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Quote from Larson:
And you are using the same old wore out argument as Buffet.
Restore confidence in the reserve currency and gold will fall.
What old wore out argument? You said gold is a currency in times like these. Gold isn't a currency. Gold is an asset. I can't pay my bills in gold coins.
Hi,Quote from morganist:
Gold and aggregate demand.
http://morganisteconomics.blogspot.com/2011/06/precious-metals-and-macroeconomic.html
You state:
"The recent default on sovereign debt in the Eurozone in particular Greece is evidential of future debt repayment required."
AFAIK Greece has not defaulted on its debt. It has received loans from IMF and EU that essentially transform bond payments to loan debt.
Then you state:
"As precious metals are a hedge against currency devaluation and debt repayment create inflation foreign countries are change their reserves pushing precious metal prices up."
Gold can do no good to exporting countries like China. They will not distribute gold to their citizens and they will not be paid in gold for exporting good to US and elsewhere. The objective of China is to keep industrial production going and averting the possibility of instability, social and economic. This can be done by accepting any form of currency the trading partners will offer. Exchanging that currency for gold will make things worse for China because the trade will shrink.
Therefore, it is to the best interest of the Chinese to keep gold prices low rather than to fuel a further rise. IF they do not understand that I would not be surprised. Chinese officials have often demonstrated an unprecedented misunderstanding of economics and how they affect international trade. Further rise in gold, as you say, has the possibility of bringing China back to where it was in 2002 in terms of a trade deficit with the US.
Quote from Kassz007:
What old wore out argument? You said gold is a currency in times like these. Gold isn't a currency. Gold is an asset. I can't pay my bills in gold coins.
So now you are speaking in terms of "legal tender" recognized by gov'ts. Is that what you are saying? Gold is easily converted to whatever currency you want to exchange it for. Then pay your bills with the" legal tender." The currency component is what makes it rise and fall opposed to fiat which has governmental liability attached to it. Gold has no liability attached. Surely you people are smart enough to figure this out for yourselves without parroting Wall St. and Buffet, unless you have a vested interest in a certain market(s).
Rumblefish
Guest
Gold is and always been a storage of value.
A guy who owns 1 ounce of gold when he bought in 2004 for $400/ounce and now the gold is worth $1,500
isn't any wealthier.
no wealth is created.
he still only own one ounce of gold.
A guy who owns 1 ounce of gold when he bought in 2004 for $400/ounce and now the gold is worth $1,500
isn't any wealthier.
no wealth is created.
he still only own one ounce of gold.
Quote from morganist:
Gold and aggregate demand.
http://morganisteconomics.blogspot.com/2011/06/precious-metals-and-macroeconomic.html
M
morganist
Quote from intradaybill:
Hi,
You state:
"The recent default on sovereign debt in the Eurozone in particular Greece is evidential of future debt repayment required."
AFAIK Greece has not defaulted on its debt. It has received loans from IMF and EU that essentially transform bond payments to loan debt.
Then you state:
"As precious metals are a hedge against currency devaluation and debt repayment create inflation foreign countries are change their reserves pushing precious metal prices up."
Gold can do no good to exporting countries like China. They will not distribute gold to their citizens and they will not be paid in gold for exporting good to US and elsewhere. The objective of China is to keep industrial production going and averting the possibility of instability, social and economic. This can be done by accepting any form of currency the trading partners will offer. Exchanging that currency for gold will make things worse for China because the trade will shrink.
Therefore, it is to the best interest of the Chinese to keep gold prices low rather than to fuel a further rise. IF they do not understand that I would not be surprised. Chinese officials have often demonstrated an unprecedented misunderstanding of economics and how they affect international trade. Further rise in gold, as you say, has the possibility of bringing China back to where it was in 2002 in terms of a trade deficit with the US.
Greece did default. A default is when the arrange payment system fails. SDRM is default.
China has urged people to buy gold as an investment. They can use it like a currency because it has a value and cannot be faked.
Quote from morganist:
Greece did default. A default is when the arrange payment system fails. SDRM is default.
China has urged people to buy gold as an investment. They can use it like a currency because it has a value and cannot be faked.
Greece has not entered into SDRM. Your information is wrong. Greek bond payments are carried as usual. There is only talk about restructuring. I propose to you to check your sources.
China will be in a lot of trouble in a few years because of their failure to understand that an exporting country cannot force others to sustain high trade deficits for long. Overcapacity will have to be reduced down with severe consequences.
Quote from Rumblefish:
Gold is and always been a storage of value.
A guy who owns 1 ounce of gold when he bought in 2004 for $400/ounce and now the gold is worth $1,500
isn't any wealthier.
no wealth is created.
he still only own one ounce of gold.
+1
Not only that. If gold starts been used as a currency, it will be subject to the same inflation pressures. The only reasons it has, it has occasionally being used as an inflation hedge was because of the presence of fiat currencies.
This is one reason that a gold beg does not and will never work. There is no free lunch with inflation.
Rumblefish
Guest
It's because there is lack of confidence in the US dollars. china owns a lot of US bonds(fiat money)
gold is convertible to US dollars or any currency.
gold is not an 'investment' it's storage of value like cash
preservation capital is the goal of pension funds.
china has a lot of pension funds and sovereign wealth funds.
US T-bills or US gov't bonds is now 'risky'
Gov't bonds or US gov't bonds at one time was the most safest and most conservative portion of investment portfolios.
gold is convertible to US dollars or any currency.
gold is not an 'investment' it's storage of value like cash
preservation capital is the goal of pension funds.
china has a lot of pension funds and sovereign wealth funds.
US T-bills or US gov't bonds is now 'risky'
Gov't bonds or US gov't bonds at one time was the most safest and most conservative portion of investment portfolios.
Quote from morganist:
Greece did default. A default is when the arrange payment system fails. SDRM is default.
China has urged people to buy gold as an investment. They can use it like a currency because it has a value and cannot be faked.