Steve Bannon nails China and talks about Covid 19

[ollie989898]

No the world economy did not out strip the price of gold. The government abandoned gold and suppressed the price of gold because they could not print it like paper money.

So now they print and spend without consequence (or so they think). How will Western governments ever repay their debts other than by creating more debt (ie print ore money). Or stealing it through inflation or negative interest rates. Paying off debt by borrowing more does not work forever! Try it with credit cards and see how long you survive!

One needs to understand how a modern economy works. The supply of gold is irrelevant. Like any other commodity it's value is determined by the demand and supply equation.

With global interest rates/bond yields so weak, why wouldn't governments borrow?

You think governments can just 'print money' with zero effect? It's a good job you aren't chancellor.

 

[Deranged peasant]

China does have its own gold mines but bans the export of gold.
It has been secretly accumulating stocks for some time, estimated to hold much more than the USA.
Gold does have an inherent value, an oz of gold buys somewhere like what it would 100 years ago, £1 does not.
There is a likelihood that this current deficit situation will partly be funded by practically perpetual zero interest bonds issued by the government brought by the BOE, difficult to see how inflation will not eventually be the result, hence hold some gold.

 

[ollie989898]

The value of the global economy annually way exceeds the value of any gold produced annually. Gold no longer has any relevance, it is a mere commodity like anything else. It's worth is only what the market determines it to be. Nothing more or less. You can't eat gold, you can't eat money. The value of a currency is determined by far more factors than just how much is in circulation.

 

[DaveGrohl]

I'm normally with you on a lot of things Ollie but your views on gold are "interesting". Gold's value has nothing to do with supply as such really. It might not have hit all time highs v the USD yet but it has in virtually every other currency. Its valie keeps on going up over decades. There's a reason why gold keeps going up, printing ever more money will ensure that continues.

 

[ollie989898]

I'm normally with you on a lot of things Ollie but your views on gold are "interesting". Gold's value has nothing to do with supply as such really. It might not have hit all time highs v the USD yet but it has in virtually every other currency. Its valie keeps on going up over decades. There's a reason why gold keeps going up, printing ever more money will ensure that continues.

The value of gold is irrelevant. The demand and supply of it are what determine price discovery.

The value of all the gold mined worldwide annually is pish all compared to the overall value of the world's economies. Therefore, the idea that you can centralise an economy on such a finite resource is nonsensical.

It's value versus any other currency or commodity is determined by market forces, nothing more or less. It is the same for virtually any other marketable commodity or financial instrument and like many others, is intrinsically valueless. A tonne of gold today is worth about 40 million quid. What it will be next year is anyone's guess, the idea that is it is a 'safe' investment is derived from the fact it's supply is very steady when compared to materials in other markets. That said, there is no reason a major player producing gold could not be hit by an earthquake, explosion or some other external factor that stops production for a time.

Why should a currency be backed against a particular commodity? It's a perverse notion. Why gold specifically? Why not something more valuable and easier to move around and store? Why not bitcoin?

 

[DaveGrohl]

Gold is very difficult to destroy unlike most other things which is why mankind has placed a value on it for countless years. You're overthinking things Ollie. Saying it has no intrisic value is irrelevant, just look at its price in any currency over thousands of years. Says it better than any of us short-lived modern money theorists can argue about. It will still be going up waaay after the likes of you and me are gone.

There is indeed a teeny tiny amount of it on Earth, which kind of proves the point that its supply and demand are irrelevant. I'll keep on buying the dips, that's my choice. You keep theorising like all the countless others who've done the same over the years, that's your choice.

 

[ollie989898]

Gold is very difficult to destroy unlike most other things which is why mankind has placed a value on it for countless years. You're overthinking things Ollie. Saying it has no intrisic value is irrelevant, just look at its price in any currency over thousands of years. Says it better than any of us short-lived modern money theorists can argue about. It will still be going up waaay after the likes of you and me are gone.

There is indeed a teeny tiny amount of it on Earth, which kind of proves the point that its supply and demand are irrelevant. I'll keep on buying the dips, that's my choice. You keep theorising like all the countless others who've done the same over the years, that's your choice.

Wow, you carry on beating the system. Good luck.

 

[DaveGrohl]

Oh btw, bitcoin? Really? That's the very definition of something that is here today gone tomorrow under the right circumstances. Just ask that bloke whose laptop is under a council tip.

 

[DaveGrohl]

Wow, you carry on beating the system. Good luck.

Beating the system? Ok, I'm out.

 

[ollie989898]

Oh btw, bitcoin? Really? That's the very definition of something that is here today gone tomorrow under the right circumstances. Just ask that bloke whose laptop is under a council tip.

I don't think you understand how bitcoin is 'stored' or how it exists.

You seem to be investing for some kind of doomsday scenario. Like I said, good luck with it.

 

[Ashtree]

Can’t measure the psychological value of fear in unprecedented times. No doubt the value of paper money is being devalued year on year, by QE and ultra low interest rates. Now throw the Covid crisis on top.
Easy for people to fly to perceived safety. Gold in the minds of many is the ultimate safe haven in a financial storm.

