again, speculatory bubbles & short swings excluded.. the price should really be closer to around $500/oz right now.

Only my two cents (which are actually 1/10th oz. Krugerrands)

My grandfather made a lot trading gold, so you don't know what the hell you're talking about. Had I bought a 1 oz gold coin in 2002 for $200, I could sell it today for ~$900. Show me a stock with a return like that in six years--you can't.

Also, please stop using comparisons you ripped off of documentaries like the Fiat Empire. If you're going to act like an expert on something you post, you should actually formulate your own opinions rather than watching a 60 minute Google movie and then waltzing on here like you know what the hell you're talking about. You don't. Another problem is that you think people buy way over spot, and then sell back at spot prices. Who the hell does that??

[fxmercenary]

The only folks that will always profit from GOLD/SILVER trades are the brokers and dealers, with their 20-30% spread.

It's not a true for-profit investment vehicle, guys.. it's a wealth preservation vehicle.

Under the rule of the Roman Empire at the time of Christ (1st Century AD), one ounce of gold would have purchased a Roman citizen his toga (suit), a leather belt, and a pair of sandals. Today two millennia later in the west, one ounce of gold will still buy a man a suit, a leather belt, and a pair of shoes.

Nothing has changed.

As Ron Paul pointed out, a $0.25 coin, when they were made of Silver, in the 40's would buy you 1 1/2 gallons of gasoline. The same silver content would get you just over 2 gallons today, but a lot of that can be attributed to efficiencies gained in mass production.

Nothing has changed.

The attraction is to preserve your purchasing power, not to increase it. And when you begin to participate during wild speculative swings, you run the risk of actually losing, in the event an artificial demand is created.

Again, speculatory bubbles & short swings excluded.. the price should really be closer to around $500/oz right now.

Only my two cents (which are actually 1/10th oz. Krugerrands)

"Damn! I shoulda listened to Ron Paul!"

WALLSTREET FACEPALM, YOU FAIL.

[llepard]

The only folks that will always profit from GOLD/SILVER trades are the brokers and dealers, with their 20-30% spread.

It's not a true for-profit investment vehicle, guys.. it's a wealth preservation vehicle.

Under the rule of the Roman Empire at the time of Christ (1st Century AD), one ounce of gold would have purchased a Roman citizen his toga (suit), a leather belt, and a pair of sandals. Today two millennia later in the west, one ounce of gold will still buy a man a suit, a leather belt, and a pair of shoes.

Nothing has changed.

As Ron Paul pointed out, a $0.25 coin, when they were made of Silver, in the 40's would buy you 1 1/2 gallons of gasoline. The same silver content would get you just over 2 gallons today, but a lot of that can be attributed to efficiencies gained in mass production.

Nothing has changed.

The attraction is to preserve your purchasing power, not to increase it. And when you begin to participate during wild speculative swings, you run the risk of actually losing, in the event an artificial demand is created.

Again, speculatory bubbles & short swings excluded.. the price should really be closer to around $500/oz right now.

Only my two cents (which are actually 1/10th oz. Krugerrands)

I was with you all the way until you said gold should be selling for $500 per ounce right now.

WRONG IMUNDO! See www.gata.org.

The price of gold has been artificially suppressed by paper gold derivatives. The price of gold should be multiples higher than its current market price, which you cannot even find it at.

I have seen calculations that show that it should be at $90,000 per ounce.

Imagine if all paper money were exchanged for gold. That would have to be the price to make supply and demand balance. Kind of makes $900 seem cheap. Of course it is hard to find it at all.

You are right. Don't speculate--invest. But you are wrong about its relative value. Very wrong.

LWL

PS: My dealer quotes a 5% spread between bid and ask and since I don't intent to sell for years who cares.

[Anti Federalist]

I was with you all the way until you said gold should be selling for $500 per ounce right now.

WRONG IMUNDO! See www.gata.org.

The price of gold has been artificially suppressed by paper gold derivatives. The price of gold should be multiples higher than its current market price, which you cannot even find it at.

I have seen calculations that show that it should be at $90,000 per ounce.

