Gold Losing It's Shine?

[boopy265420]

Gold is very precious and most trusted asset through out the history of mankind.This will always remain an important player to measure the value of the currencies even in future when only digital currencies will rule the financial system.Gold's shine can never be dimmed not even little.Recent decline in price of Gold was after effect of price hype which was created by elite now price is very fair in my opinion.

[bryant.coleman]

I am having a feeling that too much gold is being mined out right now. Two decades ago, the total gold production (from mines, as well as from placer deposits) stood at less than 1,000 tonnes. But right now, the production is about to touch 3,000 tonne per year, with countries such as China and Russia significantly increasing their output.

[chmod755]

1,000 tonnes. But right now, the production is about to touch 3,000 tonne per year

Where did you get those numbers?

[deisik]

I am having a feeling that too much gold is being mined out right now. Two decades ago, the total gold production (from mines, as well as from placer deposits) stood at less than 1,000 tonnes. But right now, the production is about to touch 3,000 tonne per year, with countries such as China and Russia significantly increasing their output.

Two decades ago most trucks could carry only about 70 tonnes of ore compared against around 250 tonnes as of now (or even more than that). So you guess the reason for the increased gold production...

[OROBTC]

...

3000 tonnes of worldwide gold production for 2015 is about right.  But, the production does not matter that much!  There are about 180,000 tonnes in stock around the world.  The stock:flow ratio is about 60:1!  The flow is what matters!

There are very few traded materials with a stock to flow of more than about two or three (that is, inventories of two - three years vs. annual production).

This is one of many reasons why gold is unique, and has been the Store of Value of choice for over 5000 years!

[fonenumba]

The most important factor affecting the price of gold is real interest rate.

If real interest rate is more than +2% , then easy money just leaves gold and goes safe harbor "interest". If real interest rate is low than 2% then easy money stays in gold. Whenever FED makes an explanation about the rate of interest it directly affects the price of it.

So , I dont believe gold will increase sooner. Since there is no new quantitative easing and there is tendency of interest rate increase , there is high possibility of decline in prices.

On the other hand, bitcoin has different price dynamics according to gold. To replace the position of gold as a safe harbor , bitcoin (services)  should be more user friendly, easy and massly adopted.

[bryant.coleman]

1,000 tonnes. But right now, the production is about to touch 3,000 tonne per year

Where did you get those numbers?

The total mine output in 1985 was 1,190 metric tonnes of pure gold (which represents an increase of 22% from 940 tonnes in 1975). The source is Mining Latin America / Minería Latinoamericana by KB Smale Adams.

The mine output stood at 2,860 metric tonnes in 2014, according to the U.S. Geological Survey. South Africa produced 60% of all the gold in 1985, and 5% in 2014.

[TECSHARE]

I consider silver to be a better store of value than gold if you are going to buy a precious metal. The reason I say this, in spite of silver's additional volatility, is that there are MASSIVE secret stores of gold all over the earth, meaning they can more easily drop the price by flooding the market.

Gold is not consumed very often in industry compared to silver, so more and more of it is in supply over time. Silver on the other hand is literally even more rare than gold (above ground and available for consumption), and it is an irreplaceable component in many modern electronics, which ultimately end up in land fills, removing it from the supply. Due to the constant inductive force of the industrial uses of silver, it is more difficult and less likely for large hidden stockpiles to be able to flood the market.

[thy]

The most important factor affecting the price of gold is real interest rate.

If real interest rate is more than +2% , then easy money just leaves gold and goes safe harbor "interest". If real interest rate is low than 2% then easy money stays in gold. Whenever FED makes an explanation about the rate of interest it directly affects the price of it.

So , I dont believe gold will increase sooner. Since there is no new quantitative easing and there is tendency of interest rate increase , there is high possibility of decline in prices.

On the other hand, bitcoin has different price dynamics according to gold. To replace the position of gold as a safe harbor , bitcoin (services)  should be more user friendly, easy and massly adopted.

