[ame="http://www.youtube.com/watch?v=2Si9AaWVbak"]The Gold Bull Market is Dead -- Long Live the Bull Market - YouTube[/ame]
Precious metals taking a beating.
- Thread starter schockergd
- Start date
The market perception for Gold and commodities has change. China isn't growing fast enough, and there is no signs of inflation in the United States, the theory on commodities has changed as a result and the price reflects that.
Admittedly, that is an extreme example of a practical use, but all the rest were valid. As a simple mainstream example, almost all cell phones have some gold in them (approximately a dollar's worth). It's a metal which is in use every second of every day in mainstream industry, it's just that many people don't realize it.
In general gold is one of the most expensive metals because:
It is attractive (people like shiny things).
It is very dense, and therefore heavy even in smaller amounts - harder to steal (think before modern equipment was made).
It is amazingly inert - it can be left for centuries. This is convenient for handling and storage.
It is a good conductor (about 75% as good as copper).
It does not corrode.
It can be manipulated into all kinds of shapes, wires, thicknesses, films, alloys with other metals (since it doesn't react) without suffering damage.
It is also quite rare, and hard to extract.
And going back to the first paragraph - its use in electronics is huge. Even though it's not quite as good a conductor as copper, as it doesn't corrode it's more useful. Nearly every television, cell phone, laptop, tablet, microprocessor, memory chip, calculator, gps and so on has gold in it for its connections and mountings. As you can see that is a fucking metric shit-ton of applications. How many iphones were manufactured and sold in Q1 this year? They all had gold in them!
But apart from all that, there are many other uses for gold since it is the most malleable, one of the strongest and one of the most reflective metals in existence. E.g. aerospace (NASA), medical and dentistry.
Probably made a mistake in there somewhere, so feel free to tear me a new one. My cheeks are primed.
Found an interesting comment Warren Buffet made last year on the price of gold:
Well when you look at it like that, I guess gold is severely overpriced
Well when you look at it like that, I guess gold is severely overpriced
I dunno. Buffet seems to be showing his moronic side once again here.
If you owned all the gold on the planet, would you really just fondle it? (Don't answer that Jeffery or Dwight!) Clearly the point in obtaining the gold in the first place would be to be able to resell it, and with those proceeds you could buy anything at all, far faster than you could with agricultural products and oil as your income.
Sure, Ag & Oil will be paying off for far longer than a finite amount of gold will, but Buffet makes it sound like it's actually worthless.
Just like a good little Keynesian would.
Substitute the word "gold" for the words "US dollars".
Same problem.
Buffet is promoting a fallacy. You buy gold to speculate or to preserve wealth. It is not a productive asset. That's never been its role. The same came be said of a pile of rice. Or a shipload of steel. But those base commodity goods are CRUCIAL for Exxon et al to even exist, let alone function.
Everything starts in the economy with resource extraction.
I was just about to say that in his example, all of those Exxons would be using gold in just about every piece of electronics deployed to all their locations. I definitely don't agree with his opinion in this case.
Actually re-reading Guerilla's first line in that post (substitute USD), that is the perfect example to debunk it too.
Well yeah, gold is just a currency at the end of the day. It has some use, but not a great deal. It's uniqueness is what makes it a great currency and that it's not tied to one local currency. It does have a lot of history though and is a 'real thing' making it a bit easier to comprehend than a string of data.
Other metals/minerals are what they are because of supply and demand.
I don't know what the value of all US dollars in existence (including credit) are.
Mises.org: Economic Data
Let's say 7.3 trillion dollars.
Buffet is claiming there are about 5,485,714,285 ounces of gold.
That's $1,330 an ounce if the USD (only, not other currencies) was to be backed by gold again.
Is gold really overpriced?
Mises.org: Economic Data
Let's say 7.3 trillion dollars.
Buffet is claiming there are about 5,485,714,285 ounces of gold.
That's $1,330 an ounce if the USD (only, not other currencies) was to be backed by gold again.
Is gold really overpriced?
More info totalling 400 tonnes of gold being sold via Merrill Lynch on Fri which set up the fall on Mon:
How short seller's 'shock & awe' crushed gold with a 400 tonne trade