Imagine if all paper money were exchanged for gold. That would have to be the price to make supply and demand balance. Kind of makes $900 seem cheap. Of course it is hard to find it at all.

You are right. Don't speculate--invest. But you are wrong about its relative value. Very wrong.

LWL

PS: My dealer quotes a 5% spread between bid and ask and since I don't intent to sell for years who cares.

[sirachman]

Gold is about not losing your entire net worth when the dollar collapses imho. The good thing about gold in this aspect is that it is DAMN good at serving this purpose AS WELL as also occasionally being an extremely profitable thing to own, and will always be worth more than if you had simply held cash.

[Matt Collins]

It's not a true for-profit investment vehicle, guys.. it's a wealth preservation vehicle.

Exactly. It's not an investment.

An investment is anything that produces something. Gold is a commodity.

[voytechs]

The only folks that will always profit from GOLD/SILVER trades are the brokers and dealers, with their 20-30% spread.

It's not a true for-profit investment vehicle, guys.. it's a wealth preservation vehicle.

Under the rule of the Roman Empire at the time of Christ (1st Century AD), one ounce of gold would have purchased a Roman citizen his toga (suit), a leather belt, and a pair of sandals. Today two millennia later in the west, one ounce of gold will still buy a man a suit, a leather belt, and a pair of shoes.

Nothing has changed.

As Ron Paul pointed out, a $0.25 coin, when they were made of Silver, in the 40's would buy you 1 1/2 gallons of gasoline. The same silver content would get you just over 2 gallons today, but a lot of that can be attributed to efficiencies gained in mass production.

Nothing has changed.

The attraction is to preserve your purchasing power, not to increase it. And when you begin to participate during wild speculative swings, you run the risk of actually losing, in the event an artificial demand is created.

Again, speculatory bubbles & short swings excluded.. the price should really be closer to around $500/oz right now.

Only my two cents (which are actually 1/10th oz. Krugerrands)

You can make a huge profit before other prices catch up. Its just a matter of how long you hold on to the physical PM. If you use it right and you can come out way ahead while other prices are still in flux. Long term, I agree, you wouldn't gain much in real wealth.

[Mini-Me]

That's some expensive clothing! Today's clothes are of higher quality and much cheaper relative to the value of gold, specifically because of technological advancement. I can buy myself clothes in far greater quantity and of far greater quality for an ounce of gold than any Roman could have. So, quite a bit *has* changed.

The assertion, also, that gold never fluctuates in absolute value is quite wrong and will harm your argument for a gold standard. It is subject to the same forces of supply and demand that any scarce resource is. The gold supply increases yearly as more of it is mined, and its practical uses beyond a medium of exchange are quite numerous.

Essentially, gold maintains a more consistent value than most other commodities over the years, but it is by no means immune to fluctuations. Its also important to note that all of the things that make gold attractive as the basis for a currency can also be said of other rare metals.

A Winnar Is Yuo? (Actually, looking around, there are several healthy doses of win here.)

[majinkoola]

If a person has a mortgage on his house, buys some gold, and hyperinflation hits, he will be able to pay off that house very cheaply in comparison to what it would have cost that person before the hyperinflation. I wouldn't call that just preservation of value.

[Mini-Me]

If a person has a mortgage on his house, buys some gold, and hyperinflation hits, he will be able to pay off that house very cheaply in comparison to what it would have cost that person before the hyperinflation. I wouldn't call that just preservation of value.

That said, once the $100 billion bills start going around and you need 75 of them to pay for a loaf of bread like in Zimbabwe...those fixed-price couple-hundred-thousand-dollar loans still won't be too hard to pay off anyway. Your point is well-taken, though.

[Nanerbeet]

The only folks that will always profit from GOLD/SILVER trades are the brokers and dealers, with their 20-30% spread.

It's not a true for-profit investment vehicle, guys.. it's a wealth preservation vehicle.

Interestingly, debt has changed that equation. If debt really is money, all you need to do to profit from inflation is borrow cash to buy the gold. THEN it becomes an investment vehicle

[blocks]

Exactly. It's not an investment.

An investment is anything that produces something. Gold is a commodity.

+1

It's security first.