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JMHX
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Gold 2012-10-16 20:46:08 Reply

It's been a fun time to be heavily invested in the market. Looking back to 2006 and the collapse that soon followed, the market has never traded at such a value in my lifetime, and may not again. In some places, such as the big financial firms, mortgage REITs and insurers, companies were trading at a nearly 90% discount. In short, what I'm saying is that if you had the temerity to get into the market in 2007 and ride it through, adding positions from 2008-2012 and adjusting accordingly, you made a pretty good profit.

This was thanks in large part to the Federal Reserve's policy of Quantitative Easing (QE), which I've opened discussion on in a thread here. In that thread, I point out that while QE has been a boon to the stock market, it's essentially ruining our ability to save in non-stock assets like Treasury Bonds, Money Market accounts, Certificates of Deposit and other low-risk venues.

Of course, there has been one class of assets where the boom has outstripped even the fire of the stock market. Commodities. Wheat, corn, copper, palladium. Those kinds of commodities. And one in particular: gold. As morefngdbs points out, Gold has jumped from just about $250 an ounce in 2000 to $1750 an ounce today. That's a handy 600% increase.

But there's also a rift here. All metals are essentially speculations against economic uncertainty, and there are two options for how to trade in them: paper (stocks, ETFs and other vehicles that hold gold and let you invest in their holdings), and specie (buying gold bullion and bullion coins directly). I think the former is a fair enough hedge as part of a diversified portfolio. The second, buying coins, borders on the silly.

Why? Premiums and discounts. Gold coinage is tough to turn into cash, and the grocery store doesn't exactly take your bullion coins at face value. You're going to pay between 3-10% premium on the spot price of gold to buy the coins. At the same time, most reputable gold dealers, especially in metro urban areas, offer between 70-85% of spot value in their gold purchases. You're taking a hit either way.

Metals are also prone to shocks. Look at the 20%+ decline in the price of silver over the past year or so, during which time dealers were paying only 70% of spot. Assuming you bought an ounce of silver at $31.50 (spot + 5%) in 2010, watched it rise to $45 in 2011, and now to $32 in 2012, if you sold today you'd receive $25.60 (80% of spot, the going rate in Washington, D.C.). If you sold through an online auction, you'd likely net 90% of spot, but you'd also pay auction fees.

I'd love your thoughts. I'm not saying metals aren't sometimes a good investment. But assuming they're a panacea, a never-go-down investment that will get you away from the risk of the world markets? That's silly.


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Ericho
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Response to Gold 2012-10-17 10:52:44 Reply

I remember Ron Paul saying that it would be better to have gold than cash, because due to inflation, money will lose its value. Granted, there are still ways for gold to become worth less, like it becoming extremely common or being able to be produced on its own. It doesn't really matter, because I myself have never seen actual gold in my life. I've looked through all the precious medals I own and I've brought them all to stores and I've never gotten lucky at all. I'd still say gold's a better investment, provided you can get any.


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JMHX
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Response to Gold 2012-10-17 11:59:05 Reply

At 10/17/12 10:52 AM, Ericho wrote: I've looked through all the precious medals I own and I've brought them all to stores and I've never gotten lucky at all. I'd still say gold's a better investment, provided you can get any.

Any actual reason, or are you just rambling?


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Response to Gold 2012-10-17 15:32:14 Reply

At 10/16/12 08:46 PM, JMHX wrote: Why? Premiums and discounts. Gold coinage is tough to turn into cash, and the grocery store doesn't exactly take your bullion coins at face value. You're going to pay between 3-10% premium on the spot price of gold to buy the coins. At the same time, most reputable gold dealers, especially in metro urban areas, offer between 70-85% of spot value in their gold purchases. You're taking a hit either way.

