
Gold price rises above $2k for first time - MindGods
https://www.bbc.com/news/business-53660052
======
obayesshelton
Might be a good time to sell then.

"While sitting in the shoeshine chair, Kennedy Sr. was alarmed to have the
shoeshine boy gift him with several tips on which stocks he should own — yes,
a shoeshine boy playing the stock market.

This unsolicited advice resulted in a life-changing moment for Kennedy Sr. who
promptly went back to his office and started unloading his stock portfolio.

In fact, he didn’t just get out of the market, he aggressively shorted it —
and got filthy rich because of it during the epic crash that soon followed.

They don’t ring bells at the top, but apparently when shoeshine boys start
giving stock advice it is time to head for the exits."

[https://www.businessinsider.com/how-to-spot-stock-market-
bub...](https://www.businessinsider.com/how-to-spot-stock-market-
bubbles-2017-10?international=true&r=US&IR=T)

~~~
ta1234567890
This anecdote illustrates how the market could be seen as a big society-level
pump and dump scheme. The guys at the top invest early at a low price, then
pump the investment downstream as much as possible, then dump when things
start looking too much like a bubble (i.e. "the shoeshine boys start giving
stock advice"). If enough people at the top dump at the same time, the bubble
bursts and there's a crisis.

Even if some of the guys at the top couldn't get out in time, they are
unlikely to get ruined by playing the game. The guys at the bottom on the
other hand, usually end up literally paying the price for their risk-taking.

~~~
chrisco255
That would be true if the market didn't consistently outperform inflation over
the long run. Dollar cost average...buy and hold. Markets are subject to
irrational swings in either optimistic or pessimistic directions. Rich people
go bankrupt too. For every short there's got to be someone with equal volume
going long...and vice versa.

~~~
maest
> That would be true if the market didn't consistently outperform inflation
> over the long run.

It should be pointed out that this is true mostly of the _US_ _stock_ market.

Empirically, this isn't true of non-stock markets and isn't true of many non-
US markets.

Buy-and-hold is a popular advice in the US because of the rather unique bull
run over the past few decades in this market.

~~~
chrisco255
Past few decades? It's been true for over a century. Even if you rode out the
Great Depression and held your Dow index. Now, I'm not claiming the current
prices aren't a bubble, but bubbles (booms and busts) are normal part of any
market.

~~~
llampx
I saw an inflation-adjusted chart of the S&P 500 that showed we are basically
getting back to even after the 2009 crash.

~~~
chrisco255
It's at all-time highs right now, way over what the stock market was in 2007,
2008. The S&P had already bounced back to pre-2009 levels by 2014. At 3350
right now, it's more than double what it was in 2007 (1500). Inflation has not
doubled since 2008. Inflation is near all time lows and interest rates are
near all time lows and have been for at least a decade.

------
lkrubner
I forget where he said it, but at some point Paul Krugman makes the point that
the price of gold will tend to rise when real interest rates are low. He makes
a similar point here (written in 2019):

"After all, the price of gold soared from 2007 to 2011... So why did gold
soar? The main answer seems to be plunging returns on other assets, especially
bonds, which were the product of a depressed world economy."

[https://www.nytimes.com/2019/07/13/opinion/goldbugs-for-
trum...](https://www.nytimes.com/2019/07/13/opinion/goldbugs-for-trump.html)

So we should expect the price of gold to rise while the pandemic is out of
control. Once the coronavirus is defeated, we should expect the price of gold
to fall.

~~~
Qasaur
Krugman in his usual arrogance neglects to consider the price and indeed
monetary history of gold. It is and always has been "real money" and most
people either consciously or subconsciously trust gold more than the pieces of
paper we call money, and its price is not a reflection of people chasing
returns but rather people having less faith in the current monetary system
(which is backed by nothing). The record physical delivery orders at Comex
proves this [1].

If the dollar hyperinflates, where would people go? Crypto is obviously
interesting, but gold is the supreme form of money that requires zero trust
(while crypto is near trust-less, you still need to trust the cryptography to
be secure).

[1] [https://reuters.com/article/gold-cme/102-tonnes-of-gold-
chan...](https://reuters.com/article/gold-cme/102-tonnes-of-gold-changing-
hands-on-cmes-biggest-ever-delivery-day-idINKCN24W1KW)

~~~
gridlockd
> If the dollar hyperinflates, where would people go?

