Gold carnage

[Major]

A few of thoughts. Firstly, most central banks can sell gold at almost any price above $50 and make money, since most still value it on the last Bretton Woods pricing of $48. Secondly, gold is easily sold, therefore is often the first thing to be sold now if liquidity is needed - we see its price often drop on events that used to cause a rise. Thirdly, over the very long term I think that gold has no relevance to the younger generations of today. It is still appreciated by people who experienced the aftermath of WW2, and the cold war, but if you ask anybody younger than 30 if they would own it, you'll probably get a blank stare. This means it's very long term demand may be non existent... Best value for gold is that of a currency that no government controls, but even that is on its way out with bitcoin et al.

[SimonPB]

I just interviewed Moxima Gama for JSEDirect on gold and the gold stocks .. ouch, will post link in the morning

[THRESHOLD]

The truth of it is that there are agreements in place in terms of which central banks may sell their gold. Not more than a combined annual tonnage, offered according to a specific arrangement taking into account the capitalisation of the bank relative to its holdings etc, etc. Gold is money because the banks have kept it as such. One must assume they have their reasons. It's no good watching the news flow because the pundits - on average - are always wrong - that is why the price moves so violently. If there was any degree of certainty (read accuracy,) any given asset would move up (or down) in a steady, linear fashion.

[EkisDoep]

But it seems like many central banks are actually buying!

[Rams]

Thresh i agree, if the pudits advice is for free, then it must be useless...thats why you have to pay for some of the more "informative" courses on trading and investing...even on OST

[#6]

For Thousands of years Gold has been used as money. Many times over the same period attempts was made to move to a Fiat currency. To date everyone has failed(With the exception of those currently still in use) Every time Gold came out on top as people rushed to this "stable" money that cannot be created out of thin air. I just feel that this time will be no different. You may say that "this time it is different" but we all know that human nature never changes and the same occurrences will happen over and over again. Nobody knows if this will happen tomorrow or decades from now, but it will happen. I just think it is smart to have some exposure to gold even if it is an outdated relic and of no real physical use. Thats just my opinion.

[SimonPB]

OK, so there two simple sides to this debate .. gold is money and we will abandon the fiat systems and revert back to gold .. and those who think not .. Here's my Q to those who think we will go back to gold .. how ??

[THRESHOLD]

? - No - that's the crazy exremist line of thinking. The fiat systems will continue on (with or without a euro - {remember the Zim dollar?}) They will continue to be abused. Gold was never removed from the system. It too will continue on as a reference currency. The USD is the current reserve currency - if gold were to unseat it - that would be "job done." BUT then again - who knows?

[SimonPB]

ok fair enough, and to a degree it already a reference currency for many (and CB's hold it which gives it some credibility) .. so the trick is to convince more to use it as a reference currency ..

[SimonPB]

link to interview with Moxima Gama
http://www.maudestreet.com/maude-street-online/jsedirect-95-diamonds-are-foevermark-while-gold-is-cr...

[THRESHOLD]

Who know?. Could happen. I certainly hope not. "Hope": the opposite of a stop-loss.

[THRESHOLD]

knows...

[Major]

A simple truth is that there can be no return to gold being fully exchangeable since there is vastly more fiat money than gold (at current prices). Even a partial return would be so wretching to an economy it doesn't bear thinking about.

[#14]

Gold is a currency and it's reserve currency is the $ dollar

[THRESHOLD]

Gold is a metal. It merely SERVES as money. The US dollar is the reserve currency. It acts as a reference point for other floating ("a dated term") and fiat currecies. Gold serves as an internationally exchangeable reference for currencies. The USD has been legally established as the reserve currency. Money is not currency. Currency is not money. Currency serves as a proxy for money within given parameters - by law. The value of money is intrinsic; it is based on direct demand dynamics. The value of currency is derivative. That said, even "money" is unreal insofar as it's value is a product of demand. So - while gold is REAL (score one for the gold bugs,) it's value is determined by human demand (Score a big one for the anti-goldies.)

[THRESHOLD]

Gold is not "a currency."

[EkisDoep]

Newgold issued 2,800,000 yesterday and 2,400,000 debentures today. Are people buying only in RSA? It seems that the international ETF's have less stock.

[SimonPB]

retail clients are buying .. but consider the previous missive buying spurt from retail was August 2011 .. just as gold peaked ..

[#19]

Some "form" of a currency. What is a currency

[THRESHOLD]

As explained (v. supra)