7 ms·

Yeah, you're a fool for thinking such a thing. Seriously, all the commodities guys are. If you look at gold/silver demand guess what the major determinant is -

Yeah, you're a fool for thinking such a thing. Seriously, all the commodities guys are. If you look at gold/silver demand guess what the major determinant is - OH YEAH - JEWELLERY! You know the stuff people buy when veblen goods are popular (i.e. a strong world economy). Your baubles are worth nothing if the 2 largest economies go down. Everyone dumped emerging markets, the euro and stocks to buy dollars and treasuries (flight to quality during high vol.). Not because anything drastically changed, but because of the beauty contest dynamic in markets. You predict what others may predict to happen in the short term and act accordingly. Go buy yourself a gun, food, and some survival training if that is your position. You can't eat gold. You can't live in silver. And you most certainly can't sell it when everything goes down. Here's a hedge fund analyst's take on it: http://www.quora.com/Why-is-the-price-of-gold-rising http://www.quora.com/Why-is-the-price-of-gold-rising. Notice the graph and its constituents. Gold/Silver guys mock us fiat currency types (i.e. everyone) when they themselves are trading the same trust based tulips as the rest of us. Everything you trade is based on trust, and trust is, and always will be, a bet on the future being better. Gold/Silver is a bet for the world getting better, not worse. You can't invest in the end of the world. You can merely prepare for it.

