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A little project for all the goldbugs


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#1 Steve Netwriter

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Posted 01 September 2009 - 07:51 AM

I've read nearly all the arguments for gold. I have no need for convincing of the soundness of holding gold.

But I thought it would be interesting to try and list all the reasons why gold is a bad idea.

First a list of the reasons (those all the anti-gold people repeat tirelessly). Then maybe we can test those assertions against reality.
So, no pro-gold comments please biggrin.gif
I want all the reasons why it's madness to consider gold. You must be able to think of what others have said or come up with something.

Here's my first attempt:

1. Gold is in a bubble.

2. It's just speculation.

3. Gold doesn't pay interest.

4. x, y & z (whatever they wrote) are just gold rampers (so ignore everything they write).

5. You're only talking about gold because you want other mugs to buy it to push the price up so you will make a profit.

6. The gold market is manipulated so it will never go up.

7. The gold market isn't manipulated (I know, 6&7 are often used at the same time).

8. Gold is just a commodity (it's not money).

9. Oh I guess that also means: gold will go down with all other commodities due to deflation.

10. Gold demand has been falling steadily for x years.

11. Or: gold demand (excluding investment demand) has been falling for x years.

There must be more!

12. Other investments (like houses) are a better investment.

13. The central banks will sell gold and knock the price down.

14. Interest rates will be raised and gold will plummet.

Maybe there's a "green" aspect to anti-gold sentiment as well, so:

15. Buying gold just keeping energy intensive and polluting gold mines going.

More ?

Thank you bakachu biggrin.gif

16. Gold will be made from lead soon (the Large Hadron Collider gains the ability to produce gold).

17. A large gold discovery would knock the price.

18. A world depression would knock the oil price and make mining gold much cheaper, and so knock the price.

19. There is no mechanism for gold to reach high prices. (I'm not sure what this would mean, but presumably: no on has any money, or no one would buy if the price went up, or some other reason why the price can't rise very much)

More ?
Fiat: What starts becoming worth less eventually becomes worthless.

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#2 bakachu

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Posted 01 September 2009 - 08:11 AM

12. The Large Hadron Collider gains the ability to produce gold smile.gif



#3 PositiveDeviant

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Posted 01 September 2009 - 09:29 AM

The price of gold is based on the price of the futures. The margin requirements for futures could be increased limiting the ability of traders to trade in size. It has already happened once before. House prices are based on the availability of credit but so is gold.

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#4 sylvester

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Posted 01 September 2009 - 09:53 AM

Storage is expensive.

You have to find somewhere to put your physical gold that is safe. It's easy to find somewhere safe to put your cash (i.e. a bank).

You can't buy a loaf of bread with a bar of gold.

It's unusual to hold gold therefore anything you want to do with it is not 'the norm' making everything that bit harder.

You can't dispose of (liquidate) it quickly.

It is easier for 'them' to confiscate it than cash.

(I feel dirty now)

It is a good time to invest in precious metals. Like brass and lead...


#5 romans holiday

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Posted 01 September 2009 - 10:16 AM

"Gold is tried by a touchstone, and men by gold."

Gold has a power over the mind. The gold bug may end up hoarding it, being unwilling to part with it, seeing it as an end in itself rather than a means to an end.
Modern money "shorts" the currency, and is backed by debt. The debt is real. A debt deflation will lead to a prolonged period of deleveraging, where the short-covering of currencies will strengthen currencies relative to asset prices. At the global level, in the FX market, central currencies will benefit from deleveraging at the expense of peripheral currencies. Due to instability and uncertainty, gold will benefit against all currencies as it continues to be re-monetized.

Hold on to your hats for hyper-deflation, where cash is king, and gold the King of cash.
[Silver? A Volatile Queen].

#6 FWIW

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Posted 01 September 2009 - 10:18 AM

You can't pay your taxes in gold. laugh.gif

Buying physical gold requires you to inform your home insurance company to ensure you have adequate insurance. ph34r.gif

If you are made unemployed then you will have to sell your gold anyway! huh.gif



#7 id5

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Posted 01 September 2009 - 11:08 AM

QUOTE (sylvester @ Sep 1 2009, 10:53 AM) <{POST_SNAPBACK}>
Storage is expensive.

Only if you rent a deposit box. A hole in the ground is cheap and so is hiding it in your house.

QUOTE (sylvester @ Sep 1 2009, 10:53 AM) <{POST_SNAPBACK}>
You have to find somewhere to put your physical gold that is safe. It's easy to find somewhere safe to put your cash (i.e. a bank).

As soon as you put your cash in a bank it is no longer yours, it is the banks, they have a debt that they have to pay you at some point in the future. It is no longer your money.

QUOTE (sylvester @ Sep 1 2009, 10:53 AM) <{POST_SNAPBACK}>
You can't buy a loaf of bread with a bar of gold.

That depends what country you are in and in a PM based currency you would buy bread with silver, gold would only be used for larger purchases such as bakeries.

