Gold is the best investment

[demons2005]

Everyone should buy gold. It has gone up 600% in the last 20 years. If you understand that our way of life is built on FAKE MONEY you understand the importance of gold. the government prints money out of thin air and your money will always lose value because they are just making as much as they want . You can bet as more and more people realize this they will buy gold which is not somethng the government can just print up. i know theres some ron paul people on this forum and though i disagree with him vehemently on social issues he is 100% right about gold.

again the price of gold has been only going up for the last twenty years and there is no reason for it to go back down because it is not fiat money. Also the eurozone crisis will probably send it soaring to record highs


disclosure: i bought gold

[johndeeregreen]

Everyone should buy gold. It has gone up 600% in the last 20 years. If you understand that our way of life is built on FAKE MONEY you understand the importance of gold. the government prints money out of thin air and your money will always lose value because they are just making as much as they want . You can bet as more and more people realize this they will buy gold which is not somethng the government can just print up. i know theres some ron paul people on this forum and though i disagree with him vehemently on social issues he is 100% right about gold.

again the price of gold has been only going up for the last twenty years and there is no reason for it to go back down because it is not fiat money. Also the eurozone crisis will probably send it soaring to record highs


disclosure: i bought gold
Who are you trying to convince, us or yourself?

[Meticode]

I've watched the first and second season of the show Gold Rush on Discovery. The Hoffman crew who are second season gold miners went up to Alaska and mined for 93 ounces of gold. Which is like almost 5x more they did the season before because they were major noobs.

[-p.tiddy-]

It has gone up 600% in the last 20 years.

20 years is a LOOOONG time guy

there are plenty of other ways to tie up money long term that will give you monster gains like that if you are willing to wait it out


check it though:

http://static.seekingalpha.com/uploads/2010/4/9/594441-12708068879101-Mikhail-Aristakesyan_origin.png


nothing is certain in any of this...you can see how gold spiked to hell in 1980...and didn't recover until 2006

yeah, the Dow hasn't been great as of late...but as it bounces up and down it will still trend up over the long run...

[JohnnySic]

I like gold because its a shiny rock.

[blablabla]

You should invest in ISH

[demons2005]

20 years is a LOOOONG time guy

there are plenty of other ways to tie up money long term that will give you monster gains like that if you are willing to wait it out


check it though:

http://static.seekingalpha.com/uploads/2010/4/9/594441-12708068879101-Mikhail-Aristakesyan_origin.png


nothing is certain in any of this...you can see how gold spiked to hell in 1980...and didn't recover until 2006

yeah, the Dow hasn't been great as of late...but as it bounces up and down it will still trend up over the long run...
Your chart show gold winning. Also, the only reason it was push down was because government manipulation. They want people to think their pieces of paper are worth alot so they did a lot of tampering with the gold markets. In the end they can't control the gold prices which are quickly exposing their paper as totally worthless.

[-p.tiddy-]

Your chart show gold winning. Also, the only reason it was push down was because government manipulation. They want people to think their pieces of paper are worth alot so they did a lot of tampering with the gold markets. In the end they can't control the gold prices which are quickly exposing their paper as totally worthless.
:oldlol:


do you have any "paper"?...can I have it?

[Manslavedave11]

But Bernanke says its just a barbaric relic?????????????:confusedshrug:

[Manslavedave11]

Also, I believe that silver is currently the better investment based on the gold/silver ratio and the fact that above ground inventory has rapidly declined for many years now. If you look at above ground silver and gold inventories it is clear that silver is the better buy. However, it is gold that central banks around the world are hording at ever increasing rates to protect themselves from fiat.

[-p.tiddy-]

what happens once everyone realizes it's just a rock?...the real value is stock in our businesses, goods and services

[demons2005]

what happens once everyone realizes it's just a rock?...the real value is stock in our businesses, goods and services
If gold was just a rock why has it been the natural currency for humanity ever since civilization began. No, gold is valuable because it is limited, has tradition, and it will always be able to leverage those businesses goods and services you speak of. On the contrary those businesses goods and services are at risk of stopping once everyone realizes it's just government endorsed paper they're receiving. At that point people who have gold will be at the top of the food chain

[-p.tiddy-]

If gold was just a rock why has it been the natural currency for humanity ever since civilization began. No, gold is valuable because it is limited, has tradition, and it will always be able to leverage those businesses goods and services you speak of. On the contrary those businesses goods and services are at risk of stopping once everyone realizes it's just government endorsed paper they're receiving. At that point people who have gold will be at the top of the food chain
it isn't though...

no one uses gold and silver to back up money any more...that is cave man shit...gold and silver coins aren't used anywhere

it USED to be that way because it is rare and pretty

humans have evolved past that...

[RedBlackAttack]

If gold was just a rock why has it been the natural currency for humanity ever since civilization began. No, gold is valuable because it is limited, has tradition, and it will always be able to leverage those businesses goods and services you speak of. On the contrary those businesses goods and services are at risk of stopping once everyone realizes it's just government endorsed paper they're receiving. At that point people who have gold will be at the top of the food chain
The gold standard has been effectively over for 80 years.... Officially over for 40.

[sunsfan1357]

it isn't though...

no one uses gold and silver to back up money any more...that is cave man shit...gold and silver coins aren't used anywhere

it USED to be that way because it is rare and pretty

humans have evolved past that...
Its vintage, bro. Vintage is in.

[LJJ]

Why is gold valuable? It's only valuable because people perceive it as such, but it has no real world value because it has barely any real world application.

Look at the graph primetime posted:

http://static.seekingalpha.com/uploads/2010/4/9/594441-12708068879101-Mikhail-Aristakesyan_origin.png

Why step in now? It's idiocy. If there ever was a bubble: it's gold.

[Jasper]

When I was in my early to mid- 20's I thought of ways to invest.

At the time if I had what would of equated into 30-40k and had invested in gold , I would of seen a very nice profit at this time 30+ years later.

So the question I hav to all those young investors that think they can make a killing on money(gold)

DO YOU HAVE THE ASSETS TO INVEST AND WAIT 30+ YEARS ON YOUR RETURN :confusedshrug:


I didn't I needed to buy a home. :rolleyes:

[falc39]

Why is gold valuable? It's only valuable because people perceive it as such, but it has no real world value because it has barely any real world application.

It's valuable because it can retain its value in an inflationary environment and is easy to store. Look at where the major gold demand is coming from- China and India.. the countries with the high inflation and biggest population. So obviously they know what's up.. so do the central banks that are increasing their holdings.

[LJJ]

It's valuable because it can retain its value in an inflationary environment and is easy to store. Look at where the major gold demand is coming from- China and India.. the countries with the high inflation and biggest population. So obviously they know what's up.. so do the central banks that are increasing their holdings.

"It's valuable because it's valuable"




What?

[LBJMVP]

It's valuable because it can retain its value in an inflationary environment and is easy to store. Look at where the major gold demand is coming from- China and India.. the countries with the high inflation and biggest population. So obviously they know what's up.. so do the central banks that are increasing their holdings.


completely false.
gold is valuable for the simple fact that it is shiny, and it can be melted down to make other shiny things.

[falc39]

"It's valuable because it's valuable"




What?

You know what currency is and why people use it? One of the reasons is store of value. Do I have to explain inflation to you and how it takes away purchasing power from consumers and savers?

[falc39]

completely false.
gold is valuable for the simple fact that it is shiny, and it can be melted down to make other shiny things.

Well the general market disagrees with you. Also a bunch of nations and central banks.

[LJJ]

You know what currency is and why people use it? One of the reasons is store of value. Do I have to explain inflation to you and how it takes away purchasing power from consumers and savers?

I do, but you don't seem to.

Currency is valuable only because it's institutionalized. It has no real value, it's essentially just a number in a computer The same goes for gold. It has value because people want it, not because people need it.


Oil has value because, you know, it's combustible (among other things). Gold is not like that. If people decide "Hey, **** gold. We are bored with gold", it suddenly has zero value. People don't need gold to do anything. Hence, no real value.

[LBJMVP]

Well the general market disagrees with you. Also a bunch of nations and central banks.

yah, but why did they originally want it?
cause some people way back in the day thought i was shiny so they used it as currency and made statues and other stuff out of it.

[sick_brah07]

i read the title as GOD is the best investment and expected an essay from LOJ

[falc39]

I do, but you don't seem to.

Currency is valuable only because it's institutionalized. It has no real value, it's essentially just a number in a computer The same goes for gold. It has value because people want it, not because people need it.


