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Gold price rises above $2k for first time
- sawaruna 6y agoI was thinking of buying some gold mining company or gold ETF shares a while ago. Still time for the ETF buy I suppose, but maybe wait for a dip before buying the former.
- Kenji 6y agoDon't buy when it's high! You're way too late now.
- rapsey 6y ago> but maybe wait for a dip before buying the former. No real dips for the last 60 days. There might be one that goes below current level in the near future but there also might not be.
- perfunctory 6y ago> There might be one that goes below current level in the near future but there also might not be. Insightful.
- Humphrey 6y agoOr just buy the real thing? The problem is since we can't know the future, it's hard to tell if it's a dip or not. I've bought a small amount in the past year by deciding on a price that I'll buy at if it drops below that. It worked out for me, buy it could have equally not dropped or plunged. #prettyMuchGambling
- johnyzee 6y agoThe real thing is the best thing, but typically you lose about 10% in transaction costs (dealers have around 5% spread on both the buy and the sell). You can decrease that somewhat with larger transactions, but you'll take a pretty big hit upfront.
- Humphrey 6y agoAbsolutely! Although I've been getting closer to 2-3% for gold. Silver though has a much larger spread, the price has to increase significantly to not loose money.
- lkrubner 6y agoI forget where he said it, but at some point Paul Krugman makes the point that the price of gold will tend to rise when real interest rates are low. He makes a similar point here (written in 2019): "After all, the price of gold soared from 2007 to 2011... So why did gold soar? The main answer seems to be plunging returns on other assets, especially bonds, which were the product of a depressed world economy." https://www.nytimes.com/2019/07/13/opinion/goldbugs-for-trump.html https://www.nytimes.com/2019/07/13/opinion/goldbugs-for-trum... So we should expect the price of gold to rise while the pandemic is out of control. Once the coronavirus is defeated, we should expect the price of gold to fall.
- coder1001 6y agoMakes sense. However, couldn't this be a sign that people are getting ready for if/when the current financial system fails?
- arethuza 6y agoIf the current financial system fails how does it help to have bits of paper saying that you "own" gold in a warehouse somewhere?
- jasode 6y agoI didn't downvote your comment but a lot of regular people do buy physical gold (coins & bars)[1] and store the precious metals in a safe. That said, I don't know how much the gold price is affected by gold ETF vs physical transactions. [1] example of gold coins that are very popular with easy liquidity: https://catalog.usmint.gov/coins/precious-metal-coins/gold/ https://catalog.usmint.gov/coins/precious-metal-coins/gold/ [2] example of liquidity via ebay sales: https://www.ebay.com/sch/i.html?_from=R40&_nkw=gold+eagle+coin+us+mint+%221oz%22&_sacat=0&rt=nc&LH_Sold=1&LH_Complete=1 https://www.ebay.com/sch/i.html?_from=R40&_nkw=gold+eagle+co...
- tomalpha 6y agoOne interesting advantage for UK buyers of gold coins specifically, is that if they're legal tender they're exempt from (Capital Gains) taxation[0]. Even if the gold content is worth significantly more than their face value, which is almost universally true. [0] https://www.royalmint.com/invest/bullion/discover-bullion/capital-gains-tax-on-investments/ https://www.royalmint.com/invest/bullion/discover-bullion/ca...
- pcdoodle 6y agoPeople lose confidence due to the shutdowns.
- lasermike026 6y agoNo, people have lost confidence because the US has not gotten Covid-19 under control.
- s1t5 6y agoNot really. If that was true, stocks would be tanking but they're also at a high. There's just a lot money around and low interest rates so all assets increase in price. I just wonder how long that can last for and how it will end.
- ngcc_hk 6y agoSomeone said what is to be watched is gold to silver price ratio. Not sure.
- DrAwdeOccarim 6y agoIf Milton Friedman is right, and inflation is always and everywhere a monetary phenomenon, it will be interesting to see how this plays out. There is a huge fight right now between deflationary forces caused by an unprecedented collapse in both supply and demand, and inflationary forces from both fiscal and monetary stimuli. The risk I've read over and over is that the stimulus overshoots the deflation risk and we get higher inflation--I think that's what gold is starting to respond to. But the most interesting thing to me is that gold does best when deflation takes hold because it forces a massive inflationary push from the government to reflate the currency (e.g., Executive Order 6102 and the Gold Reserve Act of 1934 changing the price of gold from $20.67 to $35 overnight). Talk about an inflationary shock! How would they do it now a days? Direct helicopter money into everyone's bank account...oh, wait, we are doing that...But the scary part is that demand is crimped by fear of going out and spending, so we see Amazon beat EPS by 10x because everyone simply spends online instead. What a time to be alive! But joking aside, how do you inflate if people don't want to spend? I guess if/when a vaccine comes, and everyone rushes back out is when we could see inflation jump.
