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I'm sorry ChicagoMark, I believe you are seeing what you want to see on this one.
You cannot turn on your TV or browse the internet or go to the mall without being inundated with ads to buy/sell gold. Half the ads on FNC and FNB are hinting at financial Armageddon and pressuring viewers to "BUY GOLD NOW!". Googling "price of gold" spits out page after page of websites hawking gold and precious metals. Visit any middle to lower class mall (upper class malls are immune) and you will almost certainly find a precious metals dealer, not a jewelry store, but someone looking to make a quick buck on the precious metals hysteria. This has been going on strong since 2007 when it was clear that the "ultra safe" real estate market was collapsing, there were no safe havens for conventional investments, and inflationary (or worse) fears were rampant.
There is no way you can be saying that gold and other precious metal investments are not absolutely ubiquitous right now. Now it may be your opinion that the public at large hasn't approached precious metal investing with the same level of dire urgency that you are advocating, but you cannot tell me that there hasn't been a very clear and obvious "gold craze" going on.
Why do you do anything? According to your statistics, social security will be taking care of you until you are 70 or so.....and then you are dead.
Good analysis. I guess I stand corrected.
I don't know what you are talking about. While it is true that there are a lot of gold ads on TV, less than 1% of the population owns any physical gold or silver (not counting jewelry obviously). Only a small number of the population is going out and buying any physical gold or silver bullion. Even based on this thread, it would appear as though ChicagoMark and myself are some of the few on this board. Almost everyone else thinks we are fools. As Mark said....if you were to compare that to Apple stock a few months ago, everyone I knew owned Apple stock and thought it was just going to keep climbing higher and higher. Even if somebody disagreed, very few would have told a person 3 months ago that they were foolish to buy Apple. I didn't see anyone mocking people for believing in investing in Apple stock.
This post was edited by TrapperGus 12 months ago
Lurking on tRCMB since 1996
If the investment press is questioning the outlook, I'll definitely have to buy more then
I just read your link.
A) George Soros is NOTORIOUS for saying one thing and doing another. He probably bought a shitload more GLD by now. Even if he didn't, he probably just found a better investment (like farmland)
B) Nothing in that OP discussed the physical gold market. The paper gold price has been trading down, but from what I understand the physical gold market is still going pretty strong.
C) I disagree with the article about the FED raising interest rates. As I have discussed before, the banks have backed themselves into a corner. For every 1% rise in interest rates, the US owes another $170,000,000,000 BILLION dollars. We're already running a 1 trillion dollar deficit. How many percentage points can they possibly raise rates? Are they going to raise it 5% and make our deficit 2 trillion dollars (along with crash the economy)? Are they going to raise it a meager 3% and make our deficit 1.5 trillion? Just another reason why I think we are approaching the end game. The FED is going to keep rates as low as possible for as long as possible until there is a crisis.
D) None of the fundamental reasons for owning gold have changed or appear to be changing any time soon. Negative real interest rates. Check. Massive amounts of money printing totaling > 1 trillion per year. Check. Exploding national debt. Check. Further if you look at the price of gold compared to the total amount of currency in existence (such as the fear index), the price for gold is actually rather reasonably priced. So if I were you, I wouldn't base investment decisions off of on article on Bloomberg.
I don't know what you are talking about. I double checked my 170 billion and it looks right to me.
How is $850 billion manageable when you are already running a 1 trillion dollar deficit and only take in 2.2 trillion a year? You've been reading too much Paul Krugman.
The in and out cost to own precious metals makes it difficult to make any real money.
"I think the world is run by C students"
Only if you are actively buying and selling them. The premiums on American Eagles are about 4% and you can buy 100oz silver for 2 or 3 % or less depending on how much you buy and what form. If you hold them for any kind of decent length of time the premiums are actually less than the cost of most investments.
This post has been edited 7 times, most recently by TrapperGus 12 months ago
Sometimes it really does amaze me how you manage to be completely wrong about virtually 100% of the things you believe in. Quite remarkable, really.
Your information is based on "cash costs" as opposed to "production costs". In other words, your calculation conveniently excludes by-product cash costs, sustaining capital, exploration expense, and administrative expense. When you include all the costs it takes to mine gold, the cost is closer to $1,170/oz. This calculation was made two months ago when gasoline was substantially cheaper. As someone who understands farming, you understand that gasoline costs are a huge input costs into the price to mine gold. Since gas has gone up substantially in just the past two months plus labor problems, it would not surprise me if the cost to mine gold is now closer to $1,300 or $1,400 per oz. That really isn't a whole lot of profit when you consider that mining gold carries so much time, labor, risk of not recovering your costs if your mine doesn't produce what you had hoped, risk of death, etc, etc. Not to mention that if the price of gold ever does go up to extremely high levels where you are making a ton of money, then you have to worry about being nationalized.
Moreover, it's pretty amazing that you think the mining companies are making money hand over fist. Gold miners are probably one of the most beat up sectors that you can find at any time in the past 10-20 years. They are brutally struggling to stay in business and you can buy most of their stock for extremely favorable P/E ratios.
Lastly, the price of gold is not determined by the input costs. I suppose you could make an argument that if it costs $1,200 per oz to mine an oz of gold, then that should be a FLOOR for the price since nobody is going to mine it if they can't recover at least their costs, but the value of gold is determined by the demand for it. Your statement is akin to saying that pizza should cost less than $10 because it only costs $4 to create it. If you're hungry enough, I guarantee you that you would pay every dollar you have in existence for a pizza.
$1,170 vs $773.
You really have no interest in the truth, do you? It's all about trying to prove the "other side" wrong? This discussion has nothing to do with Austrians. You're simply using cash costs instead of production costs. It's ok to admit you are wrong. No big deal. I don't expect somebody who hates gold to study the market enough to understand it.
Sorry but you are using the people who want to prove one thing...I am using the people who want to prove the truth...creative accounting...adding in every cost regardless of the if it applies...that is just lying as you should know...we have costs from zero to about $1100...that is an average of about $550...
Trapper, I spent 7 years being an accountant. I can assure you that ALL COSTS need to be accounted for when you are determining how much something will cost you to produce. That's not "creative accounting". That is simply being honest. If you don't take in more revenue than all your costs, then you will go broke. This is the real world. Not academia. In the real world you need to know all your costs. Watch this video. It will explain it for you. You are the professor. I am Thorton.
A humorous example of the gap between the "real world" and school.
This post has been edited 2 times, most recently by TrapperGus 12 months ago
Trapper, you have no idea what you are talking about. These are legitimate costs associated with the mining of gold. If you think you can mine gold without paying for let's say.....mining exploration, then you have another thing coming to you. I'd love to see you spend "$450/oz" mining for gold in your backyard.....or just digging up a random claim in Alaska. Let me know how that works out for you when you go broke.
You really are the epitome of ideology > truth or ideology > honest discussion. You have no interest in what is true or not. You only want confirmation of what you already believe and it doesn't matter how wrong you are proven to be. The average PE ratio for gold mining companies is < 10. If you really believe that 75% of their revenue is profit, then go ahead and put all your money into gold mines. I'm wiling to bet that will never happen.
The fact that you capitalized gold shows what you really worship.
That's a pretty solid refute of everything ChicagoMark said. Very impressive post.
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