johnnyg 14y ago
Glad there are still some counter parties left to take my trades. Enjoy your tbills! :-)
- confluence 14y ago
  Well seeing as my tbills represent the future output of the world's largest economies, and one of the greatest consumers of veblen goods (which includes most of the demand for your commodities), you and I aren't so different. We bet the same. But you have no idea what you're doing. I merely wish to point out that you can't bet for the end of the world. You can merely prepare for it.
  - toomuchtodo 14y ago
    I can short the end of the world; as long as there is enough time between when I profit and when I cash that profit out into something that will provide me with long term value (house, etc). For this argument, I define value as providing ME something, not value that can be traded.
- deleted 14y ago
  [deleted]
sliverstorm 14y ago
There are other, less whimsical commodities. E.g., computers probably aren't going away. Invest in copper.
- confluence 14y ago
  My point was that if you bet on commodities, you bet for increased production, and increased consumption of scarce resources. Not the end of the world. It's no different from buying the stock of companies that sell the goods the commodities are composed of (since they demand those commodities and in turn set their prices in the market via demand).
mipapage 14y ago
Interesting, normally when currencies dive the money moves to gold, no?
- confluence 14y ago
  Currencies can do whatever they want. It's all supply and demand. Money moves to safety during times of high vol. People think money moves to gold, when in fact it moves to the highest quality bonds and currency. Gold market is tiny compared to the pools I deal with. But those morons fly around claiming stupid things, and I just wanted to set things straight.
  - mipapage 14y ago
    Thanks for the reply. Interesting, I thought (speaking roughly here) entities put money in gold during high volatility - times where its hard to find stable bonds and currency. Thinking about it, perhaps that last condition is rarely the case. So why the "flight to gold" that is spoken of in the media?
    - confluence 14y ago
      Same reason puppies and natural disasters are in the news. It sells papers and ads - it's link baiting in real life. You need to look at the incentives of parties before you take their word. My incentive is obviously for people to buy dollars and treasuries, but guess what, everyone does that every day of the week (business/buying/stocks/retirement accounts). So I don't really care what gold huggers think. But gold huggers work on a small market, and it is their incentive for others to buy into this farce. Take from that what you will (reminds me of pump and dump and the tulip mania). Don't believe what I say, go figure stuff out for yourself. Everyone is biased. Don't buy t-bonds, don't buy gold. Look at incentives. Look for production of useful goods. Make your own decisions.
mcantelon 14y ago
>Everything you trade is based on trust, and trust is, and always will be, a bet on the future being better. Paper money can be made out of thin air. Gold can't. Big difference.
- confluence 14y ago
  Not really. You make a tonne of assumptions stating that gold will be better than paper. You assume rule of law, efficient markets, a government that will protect your assets, a place where you can spend your gains. etc. etc. Reports of paper money's death have been greatly exaggerated. Floating paper is here to stay people. If the world falls apart, all that matters is guns, food, water and shelter. Your baubles are worthless without the society to back it up. And since we move trillions across nations everyday, I'm going to go ahead and say the world trade markets are synced up and highly correlated/dependent. If one super centre goes down, so does everyone else. We live in one world now, people just don't know it yet.
  - mcantelon 14y ago
    >Not really. Hyperinflation is a pretty well documented historical phenomenon. Paper is created by a central authority. A central authority can inflate the currency or impose control mechanisms. Control mechanism avoidance example: China using gold to buy oil from Iran. http://buying-gold.goldprice.org/2012/04/india-and-china-to-buy-oil-with-gold.html http://buying-gold.goldprice.org/2012/04/india-and-china-to-... >You assume rule of law, efficient markets, a government that will protect your assets, a place where you can spend your gains. etc. etc. It sounds like you equate a hyperinflation scenario with a complete societal breakdown. That isn't necessarily the case. >Reports of paper money's death have been greatly exaggerated. Paper money as a tool will never die because it's convenient. Individual currencies, however, have and will. This is historical fact. >Your baubles are worthless without the society to back it up. Of course, but currencies collapse more commonly than societies. Value stored in commodities can be recovered. Currency value killed by hyperinflation can't.
    - confluence 14y ago
white_devil 14y ago
You certainly sound ferociously biased. In another comment, you implied you're making huge trades, so it's not very surprising. > You can't eat gold. You can't live in silver. And you most certainly can't sell it when everything goes down. Hyperinflation in Zimbabwe ring a bell? They sure didn't seem to mind that you can't eat gold, and just went ahead and exchanged it for food instead: https://www.youtube.com/watch?v=8HD0NWRSEjU https://www.youtube.com/watch?v=8HD0NWRSEjU Your dismissal of gold as "baubles" doesn't change the fact that it does seem to work as a medium of exchange, even in a situation where a fiat currency no longer doesn't. Sure, that's based on trust, just like you said. But mcantelon's point that gold can't be created out of thin air is relevant to that trust. > Well seeing as my tbills represent the future output of the world's largest economies Your T-Bills are IOU's from one of the world's largest economies, and guess what? -Those are based on trust too. > Money moves to safety during times of high vol. People think money moves to gold, when in fact it moves to the highest quality bonds and currency. Yes, money moves towards perceived safety. The mainstream perception of the ultimate safe investment has been US bonds. But you know, it's possible that something else might end up being perceived as safer than US bonds. Perhaps something that's not controlled by any government, and can't be created out of thin air. Perhaps something that is still trusted as a medium of exchange. Government bonds in general have been thought of as a safe investment, but Greece's bonds are government bonds too. Care to buy some?
- confluence 14y ago
  Read my comments closely devil. I trade large currency/bond markets, not the relatively small markets like gold. I was making a point. I can't make people do things, the market is way too big (just ask the Bank of England!). Gold huggers can. Hence why I stated: > Don't buy t-bonds, don't buy gold. Look at incentives. Look for production of useful goods. Make your own decisions. Yeah you're picking and choosing your examples there. I only talked about super clusters (euro/dollar/yen/yuan/rupee), not POS countries in Africa that have 0 impact on global markets, as they aren't connected, or correlated. Care to read my other comments, they indicate when hyperinflation occurs: > Hyperinflation is often associated with wars or their aftermath, political or social upheavals, or other crises that make it difficult for the government to tax the population. Sounds like Zimbabwe now then doesn't it? Barter > Gold. Barter is the normal medium of exchange. It scales nicely in the developing world, where things are slow, and people are poor. Gold is a POS medium of exchange for the exact reasons gold huggers love it. There isn't enough of it to do anything with. It's nothing but shiny baubles for the uncritically thinking. Why not diamonds? They're just as rare, just as hard to handle? Why not cacoa beans? Or platinum? Or terbium? HUH! > Sure, that's based on trust, just like you said. But mcantelon's point that gold can't be created out of thin air is relevant to that trust. Yeah that's the point. Your gold has no use in a developing country, despite what you think. People trade in dollars for a reason. > Yes, money moves towards perceived safety. The mainstream perception of the ultimate safe investment has been US bonds. The US has the fastest nukes, the best standing military and one of the greatest economies. > But you know, it's possible that something else might end up being perceived as safer than US bonds. Perhaps something that's not controlled by any government, and can't be created out of thin air. Perhaps something that is still trusted as a medium of exchange. Nothing is safer than the US government. And do you know why? Because if the US government isn't safe, well then, none of this matters. The US is a conduit for massive capital. It exports huge amounts of goods and services, and consumes far more. You want to bet on the end of the US? You can't, because that bet is the exact same as the one for the end of the world. You cannot invest for catastrophe. Merely depression! Buy gold all you want. Your bet, if you look at it closely, is exactly the same as mine. It's just that you don't know what you're doing.