- devalgo 6y ago>Direct helicopter money into everyone's bank account...oh, wait, we are doing that Except the amount is peanuts, peer countries are doing 2k/mo without issue but its somehow a struggle or hyperinflationary for the US to do 2400 over 6 months?
- Humphrey 6y agoI bought some about 10 months ago as a practice investment, as I figured it was easier to understand than the share market and it had given an average 10%/year return over the past 10 years (well at least in Australian dollars). Kinda wish I bought more though, but who would have predicted a worldwide shutdown? That said, the gold price has barely moved compared to how much silver has skyrocketed the past few weeks. The question I'm pondering is, is the value of gold/silver skyrocketing, or is the real tangible value of the USD crashing? I guess only time will tell ️
- topspin 6y ago> The question I'm pondering is, is the value of gold/silver skyrocketing, or is the real tangible value of the USD crashing? A strong decline in the value of USD would be reflected in the prices of all commodities and their is no general commodity price inflation at the moment; the gold and silver price increases are an outlier. The price of gold and silver is increasing because the demand for gold and silver is increasing.
- Humphrey 6y agoThat's a good observation! While not a commodity, I'd just add that where I live (Australia) the price of housing has also been sky rocketing the past few years.
- lasermike026 6y agoI've always thought of the gold prices as a fear index.
- wdb 6y agoI have some gold and the storage is more expensive than I thought :)
- Humphrey 6y agoWhoops! As long as it's less than the rate of return I guess? I managed to find a company that offers "pool allocated storage" for free, with an option to "cast" it to a shippable product for a small fee. Perhaps it's worth you shopping around for cheaper storage? I wonder if that's where the programming term cast comes from.
- wdb 6y agoYeah, I will have a look into that. I bought my gold in 2009 so not much to complain. Luckily, if it's securely stored it's hard to get stolen. 100% sure gold is better protected than your typical bonds/stock at the high street bank.
- johnyzee 6y agoWhat kind of storage? A safe deposit box in a bank runs like $20 a month around here.
- shanehoban 6y agoThis got me thinking. If our currencies and financial system were completely based off the value of gold and/or other precious metals where the amount on the planet is finite, wouldn't this eventually cause the opposite of inflation where the prices of goods and services go down as less and less gold is available as the population grows? Wouldn't that also mean that wealth inequality and hoarding of gold make things even cheaper as less and less can afford to buy/sell at higher prices?
- hydroreadsstuff 6y agoThe rate of new gold being dug up roughly matches global population increase. ~2% p.a.
- DrAwdeOccarim 6y agoYes, this is part of the reasoning Nixon ditched Bretton Woods and unpegged the dollar from gold.
- alexmingoia 6y agoI think it’s worth pointing out that abandoning the gold standard had little to do with gold and everything to do with the practice of fractional reserve banking. The government simply had more foreign dollar debt than they had backed by gold, and foreign governments began to demand redemption of their dollars for gold. It wouldn’t matter what the reserve is, fractional reserve banking inevitably results in bank runs. Nixon had to either devalue the dollar or completely default, and he chose to default and abandon fractional reserve banking altogether (though at the time promised it was only a temporary suspension of gold redemptions).
- tomalpha 6y agoIIRC: Broadly yes. We tried doing this before and called it the Gold Standard[0]. [0] See https://en.wikipedia.org/wiki/Gold_standard https://en.wikipedia.org/wiki/Gold_standard
- baconandeggs 6y agoPrices do go down. Smartphones for example, or clothing, tvs, music and entertainment via netflix, etc. Even food is now more attainable than ever. Technology and efficiencies in production naturally generate deflation, but for some reason governments insist on enforcing an inflationary policy.
- baconandeggs 6y agoGold price soaring represents the failure of the political establishment to manage a fiat currency. Populist proclamations via money printing, corporate welfare, and the corrupt dismantling of the rule of law (basically stealing TikTok for example) will only aid in the descent of the current fiat system into new lows and hence take gold into all time highs.