Oil has value because, you know, it's combustible (among other things). Gold is not like that. If people decide "Hey, **** gold. We are bored with gold", it suddenly has zero value. People don't need gold to do anything. Hence, no real value.

So are you going to store a ton of oil barrels at your house? Food? You know food spoils... Stocks are tied to companies and fiat currencies are tied to nations. Gold is completely neutral.

[falc39]

yah, but why did they originally want it?
cause some people way back in the day thought i was shiny so they used it as currency and made statues and other stuff out of it.

Look at its metallic properties. It's the most stable metal we know of. They uncover ancient sunken ships with the gold completely intact. Store of value..

[nathanjizzle]

it would be stupid to buy gold at this point. because of how inflation is all accross the world gold has the most value rite now..and when the world economy gets better the price of gold will drop. So if you buy now to sell later your pretty much going to buy high and sell low.

[BankShot]

Random commentary from ISHiot >>>>>> general consensus of Wall Street and other major financial institutions

[Jasper]

Random commentary from ISHiot >>>>>> general consensus of Wall Street and other major financial institutions
A bank Shot of gold

[Dizzle-2k7]

blows my mind that years ago someone convinced a bunch of people that some shiny rocks are valuable (gold, diamonds, etc).

[falc39]

blows my mind that years ago someone convinced a bunch of people that some shiny rocks are valuable (gold, diamonds, etc).

Really? who is this someone that you speak of?

I don't own gold because it's shiny... I have it for different purposes. But if something looks good, why to you is that not a reason for it to be valuable? Is all art worthless too? Who are you to judge that? So jewelry really is worthless?

Also, a lot of you guys are arguing over semantics. It's the equivalent of a philosopher asking if a chair is really a chair. It really is a chair, but if you theoretically look at it, it's just :blah :blah . I really don't benefit from any answer to that question regardless of how true that answer is...

[Jello]

No, gold is not the best investment. There are investments that are protected from anything aside from a complete market crash and actually appreciate. Gold appreciates and depreciates depending on the current market.

[KevinNYC]

No, gold is not the best investment. There are investments that are protected from anything aside from a complete market crash and actually appreciate. Gold appreciates and depreciates depending on the current market.

Anyone thinking of investing in Gold should google "Gold Bubble" before they do

[QUOTE]It is always easier to identify assets that are bubbling than to predict when the bubble will pop. Gold has much more downside than upside at this point, but this has been true for years without slowing price gains. Home prices and tech stocks also suggest that bubbles can exist for years even after objective measures (e.g. P/E ratios or rent to buy ratios) show that markets are out of equilibrium.

It is anybody

[Dizzle-2k7]

Really? who is this someone that you speak of?

I don't own gold because it's shiny... I have it for different purposes. But if something looks good, why to you is that not a reason for it to be valuable? Is all art worthless too? Who are you to judge that? So jewelry really is worthless?

Also, a lot of you guys are arguing over semantics. It's the equivalent of a philosopher asking if a chair is really a chair. It really is a chair, but if you theoretically look at it, it's just :blah :blah . I really don't benefit from any answer to that question regardless of how true that answer is...

:facepalm
this dude comparing a rock to ART.
yea bro lemme go outside and grab some dirt.. thats more valuable than a painting, or song, or sculpture. :hammerhead:

[falc39]

:facepalm
this dude comparing a rock to ART.
yea bro lemme go outside and grab some dirt.. thats more valuable than a painting, or song, or sculpture. :hammerhead:

what's a painting? it's just a piece of paper with patterns of paint splotched all over it. you can't eat it, you can't build anything with it, it just looks good to some people (sounds a lot like gold!). It can't even function as a currency. At least gold can. You see, I just proved that all paintings are worthless. Why do people even buy paintings? What a bunch of dummies... amirite???

[TheCommish]

Gold is used to protect your purchasing power. If you bought 1 ounce of gold in 1913, you still have 1 ounce of gold right now. If you had 1 dollar back in 1913, it is worth about $0.02, give or take.

[-p.tiddy-]

Gold is used to protect your purchasing power. If you bought 1 ounce of gold in 1913, you still have 1 ounce of gold right now. If you had 1 dollar back in 1913, it is worth about $0.02, give or take.
no it would have gained intrest the whole time...

[Dizzle-2k7]

no it would have gained intrest the whole time...

http://www.esreality.com/files/inlineimages/2010/76115-Joker_not_sure_if_serious.jpg

[Kungfro]

I've watched the first and second season of the show Gold Rush on Discovery. The Hoffman crew who are second season gold miners went up to Alaska and mined for 93 ounces of gold. Which is like almost 5x more they did the season before because they were major noobs.

That's a good show. My cousin actually just bought a gold claim out in BC, so I'm gonna be doing some gold panning this summer. I doubt we'll find much gold, but it should be fun.

[statman32]

Some very uneducated kids in this thread. Like most things, investing in Gold is not a sure thing or the "best" investment. Still, Gold is not a "fad" that will go away. Golds value has nothing to do with what it looks like.

Precious and base metals have made plenty of people money lately. The scrap industry is still booming, and while some experts "claim" that prices are going down for "insert reason here", these experts are just making guesses and have been wrong almost daily. If the market was easily played, anyone with money would be raking in the cash right now. It's not though because there are so many factors involved in the industry, and knowing the intentions of everyone is impossible.

[Dizzle-2k7]

Some very uneducated kids in this thread. Like most things, investing in Gold is not a sure thing or the "best" investment. Still, Gold is not a "fad" that will go away. Golds value has nothing to do with what it looks like.

Precious and base metals have made plenty of people money lately. The scrap industry is still booming, and while some experts "claim" that prices are going down for "insert reason here", these experts are just making guesses and have been wrong almost daily. If the market was easily played, anyone with money would be raking in the cash right now. It's not though because there are so many factors involved in the industry, and knowing the intentions of everyone is impossible.

:facepalm gold has no functional purpose. it does nothing that simple aluminum foil couldnt do.

[QUIZZLE]

:facepalm gold has no functional purpose. it does nothing that simple aluminum foil couldnt do.

You are incredibly ignorant

Gold is used in electronics everywhere. It's one of the few metals that isn't affected by moisture. Gold is not only the most malleable but it's the most ductile metal that has ever been discovered.

[Cowboy Thunder]

copper > gold

[Brunch@Five]

I'd much rather invest in companies which are in the chemistry business or electricity (BASF, General Electric), car companies (Toyota, BMW). Companies that produce hard values. They'll always be there, and barring major mismanagement, remain world leaders in the business.

[Nick Young]

The time to buy gold was the year 2000, now it is retarded to do it when everyone is buying it, wait for it to go on a minicrash from where it is now before you stock up.

[KevinNYC]

Everyone should buy gold. It has gone up 600% in the last 20 years. If you understand that our way of life is built on FAKE MONEY you understand the importance of gold. the government prints money out of thin air and your money will always lose value because they are just making as much as they want . You can bet as more and more people realize this they will buy gold which is not somethng the government can just print up. i know theres some ron paul people on this forum and though i disagree with him vehemently on social issues he is 100% right about gold.

again the price of gold has been only going up for the last twenty years and there is no reason for it to go back down because it is not fiat money. Also the eurozone crisis will probably send it soaring to record highs


disclosure: i bought gold

Gold is now down $300 from its peak last September.

[mika]

I keep purchasing silver, it's pretty addicting. I like collecting silver American Eagles & Canadian Maple Leafs. I'm thinking about saving up and getting a monster box of Canadian Maple Leaf silver coins, there is 500 per box.

I have five Canadian Maple Leaf gold coins & one Canadian Maple Leaf platinum coin. I like playing with my silver:confusedshrug:

Anybody else collect silver?

[joe]

GOLD is valuable because many people value it. It's that simple. People across time, culture, race, and creed have valued gold. That was true in Ancient Rome, it was true to the Native Americans, and it's true today.

Now yes, you personally might not value gold. You might think it's the most hideous looking thing you've ever seen. All well and good! But "currency" doesn't have to be something that you value; it just has to be something that MOST or MANY people value.

Take the example of cigarettes in prison. Not everyone in prison smokes, but even non-smokers trade cigarettes between each other. Why? Because cigarettes are considered valuable to MANY inmates (smokers), therefore it's easy to find a trade partner as long as you yourself have cigarettes. Non-smokers want cigarettes because they know others want cigarettes.

