Re: Why was Gold Currency made illegal? Will it return?
Any idea when gold is going to go up. Bought a bunch of it (more than I should have) at $1600. Went up to $1800. Got greedy and hoped for more. Now it has gone down like $60 in one day. Sitting at $1500 something. Ouch. It hurts.
Re: Why was Gold Currency made illegal? Will it return?
I think Sbatsky should change his as I was superman first 
Re: Why was Gold Currency made illegal? Will it return?
Any idea when gold is going to go up. Bought a bunch of it (more than I should have) at $1600. Went up to $1800. Got greedy and hoped for more. Now it has gone down like $60 in one day. Sitting at $1500 something. Ouch. It hurts.
Gold went up to 1888. Every Ram and Abdul went to Gold as it soared. No one wanted it when it was at 250 abt 11 yrs ago. Gold pays no dividends.
Holding Gold as an asset allocation may be appropriate. But to buy Gold (or any other asset) as speculation AFTER it has risen > 6-fold is a sure way to lose money.
As to when it will go up, no one knows. Those who say otherwise don't know they don't know. With Gold at 1750, some in Business forum here were bullish. Claiming it is a safe bet. Now that Gold is down, you wont see the same folks stepping up and doing a mes culpa.
Buyer beware. Do your own homework.
Re: Why was Gold Currency made illegal? Will it return?
What if we have a Monetary Balloon burst like the Housing Market, Financial Fiasco of 2008, etc. Wouldn't it make sense to revive currency that is backed with actual value? ........
Having gold standard (currency backed by gold reserves) and having gold as currency are two different things.... and things of the past.
Imagine the truckloads of gold traveling from one company to another after some of the recent billion dollar + takeover deals.
Re: Why was Gold Currency made illegal? Will it return?
^ last week one of days wsj had article on Copper (w/o Tellurium) that is being stockpiled in var countries. ETF related. Companies have to pay $120/ton for immediate access. Takes weeks to ship from point A to B.
PS -Apologies to Topic Police if this post off-topic.
Re: Why was Gold Currency made illegal? Will it return?
USA is largest holder of Gold and Silver. Until mid-60s USA dollar was following silver standard. In 1946 USA made private gold holding illegal (except jewellery) and fixed gold price at $35 an ounce to foreign governments. That kept gold price at this level at international market all over the world. This fixed exchange rate lasted until 1971. In 1971 onward gold started trading at fluctuating rate, and price increasing substantially from artificial fixed rate. By 1980, gold price was at its highest (in real term). Since then gold price decreased but sanctions on Iran and purchases from China and India recently increased gold price (though gold has not touched its real price height that was seen in 1980).
Investment facts: If ‘Mr X’ bought $100000 worth of gold in 1980 (@$600 an ounce) when gold peaked and ‘Mr Y’ invested $100000 dollars where his money was just keeping pace with American inflation than today Mr X gold would have been worth $250000 (approx. @$1450 an ounce) and Mr Y investment would have been worth around $375000 (approx. due to return = inflation) … that means Mr Y would have had 3 dollars for every 2 dollars Mr X had.
[In reality, Mr Y investment would have given him much more if his investment was getting him real return]. Now, let come to the topic:
According to my understating of the subject: Money has its own requirements and that requirement is ‘work or wealth measurement’ … or in other words … Money is measurement of work or wealth … that is ‘stored value of work’, ‘real and concrete’ output, value and effects of that output, desirability and demand of work output, desirability of stored work, and environment work done, and so on.
Now coming to Bullion (Gold and Silver) replacing paper currency: There are many reasons that bullion cannot replace paper money (unless world economy shrinks badly). Why?
1: World do not have enough bullion (gold and silver) for these two commodities to replace paper money. Actually, it is not just the quantity of these commodities but values and usability of these commodities are not enough for them to replace present world wealth and its economy. This is one reason currency got delinked from bullion (Gold and Silver).
[World economy outgrew usability, desire and demand of bullion, several times over].
2: If ‘gold and silver’ would replace currency than both rich and poor would suffer.
[Replacing bullion with paper money would substantially reduce economic activity in the world, making both rich and poor suffer … actually, situation is that such replacement is impractical].
3: Gold and Silver, both are useful commodities (in electronics as well as jewellery), and it is better that they stay commodities and do not replace currency. Buying Gold and Silver as commodity is fine but buying them for investment is bad choice in long run (as shown in above example).
[World … both rich and poor … needs increased economic activity to create more wealth so that world (with growing population) get richer, affluent, and prosperous and use of bullion to measure wealth would restrain wealth creation, rather would stall economic growth]
4: No doubt paper currency is not fulfilling requirement of ‘wealth measurement’ effectively, and there are better alternative ways to ‘manage paper money’ but that alternative is not virtual money (electronic bits) for sure, as replacing currency with virtual money could not work.
[Virtual money (or bits) can only measure donkey work of ‘programming literate’ unemployed individuals… that does not take into account ‘real or concrete’ output, value and effects of that output, desirability of that output, etc.