johnnyg 14y ago

Glad there are still some counter parties left to take my trades. Enjoy your tbills! :-)

confluence 14y ago
Well seeing as my tbills represent the future output of the world's largest economies, and one of the greatest consumers of veblen goods (which includes most of the demand for your commodities), you and I aren't so different. We bet the same. But you have no idea what you're doing. I merely wish to point out that you can't bet for the end of the world. You can merely prepare for it.
- toomuchtodo 14y ago
  I can short the end of the world; as long as there is enough time between when I profit and when I cash that profit out into something that will provide me with long term value (house, etc). For this argument, I define value as providing ME something, not value that can be traded.
deleted 14y ago
[deleted]

sliverstorm 14y ago

There are other, less whimsical commodities. E.g., computers probably aren't going away. Invest in copper.

confluence 14y ago
My point was that if you bet on commodities, you bet for increased production, and increased consumption of scarce resources. Not the end of the world. It's no different from buying the stock of companies that sell the goods the commodities are composed of (since they demand those commodities and in turn set their prices in the market via demand).

mipapage 14y ago

Interesting, normally when currencies dive the money moves to gold, no?

confluence 14y ago
Currencies can do whatever they want. It's all supply and demand. Money moves to safety during times of high vol. People think money moves to gold, when in fact it moves to the highest quality bonds and currency. Gold market is tiny compared to the pools I deal with. But those morons fly around claiming stupid things, and I just wanted to set things straight.
- mipapage 14y ago
  Thanks for the reply. Interesting, I thought (speaking roughly here) entities put money in gold during high volatility - times where its hard to find stable bonds and currency. Thinking about it, perhaps that last condition is rarely the case. So why the "flight to gold" that is spoken of in the media?
  - confluence 14y ago
    Same reason puppies and natural disasters are in the news. It sells papers and ads - it's link baiting in real life. You need to look at the incentives of parties before you take their word. My incentive is obviously for people to buy dollars and treasuries, but guess what, everyone does that every day of the week (business/buying/stocks/retirement accounts). So I don't really care what gold huggers think. But gold huggers work on a small market, and it is their incentive for others to buy into this farce. Take from that what you will (reminds me of pump and dump and the tulip mania). Don't believe what I say, go figure stuff out for yourself. Everyone is biased. Don't buy t-bonds, don't buy gold. Look at incentives. Look for production of useful goods. Make your own decisions.

mcantelon 14y ago

>Everything you trade is based on trust, and trust is, and always will be, a bet on the future being better. Paper money can be made out of thin air. Gold can't. Big difference.

confluence 14y ago
Not really. You make a tonne of assumptions stating that gold will be better than paper. You assume rule of law, efficient markets, a government that will protect your assets, a place where you can spend your gains. etc. etc. Reports of paper money's death have been greatly exaggerated. Floating paper is here to stay people. If the world falls apart, all that matters is guns, food, water and shelter. Your baubles are worthless without the society to back it up. And since we move trillions across nations everyday, I'm going to go ahead and say the world trade markets are synced up and highly correlated/dependent. If one super centre goes down, so does everyone else. We live in one world now, people just don't know it yet.
- mcantelon 14y ago
  >Not really. Hyperinflation is a pretty well documented historical phenomenon. Paper is created by a central authority. A central authority can inflate the currency or impose control mechanisms. Control mechanism avoidance example: China using gold to buy oil from Iran. http://buying-gold.goldprice.org/2012/04/india-and-china-to-buy-oil-with-gold.html http://buying-gold.goldprice.org/2012/04/india-and-china-to-... >You assume rule of law, efficient markets, a government that will protect your assets, a place where you can spend your gains. etc. etc. It sounds like you equate a hyperinflation scenario with a complete societal breakdown. That isn't necessarily the case. >Reports of paper money's death have been greatly exaggerated. Paper money as a tool will never die because it's convenient. Individual currencies, however, have and will. This is historical fact. >Your baubles are worthless without the society to back it up. Of course, but currencies collapse more commonly than societies. Value stored in commodities can be recovered. Currency value killed by hyperinflation can't.
  - confluence 14y ago

