Will gold prices ever return to pre-recession levels

[ChrisF]

Hi All,

 

As the title says do you think gold will ever slip back to pre 2007/8 levels?  If so, why?  If not, why?   

Bonus question,

Where do you see gold prices in 20/30 years time.  Higher than today or lower?

 

Thanks all, really looking forward to your thoughts.

Chris.

[sixgun]

If you go to the US Debt Clock section on precious metals you can see what the gold and silver ought to be priced at today. Then decide if their prices are suppressed. 

http://www.usdebtclock.org/gold-precious-metals.html

Silver $783 and gold $6453. These are the prices gold and silver should be at considering the massive creation of fiat USD. If many trillions if not quadrillions of extra dollars have been created it is inevitable these dollars will have less value. The European Central Bank is creating suicidal amounts of euros in their bond buying progamme. 

This is why one can rightly say silver is the most undervalued asset on the planet. i do not expect the USD, EUR or GBP to exist in 20 years time. When Nixon took the USD and so the world off the gold standard in on August 15, 1971 the currency printing presses went into overdrive. This spelt the end of fiat currency in its present existence. This is why gold and silver are so heavily suppressed b/c it would expose what has really happened. 

[ChrisF]

shortstack68 I new someone would say something like that

Interesting comments guys, so if gold/silver was to revalue would it take the end of Fiat or some other factor for the suppression to end?  

I was reading something not too long ago about some currency that was being created that was linked to the worlds major economies and a package of commodities such as oil but oddly gold was not on the list.  Unfortunately my memory is failing me and I cant remember the name of the currency.

[reidpj]

Will 'fiat' ever end?  Don't forget that one of the main reasons for taxation (there are other reasons for taxation - to fund Government spending, here in the UK, isn't one of them ?) is to give fiat money value.  In the UK, the Government will only accept £Sterling as payment of tax - so, as long as there's taxation (a functioning Government) fiat will exist.  If the SHTF, I doubt very much that gold would become a main unit of exchange, therefore, IMHO, it would, probably, cease to hold much value

[reidpj]

6 minutes ago, shortstack68 said:

Really? Gold has been around much longer as a method of payment than any fiat currency...........But i bow to your superior knowledge on the matter

I don't have knowledge, only an opinion ?.  I'm sure that the same was said with reference to other forms of 'money' that preceded precious metals.  I would imagine that more mundane things will replace 'fiat' should the SHTF - such as: food; water; fuel; medication...

[sixgun]

Gold and silver have been real money for 1000's of years. This forum is all about collecting and investing in gold and silver money. The Russian and Chinese central banks have been amassing huge amounts of gold, probably in the order of 30 000 tonnes each. Gold and silver are not going away, they are safe havens b/c they keep their value. 

There needs to be a medium of exchange. i have 50 gallons of petrol in cans and i want 20 sacks of corn you have but you don't want the petrol, you want 30 sacks of fertiliser. i have to find someone who will swap my petrol for fertiliser. A medium of exchange cuts out these problems. i can sell my petrol for the medium of exchange and then buy your corn with this.

i imagine cryptocurrencies will come to replace the paper money. These are multipurpose electronic tokens. Some are backed by commodities. There is one from Russia which represented ownership of volumes of sand. There are those which represent gold or silver. A token that represents something tangible has value either b/c they are title of ownership or they enable you to do something useful; these will increasingly be used as currency.  

Taxation is legalised extortion and is used to pay private banks for worthless currency that never needed to be borrowed in the first place. Taxation is a slice of the value of the work and assets of the people.  By the time currency has been earnt and spent a few times in the economy, most of it goes to the tax man through income tax. NI, VAT and corporation tax. This enables government to borrow more currency and issue more bonds. Governments have nothing other than what is taken from the people.

A cool way to reduce tax would be to be paid in UK legal tender gold and silver. You do a job and get paid with 30 £2 silver Britannias. You got £60 in face value for tax purposes. You got £500 value in silver Britannias. i have not heard of anyone doing this and it would be something to keep quiet about if you did.

[ChrisF]

@sixgun Interesting post mate, really makes you think.  Funny, I heard yesterday that sand is the second most traded commodity on the planet behind water and we are running out of it believe it or not.

[reidpj]

Taxation (levied by a Government that issues it's own sovereign, free floating, fiat currency - e.g. UK, USA, Australian) pays for nada, zilch, squat all.  Taxation, in addition to given value to a fiat currency, is used to destroy (if deemed necessary) said currency.  Governments (that issue fiat) create money 'out of thin air'; it is circulated around the economy (in theory); then destroyed via taxation (and Government 'borrowing').   If the money is not taxed out of existence,  there would eventually be too much of it chasing available resources, which in turn may (probably) lead to excessive inflation.

