--- In FairfieldLife@yahoogroups.com <mailto:FairfieldLife@yahoogroups.com> , "It's just a ride" <bill.hicks.all.a.r...@...> wrote: > > On Fri, Mar 5, 2010 at 8:29 PM, off_world_beings > <no_re...@yahoogroups.com>wrote <mailto:no_re...@yahoogroups.com>wrote> : > > > > > > > *Can you point out the absolute absurdity of a statement like this below > > from the news (its a year old, but its the same news today)?* > > > > "Gold jumped to a new three-month high at $980 per ounce on Friday as > > traders bought the metal as a hedge against weakness in the dollar, which > > fell to five-month lows against a basket of currencies." > > http://in.reuters.com/article/domesticNews/idINLT26882620090529 <http://in.reuters.com/article/domesticNews/idINLT26882620090529> > > > > *Hint: The paradox is right in the statement.* > > > > *Any takers?* > > > > *OffWorld* > > > > > Ummm. We had to pay $850 an ouce for gold because the money we bought it > with money that had lost its value?>>
That's right. Its silly. If I buy my bread with apples, and the worth of apples goes down, then the number of apples needed to buy bread goes up. > It's a paradox but still a wise hedge. It's a wise hedge because as the > value of the dollar decreases, the price of gold will increase in terms of > dollars. >> The dollar is the question. At the same time the dollar goes down anything you want to buy (goods or services - eg. oil, rent, apartment, build house) go up in price. Also, it looses its value against other currencies. Gold is really just another currency (you can't eat it or live in it) and if the dollar goes down, the dollar value of gold will go up, and so will everything else relative to the dollar. If the dollar goes up, then the dollar value of gold will go down, and so will everything else relative to it. If there is a real crash, the value of goods and services will sky-rocket in hyper-inflation. Gold (like other assetts and currencies) will go up re;ative to the dollar as well, but the actual worth will be no better than it was. <It would also become a wise speculation if you sell the gold for > more dollars than wait for the dollar to increase in value against, say, the > Euro, >> Except that everyone who owns gold needs to make that jugement correctly and at the right moment, or many will loose out. So statistacally it is not very good. But the difference is that people tend to sit on gold forever, waiting for widespread collapse and chaos in the streets. Even if you have your gold, then the dollar value of it will not be able to purchase the goods and services you need in a crisis because the price of goods will sky-rocket. That's what happens in hyper-inflation, and gold will not save their ass. There has been so much hype about the dollar value of gold recently. But the dollar value is not relevant in the global economy. Gold is an ok investment, not great, but its best to invest in diverse regions of the world, diverse currencies, and property in good healthy states in the US and elsewhere. <which will probably drop below parity with the dollar as the PIGS eat > at the trough and Germany and others refuse to help the PIGS out. > Except that 4 out of the 5 biggest companies in the world are European, one of which is the biggest investor in the Bank of China outside of the Chinese Government. The only good parts of AIG for example, were just bought up by British companies. Europe has a lot less debt to GDP ratio than USA, and between either the Euro and the Pound there is always a winner for Europe. Europe is the world's richest region as measured by assets under management with over $32.7 trillion compared to North America's $27.1 trillion.[2]. Europe's debt = 61.5% of GDP USA debt = 84% of GDP However, you are right, none of this is a good position to be in. OffWorld
