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Author Topic: Imagine if you had some gold...  (Read 1725 times)
Spendulus
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November 27, 2013, 02:33:56 PM
 #1

Here is gold today.

  • Today it's been estimated that only a few percent of transactions in gold are actually of the physical product, the remainder being 'paper gold'.  Yes, the 'paper gold' is apparently being printed!  More and more every year!
  • When prices rise, more mining comes into play.  There are huge reserves at slightly higher price points.

But imagine it was like this?

  • Mining got exponentially more difficult, and there could not ever be more than 21M ounces (kilograms, whatever, pick the units)
  • There was no 'paper gold'

What would the price of gold be today?
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BitcoinBarrel
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November 27, 2013, 03:28:17 PM
 #2

Gold and Bitcoin are similar as far as having a consumer demand and limited supply. The only difference is Gold is natural physical commodity and Bitcoin is a man-made digital commodity.



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GigaCoin
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November 27, 2013, 03:31:50 PM
 #3

Here is gold today.

  • Today it's been estimated that only a few percent of transactions in gold are actually of the physical product, the remainder being 'paper gold'.  Yes, the 'paper gold' is apparently being printed!  More and more every year!
  • When prices rise, more mining comes into play.  There are huge reserves at slightly higher price points.

But imagine it was like this?

  • Mining got exponentially more difficult, and there could not ever be more than 21M ounces (kilograms, whatever, pick the units)
  • There was no 'paper gold'

What would the price of gold be today?

according to many famous Gold bugs and Gold experts, with the massive fiat inflation we witnessed in the past decade, Gold should be around the $5000 - $10,000 / ounce range today if there was no market manipulation due to paper gold.

Spendulus
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November 27, 2013, 03:51:49 PM
 #4

Here is gold today.

  • Today it's been estimated that only a few percent of transactions in gold are actually of the physical product, the remainder being 'paper gold'.  Yes, the 'paper gold' is apparently being printed!  More and more every year!
  • When prices rise, more mining comes into play.  There are huge reserves at slightly higher price points.

But imagine it was like this?

  • Mining got exponentially more difficult, and there could not ever be more than 21M ounces (kilograms, whatever, pick the units)
  • There was no 'paper gold'

What would the price of gold be today?

according to many famous Gold bugs and Gold experts, with the massive fiat inflation we witnessed in the past decade, Gold should be around the $5000 - $10,000 / ounce range today if there was no market manipulation due to paper gold.
And that price range is with virtually unlimited gold mining continuing...

So what then if there was an absolute cap on the gold supply at 21m "units"?
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November 27, 2013, 04:30:05 PM
 #5

...snip...

according to many famous Gold bugs and Gold experts, with the massive fiat inflation we witnessed in the past decade, Gold should be around the $5000 - $10,000 / ounce range today if there was no market manipulation due to paper gold.

The problem here is that they use a defunct theory that printing money causes inflation in order to get to their $10k price.  Of course it doesn't - printing money prevent the system collapsing and if the system had collapsed, gold would be worthless and we would all be trading bullets.


Ibian
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November 27, 2013, 05:12:55 PM
 #6

Buh? Printing money does cause inflation. That's what inflation is.

There is no bubble.
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November 27, 2013, 07:16:29 PM
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Buh? Printing money does cause inflation. That's what inflation is.

Inflation is a persistent increase in the general price level of goods and services.  Look around.  We have been printing money since 2007.  The Japanese for even longer.  No inflation.  Its not happening.

Impaler
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November 27, 2013, 08:05:41 PM
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Buh? Printing money does cause inflation. That's what inflation is.

Inflation is a persistent increase in the general price level of goods and services.  Look around.  We have been printing money since 2007.  The Japanese for even longer.  No inflation.  Its not happening.

It's so rare that we actually have people who know the meaning of Inflation on these forums, good for you Hawker.

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Ibian
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November 27, 2013, 09:14:44 PM
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Buh? Printing money does cause inflation. That's what inflation is.

Inflation is a persistent increase in the general price level of goods and services.  Look around.  We have been printing money since 2007.  The Japanese for even longer.  No inflation.  Its not happening.

It's so rare that we actually have people who know the meaning of Inflation on these forums, good for you Hawker.
A banker and an alt coiner. What a nice teamup. By your powers combined you are Captain Marx.