;;;;
WHich is why you don't go to these shysters.
Any reputable coin dealer will pay you a higher return on gold, silver, platinium etc. seeing as little as 5% below spot.
& that's only if you are in a hurry.
Selling on e-bay , kijiji & other online spots can realise you prices above spot simply because at times there are no coins & bullion bars available. I was looking for 1/4 ,1/2 ounce coins/rounds of gold all of July & August, it wasn't until Sept that any were available locally, everyone who had any were holding on to them.
The only stuff available was over priced coins fromt he US & Canadian mint, minted this year and even those had to be ordered in.

Metals are also prone to shocks. Look at the 20%+ decline in the price of silver over the past year or so, during which time dealers were paying only 70% of spot. Assuming you bought an ounce of silver at $31.50 (spot + 5%) in 2010, watched it rise to $45 in 2011, and now to $32 in 2012, if you sold today you'd receive $25.60 (80% of spot, the going rate in Washington, D.C.). If you sold through an online auction, you'd likely net 90% of spot, but you'd also pay auction fees.

I love how people point out silver went down 20% ...without pointing out it went up the previous months Here is a link to a Canadian coin dealer, I don't use them, they are out west (B.C. & I'm in N.S. & my local coin shop pays higher.) But if you want actual prices look at their Bid price.
http://www.bullioncoinsandbars.com/products-silver-coins.htm
Look at 1 ounce maple a bullion coin, not a collectable, 4 9's pure $33.50
Its a hell of a lot higher than 25 bucks !
If you don't know what you are doing, if your idea of making moeny off bullion is mailing it to someone & waiting for the big bucks to arrive you are stupid & get what you deserve !


I'd love your thoughts. I'm not saying metals aren't sometimes a good investment. But assuming they're a panacea, a never-go-down investment that will get you away from the risk of the world markets? That's silly.

What they are is no different than buying my home & actually paying for it, they are an item of value unlike paper. When paper sinks as it has been doing for more than 4 years, gold & silver traditionally rise.
In the last 25 years there have been a lot of countries suffer hyperinflation & their currencies became worthless.
http://www.munknee.com/2011/03/21-countries-have-experienced -hyperinflation-in-last-25-years-is-the-u-s-next/


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JMHX
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Response to Gold 2012-10-17 15:40:33 Reply

At 10/17/12 03:32 PM, morefngdbs wrote:
At 10/16/12 08:46 PM, JMHX wrote:
Selling on e-bay , kijiji & other online spots can realise you prices above spot simply because at times there are no coins & bullion bars available. I was looking for 1/4 ,1/2 ounce coins/rounds of gold all of July & August, it wasn't until Sept that any were available locally, everyone who had any were holding on to them.

First off, why is it only you that ever responds? Second off, you're skeptical of the Federal Reserve but are happy to try and run a small economy through...eBay? Okay.


http://www.bullioncoinsandbars.com/products-silver-coins.htm
Look at 1 ounce maple a bullion coin, not a collectable, 4 9's pure $33.50
Its a hell of a lot higher than 25 bucks !

Yeah, buying and selling are different concepts. I won't break your mind by explaining them here.


I'd love your thoughts. I'm not saying metals aren't sometimes a good investment. But assuming they're a panacea, a never-go-down investment that will get you away from the risk of the world markets? That's silly.
What they are is no different than buying my home & actually paying for it, they are an item of value unlike paper. When paper sinks as it has been doing for more than 4 years, gold & silver traditionally rise.

Let me go to the store and buy some food with these gold coins. Oh, wait...


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Response to Gold 2012-10-17 15:44:22 Reply

At 10/17/12 03:40 PM, JMHX wrote: Let me go to the store and buy some food with these gold coins. Oh, wait...

;;;;
I never realised before how stund you are.
My bank is willing to allow me to back a loan with gold as collateral....& you seem to think it isn't money.

the substance your brain is made of is denser than gold, unfortunately it isn't
even as valuable as tungsten...too bad.


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JMHX
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Response to Gold 2012-10-17 15:46:28 Reply

At 10/17/12 03:44 PM, morefngdbs wrote:
At 10/17/12 03:40 PM, JMHX wrote: Let me go to the store and buy some food with these gold coins. Oh, wait...
;;;;
I never realised before how stund you are.
My bank is willing to allow me to back a loan with gold as collateral....& you seem to think it isn't money.

the substance your brain is made of is denser than gold, unfortunately it isn't
even as valuable as tungsten...too bad.

