Posted on 09/23/2011 2:10:22 PM PDT by blam
I bought a stack of kilo gold bars less than three years ago at $778/troy ounce. Think I’m overly upset when a liquidation event briefly drops the price to $1650/oz?
No chance. Leveraged hedge funds and speculators got smashed and had to sell, plus other weak-handed, inexperienced people got spooked and sold this week (and will lose their positions in this long term secular bull gold market), but I’m not losing a moment’s sleep.
All the central banks can do is to keep creating money out of thin air, ultimately diminishing the value of their currencies further.
The aggregate balance sheet for all of Europe’s banks is already insolvent, but the game of pretend will continue for as long as the can make the zombie banks appear to have real life in them.
‘I know there are a lot of “gold bugs” on FR but I can’t get beyond the fact that it really has little intrinsic value.’
No commodity has “intrinsic value”. The characteristics of any commodity determine the subjective value assigned to it by buyers according to their current and prospective future needs. BfloGuy’s list of the characteristics of gold provides a good set of reasons for choosing gold over fiat currency units if the need is to preserve a portion of one’s wealth through a period of severe financial distress and potential communal turbulence, where the authorities who control fiat currency issue are creating new units at a rapid pace.
If I am thirsty and water is in very short supply, a jug of drinkable water will have very high subjective value to me. I might even exchange its weight in gold or diamonds if I had them and were thirsty enough and could not foresee any other means of getting access. If I am not thirsty, and can foresee access to ample supplies of drinkable water, a jug of water may have negative value to me, if I am already weighted down with other things. Similarly with foods of various types. They will have zero to high value to me depending on how well fed I currently am, and the prospects for future access. Again, neither these or any other commodity has “intrinsic value” apart from buyer’s present and future needs.
In an armageddon type situation, large cashes of gold wouldn’t help an individual much...
No one is suggesting gold is edible, or should be bought instead of food and other critical supplies for surviving a crisis.
We’re talking about what savings vehicle to employ for our spare money. The alternatives aren’t edible either.
(PS: It’s “Caches”)
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