Thread: Everything can and will form bubbles, including gold

First of all, in about 1981 (not sure exactly when), gold was, in REAL value (i.e. inflation adjusted), like $2,000 USD. It dropped to like $200 (one-TENTH the original value) a few years later.

Second of all, it's impossible for the price of anything to go up infinitely because eventually, people won't be able to afford to buy it anymore. When too few people wanna buy something, it's price is gonna come down.

This is retarded to even talk about. It's as obvious as 2+2=4. It's annoying as mother(*)(*)(*)(*) that people even debate this (*)(*)(*)(*).

Originally Posted by DeathStar

First of all, in about 1981 (not sure exactly when), gold was, in REAL value (i.e. inflation adjusted), like $2,000 USD. It dropped to like $200 (one-TENTH the original value) a few years later.

Second of all, it's impossible for the price of anything to go up infinitely because eventually, people won't be able to afford to buy it anymore. When too few people wanna buy something, it's price is gonna come down.

This is retarded to even talk about. It's as obvious as 2+2=4. It's annoying as mother(*)(*)(*)(*) that people even debate this (*)(*)(*)(*).

Your looking at gold as an asset and not as a currency. In 1980 if everybody who had dollars could go to the treasury and purchase Gold at $800 an ounce in the end all the dollars would be at the treasury and there would still be Gold.
Big difference now.

Interest rates are around 0 and the money supply is increasing.

Originally Posted by tdekster

Your looking at gold as an asset and not as a currency. In 1980 if everybody who had dollars could go to the treasury and purchase Gold at $800 an ounce in the end all the dollars would be at the treasury and there would still be Gold.
Big difference now.

Interest rates are around 0 and the money supply is increasing.

Exactly.

As long as this continues, gold/silver should generally go up.

Originally Posted by DeathStar

First of all, in about 1981 (not sure exactly when), gold was, in REAL value (i.e. inflation adjusted), like $2,000 USD. It dropped to like $200 (one-TENTH the original value) a few years later.

Second of all, it's impossible for the price of anything to go up infinitely because eventually, people won't be able to afford to buy it anymore. When too few people wanna buy something, it's price is gonna come down.

This is retarded to even talk about. It's as obvious as 2+2=4. It's annoying as mother(*)(*)(*)(*) that people even debate this (*)(*)(*)(*).

but if and when a bubble in gold forms you have to look at what makes a bubble burst......its always the same thing.....high interest rates.

1) high interest rates is what burst the stock market bubble in the roaring 20's
2) high interest rates is what burst the commodities boom in the 70's ( 1981 actually)
3) high interest rates are what killed the dot.com bubble in 1999
4) high interest rates killed the housing bubble in 2007


So you see....it helps to know what you are talking about LOL

Bernacke for the time being has no intention of raising interest rates!

Originally Posted by tdekster

Your looking at gold as an asset and not as a currency. In 1980 if everybody who had dollars could go to the treasury and purchase Gold at $800 an ounce in the end all the dollars would be at the treasury and there would still be Gold.
Big difference now.

Interest rates are around 0 and the money supply is increasing.

all bubbles throughout history ended the same way...with high interest rates!

Originally Posted by bacardi

but if and when a bubble in gold forms you have to look at what makes a bubble burst......its always the same thing.....high interest rates.

1) high interest rates is what burst the stock market bubble in the roaring 20's
2) high interest rates is what burst the commodities boom in the 70's ( 1981 actually)
3) high interest rates are what killed the dot.com bubble in 1999
4) high interest rates killed the housing bubble in 2007


So you see....it helps to know what you are talking about LOL

Bernacke for the time being has no intention of raising interest rates!

Ok. Could it also ultimately be that nothing has infinite value?

Originally Posted by DeathStar

Ok. Could it also ultimately be that nothing has infinite value?

everything has a percieved value...its market driven.....that includes everything including paper money with one important defference......paper money is solely based on trust.....so if ever that trust goes.....the paper becomes worthless.

Think of it like these high teck stocks like google...if even one quarter they dissappoint the stock can lose half its value rather quickly....not so with a company with real value like lets say coke. Since there is nothing but trust and expectations behind the value...its very vulnerable to collapse if there is any bad news on the horizon.

And this is what makes gold and silver different

Originally Posted by bacardi

all bubbles throughout history ended the same way...with high interest rates!

The tech bubble in 2000? My recollection was:

1. Demand far outpaced supply. Duplicate orders were placed, orders used to secure loans to grow capacity.

2. As products were developed, and started rolling off the production line, duplicate orders were cancelled.

3. All the companies that based their manufacturing capacity on Sales forecasts (based on those duplicate orders), had all their cash, and credit, tied up, and had to lower prices (a lot) to maintain any market share.

4. Those that couldn't survive on lower costs, failed.

A great example of "The Beer Game".

Don't remember anything about interest rates.

Originally Posted by bacardi

everything has a percieved value...its market driven.....that includes everything including paper money with one important defference......paper money is solely based on trust.....so if ever that trust goes.....the paper becomes worthless.

Think of it like these high teck stocks like google...if even one quarter they dissappoint the stock can lose half its value rather quickly....not so with a company with real value like lets say coke. Since there is nothing but trust and expectations behind the value...its very vulnerable to collapse if there is any bad news on the horizon.

And this is what makes gold and silver different

Ok. Well, expectations is what drives the bubbles for a lot of things. Including gold. But gold and silver are not fundamentally different than any other thing that physically is easily transported, lasts a long time and has intrinsic value.

Originally Posted by DeathStar

F

Second of all, it's impossible for the price of anything to go up infinitely because eventually, people won't be able to afford to buy it anymore. When too few people wanna buy something, it's price is gonna come down.

This is retarded to even talk about. It's as obvious as 2+2=4. It's annoying as mother(*)(*)(*)(*) that people even debate this (*)(*)(*)(*).

You are essentially debating it with yourself .
Nobody of any consequence has ever even thought that Gold , as an example , would rise infinitely .
Therefore it is odd that you choose to remind us about the tricky relationship between two twos and four .
Of course , in any finite period any substance has intrinsic value if those that deal in it choose --by their behaviour ---to believe it has .
The fact that at some future point , their cherished belief proves to be a disappointment , is grist for those who profit from the mistakes of others .
In conclusion , I say to anybody wishing to define "infinity 'in a pragmatic way ( say , the next three or four years ) , Gold and Silver prices will give a (*)(*)(*)(*) fine imitation of trying to increase by an infinite amount .