QuoteOriginally posted by: PaperCutThe real reason to own gold is because some day you may need it.Under this stream of logic, farming land is an even more conservative choice. You cant eat gold. On the other hand, only human capital is the the one trully "owned" for a lifetime.

QuoteOriginally posted by: PaperCutMy 2 drams:To me, the important thing about gold is not what it is, but what it isn't. It may be a time-honored bad investment, but what it isn't is printable. That means that no matter how hard they try, or how badly they desire, none of the following people can make more of it:-Politicians-Lawyers-Central Bankers-Powerful Generals-DespotsThey can't. Not for lack of trying, mind you (cf. one of Newton's weaker resume entries).The real reason to own gold is because some day you may need it.Excellent point! As long as one keeps a touchstone handy, gold can't be diluted. But this rogues gallery of economic manipulators does have a few tricks up their sleeve:1. They can seize gold like Roosevelt did in 1933 in the U.S. or make it illegal to export/import/transact with gold.2. They can hoard gold to drive up the price (this is good for the long-time gold holders but can be a disaster for the last gold buyer before hoarding reverses)3. In the short-term, they can manipulate gold prices via derivatives contracts (i.e., they can "print" more gold by selling large quantities of futures contracts)4. In the long-term, gold producing countries could form a cartel (a la OPEC) to regulate the supply of new gold (only an issue if too many countries revert to a gold standard)That said, these 4 issues are absolutely dwarfed by the manipulative potential inherent in fiat currencies.

QuoteOriginally posted by: AnthisUnder this stream of logic, farming land is an even more conservative choice. You cant eat gold. On the other hand, only human capital is the the one trully "owned" for a lifetime.I see what you're saying, but my point is this: when you "own" farmland, all they need to do is:-raise taxes until you can't afford it anymore-encircle you and take it by force-sue youThey win. I don't know of any locale in the US where one is free from confiscatory taxation, force or legal harangue.The liberating thing about gold is that you can get out of town and start over somewhere else.

History teaches that in periods of war and famine, those with some farmland have been able to sustain themselves as opposed to those without farmland. For example, during WWII one of the most valuable pieces of property in my hometown today, changed hands for a dozen of sacks of potatoes. It may sound ridiculous to me and you because we have seen war and famine only on tv. Since one doesnt need a countless hectares of land to sustain his family, and farmland is on the cheaper end of real estate prices, a piece of farmland offers insurance, what people expect from holding gold too, while today it can be only a tiny fraction of current wealth.On the other hand, as any refugee who has left his homeland at gun point can confirm, gold isn't something you can take it with you.

Quote gold isn't something you can take it with you nah - diamonds much better for that sort of thing

QuoteOriginally posted by: daveangelQuote gold isn't something you can take it with you nah - diamonds much better for that sort of thingI guess it is a bit of a pain if you have to go and get your gold in a COMEX warehouse..

Somehow, me still thinks if we get to scenario that owning a farmland is one of the few ways of surviving, allocating few percents of portfolio to account for that disaster in gold, small arms and few years supply in food cans should get you covered…Seriously, it seems way safer play to do cointegration trades – i.e gold/silver or gold/diamond , etc.. There is very intuitive substitution effect for any of the gold’s usage, even without using fancy math…

QuoteOriginally posted by: Traden4AlphaYes, that does seem likely but when will it burst and what's the next bubble?1. Equity bubble bursts => flight to safety in real estate2. Real estate bubble bursts => flight to safety in Treasury Bills3. Treasury bill bubble bursts => flight to safety in gold4. Gold bubble bursts => ????Unfortunately, it seems that there will always be a next bubble. Too much greed, too much leverage and lousy regulation are fertile ingredients to booms and busts.There's too much leverage in financial markets (CDS, usual derivatives, and the more recent CFD's which almost seem a betting system like bwin for soccer and other sports). Thinking on the role of Auditors, Rating Agencies, Supervisors, and compensation schemes, are still open issues. Steps should be taken to smooth business cycles and prevent catastrophic events like the recent credit crunch. Unfortunately, the will for a more robust regulatory framework is missing. Regarding the next bubble after gold, looking at recent market activity, it seems to me it will be oil and emerging markets...