QUOTE (sylvester @ Sep 1 2009, 10:53 AM) <{POST_SNAPBACK}>
It's unusual to hold gold therefore anything you want to do with it is not 'the norm' making everything that bit harder.

Only in Western countries, in other countries gold is a ’norm’

QUOTE (sylvester @ Sep 1 2009, 10:53 AM) <{POST_SNAPBACK}>
You can't dispose of (liquidate) it quickly.

Pop along to any independent jewellers and ask them if they want to buy it at spot minus spread and see what happens.

QUOTE (sylvester @ Sep 1 2009, 10:53 AM) <{POST_SNAPBACK}>
It is easier for 'them' to confiscate it than cash.

‘They’ can only confiscate what they know of, don’t tell them.


The market can stay irrational longer than you can stay solvent. - John Maynard Keynes

I must remember that investing is a marathon and not a sprint!

#8 id5

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Posted 01 September 2009 - 11:18 AM

QUOTE (FWIW @ Sep 1 2009, 11:18 AM) <{POST_SNAPBACK}>
...
Buying physical gold requires you to inform your home insurance company to ensure you have adequate insurance. ph34r.gif
...

Why are you required to do so? They only want you to so they get more money. Opportunistic burglars will not be looking for it unless you brag about your stash in public. Professionals will always be able to get at a big enough stash if it is worth their while.

Putting it in a deposit box does not mean it is insured either, more than likely your bank will not insure the contents of the box that you rent. When I have used one before in order to get it insured I have had to disclose the contents of the box and have the contents independently valued. The insurance also costs extra.

The market can stay irrational longer than you can stay solvent. - John Maynard Keynes

I must remember that investing is a marathon and not a sprint!

#9 Steve Netwriter

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Posted 01 September 2009 - 11:20 AM

You guys are brilliant.
You've found loads I didn't think of (where's the clappy smilie?) biggrin.gif biggrin.gif

I wasn't expecting answers to the points, but they are welcome as well.
But please, don't be afraid to post any good OR SILLY reason not to buy gold you can think of.


Fiat: What starts becoming worth less eventually becomes worthless.

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#10 id5

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Posted 01 September 2009 - 11:30 AM

QUOTE (Steve Netwriter @ Sep 1 2009, 12:20 PM) <{POST_SNAPBACK}>
You guys are brilliant.
You've found loads I didn't think of (where's the clappy smilie?) biggrin.gif biggrin.gif

I wasn't expecting answers to the points, but they are welcome as well.
But please, don't be afraid to post any good OR SILLY reason not to buy gold you can think of.

Yellow doesn't go with your skin tone biggrin.gif
The market can stay irrational longer than you can stay solvent. - John Maynard Keynes

I must remember that investing is a marathon and not a sprint!

#11 nicejim

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Posted 01 September 2009 - 11:31 AM

HOW DO YOU NOW IF TEH COINS YOU BROUGHT ARE REAL GOLD AND NOT BRAAS AND YOU PAID FAR TOO MUCH AND AND WITH A HIGH COMMISSION WHCICH YOU LOOSE WHEN YOU NEED TO SELL BACK YOU WEILL SELL AT THE BOTTOM BECAUSE YOU DONT KNOW WHAT YOUR DOING AND IF YOU THINK YOU HAVE GOLD IN A VOLT SOMWHERE ITS NOT THEIR THERE ALL JUST A FRAUD laugh.gif laugh.gif laugh.gif THE MEINRS LIE ABOUT THEIR RESERVE'S AND ALL COMPANY'S LIE ABOUT T5HERE PROFITS EVEN IF THEY ARE ALL INSOLVENT BUT YOU DONT KNOW JUST FROM LOOKING AT THE BOOKS A HOUSE CAN BE TOUCHED AND THEY DONT MAKE LAND ANY MORE YOU CANT LOOSE
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#12 romans holiday

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Posted 01 September 2009 - 11:56 AM

When the gold ETF [explosively traded fund] blows up, the price of gold will crash. blink.gif
Modern money "shorts" the currency, and is backed by debt. The debt is real. A debt deflation will lead to a prolonged period of deleveraging, where the short-covering of currencies will strengthen currencies relative to asset prices. At the global level, in the FX market, central currencies will benefit from deleveraging at the expense of peripheral currencies. Due to instability and uncertainty, gold will benefit against all currencies as it continues to be re-monetized.

Hold on to your hats for hyper-deflation, where cash is king, and gold the King of cash.
[Silver? A Volatile Queen].

#13 wren

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Posted 01 September 2009 - 12:07 PM

20. The deflation bogeyman will make the price of gold go down.

21. Gold bugs are nutters so buying gold must be nuts.

22. You can't eat gold (I know, I know).

23. You can't live in it (unless you're a wren with a small gold house).

24. Gold bugs are evil and want to be the plutocrats of the future.
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#14 FWIW

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Posted 01 September 2009 - 12:54 PM

QUOTE (id5 @ Sep 1 2009, 12:18 PM) <{POST_SNAPBACK}>
Why are you required to do so? They only want you to so they get more money. Opportunistic burglars will not be looking for it unless you brag about your stash in public. Professionals will always be able to get at a big enough stash if it is worth their while.