Apply that same logic to gold. Gold is considered valuable to MANY people (those who think gold is attractive looking, want gold jewelry, etc), therefore it behooves even those who find gold unattractive to collect it. If you have gold, you will easily find a trade partner, and can exchange your gold for products you actually want. That is the entire purpose of currency, to facilitate trade.

You might ask, but then why is paper money any different? You don't want paper money necessarily, but you know other will accept it in trade. Isn't that the same as gold or cigarettes in prison?

Yes, in many ways it is the same. The big problem with paper money is that it can be easily counterfeited, with no real cost taken by the counterfeiter. To mine gold, it takes actual time, money, and human resources. Cigarettes are not easily obtained in prison. In other words, scarcity is what gives them their worth. If the prisons were flooded with cigarettes, who would trade you a porno magazine for one? If every person in the world had 2 tons of gold, what good would it be in trade?

Paper money on the other hand can easily be printed, with very little cost to the counterfeiter. The temptation to print is always too strong for the government/central banks. ALWAYS. They gain HUGE benefits by printing money in the short term, and the pain isn't felt until later. Before that happens they're filthy rich at the public's expense.

In theory, paper money could work if the government didn't debase it. But in practice, that is never and will never be the case.

That is why paper money only occurs by government force. The market would never choose paper money, because the risk of dishonesty is too great. The government has to mandate the paper money, and inevitably they debase it, impoverish the citizens, and enrich themselves.

[joe]

Saying "gold is a relic of the past" is ignorant. That's like saying "gravity is a relic of the past." Gold has traditionally been currency for a very good reason. It wasn't by accident, or because people were dumb in the past and now we're geniuses who can print money. It's because the natural course of the market inevitably favors gold or precious metal as money. There's nothing scary about it. Gold money is honest, efficient, trustworthy money. There's nothing about a gold standard that inherently crashes the economy. That's all BS made up by the federal reserve and government propagandists, to justify robbing us blind with their printing press.

Fact is, the world WILL return to a precious metal standard, like it or not. Paper money will always go back to its real value, which is NOTHING. Zero! Nadda! There is no documented case in world history of a paper currency not eventually becoming WORTHLESS. The only reason gold standards end is because governments make it illegal, or remove all the actual gold from the money and horde it for themselves. That's it.

[Jackass18]

Gold is now down $300 from its peak last September.

I think he was looking at it as a long-term investment.

Gold does have a number of uses: http://geology.com/minerals/gold/uses-of-gold.shtml

[joe]

This sort of talk is liable to get you fined 5000 credits.

Sadly I can see that kind of talk being illegal in the future.

[Pinkhearts]

Does this Joe ever know what he is talking about?

Sure paper money is just currency and has no value other than what the govt tells you its worth

Then you say gold is a currency? So it only serves to represent value, and not have actual value itself?

If you think gold's actual value is reflected in its price now you're doing crack. It is just an alternate currency. What's the point changing from one currency to another?

[joe]

Does this Joe ever know what he is talking about?

Sure paper money is just currency and has no value other than what the govt tells you its worth

Then you say gold is a currency? So it only serves to represent value, and not have actual value itself?

If you think gold's actual value is reflected in its price now you're doing crack. It is just an alternate currency. What's the point changing from one currency to another?

Paper money can have value. Its value is that governments accept it, and they enforce private contracts that use (for example) dollars as the payment. Governments can also tax things like gold or silver to make them less attractive as currency. Paper money doesn't get its value from the free market, but it does have value nonetheless. In a vacuum, it can work as a currency.

The problem with it is that politicians/central bankers/Kings/dictators end up debasing the currency to their own benefit. Either by printing the money, or by literally removing the gold from "gold coins." In either case, the purchasing power of the money is stolen from the people, and transferred to the ruling class. That is the case today, and is the main cause of the worlds economic issues.

[KevinNYC]

I think he was looking at it as a long-term investment.

Gold does have a number of uses: http://geology.com/minerals/gold/uses-of-gold.shtml


You try not to buy long term investments at the peak of their market and any one who had been paying attention knew that there had been a decade long bull market in gold. Also the llast time gold peaked, it dropped and stay low for a Looooong time.

http://www.ozarkia.net/bill/anarchism/rants/picts/historical-graph-of-gold-prices.png

Look at this chart, if you bought Gold at the peak of the last bull market in gold, you would have to hold on to it for over 25 years just to get your money back. And that's before adjusting prices for inflation. If adjust the prices for inflation, the price in 1980 was still higher than the peak last year. So that would have turned out to be a very bad investment compared to say a Treasury Bill or a even a bank account with interest. That's a historical perspective that folks on this board who tend to be younger might not have, especially at the end of a decade long gold rush.

This thread wasn't made two or three years ago when gold was still climbing, it was three months ago after gold prices had a fallen a bit.

If you look the 1980 gold market and this one, you see that both developed in time of fears of inflation, the 1980 market happened right after the 1979 "oil shock" that occurred right after the revolution in Iran. The recent run up in gold really kicked into gear after 2008 economic crisis. When Fed Chief Paul Volcker followed a tight money policy to deliberately break high inflation in early 80's, it caused a severe recession (http://en.wikipedia.org/wiki/Early_1980s_recession#Recession_in_the_United_Stat es) in the US, but gold prices fell and kept falling because inflation went from 13% in 1981 to 3% in 1983

[KevinNYC]

I think he was looking at it as a long-term investment.

Gold does have a number of uses: http://geology.com/minerals/gold/uses-of-gold.shtml

You try not to buy long term investments at the peak of their market and any one who had been paying attention knew that there had been a decade long bull market in gold. Also the last time gold peaked, it dropped and stay low for a Looooong time.

http://www.ozarkia.net/bill/anarchism/rants/picts/historical-graph-of-gold-prices.png

Look at this chart, if you bought Gold at the peak of the last bull market in gold, you would have to hold on to it for over 25 years just to get your money back. And that's before adjusting prices for inflation. If adjust the prices for inflation, the price in 1980 was still higher than the peak last year. So that would have turned out to be a very bad investment compared to say a Treasury Bill or a even a bank account with interest. That's a historical perspective that folks on this board who tend to be younger might not have, especially at the end of a decade long gold rush.

This thread wasn't made two or three years ago when gold was still climbing, it was three months ago after gold prices had a fallen a bit.

If you look the 1980 gold market and this one, you see that both developed in time of fears of inflation, the 1980 market happened right after the 1979 "oil shock" that occurred right after the revolution in Iran. The recent run up in gold really kicked into gear after 2008 economic crisis. When Fed Chief Paul Volcker followed a tight money policy to deliberately break high inflation in early 80's, it caused a severe recession (http://en.wikipedia.org/wiki/Early_1980s_recession#Recession_in_the_United_Stat es) in the US, but gold prices fell and kept falling because inflation went from 13% in 1981 to 3% in 1983

[joe]

If you look the 1980 gold market and this one, you see that both developed in time of fears of inflation, the 1980 market happened right after the 1979 "oil shock" that occurred right after the revolution in Iran. The recent run up in gold really kicked into gear after 2008 economic crisis. When Fed Chief Paul Volcker followed a tight money policy to deliberately break high inflation in early 80's, it caused a severe recession (http://en.wikipedia.org/wiki/Early_1980s_recession#Recession_in_the_United_Stat es) in the US, but gold prices fell and kept falling because inflation went from 13% in 1981 to 3% in 1983

Exactly. But the fear many 'gold-bugs' have today is that the federal reserve has no intention of turning off the inflation hose. Especially in the US. If the Fed were to raise interest rates like Paul Volcker did, right now, it'd be catastrophic in the short-term. The politicians don't want that, the people don't want that, and the banks don't want that. So there's no foreseeable scenario in which the Fed will tighten.

If you accept that premise, the endgame would be a debt crisis/currency crisis. And then you'd really see high gold prices.

[KevinNYC]

Exactly. But the fear many 'gold-bugs' have today is that the federal reserve has no intention of turning off the inflation hose. Especially in the US. If the Fed were to raise interest rates like Paul Volcker did, right now, it'd be catastrophic in the short-term. The politicians don't want that, the people don't want that, and the banks don't want that. So there's no foreseeable scenario in which the Fed will tighten.

If you accept that premise, the endgame would be a debt crisis/currency crisis. And then you'd really see high gold prices.

