Why are there so many Gold-Buyers?

[Hazzy]

I keep seeing ads on TV buying gold. If it's at it's highest price in decades... why buy in mass? o_0

[Sn1perJohnE]

common knowledge: gold is an almost never lossing comodity. You are almost guranteed to be able to exchange the money you have now into gold, and still make a profit from it.

[Hazzy]

So gold just never falls in price? o_o

[Sn1perJohnE]

basically, there is so much of a high demand for it, yet the there is a small supply* for it. I just saw a show today about how lots of gold is remelted down and put out again.

[Harrisonized]

The economy is based on gold. All your paper money represents existing gold somewhere. Since money is always inflating, gold is really the only way to keep up with the inflation. However, if you look at it this way, gold's price isn't going up, its the money's value going down.

[Hazzy]

So what happens when there's more gold? Does that cause deflation since there's still x money representing, cuz decimals suck, 2x gold?

[Holikoy]

As America slips away from the Gold Standard, we're bound to print more money then we have Gold to back it, therefore Gold will be worth more American Dollars.


If I was in the gold-buying business, I would be the most liberal person around :P

[Chompy]

The economy is based on gold. All your paper money represents existing gold somewhere. Since money is always inflating, gold is really the only way to keep up with the inflation. However, if you look at it this way, gold's price isn't going up, its the money's value going down.

I am 67.8894% sure we ditched the Gold standard a while back and are now on the "imaginary house of cards interwebx credit" standard.
A much better standard.:glitter:

[Hazzy]

Maybe I should come back after an Econ class... D:

[SuGaRnSp1C3]

Maybe I should come back after an Econ class... D:

I believe so yes:wink:

[Sivrat]

I am 67.8894% sure we ditched the Gold standard a while back and are now on the "imaginary house of cards interwebx credit" standard.
A much better standard.:glitter:

And that 67% would be correct. We are off of the gold standard, and a while before that, we had a silver standard as well. Some of the "silver certificate" dollar bills are still floating around, and are collectors items.

Now for my feat of memory, while i know for a fact we went off of the gold standard, i am only 62.482% sure it was Reagan who took us off of it. Might have been earlier then that.

[Derimed]

The economy is based on gold. All your paper money represents existing gold somewhere. Since money is always inflating, gold is really the only way to keep up with the inflation. However, if you look at it this way, gold's price isn't going up, its the money's value going down.

That's not correct.

Gold-based currency USED to exist in the States and elsewhere. However, it became cumbersome and useless to deal with. People exchanged the paper notes without exchanging gold. The gold rotted in Ft. Knox. The economy as a result was HELD DOWN by this.

Eventually paper currency became non-gold-based. Right now, the legitimacy of the United States is the guarantee behind your paper currency. This allowed the economy to thrive more htan when paper currency was tied to gold.

What I am saying is straight out of American history class. If you do not believe me, go a local bank, preferably where you have a savings account, and ask a banker about what I am saying. They will know a lot more about economics and currency flow than I do, (I admit I don't know that much,) but virtually no banking professional will claim that our currency right now is tied to gold.

[KajitiSouls]

Quantact is pretty much correct, except that the paper notes were a claim to a portion of the gold back in the gold-standard days. Since the notes were claims on a finite quantity of gold, and notes could be printed freely and thus never have a fixed amount in circulation, there was a lot of speculation as to the worth of the notes and the gold. This lead to the conclusion that the economy was being drawn back like Quantact said.

I find it odd that the government will still guarantee the value of the dollar, but there's nothing backing it except for the expectation that everyone will treat it as such. I suspect that, should the economy ever be destroyed for whatever reason, the country will have to rebuild its currency based on a material standard of some sort.


There's also a gold vault in the Federal Reserve Bank in New York. This vault however is a representation of some of the participating counties's claims to wealth backed by gold (and is divided as such), and it really doesn't all belong to the US in spite of being in US soil.

[Thunda]

but there's nothing backing it except for the expectation that everyone will treat it as such.

Not entirely true. You need to pay taxes in US dollars if you're live in the United States.

[Shidoshi]

money is accepted for it's value because everyone is sure they can use the money they recieved to buy other goods. The international standard of value of one currency is based on what you can buy with it, mainly what that country produces as product.

[modular]

I keep seeing ads on TV buying gold. If it's at it's highest price in decades... why buy in mass? o_0

the ads you see are a scam just like the bowflex or shamwow or whatever the oxyclean guy is selling for $20 nowadays. they want you to give up your jewelry so they can turn around and resell it for high profits after remaking it. but some investor(s) put a lot of money into the scheme, so the entrepreneur has a lot of money to blow on tv ads.

gold will always go up, its a limited resource like oil, silver, water, uranium, etc. the worlds population is still growing so the supply has to be stretched more thinly every year, especially because society demands we buy gold for our women to wear and electronics markets use it as a very good conductor that doesnt corrode. i dont know enough about gold mines like i know oil, but theyll all play out eventually and theyre the only new source of gold keeping the price from spiraling out of control. just like fossil fuels.

currently, our currency is floating against every other currency. the value of US$1 is a representation of the cost of producing products/services in the US and how much demand there is for the products/services worldwide. i think thats why the yen is getting more valuable against other currencies even though the japanese think theyve been in a recession for the last 20 years... everyone likes the electronics they make.

[Thunda]

gold will always go up, its a limited resource like oil, silver, water, uranium, etc. the worlds population is still growing so the supply has to be stretched more thinly every year, especially because society demands we buy gold for our women to wear and electronics markets use it as a very good conductor that doesnt corrode. i dont know enough about gold mines like i know oil, but theyll all play out eventually and theyre the only new source of gold keeping the price from spiraling out of control. just like fossil fuels.

From what I understand, the price of gold is not dependent on the amount we pull from our mines, but on the amount that is on the market at any given time (because this pool is much larger than than the annual increase in supply). Oil is a different story because once retrieved, it is used (and you'll never see that barrel again). Gold does not get "used" like oil does.

Gold will not always go up. Otherwise, why would people have any other investments?

---

And yes, the TV ads profit off of the difference in price that they get for the gold and the price that they sell, but I don't really think it's *scamming*. I doubt you could find a wholesaler that would buy gold from the general population ("how much for 5 ounces of this 14karat gold bracelet?" - "sorry, we only buy in 10lb or greater batches.")