white_devil 14y ago

You certainly sound ferociously biased. In another comment, you implied you're making huge trades, so it's not very surprising. > You can't eat gold. You can't live in silver. And you most certainly can't sell it when everything goes down. Hyperinflation in Zimbabwe ring a bell? They sure didn't seem to mind that you can't eat gold, and just went ahead and exchanged it for food instead: https://www.youtube.com/watch?v=8HD0NWRSEjU https://www.youtube.com/watch?v=8HD0NWRSEjU Your dismissal of gold as "baubles" doesn't change the fact that it does seem to work as a medium of exchange, even in a situation where a fiat currency no longer doesn't. Sure, that's based on trust, just like you said. But mcantelon's point that gold can't be created out of thin air is relevant to that trust. > Well seeing as my tbills represent the future output of the world's largest economies Your T-Bills are IOU's from one of the world's largest economies, and guess what? -Those are based on trust too. > Money moves to safety during times of high vol. People think money moves to gold, when in fact it moves to the highest quality bonds and currency. Yes, money moves towards perceived safety. The mainstream perception of the ultimate safe investment has been US bonds. But you know, it's possible that something else might end up being perceived as safer than US bonds. Perhaps something that's not controlled by any government, and can't be created out of thin air. Perhaps something that is still trusted as a medium of exchange. Government bonds in general have been thought of as a safe investment, but Greece's bonds are government bonds too. Care to buy some?

confluence 14y ago
Read my comments closely devil. I trade large currency/bond markets, not the relatively small markets like gold. I was making a point. I can't make people do things, the market is way too big (just ask the Bank of England!). Gold huggers can. Hence why I stated: > Don't buy t-bonds, don't buy gold. Look at incentives. Look for production of useful goods. Make your own decisions. Yeah you're picking and choosing your examples there. I only talked about super clusters (euro/dollar/yen/yuan/rupee), not POS countries in Africa that have 0 impact on global markets, as they aren't connected, or correlated. Care to read my other comments, they indicate when hyperinflation occurs: > Hyperinflation is often associated with wars or their aftermath, political or social upheavals, or other crises that make it difficult for the government to tax the population. Sounds like Zimbabwe now then doesn't it? Barter > Gold. Barter is the normal medium of exchange. It scales nicely in the developing world, where things are slow, and people are poor. Gold is a POS medium of exchange for the exact reasons gold huggers love it. There isn't enough of it to do anything with. It's nothing but shiny baubles for the uncritically thinking. Why not diamonds? They're just as rare, just as hard to handle? Why not cacoa beans? Or platinum? Or terbium? HUH! > Sure, that's based on trust, just like you said. But mcantelon's point that gold can't be created out of thin air is relevant to that trust. Yeah that's the point. Your gold has no use in a developing country, despite what you think. People trade in dollars for a reason. > Yes, money moves towards perceived safety. The mainstream perception of the ultimate safe investment has been US bonds. The US has the fastest nukes, the best standing military and one of the greatest economies. > But you know, it's possible that something else might end up being perceived as safer than US bonds. Perhaps something that's not controlled by any government, and can't be created out of thin air. Perhaps something that is still trusted as a medium of exchange. Nothing is safer than the US government. And do you know why? Because if the US government isn't safe, well then, none of this matters. The US is a conduit for massive capital. It exports huge amounts of goods and services, and consumes far more. You want to bet on the end of the US? You can't, because that bet is the exact same as the one for the end of the world. You cannot invest for catastrophe. Merely depression! Buy gold all you want. Your bet, if you look at it closely, is exactly the same as mine. It's just that you don't know what you're doing.