Still time to buy gold imo.
04-21-2009
, 01:38 PM
Gary North, who you always have to take with a grain of salt, has an excellent article on gold out: http://www.garynorth.com/public/4857.cfm
I read that and basically thought, "My thoughts exactly." The take away point from the article is that gold is still dirt cheap, and central banks & the IMF are taking measures to try to keep it that way that you can take advantage of. People probably know that it is my opinion that fiat money is completely unstable, and one of the main tools that central banks and the IMF have used to stabilize it for the past 36 years or so has been gold sales/gold dumping/gold "leasing"/whatever you want to call it. Unfortunately for them this is unsustainable because they are running out of gold. 40 years ago these entities held over half the world's gold stock. Now they own at best 20%, and perhaps as little as 8%. In the meantime, they are disgorging what will eventually become the medium of exchange again, in order to suppress its price and protect the fiat currencies.
I believe this is very, very important. Gold plays several roles that contribute to its value, industrial (small), ornamental, as a store of value, and as money. The last use, as money, currently does not exist. This is important, because the value of gold as money is more than its value as a store of wealth, which is more than its ornamental value. There is no way to measure these things, of course. But what seems to be the case to me is that when the world went off the gold standard, the value of gold became depressed due to its lack of use as a money. Particularly the gold price was greatly suppressed for essentially two decades. This means that the supply of gold did not keep up with what it would have been, had gold been money. I believe that when the fiat system collapses and gold remonetizes, this means that gold will be very valuable indeed.
Of course, when the fiat system collapses and gold remonetizes, gold will go essentially to infinite dollars/ounce. 
I've had the discussion with Zygote where we talked about CBs and the IMF selling gold. I believe they will, but at some point they will reach a point of diminishing marginal returns on how much they can effect the gold price. It would become foolhardy to get rid of all the gold. After all, it's going to be the money, and it's going to be extremely valuable. I will make the prediction that, at some point in the future, there will be gold heists, inside jobs, where the last remaining gold will vanish from the vaults of the central banks and end up instead in the vaults of the former central bankers. 12 +/- 8 years. You heard it here first.
Flame on.
I read that and basically thought, "My thoughts exactly." The take away point from the article is that gold is still dirt cheap, and central banks & the IMF are taking measures to try to keep it that way that you can take advantage of. People probably know that it is my opinion that fiat money is completely unstable, and one of the main tools that central banks and the IMF have used to stabilize it for the past 36 years or so has been gold sales/gold dumping/gold "leasing"/whatever you want to call it. Unfortunately for them this is unsustainable because they are running out of gold. 40 years ago these entities held over half the world's gold stock. Now they own at best 20%, and perhaps as little as 8%. In the meantime, they are disgorging what will eventually become the medium of exchange again, in order to suppress its price and protect the fiat currencies.
I believe this is very, very important. Gold plays several roles that contribute to its value, industrial (small), ornamental, as a store of value, and as money. The last use, as money, currently does not exist. This is important, because the value of gold as money is more than its value as a store of wealth, which is more than its ornamental value. There is no way to measure these things, of course. But what seems to be the case to me is that when the world went off the gold standard, the value of gold became depressed due to its lack of use as a money. Particularly the gold price was greatly suppressed for essentially two decades. This means that the supply of gold did not keep up with what it would have been, had gold been money. I believe that when the fiat system collapses and gold remonetizes, this means that gold will be very valuable indeed.
Quote:
Originally Posted by Gary North
At some point, the number of investors who figure out that they had better buy gold is going to go from less than 1% of the public to 5%. When that happens, the supply of gold will not increase, and the price of gold will skyrocket. If as many as 10% of the investing public tries to put 10% of their assets in gold, I suspect the price of gold would go to $10,000 an ounce. The gold market is so marginal in the overall commodities market that the attempted 10% of investors to increase their holdings of gold to 10% of their assets would make today's holders of gold very rich and very happy.
I've had the discussion with Zygote where we talked about CBs and the IMF selling gold. I believe they will, but at some point they will reach a point of diminishing marginal returns on how much they can effect the gold price. It would become foolhardy to get rid of all the gold. After all, it's going to be the money, and it's going to be extremely valuable. I will make the prediction that, at some point in the future, there will be gold heists, inside jobs, where the last remaining gold will vanish from the vaults of the central banks and end up instead in the vaults of the former central bankers. 12 +/- 8 years. You heard it here first.
Flame on.