Pericles asks:

1/ How will that protect you from paying interest?
Actually, make that two questions.
2/ Why pick on gold?

In my case I chose real estate, but that 'causes' me to pay interest.

Buying gold is just a protection against inflation. If you buy $100 worth of gold today, it will be worth a lot more in the future.
If you 'have' a $100 in the bank today, it will be worth $80 in a few years time whereas gold might be worth $120 (indicative only). "Money" won't have the same buying power as gold over time.

Of course.. you have to cash in your gold at some point. But presumably you can continue buying as funds become available, and cash in some as needed.

It's only a hedge against inflation, not interest.

Why gold ? : why of course.. "Beck says so" (sorry..that's a tease I can't resist)

Perhaps, Yabby.

>>Pericles, your Atlassian sounds like an interesting company.
Perhaps Australia is just short of intelligent entrepreneurs who
have access to venture capital<<

The thing about Atlassian was that they built it without venture capital. This approach is only really possible where i) the barriers to entry are very low (i.e. it is all brainpower) and ii) you hit the market absolutely on its sweet spot, before too many competitors pile in. Google is a good example, except that it built a sufficiently better mousetrap that blew the existing competition away. Who now remembers LookSmart (an Australian company), or Altavista?

Incidentally, "access to venture capital" are four words rarely heard in the same sentence in Australia, especially in Web/IT projects. I haven't done any form of formal research on this, but I suspect that you will find that most of the success stories started with a trawl around family, friends and acquaintances for the start-up money. Think wotif, or Seek.

Unfortunately, we seem trapped in a mid-twentieth-century mindset on everything from education onwards. Even on this forum, we find more people hankering after a fifties lifestyle than people trying hard to understand the realities of the present, and the opportunities of the future.

They don't like to think about it, because thinking about it is uncomfortable.

We have become so immersed in our prosperity, and cocooned in our comfort zone, that we haven't noticed that the world around us hasn't stopped moving and shaking.

And our response, rather than wake up and start moving ourselves, is to protest about how nasty the rest of the world is, and moan that wouldn't they, too, like to rest on their shovels.

But if we put our minds to it, and accepted reality instead of finding excuses to avoid it, we can still make sure that we continue living reasonably well, in the best country in the world.

Sorry, Boaz. That will not work.

>>Buying gold is just a protection against inflation. If you buy $100 worth of gold today, it will be worth a lot more in the future.<<

So, I suspect, will $100 worth of neodymium. Or lutetium. Or thulium.

If your sole rationale for buying gold is as a hedge against inflation, then you are just another speculator in the commodities market, are you not?

>>If you 'have' a $100 in the bank today, it will be worth $80 in a few years time whereas gold might be worth $120 (indicative only). "Money" won't have the same buying power as gold over time.<<

True, But who, in their right mind, would leave that $100 to moulder away in the Bank for all those years? It will be invested, will it not. Mostly in Super, which still has some useful tax advantages.

>>Of course.. you have to cash in your gold at some point. But presumably you can continue buying as funds become available, and cash in some as needed.<<

Ay, there's the rub.

Same as any investment, anytime, anywhere. It's either out there earning, or it's in your pocket, wasting away.

>>Why gold ? : why of course.. "Beck says so" (sorry..that's a tease I can't resist)<<

Beck wants all your currency to be backed by gold. Which is why I asked earlier...

"...what do you think will happen to the price of gold if everybody suddenly decided to use it to "back" their currency? Take a pencil and paper, and work out how you would go about buying a loaf of bread, in 12 months time."

Do the exercise. It is highly educational.

The US government has confiscated private gold on two occasions - once in 1917 (because of "trading with enemy nations") and again in 1933 when it made "hoarding" illegal and citizens were only allowed to own no more than $100 in gold coins. The remainder was "bought" and held by their government and subsequently revalued upwards.

While this was during the era of the Gold Standard that standard may yet be reinstated if the global economy starts to collapse again and people lose faith in the existing bogus system.

If the US does it then we would naturally follow.

A pity that China has bought most of what our (and Britain's) government dumped onto the market years ago.

My problem with that, wobbles, is a practical one.

>>While this was during the era of the Gold Standard that standard may yet be reinstated if the global economy starts to collapse again and people lose faith in the existing bogus system.<<

There simply isn't enough gold available, with which to back any currency.

Aproximately 140 million kilograms of gold has been mined.

Ever.

The best guess is that around 30 million kilograms of that are held in bank vaults around the world.

The rest has been turned into jewellery, electronic components, teeth etc.

But let's assume, just for the moment, that every single piece of gold is available to back the world's currency.

At today's price of $45,110 per kilo, "all the gold in the world" has a total value of $6.315 trillion.

Which works out at a touch less than half the national debt of the USA.

http://www.usdebtclock.org/

I'm always open to suggestions, but I completely fail to see how anyone can conceive that we will ever again have a currency that is "backed" by stuff we dig out of the ground.

The arithmetic simply does not work.

Not only that, but there is absolutely no logic in it, whatsoever.

Gold - or any other lump of dirt - has no intrinsic value, only that which is placed upon it by the market.

That is exactly how currencies work.

Your dollar - as well as the US dollar, the pound sterling, the Yuan, whatever - has only the value that is placed upon it by the market. The "fundamentals" that drive that price are simply a combination of factors, that include the state of the economy, relative interest rates etc., instead of the notion of a lump of yellow metal.

Our own economy is around a trillion dollars.

We'd need the combined gold reserves of USA, Germany, France, Switzerlan, Italy and the IMF, just to support it.

Over to you - (and Boaz - see, I did your homework for you, again) - to let me know what's missing from this analysis.

*We have become so immersed in our prosperity, and cocooned in our comfort zone, that we haven't noticed that the world around us hasn't stopped moving and shaking.*

An extremely good post Pericles and I agree with your sentiments.

It concerns me that Australia is becoming bogged down by the
EU disease of massive regulation and administration, holding
back innovation and creativity.

It also concerns me that so many Australians, see a world of them
and us. At the end of the day Australian business and its population,
will sink or swim together.

In WA the attitude seems a little different, as its very much an
export focussed state. Singapore etc is our closest market, not
the East.

The East seems to be becoming more and more inward looking. Look
at the amount of people on OLO calling for tariffs to be raised etc.
They might get a real shock, if it were to happen and what it would
cost them, as consumers.

Perhaps Aussies have simply had it too good for too long, to
appreciate what they have.