Why would investors prefer investment in a interest bearing paper currency at just 2% interest that also could potentially default depending on what countrys currency it is is, when gold has a way higher avg historical gain verses the fiat currencys.
If we look more recent in history then during 2000-2015 for example gold has increased 118.6% verses the CHF, 148.9% vs AUD, 165.9% vs EUR, 168.0% vs USD and 180.6% vs GBP.

If someone had got a 2% yearly fiat interest they would in 14.5 years just have got 33.2% interest so 2% can hardly be the correct equilibrium point to move values between gold<->fiat even if somone would counted on a 0% default rate for a country.

[Q7]

It is possible that gold is losing its shine considering the fact that now we have cryptocurrency being slightly better. However, I don't see it becoming oblivion or being forgotten anytime soon. The ideal scenario would be bitcoin moving alongside gold as an alternative investment option and certainly no matter what, those two are still far better than holding onto fiat.

The people who are stacking tons of gold (around 5% of their wealth) have no cares to what Bitcoin is at, they just want a hedge in case an economic crisis.

those same people usually care only about their portfolio/income, so if they see bitcoin as a better altrnative they will jump on board regardless, but it's not exactly the case for bitcoin with the current down-trend

This is true but we have no real data on if an economic crash would keep bitcoin up on high, we all theorize it would since it is essentially digital gold but we have no proof of that. I personally think it will but it just hasn't been tested yet.

It will not happen until people see it as a reliable investment that will protect their capital in the long term. Even though fiat is collaping, people will still have doubts putting their money into something that will have high possibility ended up the same, unless they see bitcoin giving a steady return. Until that happens, there is no correlation whatsoever.

[maku]

It will not happen until people see it as a reliable investment that will protect their capital in the long term. Even though fiat is collaping, people will still have doubts putting their money into something that will have high possibility ended up the same, unless they see bitcoin giving a steady return. Until that happens, there is no correlation whatsoever.

Agreed. Most of people are afraid of new thing and bitcoin is still very young and new. Many people still don't recognize btc. so for them to invest in bitcoin is impossible. Also the fact that some governments are banning (or planing to ban) btc. in the eyes of many is another argument against crypto currencies.

[deisik]

The most important factor affecting the price of gold is real interest rate.

If real interest rate is more than +2% , then easy money just leaves gold and goes safe harbor "interest". If real interest rate is low than 2% then easy money stays in gold. Whenever FED makes an explanation about the rate of interest it directly affects the price of it.

So , I dont believe gold will increase sooner. Since there is no new quantitative easing and there is tendency of interest rate increase , there is high possibility of decline in prices.

There is nothing new in this. They (all sorts of market analysts out there) repeat that thing again and again. But if you lived long enough (and managed to survive), you would know that things rarely come the way that everyone talks about. Just recent example, when the May jobs report was about to come out, the consensus was that the price of gold should fall if jobs increased above 200k. You guess, total NFP employment increased by 223,000 in April and gold spiked to +1230$ an ounce despite that...

In fact, you may not want to talk about possibility, but rather expectation

[AtheistAKASaneBrain]

Gold might be a glittering temptation for investors looking to fatten their investment returns with a relatively safe commodity. But it's far from foolproof. Indeed, gold shouldn't be considered an investment at all. Rather, the precious metal acts as a hedge, or a way to try to protect wealth against the risk of loss in such asset classes as real estate, equities and bonds. And I believe Bitcoin do the same as gold in the world of Cryptocurrencies.

Bitcoin still has a way to go to be considered "doing the same as gold but in Crypto".
Bitcoin is objectively superior in every aspect, except for the fact it's still too new for the old money to trust it, they still see it as something weird and all that money will stay in Gold, I think until a generation or two later where their inheriting sons will move tons of money into Bitcoin (think the Rothchilds and all those guys, just a couple of them securing a % of their wealth on BTC would drive the price up a lot).