Yeah, I can use my condo as collateral, but that doesn't mean my condo is money. Collateral is used to GET money. And what is money? That paper you keep rambling about. Like I said, take those gold coins to a car wash and see if they'll cash 'em.


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Response to Gold 2012-10-17 15:51:54 Reply

At 10/17/12 03:46 PM, JMHX wrote: That paper you keep rambling about. Like I said, take those gold coins to a car wash and see if they'll cash 'em.

;;;
You actually know even less than I credited you with.
THe bank doesn't "loan you money"
they create money (debt for you & me) at the stroke of a key on a computer.
THey tell a creditor you are good for the "money" & you sign a contract to repay the bank with interest the full amount. They don't actually give you any of their money

Do you not know along with fiat money we have fractional reserve banking ?

Man you really have a lot to learn.


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JMHX
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Response to Gold 2012-10-17 15:53:17 Reply

At 10/17/12 03:51 PM, morefngdbs wrote:
At 10/17/12 03:46 PM, JMHX wrote:
Man you really have a lot to learn.
really have a lot to learn
a lot to learn
learn

yup.


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Feoric
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Response to Gold 2012-10-17 17:41:46 Reply

Gold is like Apple stock in the sense that it was wise to heavily invest in it a decade ago, but it's not really a good time to start getting in on the bandwagon now. Gold is pretty volatile due to the European crisis and I wouldn't, say, put a bulk of my 401k in gold certificates. Gold isn't really a risk-free investment like it used to be anymore, everybody is putting their money in inflation-protected treasuries. Remember that mini crash last August? There was a panic and everyone bailed and went to bonds, not gold.

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Response to Gold 2012-10-17 17:54:23 Reply

I would be a bit cautious with gold right now.

The biggest reason gold has skyrocketed in the past 13 years is because gold is percieved as the safe commodity. In other words, much of gold's value is derived specifically from the fear that other commodities are unsafe. This is all well and good so long as the other commodities are out of control. However, once the economy stabilizes and the regular forms of investing, currency exchange, stocks, and so on become stable and return to consistently yielding vastly higher returns than gold, this articifically inflated "security value" in gold will evaporate in a very short period of time.

After that crash gold will make a comeback, it always does. Whenever the economies of the world take a hit gold reaps the benefits.

Investing in gold is investing in prolonged economic troubles. The economies will make a comeback, and thus gold will depress back down to realistic values.

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Response to Gold 2012-10-18 08:59:33 Reply

At 10/17/12 05:54 PM, Camarohusky wrote: I would be a bit cautious with gold right now.

;;;;
Absolutely
Unfortunately paper assets particularly wall street stock market is being artificially supported by the FED.
Which we can see is unsustainable.
IF countries of the world weren't concerned, the BRICS agreement wouldn't be in existence, China wouldn't be spending American dollars all over the world, trying to buy into undeveloped oil, land, metals etc risking dollars that if they were a 'safe' store of value they would hold onto !

After that crash gold will make a comeback, it always does. Whenever the economies of the world take a hit gold reaps the benefits.

;;;
Exactly a store of value, when paper is losing its value, when savings are being eroded by zero interest & decreasing value because of inflation.

Investing in gold is investing in prolonged economic troubles. The economies will make a comeback, and thus gold will depress back down to realistic values.

Gold nor any other tangible assets are the problem,
Many make that mistake, the problem is DEBT.
The problem is out of control borrowing by the government, & a national debt growing & growing & growing.
A fiat system works Great for the creator of money. but by increasing the amount of money , decreases its value, thus robbing the saver.


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JMHX
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Response to Gold 2012-10-18 10:10:29 Reply

At 10/18/12 08:59 AM, morefngdbs wrote: IF countries of the world weren't concerned, the BRICS agreement wouldn't be in existence, China wouldn't be spending American dollars all over the world, trying to buy into undeveloped oil, land, metals etc risking dollars that if they were a 'safe' store of value they would hold onto !

