The Flight to Gold

In times of war or economic collapse, there is a "flight to gold" which is perceived to hold exchangeable value when paper has become worthless. In the present situation there is the clear possibility of collapse of currencies and a rush to buy gold, the price of which would then shoot through the roof.

These "best quotes of September 2008" give some insight into the ways that this could work itself out.

http://www.dollarcollapse.com/iNP/view.asp?ID=78

The rush to gold is risky. Banks have issued vast amounts of paper certificates for gold and silver that they don't possess. The Swiss banks have started to reject these certificates.
Big capitalists at this stage have almost all acquired large quantities of the metails in "small bits" - coins essentially.

The idea that a functioning world economy could revert to medieval methods of exchange is as laughable as the idea that flushing more paper money into the system will cure the collapse.

Quote :

Question --Russell, would you talk a bit more about your preference for gold coins in one's possession vs. GLD, which you term "paper gold" and SLV, which you call "paper silver."

Answer -- Yes, as I see it the authorities are doing whatever they want. I'm more inclined to hold actual gold coins. The SEC now disallows shorting in 799 financial equities, an amazing turn of events. Now with central banks all over the world releasing vast quantities of fiat money, it's entirely possible that gold will embark on a major rise. If this happens, it will throw suspicion on all fiat currency which is the last thing the central banks want. Under these conditions, it would not surprise me for the Fed and the SEC to halt all trading in gold, and the easiest place to monitor such an edict would be GLD. In 1933 the government ordered in all gold held by the US population. I can't see that happening, but I can see all trading halted. This would throw gold into the black market and make it very difficult to price or sell your gold. In France, people are forbidden to take any gold out of the country. Remember, gold is the enemy of fiat paper, and in that there is a story. Rising gold throws suspicion on ALL fiat and central bank issued currency.

intrinsically gold is worthless. it has limited functions but makes nice jewellary.

if i had pucks of cash i'd be buying barrels of oil.
there's a commodity the western world cannot do without!!!!

zakalwe wrote:

intrinsically gold is worthless. it has limited functions but makes nice jewellary.

if i had pucks of cash i'd be buying barrels of oil.
there's a commodity the western world cannot do without!!!!

For people who have spare money, having some gold is a way of hedging their bets. At the moment gold prices are said not to be higher as so many people who hold gold are in trouble and being forced to sell under pressure.

I still think that tins of salmon may turn out to be the best currency before this is finished.

You can buy gold in India if you feel that way inclined. One thing to remember about gold is that it does not earn one cent of interest. You are placing a bet that it will increase against currency or other assets! High inflation can be cruel to any such investment unless its value rises. In a recession basic business will survive and once the falls stop may be a better place to invest as they will provide income. People need to eat they don't need trinkets.

Historic gold chart below and from that you can see gold has risen recently. Further rises require a flight out of currency and money from stock and bonds to go there. I think a more likely scenario would be for money to return to the markets once there is a floor. I could certainly see gold going up, do have some myself by default rather than concious choice, but it is anyone's guess. As a short term measure as a hedge against currency or banking instability fair enough.



I think land is a better buy. It grows food. Not much use for the small investor or someone worrying that their life savings will disappear as paper money devalue.

zakalwe wrote:

intrinsically gold is worthless. it has limited functions but makes nice jewellary.

if i had pucks of cash i'd be buying barrels of oil.
there's a commodity the western world cannot do without!!!!

True, but it is going down in valiue at the moment. Either you have a cheap, secure place to store it and wait for higher prices or familiarise yourself with the NYMEX light crude futures contract and become a specialist in that market. No storage costs to worry about.

cactus flower wrote:

I still think that tins of salmon may turn out to be the best currency before this is finished.

Or firewood?

A bit of a fall at the moment. Is China selling, do you think?

Anyone else watching what gold is doing? It looks like possibly one or more State selling.

cactus flower wrote:

Anyone else watching what gold is doing? It looks like possibly one or more State selling.

Is it states selling? I can post an ould youtube or two if you want as I've seen a few of the gold fellas commenting on it but I didn't pay so much attention.

The states are fairly broke it seems - is this how they're going to try to balance their budget ?

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China was selling last week. A lot of private individuals were buying, so the drop represents even bigger sales that it would appear.

If bond markets get diffcult, then we could see a lot of gold sold. Not so safe a haven.