That's the problem when you have to accept a premise for an investment to make sense. There's a difference between "Trust me, this a good investment because of these reasons" and "Trust me, this is a good investment, because I'm secretly the exiled Crown Prince of Malta." Gold prices are not necessarily based on supply and demand like any other commodity.

You also have to understand in the past few years you had lots of people running to buy gold because the US dollar was going to collapse AND you have lots and lots of people running to buy Treasury because US debt was the safest investment in the world.

However, I'm not sure what you mean by "inflation hose" though, because it kind looks like a inflation grade-school water fountain to me.

Year 2012
Jan 2.93%
Feb 2.87%
Mar 2.65%
Apr 2.30%

[-p.tiddy-]

Saying "gold is a relic of the past" is ignorant. That's like saying "gravity is a relic of the past." Gold has traditionally been currency for a very good reason. It wasn't by accident, or because people were dumb in the past and now we're geniuses who can print money. It's because the natural course of the market inevitably favors gold or precious metal as money. There's nothing scary about it. Gold money is honest, efficient, trustworthy money. There's nothing about a gold standard that inherently crashes the economy. That's all BS made up by the federal reserve and government propagandists, to justify robbing us blind with their printing press.
no it's not...that is a REALLY REALLY horrible comparison



Fact is, the world WILL return to a precious metal standard, like it or not. Paper money will always go back to its real value, which is NOTHING. Zero! Nadda! There is no documented case in world history of a paper currency not eventually becoming WORTHLESS. The only reason gold standards end is because governments make it illegal, or remove all the actual gold from the money and horde it for themselves. That's it.
yes there are many cases...how about the US Dollar :confusedshrug:

[falc39]

Guys keep in mind that gold is demanded worldwide and there are a bunch of other reasons/factors for the demand to own gold. It's a worldwide 24hr market and not just tied to federal reserve policies

http://www.usdebtclock.org/gold-demand-by-country.html

[joe]

That's the problem when you have to accept a premise for an investment to make sense. There's a difference between "Trust me, this a good investment because of these reasons" and "Trust me, this is a good investment, because I'm secretly the exiled Crown Prince of Malta." Gold prices are not necessarily based on supply and demand like any other commodity.

You also have to understand in the past few years you had lots of people running to buy gold because the US dollar was going to collapse AND you have lots and lots of people running to buy Treasury because US debt was the safest investment in the world.

However, I'm not sure what you mean by "inflation hose" though, because it kind looks like a inflation grade-school water fountain to me.

Year 2012
Jan 2.93%
Feb 2.87%
Mar 2.65%
Apr 2.30%

QE, operation twist, stimulus

You are trusting the governments statistics on the goverments (or the Feds) inflation. You might as well be asking the guy with blood on his hands if he's responsible for the dead body in his livingroom. The inflation statistics are purposely designed to lowball the real inflation.

[joe]

no it's not...that is a REALLY REALLY horrible comparison



yes there are many cases...how about the US Dollar :confusedshrug:

The US dollar has only been off of gold for 40 years, give it some time. In that span its value has shrunk, and our debt has skyrocketed. Not a good track record.

Analogies aren't my strong suit :D My point is that, the fundamental reasons that gold has always been used as currency have not changed.

[KevinNYC]

QE, operation twist, stimulus

You are trusting the governments statistics on the goverments (or the Feds) inflation. You might as well be asking the guy with blood on his hands if he's responsible for the dead body in his livingroom. The inflation statistics are purposely designed to lowball the real inflation.

Joe, at some point your going to have to see if your ideology holds up in light of the facts. You can't simply just keep complaining about the facts because they don't match your ideology. You should try this as an intellectual exercise.

If you don't like the cpi index of inflation (apparently because they're the equivalent of murderers in your opinion), you can check the Billion Price Project at MIT. (http://bpp.mit.edu/usa/) Of course, you'll get about the same result because both are derived from real world prices.

Something that cost a dollar in mid 2008 went down to 96 cents by Jan 2009 and now is a little over $1.05. about 4 years later.

Also, I know you don't like looking at the facts, but if you did ask the guy with the blood on his hands he'll tell you he was trying to stop the flow of blood from the wound and save his friends life, but he failed. If you bothered to ask, he'll point to the bullet hole that was fired through the window.

[joe]

Joe, at some point your going to have to see if your ideology holds up in light of the facts. You can't simply just keep complaining about the facts because they don't match your ideology. You should try this as an intellectual exercise.

If you don't like the cpi index of inflation (apparently because they're the equivalent of murderers in your opinion), you can check the Billion Price Project at MIT. (http://bpp.mit.edu/usa/) Of course, you'll get about the same result because both are derived from real world prices.

Something that cost a dollar in mid 2008 went down to 96 cents by Jan 2009 and now is a little over $1.05. about 4 years later.

Also, I know you don't like looking at the facts, but if you did ask the guy with the blood on his hands he'll tell you he was trying to stop the flow of blood from the wound and save his friends life, but he failed. If you bothered to ask, he'll point to the bullet hole that was fired through the window.

If you measure inflation the way they used to, it's higher than when Nixon instituted price controls. That's a fact! How do you feel about that?

http://i49.tinypic.com/6ppzcl.jpg

If you measure unemployment the way they used to, it's above 16%. Another fact.

http://i49.tinypic.com/fkmk9y.png

Inflation can be whatever you want it to be. Find the group or website that you agree with, copy and paste their charts, and inflation is low or high or medium, or whatever you wanted.

Let's just keep things simple.

http://i48.tinypic.com/wiq1j.jpg

[KevinNYC]

You've educated me Joe, I had no idea such a thing as shadowstats.com existed.

[Norcaliblunt]

The currency of the nation does not need to be backed by anything.

What matters is, WHO CREATES IT AND CONTROLS THE QUANTITY!!!!!!

So who should that be???

A. A state authorized monopoly of unelected bankers, charging interest, working for private shareholders, while using fractional reserve lending for profit, through the Federal Reserve System? What we have now.

B. Unregulated global banks under the gold standard, charging interest, controlled by private hands for private gains, in a total anarcho capitalistic free market?

Or...

C. WE THE PEOPLE!!! Debt free in the public interest, through democratically elected representatives, whose policies can be debated in an open forum and publicly held accountable?


A nation who must borrow from private banking institutions at interest, or be binded by backing their currency in gold, can never ever be truly sovereign. Those who believe that the goverment can not be trusted to handle the responsibility of creating and regulating it's own currency, also must not believe in the concept of self governance, and therefore is an anarchist. Which is okay, just admit it.

Watch and learn the deal from a real AMERICAN LIBERTARIAN, not the Austrian, goldbug, anarcho, science fiction crap.

http://m.youtube.com/watch?v=4VaSh8MMo34

[Norcaliblunt]

Gold has traditionally been currency for a very good reason. It wasn't by accident, or because people were dumb in the past and now we're geniuses who can print money. It's because the natural course of the market inevitably favors gold or precious metal as money. There's nothing scary about it. Gold money is honest, efficient, trustworthy money. There's nothing about a gold standard that inherently crashes the economy. That's all BS made up by the federal reserve and government propagandists, to justify robbing us blind with their printing press.

Fact is, the world WILL return to a precious metal standard, like it or not. Paper money will always go back to its real value, which is NOTHING. Zero! Nadda! There is no documented case in world history of a paper currency not eventually becoming WORTHLESS. The only reason gold standards end is because governments make it illegal, or remove all the actual gold from the money and horde it for themselves. That's it.


http://m.youtube.com/#/watch?v=4VaSh8MMo34

[shlver]

Not sure if Joe understands that a return to the gold standard will instantly collapse the economy into massive irrecoverable debt. There is a reason that the US is devaluing the dollar. Capitalism in the US, in its efficiency, has created more than people can consume and people are simply not confident. In world trade, the US devalues the dollar to shift the burden of overproduction overseas. This was Bernanke's gambit. Devalue the dollar, increase demands for US exports, boost GDP. The problem was China and the world went into a state of "flight-to-quality" and boosted demand for the dollar and kept the cost of US exports high.
Currency devaluation would have been an obvious solution for Greece, but they lack a central bank and their currency is issued by the European Central Bank.

[Godzuki]

The currency of the nation does not need to be backed by anything.

What matters is, WHO CREATES IT AND CONTROLS THE QUANTITY!!!!!!

So who should that be???

A. A state authorized monopoly of unelected bankers, charging interest, working for private shareholders, while using fractional reserve lending for profit, through the Federal Reserve System? What we have now.

B. Unregulated global banks under the gold standard, charging interest, controlled by private hands for private gains, in a total anarcho capitalistic free market?