Putting it in a deposit box does not mean it is insured either, more than likely your bank will not insure the contents of the box that you rent. When I have used one before in order to get it insured I have had to disclose the contents of the box and have the contents independently valued. The insurance also costs extra.


I don't beleive this, it's just a counter argument that was given to me by a city banker type when I foolishly asked him his opinion on gold. When I told him I was getting interested in gold coins as a hobby, he started to rant on about insurance...

I thought we were trying to find ALL the reasons/arguments NOT to own gold?

#15 id5

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Posted 01 September 2009 - 01:22 PM

QUOTE (FWIW @ Sep 1 2009, 01:54 PM) <{POST_SNAPBACK}>
I don't beleive this, it's just a counter argument that was given to me by a city banker type when I foolishly asked him his opinion on gold. When I told him I was getting interested in gold coins as a hobby, he started to rant on about insurance...

I thought we were trying to find ALL the reasons/arguments NOT to own gold?

My apologies FWIW, It's me losing the plot and the reason for this thread, not you..

I think I need to go back home and stare out of our bedroom window a bit..I am having a mare of a day and Dr. B's window view is looking more inviting to jump out of sad.gif

The market can stay irrational longer than you can stay solvent. - John Maynard Keynes

I must remember that investing is a marathon and not a sprint!

#16 FWIW

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Posted 01 September 2009 - 01:46 PM

QUOTE (id5 @ Sep 1 2009, 02:22 PM) <{POST_SNAPBACK}>
My apologies FWIW, It's me losing the plot and the reason for this thread, not you..

I think I need to go back home and stare out of our bedroom window a bit..I am having a mare of a day and Dr. B's window view is looking more inviting to jump out of sad.gif


No worries id5!!

Makes my head hurt too when thinking of why owning gold is a bad idea...does not really compute...but I like where Steve is going with this!



#17 romans holiday

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Posted 01 September 2009 - 01:59 PM

Owning gold is socially irresponsible and down-right anti-social. If everyone hoarded gold and stopped spending money and supporting the economy where would we be. The system, to which we owe so much, would be in danger of collapsing with the most horrendous consequences ensuing. Furthermore, the consumer would no longer be able to pursue their own happiness in a life of blissful consumption.

No, money should be considered no more than the means of exchange, and the quicker we exchange it the better. Squirreling anything away for posterity is not only an anitquated idea, but a selfish and immoral one. Forget about time, the blurry past and an uncertain future, be here now! Eat drink and be merry, I say! rolleyes.gif
Modern money "shorts" the currency, and is backed by debt. The debt is real. A debt deflation will lead to a prolonged period of deleveraging, where the short-covering of currencies will strengthen currencies relative to asset prices. At the global level, in the FX market, central currencies will benefit from deleveraging at the expense of peripheral currencies. Due to instability and uncertainty, gold will benefit against all currencies as it continues to be re-monetized.

Hold on to your hats for hyper-deflation, where cash is king, and gold the King of cash.
[Silver? A Volatile Queen].

#18 littledavesab

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Posted 01 September 2009 - 04:33 PM

If you have it in a bank safety deposit box then your normal home insurance co should agree to cover it under their policy for a reasonably cheap sum. Will get more expensive if you want it insured during transit etc.

If you hold gold at home then your home insurer will most likely cover up to between £5K & £25K with nothing special security wise other than a requirement to fit and use decent door and window locks. Over £25k you will almost certainly need a safe.


QUOTE (id5 @ Sep 1 2009, 12:18 PM) <{POST_SNAPBACK}>
Putting it in a deposit box does not mean it is insured either, more than likely your bank will not insure the contents of the box that you rent. When I have used one before in order to get it insured I have had to disclose the contents of the box and have the contents independently valued. The insurance also costs extra.


Inflation / Deflation ?? How about STAGFLATION everyone is right but everyone is wrong!
- (Update) Everyone wrong...... except Goldman Sachs apparently !!!!!!!

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#19 littledavesab

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Posted 01 September 2009 - 04:36 PM

+ 14 There is no way to measure the price of gold - other than its worth either what you will pay for it or what someone else will buy it for. Its not necessarily worth what you think someone else should pay you for it

+ 15 Owning gold - or elaborating on the reasons for owning gold might make one come accross as a right wing neocon nut. Right where did I leave my shotgun......
Inflation / Deflation ?? How about STAGFLATION everyone is right but everyone is wrong!
- (Update) Everyone wrong...... except Goldman Sachs apparently !!!!!!!

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#20 LauraB

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Posted 01 September 2009 - 04:49 PM

1) Carrying gold bars in a bum-bag is dangerous.

The strap is not designed for such a load.

A broken strap can mean broken toes


2) A modified car kiddy-seat is not a suitable substitute for the proper gold restraint system.

3) Yes, I am a little drunk; but that red wine of my neighbours is heaven








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