 

[ollie989898]

Can’t measure the psychological value of fear in unprecedented times. No doubt the value of paper money is being devalued year on year, by QE and ultra low interest rates. Now throw the Covid crisis on top.
Easy for people to fly to perceived safety. Gold in the minds of many is the ultimate safe haven in a financial storm.

Ah I see, so China are hoarding gold because they are going to unleash some kind of doomsday scenario?

Genius.

 

[DaveGrohl]

Where's the "Doomsday scenario" come from? No one else mentioned it. Paper money Ollie, paper money.

 

[Ashtree]

Ah I see, so China are hoarding gold because they are going to unleash some kind of doomsday scenario?

Genius.

??????. Talk about jumping to conclusions.
My point was on the psychology of gold. Many ordinary people associate gold with stability and a store of value in uncertain times.
Cash is declining in value by the hour. Even after all the Covid mayhem, stocks are frothy.
I can see why Joe the Plumber might want to have a slice of gold. Why, the taxi drivers might want to tell you to get into gold.
You know what happens when the leaders of the sheep flock find a gap in the hedge.......
The demand for the neighbours ryegrass goes up exponentially ....

 

[alex04w]

Where's the "Doomsday scenario" come from? No one else mentioned it. Paper money Ollie, paper money.

@ollie989898 My father bought sovereigns in 1968 at £6 each. They are now worth £350 each.

Has gold gone up in value or has the value of your paper gone down so that you now need more of it to buy the same thing?

I suggest your paper has gone down in value as the government has printed so much of it - all backed with nothing. Gold is preferable as the government cannot print gold ad lib to live beyond their means, as so many governments do at present.

 

[jimred]

@ollie989898 My father bought sovereigns in 1968 at £6 each. They are now worth £350 each.

Has gold gone up in value or has the value of your paper gone down so that you now need more of it to buy the same thing?

I suggest your paper has gone down in value as the government has printed so much of it - all backed with nothing. Gold is preferable as the government cannot print gold ad lib to live beyond their means, as so many governments do at present.

Plenty of gold in ground that can be mined if there is profit in it but it's a very long slow expensive process to set up a gold mine. Current cost of mining is approx. $1000/$1200 an ounce add a bit of profit on that for the miners and there's no long term future for gold at seriously above those prices apart from the effect of inflation. Don't forget also storing large quantities of gold is a very expensive business not like keeping a few sovereigns in the bottom drawer. Speculators will always talk price up but them drop it like a hot brick just like they did last time it got near $2000 an ounce.

 

[ollie989898]

@ollie989898 My father bought sovereigns in 1968 at £6 each. They are now worth £350 each.

Has gold gone up in value or has the value of your paper gone down so that you now need more of it to buy the same thing?

I suggest your paper has gone down in value as the government has printed so much of it - all backed with nothing. Gold is preferable as the government cannot print gold ad lib to live beyond their means, as so many governments do at present.

'Gold has gone up in value'.

Lots of things have. In that time you could have made big big money in any number of instruments or investments.

The value of a currency is affected by far far more things than how much is printed. Give me strength.

What is so magic about gold? There are many other very valuable commodities that are even rarer or harder to obtain or easier to move around and store.

 

[ollie989898]

Where's the "Doomsday scenario" come from? No one else mentioned it. Paper money Ollie, paper money.

Paper money this and that. You are placing intrinsic value in something which has none.

What are you trying to say, exactly? There are safer investments than gold, long or short term. There are products with greater returns, there are products easier to buy and sell or store. What makes gold so special apart from your psychological attachment to it?

 

[How much]

This is Chart for gold value since 1931 the low was around 1968 but there have been a good few ups and downs along the way its not a very piratical commodity to own on personal level though is it ?

China is very rich country , they have to put there money into something as well as national infrastructure that they do on grand scale . The only currency that is worth holding on an international level is really the US dollar that despite the US debt seems to hold up well , the Chinese sell all there export goods In US Dollars , Not Chinese RNB so i guess they think they are already heavily invested in us currency as a country.

Time will tell if the Chinese need to bump start there export economy and if they decide to devalue there currency to help that, now that would be a kick in the pants for us all.

 

[Exfarmer]

An excellent analysis, but you missed out one important item - gold.

China and Russia have been stock piling gold. Gordon Brown in his complete lack of wit, sold our gold and told everyone he was going to do it, so the price fell like a stone before the sale.

The USA claims to have gold in Fort Knox, but have not allowed it to be audited in over 50 years. Few believe there is any gold left in Fort Knox.

China has been buying gold when ever and where ever possible. By comparison, the USA has been printing and devaluing dollars like mad.

China's real take over will come when they say, our currency is backed by gold and printed foreign money not backed by gold is no longer accepted.

At that point gold will shoot up in value to whatever China says the price is, Western currencies, stock markets and economies will collapse. At that point people will find their paper money is just worthless paper. Ask 1930s German, or modern day Zimbabwe, Venezuela or Argentina how far worthless over printed paper goes.

The problem with your forecast, is that it is certainly not in China’s Interest, to devalue the dollar, since they are the largest holder of US debt. if the dollar loses its value, it will not only cost the Chinese this Debt , but also lose them a huge export market.