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Old Apr 26, 2013, 02:14 AM   #26
DesertEagle
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You don't invest in gold to earn profits, but to secure your values. I believe in gold more than I believe in cash, but that doesn't mean that it'll never decrease n value.
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Old Apr 26, 2013, 06:12 AM   #27
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To this older timer I feel that this Bitcoin thing feels just like a bubble and it should crash in less than two years.
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Old Apr 26, 2013, 07:34 AM   #28
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I believe in gold. Half of my assets are in gold or gold stocks and I've made alot of money off of it.
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Old Apr 26, 2013, 07:41 AM   #29
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I don't believe in god or gold but I'm coming around to putting my assets into a stakeholder magic fund.
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Old Apr 26, 2013, 08:55 AM   #30
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I do know that my grandfather on my fathers side, invested in gold. He saved his money in gold coins, he even had some US Double Eagles, and during the 1930's was the major reason he and his family kept the house over there head.

I myself still have a few coins lying about in a safety deposit box, from original stash.

The Bitcoin it sounds a bit suspect to me.
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Old Apr 26, 2013, 09:46 AM   #31
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Originally Posted by Happybunny View Post
The Bitcoin it sounds a bit suspect to me.
Bitcoin is probably worth a discussion all on its own.

Speaking as someone with a fairly advanced economics degree, and more than a passing familiarity with the internet and electronic technology, it leaves me a little baffled.

A fiat currency (because thats what a Bitcoin is, in simplest terms) relies for its value on the confidence people have in the creditworthiness of the entity issuing it. When that entity is a completely anonymous worldwide computer network, people holding them are asking for trouble - sooner or later.
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Old Apr 26, 2013, 09:50 AM   #32
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On the first chart nominal gold market price and nominal Dow Jones index price are plotted. Gold went from $19 in 1900 to $1,110 in 2010 (times 58), while DJIA went from $61 in 1900 to $10,500 in 2010 (times 172). The first finding is that stocks investments are obviously more profitable then gold investments on the long-term. While gold average yearly return for the last 110 years was 4.91%, Dow Jones average yearly return was 6.07% in the same period. But there are periods in history, when gold strongly outperformed stocks. Let's move forward.

Dow Jones Index (DJIA) and Gold Nominal Prices


Logarithmic scale, 1900-2010

Thumb resize.

Gold And Dow Jones Index Adjusted With Inflation


The point of second chart is to show you the difference between nominal and inflation adjusted growth. The thing is that prices of goods and services also rise over time and because of that, the buying power of one dollar today will be less in the future. Gold price did rose 58 times from 1900 to 2010 in nominal terms, but in real-terms, inflation adjusted growth was much lower, only 2.24 times. All the sudden gold investment doesn't look as attractive as it did before. In the same 110 years period from 1900 to 2010 the real growth of Dow Jones Index was times 5.76 (nominally 172).

Dow Jones Index (DJIA) and Gold Inflation Adjusted Cumulative Returns


1900-2010

Thumb resize.

The third chart focuses on Dow Jones Index (DJIA) And Gold Inflation Adjusted Annual Returns; gold scores 1.69% while DJIA scores 3.22% yearly. Another interesting fact can be read from the picture. The orange line, which is representing inflation adjusted gold market price, is mostly bellow the 0% line, meaning, gold growth rarely outperforms inflation; but when it does, it does it extremely. On the other side Dow Jones was a much better inflation hedge in 110 years history and it is not showing such extremes as gold market price.
FYI
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Old Apr 26, 2013, 01:44 PM   #33
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I believe in gold. Half of my assets are in gold or gold stocks and I've made alot of money off of it.
Buy low, sell high. But for the love of god, park your $ somewhere stable.
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Old Apr 26, 2013, 04:16 PM   #34
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Bitcoin ... leaves me a little baffled.
Me too. It seems like a Ponzi scheme. The last person left holding the bag finds out that its empty!
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Old Apr 26, 2013, 08:47 PM   #35
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Buy low, sell high. But for the love of god, park your $ somewhere stable.
Thats why only half of my assets are in gold.
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Old Apr 26, 2013, 08:52 PM   #36
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Thats why only half of my assets are in gold.
Indeed. The other half is in silver.
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Old Apr 26, 2013, 09:04 PM   #37
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Hello, I haven't frequented this board much lately. I still don't see what the fuss is about. Gold has gone up every year for more than a decade. And sometime soon, it will go down for more than a decade. I don't believe the former has started yet. I think the current bull market has about 3 or so years to go, and it will be the sharpest increase of the entire bull market beginning around 2000.

I remember when Aapl was around $200 at the very end of 2007. It slowly went down to $180, then $160, then $130, then the crash down to $80-90. Everyone was bearish. It's great when everyone agrees about something because it signals you to do the opposite. I'm glad everyone is agreeing about gold. Many of the people who thought gold was a great investment over the last few years have changed their tune. I've been waiting for a sign.