One day, soon I hope, people will start to understand that in an economy, such as the UK's, it is NOT tax and spend, it is, in fact: spend (into existence) then tax (out of existence).  And that where that money is spent (your 'giving to the banks') and how it is destroyed,  are political decisions, not economic.

 

If anyone is interested in the 'truth' (no I'm not a conspiracy theorist lol) re. how fiat money is really created and destroyed; and the necessity for taxation and Government 'borrowing', then may I recommend Professor Richard Murphy's : The Joy of Tax.

[HawkHybrid]

4 hours ago, ChrisF said:

shortstack68 I new someone would say something like that

Interesting comments guys, so if gold/silver was to revalue would it take the end of Fiat or some other factor for the suppression to end?  

I was reading something not too long ago about some currency that was being created that was linked to the worlds major economies and a package of commodities such as oil but oddly gold was not on the list.  Unfortunately my memory is failing me and I cant remember the name of the currency.

 

you might be thinking of special drawing rights(sdr)

 

I think gold will return to recession highs, after all we

have positive inflation year after year.

 

zimbabwe hyperinflation, you might want to think of

20-30 year investments not in terms of price but in

terms of purchasing power. eg how much gold do you

need to top up your pension so that you can retire?

 

7 hours ago, sixgun said:

Silver $783 and gold $6453.

those figures assume a gsr of ~8-9. I would take

it with a pinch of salt.(salt is not as valuable now

compared to ancient times. things change to new

equilibriums, at least in our short lifetimes)

 

HH

[sixgun]

12 minutes ago, HawkHybrid said:

 

Those figures assume a gsr of ~8-9. I would take it with a pinch of salt.(salt is not as valuable now compared to ancient times. things change to new equilibriums, at least in our short lifetimes)

 

HH

If currency were backed by gold this is where the figures we see of $60 000/oz [and rising] come from. This is the value gold would have to have in USD terms to back the currency.  

[kimchi]

There are so many 'ifs' and 'buts'.

I'm still into silver and gold when I can afford it, and taking everything out of fiat (I don't have enough to put it into property, or more importantly imho, land). I was first attracted for SHTF and while flipping and collecting etc have distracted me often, I haven't entered into it (yet?) - I just buy and hold.

But I had a bit of a 'revelation' recently regarding SHTF. Maybe I am bang on the money (as it were!) or maybe I'm not, but this is what I'm half expecting. I think in that scenario there will be a mid-way stage where things break down and everyone panics. In that particular bubble, yes e.g. silver may be worth £4000 an ounce or whatever, but £4000 will be fairly worthless anyway. An ounce of silver would be very useful in that you could (portably) buy a meal with it, rather than trundling to a shop with a wheelbarrow of cash, but in that scenario you need enough food and practical goods to see you through (however long it takes). I think e.g. batteries will be as important as silver at such a time.

Get past that and PMs will show their truth worth once everything settles down, but imho should that ever happen a lot of folk will have 'blown' their PMs merely to survive.

You can call me 'cheerful kimchi' LOL

[kimchi]

Soz - to answer the question posed by the thread - no I don't think it'll ever go back down to those levels, I believe it'll go up - whether SHTF or not.

But I see more adjustment in silver either way than gold. It's been ridiculously cheap recently imvho, unfortunately I couldn't buy in.

 

[sixgun]

It is not tax that destroys currency. Tax simply redistributes it. 

Fiat currency is debt based, so when debt is paid off this extinguishes currency. A [negative debit] on the ledger meets a [positive] repayment credit and they cancel each other out. Currency is not backed by anything other than the 'credit' of the nation and as such it is just an entry on a ledger. Most of the currency in existence is created when private individuals and companies [allegedly] borrow currency from a High Street bank. The currency is created with the alleged borrower's signature, the bank makes a credit entry and boom we have currency.

Currency is devalued by inflation. Inflation is a hidden tax stealing the value of our currency. If there is £1 trillion in the system and the government goes on a spending spree and borrows into existence £1 trillion more, the value of the currency is worth less. Governments devalue our currency by borrowing money into creation. We are saddled with the debt and our currency is worth less. Lose lose.

Gold is the safe haven. It is the hedge against inflation,, governments cannot create gold into existence. The vampire squid that is Goldman Sachs which is going long precious metals in spades. GS explains the rising price of gold.