- nine_zeros 6y agoUnderrated comment. One of the reasons third world countries continue to remain third world is because of gangster corruption such as this. It is really sad that America has fallen to such levels and is no longer the shining beacon.
- devalgo 6y ago>basically stealing TikTok for example 'Stealing' it for 30 Billion? Give me a break... TikTok is not the hill to die on...
- obayesshelton 6y agoMight be a good time to sell then. "While sitting in the shoeshine chair, Kennedy Sr. was alarmed to have the shoeshine boy gift him with several tips on which stocks he should own — yes, a shoeshine boy playing the stock market. This unsolicited advice resulted in a life-changing moment for Kennedy Sr. who promptly went back to his office and started unloading his stock portfolio. In fact, he didn’t just get out of the market, he aggressively shorted it — and got filthy rich because of it during the epic crash that soon followed. They don’t ring bells at the top, but apparently when shoeshine boys start giving stock advice it is time to head for the exits." https://www.businessinsider.com/how-to-spot-stock-market-bubbles-2017-10?international=true&r=US&IR=T https://www.businessinsider.com/how-to-spot-stock-market-bub...
- deleted 6y ago[deleted]
- czechdeveloper 6y agoIf you would sell every time something reaches all-time high, you would really not make any money.
- blaser-waffle 6y agoThat would depend on when you bought it. Picked up 200 shares right before the peak? a modest gain, if that. Maybe you miss the worst of the downturn, though. Bought 200 shares 10 years ago and now it's peaking? Get them ducets, son.
- ItsDeathball 6y agoI think the phrasing is hiding the logic. All-time high doesn't mean the peak. Quite often, all-time highs are followed by more all-time highs. Things can run quite a bit before a correction.
- IgorPartola 6y agoYou by definition would make money. If you sell at max price that means you had to have bought it for lower than that. Assuming you didn’t buy for so close to max such that transaction fees are larger than your margin.
- onetimemanytime 6y agoIMO: if you have tens of millions, buy 10KG of gold and 100kg of silver and bury it just in case. As an investment it sucks when compared to the rest but then a tiny percentage of your networth is nothing when considering that it may be useful if SHTF
- minerjoe 6y agoI heard once that their still finding caches of gold from the fall of the Roman empire. It didn't help those rich papos, why would it help you? I truly don't see gold being of any use in a collapse where suddenly food is the most valuable asset.
- johnyzee 6y agoFWIW, during the (first) IMF default in Argentina, when the local economy and monetary system was in total collapse, gold was the most sought after item for trade and barter. People consistently said afterwards that they wished they had kept more savings as gold.
- onetimemanytime 6y ago>>I heard once that their still finding caches of gold from the fall of the Roman empire. It didn't help those rich papos, why would it help you? Maybe some where helped by it, we don't know. But better to have it than not to, unless you announce to the desperate masses that you have lotsa gold >>I truly don't see gold being of any use in a collapse where suddenly food is the most valuable asset. You can do without food for weeks, and many will trade food for gold ("I have enough food" etc etc). plus, you can provision for food too. The idea is to make believe you don't have x% of your networth and buy gold/silver/guns/food/land with it for that one moment in time.
- refurb 6y agoWell, if they did dig it up and it helped them, we wouldn’t know, right?
- namelosw 6y agoIt's people vote "I agree that things are really bad now and probably stay the same in the near future" by their own actions.
- fredfoobar 6y agoGold is the oldest ponzi scheme that exists out there! * The practical uses of it are totally diminished because of this "novelty premium". * Can't use it online * Can't use it offline either (Can I buy a starbucks with it?) * Securing it and moving it around is risky I don't get it, who's buying this crap?
- piinbinary 6y agoIt has been consistently regarded as valuable for thousands of years, and there is very little chance of the value dropping to near zero. Edit: In response to child comment, I mean in the sense of the Lindy effect, not in the sense that age implies realness
- fredfoobar 6y agoNext, you're gonna tell me that "god" is real, because religions are old or something. There are untouched tribes out there in the Amazon who've been around for 1000s of years, it doesn't make their way of life better.
- gnusty_gnurc 6y agoas though everyone hopelessly consumed by anxiety, existential meaninglessness and insecurity nowadays isn’t argument enough in favor of the religions you’re discounting...old things aren’t inherently simple-minded or useless
- fredfoobar 6y agoWhatever floats your psychology man, do what you have to.
- Loughla 6y agoI find this argument interesting. I want to focus on the anxiety portion. Is there proof that people are more anxious today than in the past? Is there proof that religious morals and expectations didn't have a negative impact on folks' anxiety levels in the past? What about religion means individuals would be less anxious, and how do you prove that?