QuoteOriginally posted by: Traden4Alpha Gold is only worth what people will pay for it, no more, no less. Like you, I see gold as just another fiat currency whose value is declared and regulated by the democracy of the markets.How did you vote on question #10 of my economics quiz, Traden4Alpha?Question 10Which of these quotations about gold do you agree with? a) "Gold has provided a return of almost 17.9% in seven months, or an annualized return of over 30% – on something real, of intrinsic value, and which has been used as a store of value for 5,000 years… Gold is history's oldest and most stable currency… Since your dollars have no intrinsic value, they are subject to currency market fluctuations." b) "Gold bullion has only recently served as money; certainly not throughout the last 5000 years. For most of that time, cattle were money. Gold coins were certificates for cows in a rancher's herd but only the mint, not merchants, accepted bullion – and the mint did not pay anywhere close to a full cow for a coin bearing the mark of a defunct cattle ranch. This is theoretically identical to how, thousands of years later, banknotes were certificates for gold coins in a bank's vault. In the context of the cow standard, gold coins became fiat money when they began circulating without any cattle backing just as, in the context of the gold standard, dollars became fiat money when they began circulating without any gold backing." c) "Gold is mostly used in the manufacture of electronic devices. But, after being mined, the metal must be refined, the devices manufactured, shipped across the Pacific ocean, distributed to consumer electronics stores and finally sold to consumers. This takes considerable time, making gold one of the most volatile commodities. Its value plunges up and down as investors try to predict years into the future how many electronic devices will be needed." These answers represent the Austrian, Axiomatic and Mainstream views, respectively. Note that, to prevent people from using crib sheets, the order of the answers changes every time someone takes the quiz, so they will not necessarily be in the above order when you take the test.

QuoteOriginally posted by: GroznyQuoteOriginally posted by: Traden4Alpha Gold is only worth what people will pay for it, no more, no less. Like you, I see gold as just another fiat currency whose value is declared and regulated by the democracy of the markets.How did you vote on question #10 of my economics quiz, Traden4Alpha?Somewhere between "A" and "B" because both contain true (and no-so-true) statements and neither tells enough of the full story of gold's role in the economy through history. Empirically speaking, gold has offered greater stability than have other stores of value.(A) Food-based stores of wealth have probably NOT retained value as well as have precious metals(A) due to productivity issues. Although food-based wealth may be backstopped by the fundamental demand factor that people must eat(B), there are also supply issues in which increasing agricultural productivity has induced a steady deflation of food prices (e.g., the average US household has income equivalent to nearly half a million pounds of wheat per year)(A).Yet I also agree that gold has been most commonly used as money in the context of government-manufactured/sanctioned gold coinage (rather than by-weight bullion) with the attendant issues of seigniorage, debasement of precious metal content, and confidence in government institutions implied by any government-controlled currency(B). That said, gold is much less a fiat currency than most. If the government of South Africa collapsed into abject anarchy, then the Rand would plummet in value but gold Krugerrands wouldn't lose much of their value.(A)I'm not sure that cattle were ever really "money" as we know it today (i.e., something everyone has in varying degrees and uses in daily commerce). Cows aren't interchangeable, compact, portable, cheaply storable, or cleanly divisible in the way that gold is(A). Yes, cows may have represented wealth in many ancient economies(B), but then so did pigs, goats, sheep, chickens, bushels of wheat, furs, yams, beads, etc. Also, I doubt that the gold-coin-as-certificate-of-one-cow was universal(A). Different regions of the world evolved different coinage traditions such as the silver penny in the British Isles or the bronze or copper coins of China. Ultimately, gold's historical retention of value is no guarantor of future retention of value(B). You can't eat gold and most people in today's world don't have the knowledge or confidence to recognize pure gold from counterfeit gold. No substance has true intrinsic value -- everything is negotiable and variable in the context of market supply/demand and government regulatory factors.