Or...

C. WE THE PEOPLE!!! Debt free in the public interest, through democratically elected representatives, whose policies can be debated in an open forum and publicly held accountable?


A nation who must borrow from private banking institutions at interest, or be binded by backing their currency in gold, can never ever be truly sovereign. Those who believe that the goverment can not be trusted to handle the responsibility of creating and regulating it's own currency, also must not believe in the concept of self governance, and therefore is an anarchist. Which is okay, just admit it.

Watch and learn the deal from a real AMERICAN LIBERTARIAN, not the Austrian, goldbug, anarcho, science fiction crap.

http://m.youtube.com/watch?v=4VaSh8MMo34


i agree with this

[raiderfan19]

The people who say gold cant go down are the same idiots who said that real estate couldnt go down because of its intrinsic value. Gold is following the exact same bubble that real estate went through a few years ago and in another couple of years it will also crash. It wont be as bad because its not bought on credit the way real estate is, but it will still go down.

[brantonli]

Saying "gold is a relic of the past" is ignorant. That's like saying "gravity is a relic of the past." Gold has traditionally been currency for a very good reason. It wasn't by accident, or because people were dumb in the past and now we're geniuses who can print money. It's because the natural course of the market inevitably favors gold or precious metal as money. There's nothing scary about it. Gold money is honest, efficient, trustworthy money. There's nothing about a gold standard that inherently crashes the economy. That's all BS made up by the federal reserve and government propagandists, to justify robbing us blind with their printing press.

Fact is, the world WILL return to a precious metal standard, like it or not. Paper money will always go back to its real value, which is NOTHING. Zero! Nadda! There is no documented case in world history of a paper currency not eventually becoming WORTHLESS. The only reason gold standards end is because governments make it illegal, or remove all the actual gold from the money and horde it for themselves. That's it.

Well...

http://isites.harvard.edu/fs/docs/icb.topic467999.files/October%2022%20and%2027%20-%20Trade%20Money%20and%20Finance/Eichengreen.pdf

[QUOTE]there now exists agreement among most economists
that the gold standard was a key element

[heyhey]

If you measure inflation the way they used to, it's higher than when Nixon instituted price controls. That's a fact! How do you feel about that?

http://i49.tinypic.com/6ppzcl.jpg

If you measure unemployment the way they used to, it's above 16%. Another fact.

http://i49.tinypic.com/fkmk9y.png

Inflation can be whatever you want it to be. Find the group or website that you agree with, copy and paste their charts, and inflation is low or high or medium, or whatever you wanted.

Let's just keep things simple.

http://i48.tinypic.com/wiq1j.jpg
very interesting material. do you have information about shadowstats' methodology? I'm interested in knowing whether they collect the data or compute it via some unpublished numbers or do a correction of sorts

the appearance of the inflation curves looked so similar that it seems they just added 2% to the official number

but the unemployment curve actualy looks like it has data points so I'm wondering how that's computed

[joe]

very interesting material. do you have information about shadowstats' methodology? I'm interested in knowing whether they collect the data or compute it via some unpublished numbers or do a correction of sorts

the appearance of the inflation curves looked so similar that it seems they just added 2% to the official number

but the unemployment curve actualy looks like it has data points so I'm wondering how that's computed

Ummm I forget where I got the unemployment graph. Google "the old way of measuring unemployment" or something like. Or, "the real unemployment rate" would be even better. I won't vouch for the sources I put up there specifically, but I've seen similar numbers from a few different places. The gov. doesn't deny that the unemployment and cpi statistics have been changed to show lower numbers. They just say the new numbers are more accurate or useful, where I think they changed them to mask the effects of their policies.

I just hope people see my main point, which is that statistics are pretty useless in the grand scheme. Everyone has statistics that back up their argument. Numbers don't lie, but humans do. And humans are what creates the formulas, and gives significance to the results.

[joe]

Well...

http://isites.harvard.edu/fs/docs/icb.topic467999.files/October%2022%20and%2027%20-%20Trade%20Money%20and%20Finance/Eichengreen.pdf



By Eichengreen and Temin, two extremely well respected academics.

The whole effing Great Depression was caused by the Fed operating under the Gold Standard (and had to raise interest rates to prevent gold outflows, which ****ed up the rest of the economy). FYI, Spain didn't go on the gold standard in the interwar period and didn't suffer nearly as much of a crisis as the other countries did.

The Austrian school has a totally different take on the Great Depression, if you care to hear it. They argue that it was a classic example of the Austrian business cycle, with the Fed creating too much credit in the 20's, leading to an artificial boom, followed by the bust in 29/30. Then, instead of allowing the free market to fix the problem, the government consistently intervened, causing a depression. The depression didn't end until 1946, when government finally cut spending (as Keynesians of the time were predicting the austerity would devastate the economy). 1946 was one of our best economic years in history.

I do tend to agree with that explanation, but I won't say it's cut and dry.

I don't know much about Spain's history, so I can't comment. But correlation does not equal causation. Maybe Spain avoided economic problems for another reason?

After all, we have had economic problems recently, and we don't have a gold standard. So shouldn't I be able to say that if we had one, things would be fine?

I think a lot of bad history has plagued the perception of gold. Mainly the idea that we had many bank panics/recessions before the Fed came along. People should be reading alternative versions of history on that, because there's great arguments against those interpretations of history. Some even gaining acceptance in the mainstream.

[KevinNYC]

You've educated me Joe, I had no idea such a thing as shadowstats.com existed.

For those of you who have followed the conversation Joe and I have been having on economics on ISH, might have guessed that I meant that sentence ironically. It's not a statement of approval. I had a very simliar feeling the first time I saw Rebbecca Black's video for "Friday."

I also kept my reply to Joe to one sentence, because I knew it wouldn't matter what I said, he would still believe in shadowstats because it helps support his world view. I did do some Googling to see what mainstream economists think of shadowstats and it makes for some interesting readng, but I'm not able to evaluate the debate. Unless anyone on ISH is an expert in statistics and understands how economists use "hedonic regression" and "Laspeyres indexes" they are simply not qualified to differentiate between the model that shadowstats.com uses and the method that the Bureau of Labor Statistics uses either.

But even given that, there are a few guides as to the reliability of shadowstats.com.

One is pointed out by heyhey in this thread. Why does the graph published by shadowstats exactly match the shape of the CPI-U index? I mean take a look at this chart that shows how the Billion Price Project at MIT matches up to the CPI

http://3.bp.blogspot.com/-6tzCVoMRlrA/TbZQzAzqGaI/AAAAAAAAFls/4P-edgciDcI/s1600/Billion_Price_index.jpg

As you can see both graphs show roughly the same trend, but they are not the exact same shape. (and they shouldn't be the same shape because MIT does not measure the exact same goods and services that the Bureau of Labor Statistics does.

Another clue about shadowstats is when you go to their page (http://www.shadowstats.com/), you see the Title is
John Williams' Shadow Government Statistics

So is this a one man shop? Dunno, but if you look up the company that publishes shadowstats is American Business Analytics & Research LLC. They don't have a website of their own and if you look them up on coporatewiki (http://www.corporationwiki.com/California/Oakland/american-business-analytics-and-research-llc/47246808.aspx), no officers are listed for the company.

So I doubt SGS is actually going out and collecting any information. Their method does seem to be take the BLS number and add 2 or 3% to it. (I think it's actually 2.7%)

If you want some background, here's what econobrowser (http://www.econbrowser.com/archives/2008/09/shadowstats_deb.html) says about them


Shadowstats debunked

I've yet to find someone who has been able to reproduce the claims made by Shadow Government Statistics about the extent to which government agencies are grossly misreporting the U.S. inflation rate. Apparently, neither has the Bureau of Labor Statistics, as detailed in an article by BLS economists John Greenlees and Robert McClelland in the latest issue of Monthly Labor Review.
......

Finally, and most importantly, there is rigorous empirical evidence on the actual quantitative impact of the geometric mean formula, because the BLS has continued to calculate Laspeyres indexes for all CPI basic indexes on an experimental basis for comparison with the official index. These experimental indexes show that the geometric mean led to an overall decrease in CPI growth of about 0.28 percentage point per year over the period from December 1999 to December 2004, close to the original BLS prediction that the impact would be approximately 0.20 percentage point per year.