The dollar is inflating right now, where are people going, besides gold? Why
would the dollar _hyperinflate_?

~~~
Qasaur
Hyperinflation is the phenomenon when people wake up and realise that real
estate and prices rising is not a function of real prices increasing but
rather their money losing value. We already have extreme asset price inflation
(not to mention the rapid expansion of the monetary base). In my opinion it is
only a matter of time before people realise what is going on, start dumping
their dollars/euros/pounds/etc., and use something else for their daily
transactions and savings, probably crypto at first. It is worth noting that
_every_ fiat currency throughout history, without exception, has eventually
hyperinflated and collapsed to nothing.

~~~
gridlockd
> Hyperinflation is the phenomenon when people wake up and realise that real
> estate and prices rising is not a function of real prices increasing but
> rather their money losing value.

That is not actually what hyperinflation means.

> We already have extreme asset price inflation...

Sure, but we don't have asset price _hyper_ inflation.

> In my opinion it is only a matter of time before people realise what is
> going on, start dumping their dollars/euros/pounds/etc., and use something
> else for their daily transactions and savings, probably crypto at first.

Dump the dollars for _what_? Most people have no savings, they have a monthly
paycheck that goes right to expenses for the most part. That alone greatly
limits the velocity of money and therefore the rate of inflation.

Those people that (rightly) expect inflation (not _hyperinflation_ ) have
already piled into other asset classes.

Either way, there can't be _hyper_ inflation without a commensurate increase
in money supply, which can't be achieved just by people spending their money
more quickly.

> It is worth noting that every fiat currency throughout history, without
> exception, has hyperinflated and collapsed to nothing.

That is untrue. Hyperinflation is exceptional. Inflation over a long time can
erode a lot of the value, but that isn't hyperinflation and it's not
necessarily a problem either.

~~~
imtringued
> That alone greatly limits the velocity of money and therefore the rate of
> inflation.

Nitpick. It limits the potential increase in velocity of money. Spending your
money as soon as you get it is pretty much as fast as possible. The reason why
there is little inflation is that these people don't have enough money to buy
all the things they want to buy, meanwhile someone else is sitting on a fat
stack of wealth and wondering what to do with it.

------
baconandeggs
Gold price soaring represents the failure of the political establishment to
manage a fiat currency. Populist proclamations via money printing, corporate
welfare, and the corrupt dismantling of the rule of law (basically stealing
TikTok for example) will only aid in the descent of the current fiat system
into new lows and hence take gold into all time highs.

~~~
nine_zeros
Underrated comment. One of the reasons third world countries continue to
remain third world is because of gangster corruption such as this. It is
really sad that America has fallen to such levels and is no longer the shining
beacon.

------
DrAwdeOccarim
If Milton Friedman is right, and inflation is always and everywhere a monetary
phenomenon, it will be interesting to see how this plays out. There is a huge
fight right now between deflationary forces caused by an unprecedented
collapse in both supply and demand, and inflationary forces from both fiscal
and monetary stimuli. The risk I've read over and over is that the stimulus
overshoots the deflation risk and we get higher inflation--I think that's what
gold is starting to respond to. But the most interesting thing to me is that
gold does best when deflation takes hold because it forces a massive
inflationary push from the government to reflate the currency (e.g., Executive
Order 6102 and the Gold Reserve Act of 1934 changing the price of gold from
$20.67 to $35 overnight). Talk about an inflationary shock! How would they do
it now a days? Direct helicopter money into everyone's bank account...oh,
wait, we are doing that...But the scary part is that demand is crimped by fear
of going out and spending, so we see Amazon beat EPS by 10x because everyone
simply spends online instead. What a time to be alive! But joking aside, how
do you inflate if people don't want to spend? I guess if/when a vaccine comes,
and everyone rushes back out is when we could see inflation jump.

~~~
devalgo
>Direct helicopter money into everyone's bank account...oh, wait, we are doing
that

Except the amount is peanuts, peer countries are doing 2k/mo without issue but
its somehow a struggle or hyperinflationary for the US to do 2400 over 6
months?

------
dnprock
Gold is not simply a shiny metal or a collective fiction. I think many
historians (e.g. Harari) got this wrong. Humans first learned how to
manipulate metal through gold around 40k years ago. It sparked the metal
industries that advanced human civilizations. Humans progressed through Bronze
Age, Iron Age. Gold was an icon of metal technologies. Its use as money
probably predated written history.

[https://bitflate.org/post/2019/11/29/how-gold-became-
money.h...](https://bitflate.org/post/2019/11/29/how-gold-became-money.html)