China's neocolonialism is nothing new, they've been doing this for over a decade now. It has less to do with concern about the market than it has to do with China securing the commodities that will ensure its continued development.

A fiat system works Great for the creator of money. but by increasing the amount of money , decreases its value, thus robbing the saver.

You pretend like the same thing hasn't happened with gold-as-currency dozens of times in the past.


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Response to Gold 2012-10-18 11:00:03 Reply

At 10/18/12 10:10 AM, JMHX wrote:
At 10/18/12 08:59 AM, morefngdbs wrote: A fiat system works Great for the creator of money. but by increasing the amount of money , decreases its value, thus robbing the saver.
You pretend like the same thing hasn't happened with gold-as-currency dozens of times in the past.

;;;
Nothing like what has happened with fiat currencies.
Show me 1 example of a gold, silver based monitary system collapsing .

You can't even use Rome. Their system collapsed bacause they debased the gold & silver coinage with base metal , effectively doing just what the printing press & creation of 'money' at the stroke of a key is doing today !
I couldn't find one example of a gold or silver based currency collapsing, but I found this
http://dailyreckoning.com/fiat-currency/


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JMHX
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Response to Gold 2012-10-18 11:26:26 Reply

At 10/18/12 11:00 AM, morefngdbs wrote:
Show me 1 example of a gold, silver based monitary system collapsing .
You can't even use Rome.

>Show me one example

>Don't use these examples

>Hope JMHX doesn't know about Portuguese destroying the global economy in the 17th Century by coining silver from Mexico City and Peru until markets shut down.

>Hope JMHX doesn't know about the Dutch in the 18th Century cornering the market on Indian Ocean trade and collecting so much silver and gold from Japan, the Moluccas and Aceh that the world went into a decade-long depression/hyperinflationary cycle.

>Hope JMHX doesn't know about the 19th Century, when the United States contributed to a major surge in world inflation prices thanks to the mass coining of gold and silver.

>Hope JMHX doesn't know about the 20th Century, when gold-backed policy became so out of touch with global demand that it caused a complete lockdown of global trade, stunting markets and worsening what became the Great Depression.

>Hope JMHX doesn't know about the 21st Century, when wingnuts consider 2% inflation in the paper markets of the U.S. to be Zimbabwe Redux, but a 600% inflation in the price of gold (even as gold supplies produced around the world are increasing - see 16th and 17th Century examples) isn't mentioned.


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Response to Gold 2012-10-18 15:41:37 Reply

Personally, Im waiting for the next gold crash, at which point I am buying a shit load of it (on paper). Few commodities have such a constant upward value. Even if it is down for a couple years, it will go up again for sure. Precious metals main purpose is their value, unlike other commodities which are actually usable like wheat or oil.


Bellum omnium contra omnes

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Response to Gold 2012-10-18 15:59:17 Reply

At 10/18/12 03:41 PM, JoS wrote: Precious metals main purpose is their value.

What's more fiat than that?


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Response to Gold 2012-10-18 16:30:40 Reply

At 10/18/12 11:26 AM, JMHX wrote:
At 10/18/12 11:00 AM, morefngdbs wrote:
Show me 1 example of a gold, silver based monitary system collapsing .
You can't even use Rome.
>Show me one example

>Don't use these examples

>Hope JMHX doesn't know about Portuguese destroying the global economy in the 17th Century by coining silver from Mexico City and Peru until markets shut down.

As I am a coin collector as well, this bit of old news throws doubt on the inflation of Mexican silver & it was over a 80 year period, 150 over all if you read the link
http://www.rsc.org/chemistryworld/News/2011/May/24051103.asp

>Hope JMHX doesn't know about the Dutch in the 18th Century cornering the market on Indian Ocean trade and collecting so much silver and gold from Japan, the Moluccas and Aceh that the world went into a decade-long depression/hyperinflationary cycle.A cash starved Europe previous to all this new money Over supply and a thing called the black death had a bit to do with it as well , but I see you conveniently left that out.
>Hope JMHX doesn't know about the 19th Century, when the United States contributed to a major surge in world inflation prices thanks to the mass coining of gold and silver.