[manselr]

I consider silver to be a better store of value than gold if you are going to buy a precious metal. The reason I say this, in spite of silver's additional volatility, is that there are MASSIVE secret stores of gold all over the earth, meaning they can more easily drop the price by flooding the market.

Gold is not consumed very often in industry compared to silver, so more and more of it is in supply over time. Silver on the other hand is literally even more rare than gold (above ground and available for consumption), and it is an irreplaceable component in many modern electronics, which ultimately end up in land fills, removing it from the supply. Due to the constant inductive force of the industrial uses of silver, it is more difficult and less likely for large hidden stockpiles to be able to flood the market.

The big problem with silver - and, indeed, every other commodity - is that the stock:flow ratio is wrong for use as money. It can still be a store of value, or even a good speculative investment, but because there is (and has been) so much industrial demand for silver the ratio of existing:production is all wrong.

[deisik]

Gold is not consumed very often in industry compared to silver, so more and more of it is in supply over time. Silver on the other hand is literally even more rare than gold (above ground and available for consumption), and it is an irreplaceable component in many modern electronics, which ultimately end up in land fills, removing it from the supply. Due to the constant inductive force of the industrial uses of silver, it is more difficult and less likely for large hidden stockpiles to be able to flood the market.

In this aspect palladium also looks quite promising. Personally, I would favor it before silver since, unlike the latter, it doesn't have that much pecuniary constituent in its value (actually none). That means its price would be more reactive to the expansion in the industrial usage of this metal, which could be exponential, e.g. due to its uniqueness in hydrogen absorption capacity and as a catalyst...

[thejaytiesto]

Gold still got the massive network effect, everyone in the world has the mental image of gold = wealth and luxury. Im not worried at all about it.
What gold lacks and Bitcoin has tho, is the excitement of novelty and revolution. Gold feels old and established and pretty boring, Bitcoin is an exciting rollercoaster into the future.

[OROBTC]

...

deisik notes that palladium might be a great speculation/investment because of its special properties.  I agree.  It can absorb and store huge amounts of hydrogen gas.  Pd is impermeable to ALL gases except hydrogen, so there could be very high demand for Pd if/when hydrogen fuel cell (eg, for cars) technology gets rolling.

Physical palladium coins are available, Canada and Russia make them for small speculators.  APMEX and provident metals have them.  Also you might check bitcointalk's Veldt Gold, they might have palladium in stock as well:

https://veldtgold.com/product-category/palladium/

(I have bought twice from Veldt, both times delivered as promised)

[manselr]

Most people still think gold as safe haven, for example take Greece. Anyone holding CDS on Greek debt will be looking for their sacks of gold. The bond guys surely can't claim this is anything but a default event, can they?

[gripflierGO]

Gold will never lose it's shine as this is oldest asset which is trusted by everyone throughout history.If you refer at recent collapse of price then I will say that was hype and was artificial raise in price.Gold will always decide the value of everything.This time when Gold's price will rise that when will be genuine and long term rise.

Gold is definitely the best product for investment. History says it all. And the reason behind it is that people trust gold more  as it is a traditional product and gives a good return on investment so at present the prices have gone down but it will raise in the future coming period.

[neurotypical]

Gold will never lose it's shine as this is oldest asset which is trusted by everyone throughout history.If you refer at recent collapse of price then I will say that was hype and was artificial raise in price.Gold will always decide the value of everything.This time when Gold's price will rise that when will be genuine and long term rise.

Gold is definitely the best product for investment. History says it all. And the reason behind it is that people trust gold more  as it is a traditional product and gives a good return on investment so at present the prices have gone down but it will raise in the future coming period.

Sure, gold is solid, but has low return of investment. You'll never get rich putting 10K in gold. You may be come a millonaire if you put 10K in BTC. Gold is too stablished to give the insane returns BTC and other crypto projects like Maid can give you in the future.