- grizzles 6y agoGold: If you don't have the physical gold in your IMMEDIATE possession, you don't own gold.
- stingraycharles 6y agoI feel like I’m missing some underlying point here, since you’re assuming there is a financial difference between buying, say, 100 gram of gold on the stock market vs having it stored at home.
- mattmanser 6y agoHe's implying if there were some serious financial disaster, digital records saying you own gold are going to mean little.
- orthecreedence 6y agoIf there's a serious financial disaster, cans of beans are going to be worth more than physical gold anyway.
- 01100011 6y agoIf there is a serious societal collapse, gold is going to be the last thing on your mind. Bullets, fuel, tools... trust relationships with other people... all infinitely more valuable than gold in a crisis. People who own physical gold are preparing for an extremely unlikely event, where society has collapsed in a very specific way. A HAM radio and the skills to operate it would be worth more than its weight in gold in many disaster scenarios.
- danhak 6y agoNot everybody holds gold as a hedge against complete and utter collapse. It can be a sensible hedge against a weakening dollar, such as is currently happening.
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- fortran77 6y agoI'm not a gold bug, and I certainly won't buy it now at the all-time high prices. That being said: I have enough Krugerands and similar gold coins in a very secure safe (in ground, in concrete) so I could GTFO if I had to and go somewhere else. All 4 of my grandparents had to pack up and leave suddenly and having something small you can pawn/hock/sell is handy. (Two fled Lithuania, one fled Belarus, and one fled Gaza City in 1929 when all the Jews were suddenly expelled. The families had all been living comfortably in the respective location for hundreds of years--or thousands in the case of Gaza.)
- miohtama 6y agoThe inflation adjusted price of gold is still below 2008 and 1980 peaks.
- deleted 6y ago[deleted]
- kyboren 6y agoNot surprising. The money supply has increased sharply: https://fred.stlouisfed.org/series/M2 https://fred.stlouisfed.org/series/M2
- baryphonic 6y agoAnd yet velocity of M2 has decreased sharply.[1] Therefore, hyperinflation seems unlikely unless the real economy unexpectedly recovers rapidly. However, since money is not neutral in the short run[2], we could actually get additional output from the increased money supply. That said, I'm personally skeptical of that claim in this crisis. Additional M2 can have zero effect on output when the law itself has forbidden workers from showing up and producing goods, and in some cases has discouraged them from trying to do so. [1] https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V [2] https://en.wikipedia.org/wiki/Monetary-disequilibrium_theory https://en.wikipedia.org/wiki/Monetary-disequilibrium_theory
- kyboren 6y agoIndeed, velocity has decreased sharply. I also do not think hyperinflation is likely, even if the economy recovers quickly. But I do expect to see asset price inflation.
- canada_dry 6y ago>> money supply has increased sharply > velocity of M2 has decreased sharply I don't think M2 takes into account money going into derivatives, does it?? I'd propose that most of the stimulus is going directly into propping up the US financial market. My take is that bubble might burst when markets realize that the situation is still getting worse i.e. earnings and GDP continue to decline winter 2020/spring 2021.
- ogogmad 6y agoCryptocurrencies are rallying as well. Some of them tap into the same economic logic as gold.
- NicoJuicy 6y agoI thought so as well, but I'm starting to believe it's more looks civilians running away from faultering currency ( Venezuela, turkey, Russia, HK ). Which has very similar market conditions.
- dnprock 6y agoGold is not simply a shiny metal or a collective fiction. I think many historians (e.g. Harari) got this wrong. Humans first learned how to manipulate metal through gold around 40k years ago. It sparked the metal industries that advanced human civilizations. Humans progressed through Bronze Age, Iron Age. Gold was an icon of metal technologies. Its use as money probably predated written history. https://bitflate.org/post/2019/11/29/how-gold-became-money.html https://bitflate.org/post/2019/11/29/how-gold-became-money.h...
- IgorPartola 6y agoThat’s true, but history of something does not equal it’s value today. Otherwise companies like DEC would still be around, no?
- dnprock 6y agoHarari sees history as fiction. But I think we need to make a distinction between fiction and physical reality. Gold is a physical reality that got married into human's fiction. DEC technologies are still around. They just got replicated and extended into other technology stacks. It's not easy to replicate gold. The easy way is to mine more gold. Technologies are ideas. Gold is physical. Bronze and iron became less popular after BC. Will steel go away any time soon? No. Humans have worked with gold much longer. Gold has had its ups and downs. It has always come back for thousands of years. This suggests it's not going away (Lindy effect).