>Hope JMHX doesn't know about the 20th Century, when gold-backed policy became so out of touch with global demand that it caused a complete lockdown of global trade, stunting markets and worsening what became the Great Depression.

;;;
Manufactured bullshit to get rid of the gold standard & allow for a full on Governments ability of printing themselves into the mess we are in in the world today !

>Hope JMHX doesn't know about the 21st Century, when wingnuts consider 2% inflation in the paper markets of the U.S. to be Zimbabwe Redux, but a 600% inflation in the price of gold (even as gold supplies produced around the world are increasing - see 16th and 17th Century examples) isn't mentioned.

2% .....I don't believe for a second you are stupid, yet you use BS arguments to attempt to make it look as if you are right.

The way that numbers for unemployment & CPI are determined by deliberately changing how they are collected, leaving things like gas & electricity prices out of the equation.
Saying long term unemployed don't count , part time jobs being counted as employment when no one can live on that ...then only a small segment of the population is used to 'count to artificially give a better outlook that reality !
http://www.washingtontimes.com/news/2012/oct/5/obamas-fudged -unemployment-numbers/

I know for sure it isn't 2% because I own a company & I have to track all my expenses, & have done so for over 15 years., my shop power bill which when I bought it 10 years ago, was in the 50 -60 mark & at the official rate of 1.5 to 3 % inflation over that time it should only be about 75 -85 dollars. but it is never under 125 dollrs in the last year ! yet I use the shop no more now than I used to & I have since I first bought it, changed out all the lighting to energy efficient lighting, got rid of the electric heat in the office & went to hot water heat when I installed the new boiler to replace the old one , that heated the main 4000 sq ft of shop floor all up grades I have made over time yet my bill keeps going up at a much higher rate than 2% !!!!!.
I even got rid of my hot water heater, because my new boiler offered a domestic hotwater option...yet my bill if it increased at the rate of government inflation in the last year shouldn't be so high . So logically electricity has increased at a higher rate than the official 2 %
Got the same problem with heating fuel, gasoline, food ....you say 2% & if you believe it, you are living in la la land
http://moneymorning.com/2012/03/08/steak-hamburger-and-dog-f ood-how-the-government-lies-about-the-real-inflation-rate/

Heres 3 options to find out the real inflation rate !
http://commodityhq.com/2012/three-alternative-sources-for-th e-current-inflation-rate/


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JMHX
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Response to Gold 2012-10-18 16:32:56 Reply

lol

Owning a company normally involves some basic understanding of punctuation and grammar. And not spending your days on the Newgrounds Politics Forum.


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Response to Gold 2012-10-18 16:36:09 Reply

I invest in precious metals. Social Security and all the "safety nets" for the elderly will be gone by the time I retire (by which time the retirement age will be 70 or 80).

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Response to Gold 2012-10-18 16:37:27 Reply

At 10/18/12 04:36 PM, LemonCrush wrote: I invest in precious metals. Social Security and all the "safety nets" for the elderly will be gone by the time I retire (by which time the retirement age will be 70 or 80).

Gordon?!

Gold


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Response to Gold 2012-10-18 17:10:30 Reply

You could make the same argument for stocks. There is a cost to buying and selling them but overall you will still make money long-term.

The question is: how long can you wait if it crashes?

Money doesn't crash except in extremely rare cases. It loses value slowly but it won't be cut suddenly by 30% in a year. If you have invested your retirement fund in gold and it drops 30% in value in your 60s, can you wait 10-20 years for it to pick back up?

Anyway, I don't know what would happen if the US or most the EU switched to gold-backed currency tomorrow. Its value would skyrocket so fast it's bound to cause a bunch of nonsense.