There's some very technical language in there, but check out what they are saying in that last part. In a very dry way they are saying

A. The BLS still publishes and index the old way. (so you can use those figures if you so please.)
B. The difference between the old way and new way is not 2.7% as some are claiming (cough, shadowstats, cough).
C The difference is actually .28 % ( 3 divided by .28 is 10.7, so shadowstats is exaggerating the difference by a factor of almost 11.)
D. When we made the change years ago we PUBLICALLY predicted we thought the difference would be somewhere around .20 %.


The comments to that blog post are very interesting as well. If you want to dive into the whole thing you can this PDF that the blog (http://www.bls.gov/opub/mlr/2008/08/art1full.pdf)references. It seems it was written in direct response to shadowstats.

In the PDF they have a chart that shows the rise in prices for various goods from 1998 to 2008, actual measured prices. And they compare this to what their critics say the price should actually be and those prices are always higher because their critics are overestimating inflation and the actual measured price increases do not reflect this higher inflation level.

[brantonli]

The Austrian school has a totally different take on the Great Depression, if you care to hear it. They argue that it was a classic example of the Austrian business cycle, with the Fed creating too much credit in the 20's, leading to an artificial boom, followed by the bust in 29/30. Then, instead of allowing the free market to fix the problem, the government consistently intervened, causing a depression. The depression didn't end until 1946, when government finally cut spending (as Keynesians of the time were predicting the austerity would devastate the economy). 1946 was one of our best economic years in history.

I do tend to agree with that explanation, but I won't say it's cut and dry.


After all, we have had economic problems recently, and we don't have a gold standard. So shouldn't I be able to say that if we had one, things would be fine?


Good response, and because of it I'm reading up on the Austrian business cycle right now, however I would be very grateful if you could return the favor and read the paper that I had put in my first post (note this isn't an article by a journalist, it's a proper academic paper, so it's pretty long and rigorous).

[KevinNYC]

Some comments from the blog post mentioned above that resonated with me


The BLS...Methods used are all posted online, and conform to international best-practice. ....Academic experts are free to challenge these methods, and from time to time do -

....

Yes, you're right. We have learned no economics since the 1970s when the "old" ways were being used. There have been no advances in measurement. The BLS should use the old method ....that the rest of the world has rejected these old methods only PROVES that these old methods are watertight and ironclad. Because after all, the old methods show that inflation is higher, and we KNOW that higher inflation is the case -- because we just know, that's all. (Don't confuse me with data.) All the PhD economist experts who insisted that the BLS change its methods are lunatic idiots, morons, imbeciles. We should definitely put faith in a shoestring operation which "corrects" the CPI in a way that implies that we were in the worst depression imaginable only a few decades ago.......If you have a valid criticism of the CPI, try to write a serious paper, present it before experts, and see if you have a case. So far, no one here has raised any credible issue; it is the wildly uninformed misleading the even more wildly uninformed. Please become informed, and actually read the MLR article before commenting......Measurement is an active area of research in economics. There are top PhD's writing papers in measurement all the time. Their papers are peer-reviewed and published in academic journals. Quoting Marginal Revolution, "Being pro-science means being pro economic science."

.......

the BLS does show what the CPI would be without the revisions. They publish it every month. It is called the CPI-RS and can be downloaded at BLS.

........

I asked, "Why do people give credibility to an operation like Shadowstats?", to which many of you offer answers along the lines of, "because we don't believe the BLS." But that's not a logical answer. Just because you doubt A is not a valid reason for accepting the truth of B.

And as for the question, "Why should we believe any BLS economists?", here's one answer: because you can check their math. Let me walk you through how Greenlees and McClelland's ice cream vs. yogurt example works. The arithmetic mean is

0.5(1.086 + 0.958) = 1.022

whereas the geometric mean is

(1.086)(0.958)^0.5 = 1.020

for a difference between the two measures of 1.022 - 1.020 = 0.002 or 0.2%. For those of you whose position is that "we believe Shadowstats because it's consistent with what we see around us," here is your homework assignment. Give me some plausible numbers, which you think are consistent with what you see around you, under which geometric averaging could reduce the reported inflation rate by something on the order of 3% per year, year after year.

And please show your work.

...................

The three major changes adopted by.....BLS indexes --- a geometric means for the use of substitution effects (a standard micro-economic concept dozens of decades old by now), an updated version of the 1981 measure of the cost of housing shelter for home-owners (a rental equivalent: guess what, 69% of Americans own their homes and aren't looking yearly to buy another), and a new view of quality changes --- are explained clearly and with simple examples that refute the conspiratorial charges as well as those that lead others to yell "cheaters!" and "con-men frauds!".

[brantonli]

The Austrian school has a totally different take on the Great Depression, if you care to hear it. They argue that it was a classic example of the Austrian business cycle, with the Fed creating too much credit in the 20's, leading to an artificial boom, followed by the bust in 29/30. Then, instead of allowing the free market to fix the problem, the government consistently intervened, causing a depression. The depression didn't end until 1946, when government finally cut spending (as Keynesians of the time were predicting the austerity would devastate the economy). 1946 was one of our best economic years in history.



I think if you presented this to a mainstream economist, this would be his objection:


Thus, it is readily conceded that (a) expansionary monetary policy reduces interest rates, and (b) lower interest rates stimulate investment in more round-about projects. Where then does the disagreement emerge? What I deny is that the artificially stimulated investments have any tendency to become malinvestments. Supposedly, since the central bank's inflation cannot continue indefinitely, it is eventually necessary to let interest rates rise back to the natural rate, which then reveals the underlying unprofitability of the artificially stimulated investments. The objection is simple: Given that interest rates are artificially and unsustainably low, why would any businessman make his profitability calculations based on the assumption that the low interest rates will prevail indefinitely? No, what would happen is that entrepreneurs would realize that interest rates are only temporarily low, and take this into account.

In short, the Austrians are assuming that entrepreneurs have strange irrational expectations. Rothbard states this fairly explicitly: "[E]ntrepreneurs are trained to estimate changes and avoid error. They can handle irregular fluctuations, and certainly they should be able to cope with the results of an inflow of gold, results which are roughly predictable. They could not forecast the results of a credit expansion, because the credit expansion tampered with all their moorings, distorted interest rates and calculations of capital."[48] Elsewhere, he informs us that: "[S]uccessful entrepreneurs on the market will be precisely those, over the years, who are best equipped to make correct forecasts and use good judgment in analyzing market conditions. Under these conditions, it is absurd to suppose that the entire mass of entrepreneurs will make such errors, unless objective facts of the market are distorted over a considerable period of time. Such distortion will hobble the objective 'signals' of the market and mislead the great bulk of entrepreneurs."[49]

and the link:

http://econfaculty.gmu.edu/bcaplan/whyaust.htm

interestingly, this guy used to be an Austrian economist, although Bradford DeLong did call him the stupidest man alive.

[joe]

For those of you who have followed the conversation Joe and I have been having on economics on ISH, might have guessed that I meant that sentence ironically. It's not a statement of approval. I had a very simliar feeling the first time I saw Rebbecca Black's video for "Friday."

I also kept my reply to Joe to one sentence, because I knew it wouldn't matter what I said, he would still believe in shadowstats because it helps support his world view. I did do some Googling to see what mainstream economists think of shadowstats and it makes for some interesting readng, but I'm not able to evaluate the debate. Unless anyone on ISH is an expert in statistics and understands how economists use "hedonic regression" and "Laspeyres indexes" they are simply not qualified to differentiate between the model that shadowstats.com uses and the method that the Bureau of Labor Statistics uses either.

But even given that, there are a few guides as to the reliability of shadowstats.com.

One is pointed out by heyhey in this thread. Why does the graph published by shadowstats exactly match the shape of the CPI-U index? I mean take a look at this chart that shows how the Billion Price Project at MIT matches up to the CPI

http://3.bp.blogspot.com/-6tzCVoMRlrA/TbZQzAzqGaI/AAAAAAAAFls/4P-edgciDcI/s1600/Billion_Price_index.jpg

As you can see both graphs show roughly the same trend, but they are not the exact same shape. (and they shouldn't be the same shape because MIT does measure the exact same goods and services that the Bureau of Labor Statistics does.

Another clue about shadowstats is when you go to their page (http://www.shadowstats.com/), you see the Title is
John Williams' Shadow Government Statistics

So is this a one man shop? Dunno, but if you look up the company that publishes shadowstats is American Business Analytics & Research LLC. They don't have a website of their own and if you look them up on coporatewiki (http://www.corporationwiki.com/California/Oakland/american-business-analytics-and-research-llc/47246808.aspx), no officers are listed for the company.