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- j_walter 6y agoThe real questions is: Why has gold risen so much and platinum (which is much rarer than gold) stayed relatively flat recently (down since 2009) and is currently worth less than have as much? Platinum was > $2K/oz during the 2008-09 financial crisis...it's now under $1K/oz. What makes gold's intrinsic value so much higher? "The price of platinum changes along with its supply and demand; during periods of sustained economic stability and growth, the price of platinum tends to be as much as twice the price of gold; whereas, during periods of economic uncertainty,[7] the price of platinum tends to decrease because of reduced demand, falling below the price of gold, partly due to increased gold prices." https://en.wikipedia.org/wiki/Platinum_as_an_investment#:~:text=The%20price%20of%20platinum%20changes,because%20of%20reduced%20demand%2C%20falling https://en.wikipedia.org/wiki/Platinum_as_an_investment#:~:t...
- Nasrudith 6y agoPerhaps platinium prices arr more set by practical uses for things like catalytic converters and the demand is down with the rest of the economy? Of course gold's speculation value is essentially memetically driven by history and platinium tends to lack that.
- j_walter 6y agoPlatinum prices have declined every year, more or less, for the last decade. Car manufacturing world wide has increased in that same time frame (even excluding EV that wouldn't need platinum).
- gravitas 6y agoWhen you look at the macro trend, platinum has trended gold since the 80s... until around 2014 where it started going the other direction. https://www.macrotrends.net/2541/platinum-prices-vs-gold-prices https://www.macrotrends.net/2541/platinum-prices-vs-gold-pri...
- DoreenMichele 6y agoThe article seems to suggest it's rising because of the lockdown. In other words: we aren't mining it currently, or not mining it very much. My general impression is that gold is going up because of its use in electronics. Platinum is also used, but in smaller amounts. A typical iPhone is estimated to house around 0.034g of gold, 0.34g of silver, 0.015g of palladium and less than one-thousandth of a gram of platinum. https://www.bbc.com/future/article/20161017-your-old-phone-is-full-of-precious-metals https://www.bbc.com/future/article/20161017-your-old-phone-i...
- autokad 6y agoI use to scoff at gold investors, I was one of those 'only the sp500 is the right asset class, it always beats every other asset class over the long run' type people. then in 2019, I saw a chart of asset prices over the last 20 years. Gold, oil, and real-estate out performed the sp500 over that 20 year period (to me, a reasonable 'long period of time'). its actually still true today in 2020, probably will remain so for a long time. gold aug-2000:aug-2020 = 409:2000 or 4.89x sp500 aug-2000:aug-2020 = 1471:3327 or 2.26x that is serious under performance over a 20 year period, which has been true for ever a year now. not true with oil anymore though.
- prepend 6y agoCompare that to all the other 20 year windows. So unless you think this 20 year period is useful for predicting the next 20 year window, it’s not very helpful. Gold really sucks over long term investing windows (eg 30-50 years) although it, like pretty much everything, will have specific windows of outperforming the s&p.
- autokad 6y ago> "Compare that to all the other 20 year windows. So unless you think this 20 year period is useful for predicting the next 20 year window, it’s not very helpful." No window is good at predicting any asset. As in, previous returns can't be used to predict anything. Nobody cares about 50 year windows if that is well outside of their investment window. realistically, a person has about 20 years to build up assets before they need to switch to more safer bonds so talking about 50 year windows is like me saying I want to live in this geography for nice weather and you saying 'well over geological epochs, this place is far more stable'. I think the sp500 should be most people's primary investment. but I also hate people who say the sp500 is infallible, when they used research that only looked at 1952 - 1999. so when you see people parrot 'the sp500 beats all asset classes over any long period of time'. well 20 years is a long period of time.
- prepend 6y agoI’ve never met anyone who says s&p is infallible, it’s usually that it is better than any alternative. I want a 50 year horizon for intergenerational wealth. For myself, I started at 20 and probably wont retire until 65-75. Although it won’t all be in s&p at 75, some of it will. The 20 year window is useful for retirement, but the fact that one 20 year window in the past 100 years out performed isn’t that handy as the s&p usually outperforms gold.
- BMSmnqXAE4yfe1 6y agoWow 263 comments ... interesting to see what hackers really care about)