~~~
IgorPartola
That’s true, but history of something does not equal it’s value today.
Otherwise companies like DEC would still be around, no?

~~~
dnprock
Harari sees history as fiction. But I think we need to make a distinction
between fiction and physical reality. Gold is a physical reality that got
married into human's fiction.

DEC technologies are still around. They just got replicated and extended into
other technology stacks. It's not easy to replicate gold. The easy way is to
mine more gold. Technologies are ideas. Gold is physical.

Bronze and iron became less popular after BC. Will steel go away any time
soon? No. Humans have worked with gold much longer. Gold has had its ups and
downs. It has always come back for thousands of years. This suggests it's not
going away (Lindy effect).

------
grizzles
Gold: If you don't have the physical gold in your IMMEDIATE possession, you
don't own gold.

~~~
stingraycharles
I feel like I’m missing some underlying point here, since you’re assuming
there is a financial difference between buying, say, 100 gram of gold on the
stock market vs having it stored at home.

~~~
mattmanser
He's implying if there were some serious financial disaster, digital records
saying you own gold are going to mean little.

~~~
01100011
If there is a serious societal collapse, gold is going to be the last thing on
your mind. Bullets, fuel, tools... trust relationships with other people...
all infinitely more valuable than gold in a crisis. People who own physical
gold are preparing for an extremely unlikely event, where society has
collapsed in a very specific way.

A HAM radio and the skills to operate it would be worth more than its weight
in gold in many disaster scenarios.

~~~
danhak
Not everybody holds gold as a hedge against complete and utter collapse. It
can be a sensible hedge against a weakening dollar, such as is currently
happening.

~~~
01100011
Right, in which case you do not need to physically possess it, which is what
we're talking about here.

------
Humphrey
I bought some about 10 months ago as a practice investment, as I figured it
was easier to understand than the share market and it had given an average
10%/year return over the past 10 years (well at least in Australian dollars).
Kinda wish I bought more though, but who would have predicted a worldwide
shutdown?

That said, the gold price has barely moved compared to how much silver has
skyrocketed the past few weeks.

The question I'm pondering is, is the value of gold/silver skyrocketing, or is
the real tangible value of the USD crashing? I guess only time will tell ️

~~~
topspin
> The question I'm pondering is, is the value of gold/silver skyrocketing, or
> is the real tangible value of the USD crashing?

A strong decline in the value of USD would be reflected in the prices of all
commodities and their is no general commodity price inflation at the moment;
the gold and silver price increases are an outlier. The price of gold and
silver is increasing because the demand for gold and silver is increasing.

~~~
Humphrey
That's a good observation! While not a commodity, I'd just add that where I
live (Australia) the price of housing has also been sky rocketing the past few
years.

------
shanehoban
This got me thinking.

If our currencies and financial system were completely based off the value of
gold and/or other precious metals where the amount on the planet is finite,
wouldn't this eventually cause the opposite of inflation where the prices of
goods and services go down as less and less gold is available as the
population grows?

Wouldn't that also mean that wealth inequality and hoarding of gold make
things even cheaper as less and less can afford to buy/sell at higher prices?

~~~
baconandeggs
Prices do go down. Smartphones for example, or clothing, tvs, music and
entertainment via netflix, etc. Even food is now more attainable than ever.
Technology and efficiencies in production naturally generate deflation, but
_for some reason_ governments insist on enforcing an inflationary policy.

~~~
Qasaur
They insist on enforcing inflationary monetary policy because it is thinly-
veiled regulatory capture. No matter what the academics say to try and justify
it (it is not justified and does not hold up to critical analysis, see the
Cantillon effect), inflation is phenomenon that redistributes purchasing power
from the people to those who are relatively closer to the central bank and the
printing press (they can purchase assets and spend money before inflation hits
the rest of the economy).

------
j_walter
The real questions is: Why has gold risen so much and platinum (which is much
rarer than gold) stayed relatively flat recently (down since 2009) and is
currently worth less than have as much? Platinum was > $2K/oz during the
2008-09 financial crisis...it's now under $1K/oz. What makes gold's intrinsic
value so much higher?

"The price of platinum changes along with its supply and demand; during
periods of sustained economic stability and growth, the price of platinum
tends to be as much as twice the price of gold; whereas, during periods of
economic uncertainty,[7] the price of platinum tends to decrease because of
reduced demand, falling below the price of gold, partly due to increased gold
prices."