So I doubt SGS is actually going out and collecting any information. Their method does seem to be take the BLS number and add 2 or 3% to it. (I think it's actually 2.7%)

If you want some background, here's what econobrowser (http://www.econbrowser.com/archives/2008/09/shadowstats_deb.html) says about them



There's some very technical language in there, but check out what they are saying in that last part. In a very dry way they are saying

A. The BLS still publishes and index the old way. (so you can use those figures if you so please.)
B. The difference between the old way and new way is not 2.7% as some are claiming (cough, shadowstats, cough).
C The difference is actually .28 % ( 3 divided by .28 is 10.7, so shadowstats is exaggerating the difference by a factor of almost 11.)
D. When we made the change years ago we PUBLICALLY predicted we thought the difference would be somewhere around .20 %.


The comments to that blog post are very interesting as well. If you want to dive into the whole thing you can this PDF that the blog (http://www.bls.gov/opub/mlr/2008/08/art1full.pdf)references. It seems it was written in direct response to shadowstats.

In the PDF they have a chart that shows the rise in prices for various goods from 1998 to 2008, actual measured prices. And they compare this to what their critics say the price should actually be and those prices are always higher because their critics are overestimating inflation and the actual measured price increases do not reflect this higher inflation level.

I'm not going to defend shadow stats. I didn't even find that graph on their website, and I've never heard of them before now, frankly.

You place too much importance on statistics, as I've said all along. The problem with statistics is that I, a human being, must interpret them. And a human being must create the formulas. And my human ideological opponents can interpret them in a different way. Statistics are helpful to me, but not the end all be all.

For interpreting economic/world events, I (try my best to) use the Austrian method of Praxeology. Praxeology is the study of human action. It uses logic to interpret economics, as opposed to mathematics. The very first axiom of Praxeology is that people act, and that people act with the intention of accomplishing certain goals (I may work overtime to buy new shoes, for example). By acting, I am assuming that attaining my goal will lead to a greater state than had I not acted. For instance, when Kev is rude to me though I haven't been rude to him, he believes his life will be better than had he not been rude to me.

To me, praxeology works great and helps to clear your mind. It lets you see through the endless statistics and focus strictly on action, and motivation.

Once you focus on human action and praxeology, it makes total sense that the Fed/government would want the CPI to understate inflation.



A lower CPI provides at least two major benefits to the government:

1. Many government payments, such as Social Security and the returns from TIPS, are linked to the level of the CPI; therefore, a lower CPI translates into lower payments - and lower government expenditures.

2. The CPI deflates some components used to calculate the real GDP - a lower inflation rate makes the economy look better than it really is.


Read more: http://www.investopedia.com/articles/07/consumerpriceindex.asp#ixzz1xO5keViU


Not to mention, the Fed printing 600 billion dollars and giving it to their friends, in total secret, with no repercussions. (http://www.zerohedge.com/article/exclusive-feds-600-billion-stealth-bailout-foreign-banks-continues-expense-domestic-economy-)A lower CPI hides all of the corruption and theft within the Fed.

I highly suggest reading this article, especially the section on "CPI and consumer behavior."

http://www.investopedia.com/articles/07/consumerpriceindex.asp#axzz1xO4mVjJE

[joe]

I think if you presented this to a mainstream economist, this would be his objection:



and the link:

http://econfaculty.gmu.edu/bcaplan/whyaust.htm

interestingly, this guy used to be an Austrian economist, although Bradford DeLong did call him the stupidest man alive.

Hey, I'll check out that article you posted sometime today or tomorrow, and post my thoughts on it in here, or send you a PM. I appreciate you checking out the Austrian Business Cycle theory, it's a lot to get into. I have a response to this quote too, but I can't go into it now. This kind of critique of the ABCT is pretty common, and the Austrians have given some good responses. Till then..

[Jailblazers7]

So stats is prone to human bias but praexology is somehow more objective. I'm sorry but that makes no sense.

[KevinNYC]

For instance, when Kev is rude to me though I haven't been rude to him, he believes his life will be better than had he not been rude to me.

I once read a gentleman never offends unintentionally, so if I've been rude, I apologize.
I thought of it more as collegial jesting, but tone often is misunderstood with just written text.


I'm not going to defend shadow stats. I didn't even find that graph on their website, and I've never heard of them before now, frankly.

Then I'm not sure what you thought that graph was showing since if we don't know what SGS is, what's the point of the chart?


Not to mention, the Fed printing 600 billion dollars and giving it to their friends, in total secret, with no repercussions. A lower CPI hides all of the corruption and theft within the Fed.

You may know this already but one than one writer posts under the name "Tyler Durden" at Zero Hedge. It becomes rather confusing. If you read that blog for long enough, you'll find Tyler being outraged over both sides of an issue.

There's a lot of questions that can be raised about the Fed's response to the financial crisis, and even about the $600 billion you mentioned. But you have two consider.


A. The 600 billion you mentioned were loans lend for short periods and backed by high-quality collateral and then repaid with interest. So "giving it the their friends" and "corruption and theft" are highly misleading.
B . The reason the Fed was lending like this in the first place was the commercial credit markets were not functioning. We were in the midst of a failure of the market.
C. By taking these and other actions to stabilize the financial markets a depression was averted.

[Norcaliblunt]

The currency of the nation does not need to be backed by anything.

What matters is, WHO CREATES IT AND CONTROLS THE QUANTITY!!!!!!

So who should that be???

A. A state authorized monopoly of unelected bankers, charging interest, working for private shareholders, while using fractional reserve lending for profit, through the Federal Reserve System? What we have now.

B. Unregulated global banks under the gold standard, charging interest, controlled by private hands for private gains, in a total anarcho capitalistic free market?

Or...

C. WE THE PEOPLE!!! Debt free in the public interest, through democratically elected representatives, whose policies can be debated in an open forum and publicly held accountable?


A nation who must borrow from private banking institutions at interest, or be binded by backing their currency in gold, can never ever be truly sovereign. Those who believe that the goverment can not be trusted to handle the responsibility of creating and regulating it's own currency, also must not believe in the concept of self governance, and therefore is an anarchist. Which is okay, just admit it.

Watch and learn the deal from a real AMERICAN LIBERTARIAN, not the Austrian, goldbug, anarcho, science fiction crap.

http://m.youtube.com/watch?v=4VaSh8MMo34



i agree with this

:applause:

:cheers:

[Sarcastic]

http://abcnews.go.com/blogs/business/2013/04/gold-sell-off-biggest-in-30-years/


Gold dropped $144 an ounce, the biggest drop in 30 years.

[nathanjizzle]

:facepalm you buy when its cheap, not when its trending. or else u end up broke like OP.

[HarryCallahan]

:facepalm you buy when its cheap, not when its trending. or else u end up broke like OP.

Long term trends homie. If OP holds onto it he can still make a long-term gain.

[KevinNYC]

Long term trends homie. If OP holds onto it he can still make a long-term gain.

In the long term, we're all dead.

But the OP recommended one of the worst times ever to buy gold, very near the top of a historical bubble in gold. It's one reason you don't take your
investment advice from Ron Paul
(http://www.businessinsider.com/ron-paul-investment-gold-2013-4)
A few weeks ago, we figured out what was happening to the Ron Paul portfolio — the former Texas congressman's 64% investment in gold and other rocks — and it wasn't pretty.
His portfolio is comprised of major miners and a handful of juniors, and displays a marked lack of diversification.
Investment manager William Bernstein told the Wall Street Journal that “This portfolio is a half-step away from a cellar-full of canned goods and nine-millimeter rounds.”

All told, the average loss was -40.3% over the past six months
Given that The Wall Street Journal reported that Paul's portfolio was worth between $2.44 million and $5.46 million — and that 64 percent of his assets were in these precious metal stocks — a very loose estimate is that Ron Paul has lost between $624,640 and $1,397,760 over the past six months, based on the average loss of his mining holdings. This assumes a 40.3% loss on 64% of his holdings.

Also had you ignored the OP's advice just bought a fund that match the Dow Jones, you would have a nice gain over the past year.

[KevinNYC]

http://abcnews.go.com/blogs/business/2013/04/gold-sell-off-biggest-in-30-years/


Gold dropped $144 an ounce, the biggest drop in 30 years.

This means people are more optimistic about the economy...possibly worldwide....1983 was a year when a strong recovery began after a steep recession.