QuoteOriginally posted by: Traden4Alpha...You can't eat gold and most people in today's world don't have the knowledge or confidence to recognize pure gold from counterfeit gold... Sorry Bro. These days an ordinary Shmoe can do a gold assay no problem. Also I suppose there's Archimedes' density test as well. QuoteOriginally posted by: BullBear...Unfortunately, it seems that there will always be a next bubble. Too much greed, too much leverage and lousy regulation are fertile ingredients to booms and busts. No, it's just central banking. Stop them and you stop the bubbles.QuoteSteps should be taken to smooth business cycles and prevent catastrophic events like the recent credit crunch. Unfortunately, the will for a more robust regulatory framework is missing.The Party Line is that "smoothing the business cycle" is what the Central Bank is supposed to do. Of course they do anything but. The US Fed CAUSED the credit problem.

QuoteOriginally posted by: PaperCutQuoteOriginally posted by: Traden4Alpha...You can't eat gold and most people in today's world don't have the knowledge or confidence to recognize pure gold from counterfeit gold... Sorry Bro. These days an ordinary Shmoe can do a gold assay no problem. Also I suppose there's Archimedes' density test as well. Aren't both our statements correct? Although most people can have the knowledge and tools to assay gold, most people don't have the knowledge and tools to do so. If I go to my local grocery store or electronics store or car dealer, I doubt they would accept gold coins as legal tender based on the current price of gold. Until enough of the country's retailing and banking infrastructure buys assay equipment (or the government creates a secure gold-based coinage), the acceptance of gold will be quite limited and are rates that are a fraction of the market price of the precious metal.QuoteOriginally posted by: PaperCutQuoteOriginally posted by: BullBear...Unfortunately, it seems that there will always be a next bubble. Too much greed, too much leverage and lousy regulation are fertile ingredients to booms and busts. No, it's just central banking. Stop them and you stop the bubbles.Are you sure? I thought booms and busts predated central banking by hundreds or thousands of years. The real problem with central banking ( and central committees and any other economic/government approach), is that they are run by human beings and that's a really hard problem to fix.QuoteOriginally posted by: PaperCutQuoteSteps should be taken to smooth business cycles and prevent catastrophic events like the recent credit crunch. Unfortunately, the will for a more robust regulatory framework is missing.The Party Line is that "smoothing the business cycle" is what the Central Bank is supposed to do. Of course they do anything but. The US Fed CAUSED the credit problem.You are quite right, but did the Fed have much choice in the matter? Could the Fed really have raised rates in 2003 or 2004 at a time when the economy was still hurting from the dotcom crash?

QuoteOriginally posted by: Traden4AlphaAren't both our statements correct? Although most people can have the knowledge and tools to assay gold, most people don't have the knowledge and tools to do so. Yes, I think we are both right. My view on the whole thing isn't really the convenience or widespread acceptance. It's that it can and will be "just right" when the dollar collapses / aliens finally penetrate my tinfoil hat, et cetera.QuoteThe real problem with central banking ( and central committees and any other economic/government approach), is that they are run by human beings and that's a really hard problem to fix. Right again. That's why I propose that money-printing be taken out of the hands of the money-printers.Quote...You are quite right,... I like your attitude. You may have a bright future at the firm, son.

QuoteOriginally posted by: PaperCutQuoteThe real problem with central banking ( and central committees and any other economic/government approach), is that they are run by human beings and that's a really hard problem to fix. Right again. That's why I propose that money-printing be taken out of the hands of the money-printers.Perhaps, but does it solve the problem? How does one take money-printing out of the hands of either(both) right-wing and left-wing political influences. This crisis seems to have been politically perfect because the right wanted higher bank profits and the left wanted more home ownership for poor people. Loose credit made everyone happy and absolutely no one (home buyers, mortgage brokers, bankers, MBS fund managers, central bankers, or politicians) had the incentive structure to avoid the bubble.Perhaps we need to let tinfoil-hat-penetrating aliens handle the currency. Who's voting for Alan Little Greenman as Fed Chair?QuoteOriginally posted by: PaperCutQuote...You are quite right,...I like your attitude. You may have a bright future at the firm, son.Thank you! Do you have any central or non-central banks that you'd like me to run?

QuoteOriginally posted by: PaperCut The US Fed CAUSED the credit problem.This is such a nonsense that makes me laugh!