[https://en.wikipedia.org/wiki/Platinum_as_an_investment#:~:t...](https://en.wikipedia.org/wiki/Platinum_as_an_investment#:~:text=The%20price%20of%20platinum%20changes,because%20of%20reduced%20demand%2C%20falling)

~~~
Nasrudith
Perhaps platinium prices arr more set by practical uses for things like
catalytic converters and the demand is down with the rest of the economy?

Of course gold's speculation value is essentially memetically driven by
history and platinium tends to lack that.

~~~
j_walter
Platinum prices have declined every year, more or less, for the last decade.
Car manufacturing world wide has increased in that same time frame (even
excluding EV that wouldn't need platinum).

~~~
gravitas
When you look at the macro trend, platinum has trended gold since the 80s...
until around 2014 where it started going the other direction.
[https://www.macrotrends.net/2541/platinum-prices-vs-gold-
pri...](https://www.macrotrends.net/2541/platinum-prices-vs-gold-prices)

------
fredfoobar
Gold is the oldest ponzi scheme that exists out there!

* The practical uses of it are totally diminished because of this "novelty premium".

* Can't use it online

* Can't use it offline either (Can I buy a starbucks with it?)

* Securing it and moving it around is risky

I don't get it, who's buying this crap?

~~~
legulere
Pro points of gold:

* It’s relatively rare and production is naturally very limited (in contrast to e.g. diamonds that can be produced from carbon)

* It has a special tax-free status in some legislations.

* It can hardly be destroyed (you can easily loose your bitcoin when your hard disk dies)

* it’s beautiful and you can use it for jewelry and art

Seems like a good choice if you see the risk of inflation, or of a state
taking your money.

~~~
adventured
Another important point is that it can be blended.

Also, to add to the jewelry point, humanity has a nearly unlimited desire for
luxury and will always seek out status, which is why so many thousands of
years later humanity still has such an immense desire for gold jewelry when we
very obviously don't need it. Status seeking is not going away.

The continued expansion of human population, rising living standards and
finite quantity of gold, ensures it will grow more scarce per capita (driving
up its perceived value persistently).

At the median our soon to be eight billion people will have a higher standard
of living than when we had only one billion people. There isn't nearly enough
gold to match that extraordinary change.

~~~
fredfoobar
> "Status seeking is not going away"

you are correct, but what is high status now may not be high status in the
future. For example: it used to be high status to have gout, but not so much
now.

------
autokad
I use to scoff at gold investors, I was one of those 'only the sp500 is the
right asset class, it always beats every other asset class over the long run'
type people.

then in 2019, I saw a chart of asset prices over the last 20 years. Gold, oil,
and real-estate out performed the sp500 over that 20 year period (to me, a
reasonable 'long period of time').

its actually still true today in 2020, probably will remain so for a long
time.

gold aug-2000:aug-2020 = 409:2000 or 4.89x sp500 aug-2000:aug-2020 = 1471:3327
or 2.26x

that is serious under performance over a 20 year period, which has been true
for ever a year now. not true with oil anymore though.

~~~
jcheng
For stocks[1], August 2000 is just about the high water mark of the dot-com
bubble; for gold[2], August 2000 is the bottom of a "V" that extends 20 years
in either direction.

I'm not saying you cherry-picked August 2000 as a starting point to make gold
look good (20 years is a nice round number and a reasonable time span), but if
you were cherry-picking you couldn't do better than that.

[1]
[https://www.google.com/search?q=sp500+historical&oq=sp500+hi...](https://www.google.com/search?q=sp500+historical&oq=sp500+historical&aqs=chrome..69i57j0l7.1975j1j7&sourceid=chrome&ie=UTF-8)

[2] [https://www.macrotrends.net/1333/historical-gold-
prices-100-...](https://www.macrotrends.net/1333/historical-gold-
prices-100-year-chart)

~~~
autokad
That's true, but stocks are also at all time highs now, so its not a
completely unfavorable position for stocks. This is the reason why I said it
will likely out perform over that window for a few years.

The problem is, someone who is working and saving money away doesnt get to
choose the window they are in.

I wouldn't buy gold here, but if gold ever drops around the range of 1500, I
am not going to miss that chance again at having some of it in my portfolio.

