3 ms·

Credit Deflation and Gold

2 points by tomkwok 11y ago

dsmithatx 11y ago
Gold is at a 5 year low because the market is up. The value at $1165 per ounce is a bubble still. I sold my Eagles and other coins at $1600/oz. After a lot of study I've concluded Gold isn't all that heavily used in Manufacturing and industry. Not much more than Silver. For every ounce/pound of Silver that comes out of the ground we get 1/17.5 that much gold. If all that research is correct gold should be at $259-350 per ounce. However, people don't listen. This means that if I get any sense the market is going to crash again I will immediately buy Gold bullion again and profit again I'm positive. Simply because people are herd animals and will always buy high and sell low. As the market crashes they'll get scared and shelter up in gold again.
ChuckMcM 11y ago
When people write something like this in a piece : "Since credit was expanded out of thin air by banks without underlying stocks of gold to cover it, ..." you know they are confused. Banks don't "expand credit" out of "thin air" they capture future economic output by funding it in the present. You say to the bank "loan me $100,000 to build a house." and the bank says "sure if you agree to pay me 5% of that loan amount every year for the next 30 years." They have agreed to loan you money today, and you are going to give them all that money back and you are going to give them some additional money (5% of the loan amount per year) that you make over the next 30 years as well. And then they calculate what the total amount would be over 30 years and they divide that by 360 months, and that becomes your "monthly payment". So no money was "created out of thin air" rather future money that doesn't exist yet, but the bank has reason to believe will exist, has been allocated to that bank because you are going to give it to them. And to get that money to loan you they tell other people, "hey, we'll pay you 2% interest on your money if you keep it in our bank." They net the difference (3%) and the world goes around and around.

2 points by tomkwok 11y ago

Gold is at a 5 year low because the market is up. The value at $1165 per ounce is a bubble still. I sold my Eagles and other coins at $1600/oz. After a lot of study I've concluded Gold isn't all that heavily used in Manufacturing and industry. Not much more than Silver. For every ounce/pound of Silver that comes out of the ground we get 1/17.5 that much gold. If all that research is correct gold should be at $259-350 per ounce. However, people don't listen. This means that if I get any sense the market is going to crash again I will immediately buy Gold bullion again and profit again I'm positive. Simply because people are herd animals and will always buy high and sell low. As the market crashes they'll get scared and shelter up in gold again.

ChuckMcM 11y ago

When people write something like this in a piece : "Since credit was expanded out of thin air by banks without underlying stocks of gold to cover it, ..." you know they are confused. Banks don't "expand credit" out of "thin air" they capture future economic output by funding it in the present. You say to the bank "loan me $100,000 to build a house." and the bank says "sure if you agree to pay me 5% of that loan amount every year for the next 30 years." They have agreed to loan you money today, and you are going to give them all that money back and you are going to give them some additional money (5% of the loan amount per year) that you make over the next 30 years as well. And then they calculate what the total amount would be over 30 years and they divide that by 360 months, and that becomes your "monthly payment". So no money was "created out of thin air" rather future money that doesn't exist yet, but the bank has reason to believe will exist, has been allocated to that bank because you are going to give it to them. And to get that money to loan you they tell other people, "hey, we'll pay you 2% interest on your money if you keep it in our bank." They net the difference (3%) and the world goes around and around.