Pericles

I agree with what you say. All thing being equal, and a company continues to make money, their shares could make a good investment because the return tends to match inflation, However if you buy a bond that only yields 2% and inflation is running at say 10% (the official rate is massaged, because it often doesn't include many items) you tend to lose money. Even a term deposit at say 6% is behind the eight ball. Do you remember the 70s when house mortgages were in the teens ?

Gold is a lump of metal that has very few industrial uses and pays no dividend, but it does have intrinsic value that over the years has maintained its value for a basket of goods. Which would you rather find as buried treasure, 100 year old one pound notes or one hundred gold sovereigns? People buy gold because it has always been used as money and retains value as fiat currency loses its value because fiat has counterparty promises attached to it and governments always debase it. Just think about what a dollar can buy compared with 20 years ago. This never happened during the gold standard because it was backed by the metal. It all started to crash when Nixon abolished Bretton Woods in 1971 (partial gold standard) so that he could inflate and borrow and pay for the wars
Much of what you say about Gold is true, but Aristotle defined a good form of money must be
1 durable
2 portable
3 divisible
4 have intrinsic value (rare and not able to be manufactured)

continued

Pericles

The United States has a deficit of about 14 trillion dollars, climbing by a further trillion dollars every year. They have unfunded liabilities of somewhere around 80 trillion dollars in the foreseeable future. They are struggling now paying the interest let alone the principle. Is it any wonder that the price of bullion is rising and every sovereign country is trying to get hold of it. Chavez in Venezuela has even shipped his gold back home from London and elsewhere ! Six states in the US have officially legislated gold as a form of exchange in the last few months. The only advantage that the US has is that it's the reserve currency and it wants to keep it that way because it can print it. It doesn't want to go back to Gold.

Ron Paul asked the the Senate for an Audit of Fort Knox as he doesn't believe the Gold is there any more. There has not been an audit since the 1950s but the Fed refuse and will not give a reason.

No more room or time

You say the share market is an indication of our economy, why is our share market so sensitive to what happens in greece, or mongolia. even our currency is sensitive to external forces.
Is our economy being run from overseas.

Ok, snake, let me ask you a simple question.

>>The United States has a deficit of about 14 trillion dollars, climbing by a further trillion dollars every year. They have unfunded liabilities of somewhere around 80 trillion dollars in the foreseeable future.<<

The total amount of gold ever mined out of the earth has been estimated at 158,000 tons. Assuming every ounce was 24k pure, that's a shade under 5.1 billion troy ounces, which on today's market will fetch a tad under US$9 trillion. Annual production is around the 50 million troy ounce mark, or US$88 billion.

Please explain how using gold as currency would solve any one single problem facing the US, or the world, economically speaking.

Don't forget to allow for a) an increase and b) a decrease in the value of the metal, and sketch the impact of these on i) gold-producing countries and ii) those countries who have no gold mines.

I think you may have missed the point here, too:

>>Which would you rather find as buried treasure, 100 year old one pound notes or one hundred gold sovereigns?<<

According to at least one collector's site, a 1913 pound note could fetch $4,000 in today's money, giving you a total of $400,000.

http://www.therightnote.com.au/shop650/shopdisplayproducts.asp?id=19&cat=King+George+V+-+One+Pound

Your gold sovereign weighs about eight grams, and 800 grams of gold is around 26 troy ounces, so would fetch $46,000. Even as a collector's item, they'd only fetch around $600 each, which would get you $60,000.

So the answer is an unequivocal "I'd rather find the notes, thank you".

Oh Arjay. When will you learn to do your homework, instead of just copy/pasting from hysterical doomsday sites?

>>There are $35 trillion in credit default swaps in the West.This casino economy of derivatives must be separated from the real economy otherwise you will lose the rest of your super.<<

I've asked you this before, but you refuse to do the research necessary to get to an answer... what is the relationship between Credit Default Swaps, the "real economy" (whatever you perceive that to be), and my super fund?

And if/when you are done with that, perhaps you will turn your attention to the concept of "separating derivatives from the real economy". A brief explanation of how this could be achieved might help us understand your viewpoint.

Let's face it, you don't understand the first thing about derivatives and the derivative market, do you.

As always, I urge you to "follow the money". But no doubt, as always, you will ignore my good advice, and your entire response will be built on yet another meaningless slogan.

One can always hope, though.

Rehctub, the thing is that alot of American companies are quite
innovative, are operating globally and are doing very well. Apple
for instance, is now sitting on 100 billion$ of cash! Google, MS,
Catepillar, John Deere, etc, all global companies doing very
well, which is reflected in their share price.

The part of the US economy that is in trouble is building, as they
have a surplus of houses. Now if our house building industry come
to a near abrupt halt, our unemployment figures would not be looking
too rosy.

Our share market does not reflect those kind of innovative, global
businesses. We have a few like CSL, but not too many.

Our stock market is really dominated by banks and a couple of large
miners, plus Woolies and Coles. (Wesfarmers)

The banks won't be growing like they used to and the rest is really
a one trick pony dependant on China