[Vision2020] 7-25-2011: Gold hits fresh record high at $1, 623.49/oz overnight

[Ted Moffett]

Schou is arguing, if I understand correctly, that gold is not a
commodity like many others, with "intrinsic worth."

He offers examples of investments he considers more wise than gold,
pork bellies or molybdenum, and states "The problem is that the
underlying belief leading people to purchase gold is false: it does
not have intrinsic worth."

I was merely pointing out the fact, which Schou did not refute, that
investing in gold in 2008 and selling now in 2011, would give a "nice
return."  I was not giving advice on current best investment
options... Gold price could collapse next month, for all I know...

Schou wrote:

"Instead of being in a market where the price is determined by a herd
of panicked, mattress-stuffing idiots, ..."

If money can be made off a herd of panicked idiots, some will jump at
the chance and laugh all the way to the bank...

The examples in history are too numerous to bother listing...
------------------------------------------
Vision2020 Post: Ted Moffett

On 7/27/11, lfalen <lfalen at turbonet.com> wrote:

> I tend to agree with you, although I am a neophyte as far as the markets are
> concerned. Except for the hype, I do not see where gold is any different
> than any other commodity.
> Roger
> -----Original message-----
> From: Andreas Schou ophite at gmail.com
> Date: Tue, 26 Jul 2011 13:56:56 -0700
> To: Ted Moffett starbliss at gmail.com
> Subject: Re: [Vision2020] 7-25-2011: Gold hits fresh record high at
> $1,623.49/oz overnight
>
>> Ted --
>>
>> It's still not wise. There are a lot of people who will tell you that
>> gold is a commodity of "intrinsic worth," which will retain its value
>> even when the value of fiat currencies depreciate. That's not the
>> case. But this widespread belief about the value of gold has led to
>> its somewhat unusual pricing structure. Think about it this way:
>>
>> Because people believe that gold has "intrinsic worth," the price of
>> gold as a commodity is essentially the sum of hedge positions against
>> fiat currencies worldwide. When people are concerned about the value
>> of fiat currencies, the value of gold goes up. When people are less
>> concerned, the value of gold goes down. In that framework, then,
>> purchasing gold is essentially just a hedge against fiat currencies.
>>
>> The problem is that the underlying belief leading people to purchase
>> gold is false: it does not have intrinsic worth. Consequently, the
>> value of gold is largely determined by people with a mistaken belief
>> about what they're buying, and people who believe that others will
>> mistakenly hold that belief. If you think the dollar will drop in
>> value (and I don't think this will be the case, unfortunately),
>> short-sell dollars rather than buying gold. Or buy something boring,
>> like pork bellies or molybdenum.
>>
>> Instead of being in a market where the price is determined by a herd
>> of panicked, mattress-stuffing idiots, you'll be in a market full of
>> people who, wisely or unwisely, are trading on the market value of the
>> good itself rather than their subjective beliefs w/r/t other peoples'
>> subjective beliefs.
>>
>> -- ACS
>>
>>