I would not like to go into alternatives management of paper money, as they are quite a few, but then, only big economics can effectively implement such alternative currency management that many may not like]
5: It is wrong belief that paper currency is controlled by governments alone as they do not wholly control paper currency, rather many elements control paper currency (money supply) in country (including banks and individuals), as in most cases it is economic activity (any type of wealth generation or creation) in the country that determines quantity as well as value of paper currency of a country.
[Actually, it is mostly economic activities that generates wealth in country, and to measure that wealth value of paper money varies
Creation of paper money: When one writes a bank cheque or does work before payment, that person generates paper money equivalent to cheque amount (before cheque got cashed) or work done (before getting paid for that work). Government printed money replaces such wealth generation only when cheque get enchased from bank or person gets paid using government printed money.
Same way, when bank gives loan bank creates paper money. Government printed money replaces bank created money only if and when borrower withdraw that money from bank].
So … I believe we should stop thinking of gold replacing paper currency ever in future. Actually, in my opinion, Gold in real terms would keep losing value over time.
[Any particular question and I would try to answer that to the best of my knowledge and understanding of the subject]
Reason for Surge in value of Gold in recent years.
Sanctions on Iran made Iran buy gold from world market for their reserve (I believe now they have over 1000 Tons of gold). China, UAE and India is buying gold, as they are still living in impression of past economy where people use to think ‘gold is Gold’, and many scared individuals seeing surge in gold price (due to purchases from Iran, China, UAE, and India) are also buying gold (again, it is same ‘gold is Gold’ thinking playing its role). All these buys has temporarily increased demand for Gold giving surge to price, that would settle down once reality bites in. Since Gold as investment has little value for holders, and its utility value is limited, price of gold is bound to come down
[Well, whatever I wrote above is what I believe according to my knowledge and understanding… and thus that is opinion … so, if gold price keep increasing, please do not blame me :)]
Re: Why was Gold Currency made illegal? Will it return?
Wah! Learnt a lot. Keep posting, Saleem!
Re: Why was Gold Currency made illegal? Will it return?
Becasue muslim rulers are eggheads.Bhutto gave the idea of dealing in Gold against Oil to Late Muslims leaders, Col. Qaddafi, Shah Faisal, Etc.
More Interestingly most of the muslims countries are enriched with gold and oil.So in order to get oil you hve to buy gold first. 
Re: Why was Gold Currency made illegal? Will it return?
Well, I don't know how it's good or bad to change gold in papers or its return again but I prefer to have some bills in pockets instead of having two three small bags of coins (^_^)
Re: Why was Gold Currency made illegal? Will it return?
Wah! Learnt a lot. Keep posting, Saleem!
You are welcome.:)
Well, I don't know how it's good or bad to change gold in papers or its return again but I prefer to have some bills in pockets instead of having two three small bags of coins (^_^)
I think you misunderstood what gold standard mean, and thinking that gold standard means no paper money, rather an era of silver and gold coins. In reality, if gold standard starts then nothing would change in practice, other than currency having some fixed value in gold that holder of currency note would know.
In present age, when we talk about gold standard, it does not necessarily mean people carrying gold or silver coins instead of paper money. It only means government guarantee a fixed amount of gold for paper money in pocket. For instance, government can declare that for paper money adding to £1000, government would guarantee to replace that £1000 for 1 ounce of gold on demand. For that, we expect that government would have sufficient gold in stock to back-up their promise,
That means, pound has gold standard, where £1000 is worth one ounce of gold.
How that would work?
If one look at currency note of any country, we will see it would be written on it a promise from issuing authority.
For instance in UK on £10 pounds note it would be written:
‘I promise to pay the bearer on demand the sum of ten pounds’
Above statement is bank of England promise to holder of ten pounds note (same is true for all motes … £5, £10, £20 or £50). We do not know what pound is, what pound means, or what pound is worth, still on that promise we work, buy or sell using the note … and market determines the value of that 10 pounds.
But if pound had gold standard where £1000 would be equal to one ounce of gold then promise statement on ten pound note could be:
‘I promise to pay the bearer on demand (10/1000) ounce of gold’
In above situation, a person would know that the paper note a person is holding, what it is worth in gold and that the person can take that note to bank of England or their representative to demand and collect gold if one wants to.
Re: Why was Gold Currency made illegal? Will it return?
In other news, aluminum prices are doen due to over supply.
Re: Why was Gold Currency made illegal? Will it return?
Gold down $145/ounce today. Down 200/ounce last two trading days. That is 13% in two days. Probably down 17 to 19% since thread started. Nice timing there.
Re: Why was Gold Currency made illegal? Will it return?
gold worthless ??? Just Take a look at reality the United States has 8000 tonnes of gold in reserve the biggest in world followed by Germany which has 3000 tonnes then China.
Gold has real intrinsic value, paper currency is the worthless one and can be worth nothing tomorrow.