------
fortran77
I'm not a gold bug, and I certainly won't buy it now at the all-time high
prices.

That being said:

I have enough Krugerands and similar gold coins in a very secure safe (in
ground, in concrete) so I could GTFO if I had to and go somewhere else. All 4
of my grandparents had to pack up and leave suddenly and having something
small you can pawn/hock/sell is handy. (Two fled Lithuania, one fled Belarus,
and one fled Gaza City in 1929 when all the Jews were suddenly expelled. The
families had all been living comfortably in the respective location for
hundreds of years--or thousands in the case of Gaza.)

~~~
miohtama
The inflation adjusted price of gold is still below 2008 and 1980 peaks.

------
sawaruna
I was thinking of buying some gold mining company or gold ETF shares a while
ago. Still time for the ETF buy I suppose, but maybe wait for a dip before
buying the former.

~~~
rapsey
> but maybe wait for a dip before buying the former.

No real dips for the last 60 days. There might be one that goes below current
level in the near future but there also might not be.

~~~
perfunctory
> There might be one that goes below current level in the near future but
> there also might not be.

Insightful.

------
lasermike026
I've always thought of the gold prices as a fear index.

------
namelosw
It's people vote "I agree that things are really bad now and probably stay the
same in the near future" by their own actions.

------
onetimemanytime
IMO: if you have tens of millions, buy 10KG of gold and 100kg of silver and
bury it just in case. As an investment it sucks when compared to the rest but
then a tiny percentage of your networth is nothing when considering that it
may be useful if SHTF

~~~
minerjoe
I heard once that their still finding caches of gold from the fall of the
Roman empire. It didn't help those rich papos, why would it help you?

I truly don't see gold being of any use in a collapse where suddenly food is
the most valuable asset.

~~~
johnyzee
FWIW, during the (first) IMF default in Argentina, when the local economy and
monetary system was in total collapse, gold was the most sought after item for
trade and barter. People consistently said afterwards that they wished they
had kept more savings as gold.

------
kyboren
Not surprising. The money supply has increased sharply:
[https://fred.stlouisfed.org/series/M2](https://fred.stlouisfed.org/series/M2)

~~~
baryphonic
And yet velocity of M2 has decreased sharply.[1] Therefore, hyperinflation
seems unlikely unless the real economy unexpectedly recovers rapidly. However,
since money is not neutral in the short run[2], we could actually get
additional output from the increased money supply. That said, I'm personally
skeptical of that claim in this crisis. Additional M2 can have zero effect on
output when the law itself has forbidden workers from showing up and producing
goods, and in some cases has discouraged them from trying to do so.

[1]
[https://fred.stlouisfed.org/series/M2V](https://fred.stlouisfed.org/series/M2V)

[2] [https://en.wikipedia.org/wiki/Monetary-
disequilibrium_theory](https://en.wikipedia.org/wiki/Monetary-
disequilibrium_theory)

~~~
kyboren
Indeed, velocity has decreased sharply. I also do not think hyperinflation is
likely, even if the economy recovers quickly. But I do expect to see asset
price inflation.

------
ogogmad
Cryptocurrencies are rallying as well. Some of them tap into the same economic
logic as gold.

~~~
NicoJuicy
I thought so as well, but I'm starting to believe it's more looks civilians
running away from faultering currency ( Venezuela, turkey, Russia, HK ).

Which has very similar market conditions.

------
wdb
I have some gold and the storage is more expensive than I thought :)

~~~
Humphrey
Whoops! As long as it's less than the rate of return I guess?

I managed to find a company that offers "pool allocated storage" for free,
with an option to "cast" it to a shippable product for a small fee. Perhaps
it's worth you shopping around for cheaper storage?

I wonder if that's where the programming term cast comes from.

~~~
wdb
Yeah, I will have a look into that. I bought my gold in 2009 so not much to
complain. Luckily, if it's securely stored it's hard to get stolen. 100% sure
gold is better protected than your typical bonds/stock at the high street
bank.

------
pcdoodle
People lose confidence due to the shutdowns.

~~~
s1t5
Not really. If that was true, stocks would be tanking but they're also at a
high. There's just a lot money around and low interest rates so all assets
increase in price. I just wonder how long that can last for and how it will
end.

------
ngcc_hk
Someone said what is to be watched is gold to silver price ratio. Not sure.

------
BMSmnqXAE4yfe1
Wow 263 comments ... interesting to see what hackers really care about)

