Bear Posted November 26, 2009 Share Posted November 26, 2009 I love to watch the free market in action! Well, when the US govt deregulated the price of gold, I bought 6 ounces at $43 an ounce. Many years later I sold that gold for the then going rate of $879 an ounce. If I had hung onto it until now, I could sell it today for about $1200 an ounce. That is not unfair, it is just how the market goes, I made a solid investment. When the US economy recovers, oil will jet back up over $100 a barrel and gold will drop like a rock. Then the folks who are buying it now for $1200/oz will suffer a loss. Not an unfair loss though, because it is their fear of the general economic conditions that has convinced them to make the choice to invest in gold rather than stocks, bonds or real estate. That is just how the investment game is played. Lets say that I spend $40 on gas, go to a locale, spend the day looking for stuff and make a decent find. I bring it home, clean it up and put it up for sale. Who is to say whether the price is fair or not? It is my specimen, I knew where to look, I knew what to look for and how to look for it. I knew how to remove it without destroying it, clean it up enough to be presentable, where, when and how to sell it. That is all stuff that you have to pay money and time to possess, part of my working capital. If the going rate is $100 for an item and I sell it to you for $150, how is that unfair? Maybe I earn more dollars per hour than the cheaper guy down the hall. Maybe I have a better rep or do better prep. Maybe mine is real and his is plastic. There are a lot of variables involved, it is not as cut and dried as it may seem. I would suggest practicality here. If the price is beyond your reach, it is not sour grapes, it is just a higher price than you can afford today. If it is truly the same item as the other fella has, but at a lower price, than you should buy it from him and spend your profit elsewhere. You can also feel clever for having shopped around a bit to get a better price. But, say you find something that you want for $200, but you think that is too much. You decide to shop around for better pricing. However, if your time is worth $20/hour and it takes you 5 hours to find another source for that item, than it must be well below $100 to justify the effort and time. Otherwise you should have just gone for the higher price. Fair and unfair don't enter the equation in capital transactions, unless one party or the other is cheating. The going rate is subject to change at a moments notice. I have had the price change as the transaction went down. I did not like that, but understood and accepted it. Just business. Link to comment Share on other sites More sharing options...
fig rocks Posted November 26, 2009 Share Posted November 26, 2009 I love to watch the free market in action! Well, when the US govt deregulated the price of gold, I bought 6 ounces at $43 an ounce. Many years later I sold that gold for the then going rate of $879 an ounce. If I had hung onto it until now, I could sell it today for about $1200 an ounce. That is not unfair, it is just how the market goes, I made a solid investment. When the US economy recovers, oil will jet back up over $100 a barrel and gold will drop like a rock. Then the folks who are buying it now for $1200/oz will suffer a loss. Not an unfair loss though, because it is their fear of the general economic conditions that has convinced them to make the choice to invest in gold rather than stocks, bonds or real estate. That is just how the investment game is played. Hi Bear, actually the value of gold hasn't changed a bit. At the turn of the century an ounce of gold would buy you a fine suit, today an ounce of gold will still buy you a fine suit. What has changed is the value of the dollar, it is dropping so the price of gold is going up because the dollar isn't worth what it used to be. I think the trend will continue and in 2 yrs it will be worth nothing. An ounce of gold will always buy what an ounce of gold buys. A dollar is only worth the paper it's written on. IMHO Link to comment Share on other sites More sharing options...
Bear Posted November 27, 2009 Share Posted November 27, 2009 Good morning, dear Fig! I can smell those dinosaur bones on the wind outside today, as the wind that blows here today is from Alberta. (Its a little chilly as well...) I agree that the value of the dollar has gone down continuously for many years and that the current price of gold reflects that loss...to a certain extent. However, the "spot price" of gold literally changes hourly with the state of the world economy and the confidence that investors have in said world economy. The price of gold will certainly rise today following the thousand + point drop on the Hong Kong stock market yesterday following Dubai's announcement that it is unable to meet its credit obligations. Investors are justifiably worried that one of the wealthiest nations on the planet and a major purchaser of consumer products is unable to pay its bills as per the terms agreed upon. This has a lot to do with the much - lower world use of petroleum (Dubai's source of income) than the lower value of the dollar. Further, since the early 1970's (when the US govt deregulated gold prices), inflation has been 300% - 400% in the US. That would give an ounce of gold the dollar value of ~$350 US - ~$700 now, far less than it actually sells for. Additionally, our technology now uses much more gold than it used to. Witness the gold plate mylar that we wrap satellites in and the many new uses for gold in microcircuits and such. Heck, some car companies are now plating their car parts with gold even! (you used to have to get that done specially for your custom ride, now it comes stock from the factory with gold plating installed.) As the demand for gold goes up for these various reasons, its valuation goes up as well - the law of supply and demand. A substantial portion of my financial assets are in RBC, in Canadian dollars as well. Those are doing even worse than my American dollars, the Canadian GST impacts that a lot. I am minutes away from Ontario, just over the border, so a lot of my personal financial transactions involve $CA and Canadian clients. I get hammered from both directions, financially. We have actually been experiencing deflation in country recently. I have kept my professional charges even for quite some time, I know many other business people who are doing the same so as not to further cut into our business income. Link to comment Share on other sites More sharing options...
Frank Menser Posted November 27, 2009 Share Posted November 27, 2009 I guess I need to see more museums, because the ones I am familiar with are loaded with specimens I would love to have. Be true to the reality you create. Link to comment Share on other sites More sharing options...
Bear Posted November 27, 2009 Share Posted November 27, 2009 If they are nearby I will be glad to tag along, Frank. I love to drool on the museum floors! Link to comment Share on other sites More sharing options...
Frank Menser Posted November 27, 2009 Share Posted November 27, 2009 Well you could start right here in East NC. The Aurora Museum has a Meg collection that would leave them knee deep in drooling fans...and that is only part of what's there. Be true to the reality you create. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now