There is no bubble.
Hawker
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November 27, 2013, 09:17:45 PM
 #10

Buh? Printing money does cause inflation. That's what inflation is.

Inflation is a persistent increase in the general price level of goods and services.  Look around.  We have been printing money since 2007.  The Japanese for even longer.  No inflation.  Its not happening.

It's so rare that we actually have people who know the meaning of Inflation on these forums, good for you Hawker.
A banker and an alt coiner. What a nice teamup. By your powers combined you are Captain Marx.

Leaving the ad hominem aside, I hope you now get the reason that the article about gold was wrong and that it would be a mistake to invest in gold right now.  It has its place but don't buy at the end of an intense period of gold buggery.


knarzo
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November 27, 2013, 10:14:27 PM
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Buh? Printing money does cause inflation. That's what inflation is.
 No inflation.  Its not happening.

Seriously? So Feds monthly allowance goes where then?

Sic parvis magna
Hawker
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November 27, 2013, 10:24:01 PM
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Buh? Printing money does cause inflation. That's what inflation is.
 No inflation.  Its not happening.

Seriously? So Feds monthly allowance goes where then?

Seriously? 

theonewhowaskazu
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November 28, 2013, 07:33:42 AM
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Buh? Printing money does cause inflation. That's what inflation is.
 No inflation.  Its not happening.

Seriously? So Feds monthly allowance goes where then?

Seriously? 

Seriously I have no idea what you're on about. If you have some drop-dead one-liner drop it already and stop with the dramatic build up, its getting really old.

Hawker
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November 28, 2013, 08:13:46 AM
 #14

Buh? Printing money does cause inflation. That's what inflation is.
 No inflation.  Its not happening.

Seriously? So Feds monthly allowance goes where then?

Seriously? 

Seriously I have no idea what you're on about. If you have some drop-dead one-liner drop it already and stop with the dramatic build up, its getting really old.

https://www.google.co.uk/search?q=us+inflation+rate&ie=utf-8&oe=utf-8&rls=org.mozilla:en-GB:official&client=firefox-a&gws_rd=cr&ei=TvqWUoC6B5GrhQe9pICIAQ

"The inflation rate in the United States was recorded at 1 percent in October of 2013"

That is reality.  No inflation after 5 years of money printing.  I wasn't building up suspense - I was just surprised that someone was asking me to use google for them.

Erdogan
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November 28, 2013, 10:28:22 AM
 #15

Buh? Printing money does cause inflation. That's what inflation is.
 No inflation.  Its not happening.

Seriously? So Feds monthly allowance goes where then?

Seriously? 

Seriously I have no idea what you're on about. If you have some drop-dead one-liner drop it already and stop with the dramatic build up, its getting really old.

https://www.google.co.uk/search?q=us+inflation+rate&ie=utf-8&oe=utf-8&rls=org.mozilla:en-GB:official&client=firefox-a&gws_rd=cr&ei=TvqWUoC6B5GrhQe9pICIAQ

"The inflation rate in the United States was recorded at 1 percent in October of 2013"

That is reality.  No inflation after 5 years of money printing.  I wasn't building up suspense - I was just surprised that someone was asking me to use google for them.

I accept the price level definition of inflation. Anyway, the printing and debt creation represents an inflation pressure. There must be something else going on, either specific areas of the economy taking up the inflation (stocks, houses) leaving the consumer prices to rest, or a strong deflationary pressure. This can be increased user base for the top five currencies, or repayment of loans in the consumer segment. Or technology that leads partly to lower prices or more value for the same price.


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Hawker
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November 28, 2013, 10:38:07 AM
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...snip...

I accept the price level definition of inflation. Anyway, the printing and debt creation represents an inflation pressure. There must be something else going on, either specific areas of the economy taking up the inflation (stocks, houses) leaving the consumer prices to rest, or a strong deflationary pressure. This can be increased user base for the top five currencies, or repayment of loans in the consumer segment. Or technology that leads partly to lower prices or more value for the same price.

On a serious note, Krugman is not liked on this forum but his study of deflation in Japan and his warnings that now the rest of the world has the same issue have been spot on.  People, including me, may disagree with his recommended solutions but he absolutely got the description of the problem right.  As you say, its "a strong deflationary pressure" and its not going away.

On a less serious note, here is what QE has done:

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