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I'm guessing that the couple who found two rusting cans of gold coins while out walking the dog beg to differ. Gotta go, my furry kids are calling for their walk.
Funny you mention bitcoin and gold. Though I have no interest in bitcoin, I read this article in the newspaper yesterday. The comment I highlighted below got me thinking, if a digital currency took off, bitcoin or something else down the road, would the price of gold plummet? I mean, it's industrial uses are minimal. It's price to me, and I could be wrong, is because gold is a fiat currency excepted worldwide. So the cost is mostly due to governments hording for economic safety. But what if the digital future makes the economic safety of gold obsolete?
SecondMarket, a New York company, plans to launch a regulated exchange to facilitate trading in Bitcoin, a digital currency some think could be a global form of monetary transfer. Given its successful track record, some say this small company with just 50 employees has the heft to push Bitcoin past recent major problems and make it a legitimate rival to major currencies, such as the U.S. dollar and stores of value like gold.
@MikeM, interesting question. Depends on to what extent it "takes off".
Realistically, its role will be less than what its proponents hype it to be and more than what its detractors give it credit for.
While there is great potential for its spread as alternate currency in transfers/transactions, I would not expect it to replace a store of value such as Gold. Gold has played that role for some specific characteristics the most important being that its value is not subject to monetary/fiscal policies of any one entity. Bitcoins share that characteristic.
However, there are some equally important characteristics of Gold such as its limited nature and physical durability (it is not a perishable when stored) that is guaranteed by nature and so no agreement/consensus/regulation is necessary to ensure it. Bitcoin, as an artificial construct, requires consensus/trust/regulations to ensure those characteristics and that very requirement will work against it as a replacement for Gold as a store of value.
Does the same concept apply when one finds oil, copper, gold nuggets etc. on their property? This is just wrong. Moral: Find stuff, shut mouth.
How do you get rid of the stuff? I think they thought this through. Sell one coin, maybe (uh, my grandfather gave it to me for Christmas), maybe sell two. Then what? Give your furry kids extra treats, ya' never know hawk
You might say: Gold is a good buy because it’s a store of value, it protects against inflation, and it gives comfort in times of panic. So you argue that’s a good reason to buy gold today at $1300. But the trouble is that all those things were also truth when it was at $1900, and the person who bought it there has lost a third of his money. Therefore, you can’t invest intelligently in gold. There is no way to translate those virtues into a dollar figure. By the way: If you take the word «gold» and you take away the letter «l» then you have god. And it’s the same analysis: Either you believe in it or you don’t. "Howard Marks, chairman of the U.S. investment firm Oaktree Capital"
Yep. Like anything else, only more volatile: you don't lose till you sell. We don't consider gold an 'investment' either and hold only a small 2% of portfolio. However, when we travel in places such as eastern Europe, the eastern Med, Russia, and wherever else (uh, anybody for Cyprus?) a couple of gold eagles have seemed like good companions.
@turtle, that seems like a rather poor understanding of the role of Gold if one should choose to hold it. Ignoring trading it as a speculation for the moment, It is an alternative to holding cash in currency and as a hedge or diversification. Its usefulness comes in when the currency deteriorates or otherwise loses value. Not very different from why you would diversify into bonds as a diversification from equities even if it may lose in total return in a rising interest rate market. And as in any hedge, there may be a cost associated with holding it if you never need the hedge.
You could buy Yens instead if you wanted to diversify from just one currency as opposed to currency in general. You can lose a lot of value buying Yens as well depending on when you buy it. But that doesn't invalidate its use as a hedge if you need it.
Because Gold is also involved in a speculative market, it is undervalued and overvalued at times just as equities are.
Only Gold nuts think it is always a good buy and you have the corresponding Gold haters who look at it in the same irrational way, that it never is.
The higher the volatility in a particular currency, the greater the utility of Gold purchased in that currency, hence its traditional use as a store of value in different parts of the world some more than others.
Gold as an asset class is not well understood it seems.
Comments
Regards,
Ted
http://blogs.marketwatch.com/themargin/2014/02/27/tax-collector-is-coming-for-greatest-buried-treasure-ever-unearthed/tab/print/
Realistically, its role will be less than what its proponents hype it to be and more than what its detractors give it credit for.
While there is great potential for its spread as alternate currency in transfers/transactions, I would not expect it to replace a store of value such as Gold. Gold has played that role for some specific characteristics the most important being that its value is not subject to monetary/fiscal policies of any one entity. Bitcoins share that characteristic.
However, there are some equally important characteristics of Gold such as its limited nature and physical durability (it is not a perishable when stored) that is guaranteed by nature and so no agreement/consensus/regulation is necessary to ensure it. Bitcoin, as an artificial construct, requires consensus/trust/regulations to ensure those characteristics and that very requirement will work against it as a replacement for Gold as a store of value.
Give your furry kids extra treats, ya' never know
hawk
"Howard Marks, chairman of the U.S. investment firm Oaktree Capital"
However, when we travel in places such as eastern Europe, the eastern Med, Russia, and wherever else (uh, anybody for Cyprus?) a couple of gold eagles have seemed like good companions.
You could buy Yens instead if you wanted to diversify from just one currency as opposed to currency in general. You can lose a lot of value buying Yens as well depending on when you buy it. But that doesn't invalidate its use as a hedge if you need it.
Because Gold is also involved in a speculative market, it is undervalued and overvalued at times just as equities are.
Only Gold nuts think it is always a good buy and you have the corresponding Gold haters who look at it in the same irrational way, that it never is.
The higher the volatility in a particular currency, the greater the utility of Gold purchased in that currency, hence its traditional use as a store of value in different parts of the world some more than others.
Gold as an asset class is not well understood it seems.