EDIT Or it could mean that growth in China is weak and they will be buying less gold.
http://www.reuters.com/article/2013/04/15/us-markets-commodities-idUSBRE93E0LK20130415

[StroShow4]

http://www.marottaonmoney.com/wp-content/uploads/2012/04/stocks-for-the-long-run_b.png

:confusedshrug:

[HarryCallahan]

In the long term, we're all dead.

But the OP recommended one of the worst times ever to buy gold, very near the top of a historical bubble in gold. It's one reason you don't take your

Also had you ignored the OP's advice just bought a fund that match the Dow Jones, you would have a nice gain over the past year.

Too short term focused son, Ron Pauls portfolio has performed well over the last 20 years. One year doesn't make or break investment strategies.

[Sarcastic]

Too short term focused son, Ron Pauls portfolio has performed well over the last 20 years. One year doesn't make or break investment strategies.



2007 says Hi.


Do you think buying mortgage backed securities is still a good strategy?

[KevinNYC]

Too short term focused son, Ron Pauls portfolio has performed well over the last 20 years. One year doesn't make or break investment strategies.

Yeah, we have been talking about Gold prices since 1983. Or a longer term than you mention.


Or we are talking about the past year when the OP gave very, very bad investment advice.

[HarryCallahan]

2007 says Hi.


Do you think buying mortgage backed securities is still a good strategy?

I never have and never will. :confusedshrug: Not sure why you'd say that.

[HarryCallahan]

Yeah, we have been talking about Gold prices since 1983. Or a longer term than you mention.


Or we are talking about the past year when the OP gave very, very bad investment advice.

I was responding to your saying "It's one reason you don't take your investment advice fro Ron Paul." I find your need to insult political opponents at every opportunity (even when in no position to do so) very distasteful and unbecoming.

[KevinNYC]

I was responding to your saying "It's one reason you don't take your investment advice fro Ron Paul." I find your need to insult political opponents at every opportunity (even when in no position to do so) very distasteful and unbecoming.

Read the first post of this thread. The OP is saying gold is the best investment and the reasons he give are 100% political and matches up very well with the type of nonsense that Ron Paul regularly spews. People who followed that advice would have lost a lot of money.

[longhornfan1234]

Everyone should buy gold. It has gone up 600% in the last 20 years. If you understand that our way of life is built on FAKE MONEY you understand the importance of gold. the government prints money out of thin air and your money will always lose value because they are just making as much as they want . You can bet as more and more people realize this they will buy gold which is not somethng the government can just print up. i know theres some ron paul people on this forum and though i disagree with him vehemently on social issues he is 100% right about gold.

again the price of gold has been only going up for the last twenty years and there is no reason for it to go back down because it is not fiat money. Also the eurozone crisis will probably send it soaring to record highs


disclosure: i bought gold


That 9.4% drop today was pretty heavy.

[HarryCallahan]

Read the first post of this thread. The OP is saying gold is the best investment and the reasons he give are 100% political and matches up very well with the type of nonsense that Ron Paul regularly spews. People who followed that advice would have lost a lot of money.


There you go again, why do you have to do that? You are clearly a mature and intelligent adult, so why do you feel the need to insult people who simply have different ideals to you?

And for the record if those who've already bought gold continue to hold it, they could very well see a massive profit in the short term. You're dreaming if you think the bull run is over.

[ripthekik]

I think now is a good time to buy gold :pimp:

[falc39]

There you go again, why do you have to do that? You are clearly a mature and intelligent adult, so why do you feel the need to insult people who simply have different ideals to you?

It's to be expected. Why did I know that Sarcastic/KevinNYC would post about the gold movement during these last two days... because they have done it before and here I am on the forum tonight and that is exactly what happened... again.

Bumping a thread almost a year old too... jesus, just let it go.... who does that????

Most gold investors are still fine. The typical gold investor only has like, what, 10% of their portfolio at most in precious metals. I have even less. Even the biggest bulls like Peter Schiff only recommend a max of 15%. Guys like Ron Paul are fine. He was a doctor and congressman... and most importantly he is frugal and lives well within his means. He's pretty much set for life.

[Godzuki]

It will go up again. Patience, people.


it was over inflated and a bubble ready to pop. called this a while ago(think it was another gold thread here) but it was so obvious with the gold craze and the country falling apart fear mongering from the right. every bubble that burst has always happened just like this based on a bandwagon that was too good to be true with gold values constantly rising. the more people going for it creates the over inflated hysteria that overvalues it, and it was definitely one of those obvious bubbles waiting to burst.

gold values might go back to their previous highs some day when there is mass hysteria and 'end of the America' outlook again but i don't see it happening anytime soon. i'd bet there is a small rebound spike, then it'll decline slowly. maybe i'm wrong but there is no way it was worth its stock price if not for the mass hysteria of the country falling apart or economy collapsing, which has calmed quite a bit.

[KevinNYC]

I think now is a good time to buy gold :pimp:

Not yet, it's not. It's only Monday. You have a lot of passive investors who are going to come home and find out that gold is in the news and learn about the drop. In a few days, my guess will be a better time to buy.

But in general you right, buy on the drop not at the peak. That was OP's mistake.

[HarryCallahan]

It's to be expected. Why did I know that Sarcastic/KevinNYC would post about the gold movement during these last two days... because they have done it before and here I am on the forum tonight and that is exactly what happened... again.

Bumping a thread almost a year old too... jesus, just let it go.... who does that????

Most gold investors are still fine. The typical gold investor only has like, what, 10% of their portfolio at most in precious metals. I have even less. Even the biggest bulls like Peter Schiff only recommend a max of 15%. Guys like Ron Paul are fine. He was a doctor and congressman... and most importantly he is frugal and lives well within his means. He's pretty much set for life.

Not to mention he is a highly sought after public speaker.

[KevinNYC]

Gold bounced today. Up 2%

[BigNBAfan]

1190

[Godzuki]

gold investors are better off buying dredging equipment and mining it. anyone investing in gold these days is a late fad following fool.

[KevinNYC]

gold investors are better off buying dredging equipment and mining it. anyone investing in gold these days is a late fad following fool.
Actually the last few months have been a pretty good time to buy gold.

Using 20/20 hindsight, we see that it was not a good time to buy gold when this thread was started three years ago, gold was $1,707.00

It's not down about $500 or about 30%. But it's had a couple of rallies in the past few months. If you had 20/20 hindsight, you could have bought bought in Nov at 1140 and sold in January at 1300. Then bought last month 1150 see it go as high as 1200.

Even if you don't have 20/20 vision and you are holding for the long term, the price is looking a lot better. So the fad might have turned. You have a much better chance of buying low and selling high than you did 3 years ago.

The main point is don't let the value of a commodity be influenced by your politics. That is a good way to lose money.

[BigNBAfan]

^Unless you have loads of cash why even bother making 10% like that... there's better investments out there.

[Godzuki]

Actually the last few months have been a pretty good time to buy gold.

Using 20/20 hindsight, we see that it was not a good time to buy gold when this thread was started three years ago, gold was $1,707.00

It's not down about $500 or about 30%. But it's had a couple of rallies in the past few months. If you had 20/20 hindsight, you could have bought bought in Nov at 1140 and sold in January at 1300. Then bought last month 1150 see it go as high as 1200.

Even if you don't have 20/20 vision and you are holding for the long term, the price is looking a lot better. So the fad might have turned. You have a much better chance of buying low and selling high than you did 3 years ago.

The main point is don't let the value of a commodity be influenced by your politics. That is a good way to lose money.


gold share price is too high to make much off of it unless you're a million dollar investor who can buy tons of shares.

even then it pays no dividends like many strong stocks do who have high share prices like that on top of gains.

gold is also very bloated IMO, and has not corrected itself enough from the right wing fear mongering when the idiots were saying the US dollar was going to be worthless.

the only pro is it is not a company that can go BK, it will always hold decent value, but for a investor who really wants to make money its poor play. one of the poorest things to invest your money in right now imo.

[BigNBAfan]

Gold down just about $560 dollars in 4 years since OP. Good investment fakkit

[Velocirap31]

Only buy gold when the stock markets tank

[navy]

Gold down just about $560 dollars in 4 years since OP. Good investment fakkit
:lol

[enayes]

Luckily I sold all my gold 4 years ago and bought a yacht. Here she is:

http://i60.tinypic.com/14o1wur.jpg

[BigNBAfan]

Now its at 1k