What's fascinating is that despite the drop in the gold price, most sellers of physical gold are totally sold out. It's only the non physical gold you can buy for the current 2 year lows. What does that mean?
Same thing happened to gold in the mid 70's, collapsed in half before rising 8 fold. Nothing in the our current financial system gives me any confidence in any instrument with counterparty risk. After seeing how the Chinese and Indians are buying gold with a frenzy on this drop, I would rather trust the teeming masses of Asia than any corrupt politician or criminal banker.
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Old Apr 27, 2013, 01:23 AM   #38
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Same thing happened to gold in the mid 70's, collapsed in half before rising 8 fold. Nothing in the our current financial system gives me any confidence in any instrument with counterparty risk. After seeing how the Chinese and Indians are buying gold with a frenzy on this drop, I would rather trust the teeming masses of Asia than any corrupt politician or criminal banker.
In China and India, people have traditionally had very little confidence in banks, and n many cases with good reason. Why keep your money or other valuables somewhere other than in your own house?

Since the bankers and their staff are all high-educated people and mostly from the cities, people in rural areas (in said countries, that is) are likely to avert opening bank accounts only on grounds of class difference. They prefer to buy gold from the local gold dealer who everybody in the village knows.
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Old Apr 27, 2013, 12:30 PM   #39
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Me too. It seems like a Ponzi scheme. The last person left holding the bag finds out that its empty!
The last person left holding the bag finds out there's not even a bag there.
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Old Apr 27, 2013, 02:54 PM   #40
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The last person left holding the bag finds out there's not even a bag there.
The thread title, a little facetious, was intended to be thought-provoking. I don't own any Bitcoin myself, nor do I recommend for (or against) anyone else doing so. If the cryptography is correct, then, the "bag" will still be there, and, it isn't subject to printing money. So, as long as people believe in it, it has just as much scarcity value as any fiat currency, and, it avoids many of the pitfalls of commodities, like gold. In fact, in some ways it is better than gold-- there is a limit (if the algorithm works) to how much Bitcoin currency can exists, and, it can't be diluted. And, it is so compact to store -- just as easy to guard a massive hoard as a tiny amount. It doesn't get used up in jewelry or gold contacts for computer memory.

So, what makes it different from the U.S. dollar? Two simple facts: First, the U.S. dollar is used by the government of the U.S. to pay its debts, and, if the government pays you in dollars you can't demand anything else. Second, the U.S. government can collect the dollars it needs through taxation. Since the U.S. is the world's largest economy-- and it is effectively larger even than that, if you consider all the dollar-denominated transactions that take place worldwide-- that is a lot of short-term stability built in. Plenty long enough to either spend the dollars you have, or, invest them in something.

As long as taxation is working effectively, the dollar is safe as a short-term medium of exchange.


How strange it is, then, that some tea-partiers seemed intent, in 2011-2012, on undermining the dollar. From the Constitution:


Quote:
Section 8.

The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;

To borrow money on the credit of the United States;

----

To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;

To provide for the punishment of counterfeiting the securities and current coin of the United States;

----
The problem that I have with both Bitcoin, and, the Euro is that there is no taxation authority (for the Euro as a whole).
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Old Apr 27, 2013, 04:43 PM   #41
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...

I remember when Aapl was around $200 at the very end of 2007. It slowly went down to $180, then $160, then $130, then the crash down to $80-90. Everyone was bearish. It's great when everyone agrees about something because it signals you to do the opposite. I'm glad everyone is agreeing about gold. Many of the people who thought gold was a great investment over the last few years have changed their tune. I've been waiting for a sign....
Yeah, the great APPL drop was as good as my original purchase of the stock for less than $20. When it went below $100, I just bought more. I sold just past its height, so now I'm waiting to buy more.

Really, I've been investing with " ... when everyone agrees about something because it signals you to do the opposite" as my mantra for a while.
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Old Apr 29, 2013, 11:18 AM   #42
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BBC article on Bitcoin

The article starts with a description of what happened recently in Cyprus, and then continues to discuss the long-term "store of wealth" aspect of money.


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Some seek safety in gold, which functions more like a currency than a commodity and has the advantage of being a finite resource that cannot be created out of nothing like paper currencies. But while gold cannot be printed by governments, it has in practice been closely controlled by them.

It has even been claimed that the price of gold has been manipulated, with some suggesting the current sell-off has been somehow orchestrated - an idea that may be mistaken but doesn't seem quite so outlandish now that we know lending rates between banks were for a time rigged on an enormous scale. If you mistrust the financial system, it's not obvious that gold can offer a way out.

This is where Bitcoin - which some of its supporters describe as digital gold - comes in.
http://www.bbc.co.uk/news/magazine-22292708
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