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Response to Gold 2012-10-18 17:48:10 Reply

At 10/18/12 05:10 PM, poxpower wrote:
Anyway, I don't know what would happen if the US or most the EU switched to gold-backed currency tomorrow. Its value would skyrocket so fast it's bound to cause a bunch of nonsense.

Bad things. There's just not enough gold in the world to cover half of the DOLLARS currently in trade, let alone money that other nations are trading with now. A transition of even the United States to the gold standard would see an economic contraction unlike any we've seen before, and far beyond the scale of the Great Depression.


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Response to Gold 2012-10-18 19:40:03 Reply

At 10/18/12 05:48 PM, JMHX wrote: Bad things. There's just not enough gold in the world to cover half of the DOLLARS currently in trade, let alone money that other nations are trading with now. A transition of even the United States to the gold standard would see an economic contraction unlike any we've seen before, and far beyond the scale of the Great Depression.

Then we shouldn't have printed so many dollars without something to back it up.

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Response to Gold 2012-10-18 19:41:44 Reply

At 10/18/12 05:10 PM, poxpower wrote: You could make the same argument for stocks. There is a cost to buying and selling them but overall you will still make money long-term.

The question is: how long can you wait if it crashes?

Money doesn't crash except in extremely rare cases. It loses value slowly but it won't be cut suddenly by 30% in a year. If you have invested your retirement fund in gold and it drops 30% in value in your 60s, can you wait 10-20 years for it to pick back up?

Anyway, I don't know what would happen if the US or most the EU switched to gold-backed currency tomorrow. Its value would skyrocket so fast it's bound to cause a bunch of nonsense.

Precious metals do not "crash".

Stocks and fiat currency are massively unstable. And build on "bubble theory". Precious metals are not really subject to the instability, because it always has value.

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Response to Gold 2012-10-18 19:49:28 Reply

At 10/18/12 07:40 PM, LemonCrush wrote:
At 10/18/12 05:48 PM, JMHX wrote: Bad things. There's just not enough gold in the world to cover half of the DOLLARS currently in trade, let alone money that other nations are trading with now. A transition of even the United States to the gold standard would see an economic contraction unlike any we've seen before, and far beyond the scale of the Great Depression.
Then we shouldn't have printed so many dollars without something to back it up.

Judging by the fact that other countries are rushing to buy our Treasury-backed debt, I'd say the Full Faith and Credit clause is doing just a fine job of backing it up.


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Response to Gold 2012-10-18 19:58:13 Reply

At 10/18/12 07:49 PM, JMHX wrote: Judging by the fact that other countries are rushing to buy our Treasury-backed debt, I'd say the Full Faith and Credit clause is doing just a fine job of backing it up.

They're buying debt based on legacy, not mathematics or econ. theory.

Keep in mind, those same nations are also stockpiling gold.

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Response to Gold 2012-10-18 19:59:40 Reply

At 10/18/12 07:58 PM, LemonCrush wrote:
At 10/18/12 07:49 PM, JMHX wrote:
They're buying debt based on legacy, not mathematics or econ. theory.

>They're buying


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LemonCrush
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Response to Gold 2012-10-18 20:09:34 Reply

At 10/18/12 07:59 PM, JMHX wrote:
>They're buying

And what happens what no one buys debt or trades in dollars because they're no longer worth anything anymore.

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Response to Gold 2012-10-18 20:14:48 Reply

At 10/18/12 08:09 PM, LemonCrush wrote:
At 10/18/12 07:59 PM, JMHX wrote:
>They're buying
And what happens what no one buys debt or trades in dollars because they're no longer worth anything anymore.

And what happens when the British Empire comes back from the dead with zombie Victoria at the helm?
And what happens when a nuclear bomb hits the Fed?
And what happens when
And what happens when
And what happens when

There's an oversubscription on 30-year Treasuries. That's a pretty solid sign demand isn't exactly going to vanish into thin air. We're on the brink of a sequestration of the budget and the world can't get ENOUGH. Don't play hypotheticals, I already told you not to fall back on those.


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