"So if gold isn't rising on North Korea, what is it rising on, and just what risk does gold hedge? Goldman's "short answer" - currency debasement typically resulting from a central bank printing money."

http://www.zerohedge.com/news/2017-09-05/using-gold-hedge-korea-nuclear-war-risk-how-do-it-according-goldman

[reidpj]

Please read 'The Joy of Tax' then you'll better understand the way the Economy really works re. money creation and destruction.  Re. inflation: here in the UK, over the last few years, the Government has created 'out of thin air', plucked from the 'magic money tree' if you will, some £435bn (so called quantitative easing).  How much inflation has that caused?.  In fact, Japan has been trying, without success, for the last 30 years to cause inflation by 'printing' money.

[vand]

Deflationists think that demographics will lead Gold and every other asset much lower. 

Could happen; look at Japan. Low birth rate & net emigration = falling general & asset prices for 3 decades.

Not saying that I think it will happen in the Western economies, but markets & history teach you to accept that it is at least a viable proposition.

[HawkHybrid]

currency inflation doesn't work like that. currency is

created to circulate. as such it's price versus value

mismatch can be delayed for many years with the right

accounting. for example if the royal mint produces

many more sovereigns this year. does the creation of

more sovereigns drive down it's price? over the long

term maybe, in the short term(years) then no.

 

HH

[sixgun]

1 hour ago, HawkHybrid said:

currency inflation doesn't work like that. currency is created to circulate. as such it's price versus value mismatch can be delayed for many years with the right accounting.

for example if the royal mint produces many more sovereigns this year. does the creation of more sovereigns drive down it's price? over the long term maybe, in the short term(years) then no.

HH

" [The] Goldman [Sachs] "short answer" [is] - currency debasement typically results from a central bank printing money."

Why does Goldman Sachs say currency is debased [reduced in value due to inflation], the more currency is pushed out into the system?

Inflation is a function of the money supply, the new currency coming into the system AND money velocity, the rate at which the money circulates.

If the Bank of England printed a £50 trillion but it just sat in their vaults it would have zero velocity and not impact on inflation.

The majority of the Quantitative Easing currency is being used to buy stock and bonds. It is not going into the general system which is why we have 2.6% general inflation and not 26% general inflation.

The European Central Bank is buying up every European sovereign and corporate bond in sight. The Bank of Japan has bought up the majority of the Nikkei index. All the central banks are in on the act. The new currency is causing inflation but it is inflation in the stock and bond markets b/c that is where the new currency is going. This is why there are over $10 trillion of bonds with negative yields. The bond prices have gone so high they have no or even a negative yield. This is why the indices keep breaking all time highs despite corporate profits not substantiating these stock prices. 

The fear in the US is if the big oil producers no longer sell their oil in USD. Buyers of oil will no longer need to hold USD and all these dollars will work their way back to America with the result their would be massive inflation. The US created $trillions of dollars which other countries needed to buy oil. The US was able to create this new currency, buy goods overseas but at the same time export this dollars and so export their inflation. 

Sovereigns are gold, real money - a real store of wealth. We do not use sovereigns to buy goods in the shops. Sovereigns have zero velocity in the general economy and so they have zero impact on general inflation.

[ChrisF]

@HawkHybrid  Thats the one.

The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves. As of March 2016, 204.  1 billion SDRs (equivalent to about $285 billion) had been created and allocated to members. SDRs can be exchanged for freely usable currencies.

I think they were talking about restructuring the commodities it was based on (of which gold was not "currently" on the list).  

This is all interesting stuff guys, I really must thank you all for contributing.  So in summation,   gold and silver will continue to rise even higher going forward and even though we are seeing highs at the moment.  Though there will obviously be peaks and troughs along the way. 

[HawkHybrid]

does currency lose purchasing power and then more

currency is created to make up the shortfall? or

does currency lose purchasing power after the creation

of more currency?

or both?

 

HH

[Markh]

I believe we will be forced into a cashless society. Its already started, it's irelervent as to what form it will take because it's just data on a computer. This will be used for the masses.

 Gold will be used in trade settlement. 

Then there's the underground/black market element of life  in which PM's will fit nicely due to the fact there highly liquid and untraceable.

So in summary gold may/may not go down in price short term, but I believe longer term it will be much higher.

Some of you guy's go into great detail of why and what is happening in the world. You have a good knowledge and understanding of how were being screwed and manipulated. I take my hat off to you.

To me it's not really about price £ € ¥ $ it's about preserving what I've sweated, cried and bleed for.

 

[breaktwister]

Read Jim Rickards books for more on this, SDR etc