Is gold actually worth anything?

[explod]

An excellent question imo!

I think perceived value has a lot to do with it, why does LGL rally if everyone wants their physical?

Now you are getting down to it, encapsulated in the word "SENTIMENT"

Many good value stocks are going down with the bad, why? "SENTIMENT"

What does the media try to get through to us? you are getting good at this, it plays on our weakness which is "SENTIMENT"

If there is gold in "them thair hills" people will come out of thier burrows and foxholes from everywhere because we have been conditioned by good ole sentiment.

 

[sinner]

Nonetheless explod, for me the writing is on the wall for gold.

I know of at least one small cap gold miner who is in the enviable position that the high AUD price of gold coupled with high physical demand has allowed them to process the very lowest grade of dirt that is usually dumped as useless/unfeasible/unprofitable to pay the bills!

They are stockpiling their good stuff with no worries! I'm sure if these guys are doing it there must be other companies in a similar position.

I also saw 2 long plays on some "smallish" cap players BEFORE the market rally today!

 

[explod]

Nonetheless explod, for me the writing is on the wall for gold.

I know of at least one small cap gold miner who is in the enviable position that the high AUD price of gold coupled with high physical demand has allowed them to process the very lowest grade of dirt that is usually dumped as useless/unfeasible/unprofitable to pay the bills!

They are stockpiling their good stuff with no worries! I'm sure if these guys are doing it there must be other companies in a similar position.

I also saw 2 long plays on some "smallish" cap players BEFORE the market rally today!

Absolutely agree with you but we are here trying to establish the intrinsic value to gold. As has been pointed out by others, it has been used as a form of exchange going back thousands of years, regarded by many as money and this is imprited virtually into our sub-conscious. The markets are bad and have been looking shaky for a few years now by some of us, so the sentimental buffer against paper money losing value is gold. This sentiment will soon drive the price up, others will then notice that it is about the only thing on the block and then the rush north will be well and truly on.

'SENTIMENT'

 

[Dowdy]

You guys have this around the wrong way. It's almost laughable.

It's fiat money that has no value. Just look up what the term Fiat Money means.

The terms fiat currency and fiat money relate to types of currency or money whose usefulness results not from any intrinsic value or guarantee that it can be converted into gold or another currency, but instead from a government's order (fiat) that it must be accepted as a means of payment.

ie. It only has value because we (the government) says so.

Gold has intrinsic value, industrial uses etc

 

[Naked shorts]

It's fiat money that has no value.
............................
Gold has intrinsic value, industrial uses etc

You seem to be contradicting yourself here.

 

[So_Cynical]

You guys have this around the wrong way. It's almost laughable.

It's fiat money that has no value. Just look up what the term Fiat Money means.



ie. It only has value because we (the government) says so.

Gold has intrinsic value, industrial uses etc

You seem to be contradicting yourself here.

In what way?

Pretty clear to me.

 

[Naked shorts]

In what way?

Pretty clear to me.

.......fiat money has no intrinsic value

 

[So_Cynical]

.......fiat money has no intrinsic value

http://en.wikipedia.org/wiki/Innate

The term intrinsic denotes a characteristic or property of some thing or
action which is essential and specific to that thing or action, and which
is wholly independent of any other object, action or consequence. A
characteristic which is not essential or inherent is extrinsic.

Prob a poor choice of words.

Fiat currency is backed by nothing....well a promise of sorts...money in infinite and plentiful.

Gold is Gold...it is what it is and will remain that way....Gold is finite and rare.

 

[sinner]

A useful statistic to consider is that 95+% of the earths gold has been mined, all the stuff that was around 2000-4000 years ago founding and ruining empires is still above ground being used for the same function and we are still looking for more!

 

[champ2003]

An excellent question imo!

I think perceived value has a lot to do with it, why does LGL rally if everyone wants their physical?

Because if everyone wanted their physical Gold then that in effect would skyrocket the price of GOLD to unprecedented highs and that would benefit the Gold mining companies.

 

[Temjin]

Lol go back a 100 years ago and beyond back and ask the same question. Then you tell them you don't think gold is worth anything and only your piece of paper is. I can't imagine their responses.

The fact remains that gold/silver has been human's choice of money for the last few thousand of years. Fiat money has only an extremely short history by comparison and in theory, has a 100% failure rate. (i.e. it fails as a form of money)

Beside a Fallout's style doomsday event, anyone on this planet would surely trade stuff with you for gold.

 

[mayk]

A useful statistic to consider is that 95+% of the earths gold has been mined, all the stuff that was around 2000-4000 years ago founding and ruining empires is still above ground being used for the same function and we are still looking for more!

Is that one of the on-the-spot statistic? Or you have some reference?

 

[sinner]

Sorry, no references. I am extrapolating from slightly older data (2004ish) because below-ground reserves are not evaluated too frequently (happy for someone to provide newer data).

But if we assume total above ground gold (pretty much all the stuff ever mined is still with us) to be at 140,000ish tonnes at 2004, with below-ground reserves ESTIMATED at 50,000 tonnes we are talking below ground rates of 22% total gold remaining below ground in 2004.

Roughly 2500 tonnes a year is dug up we can see below ground reserves quickly approaching <10% if you take into account destruction and diminishing returns on what is left. Just think, less than a decade ago cost of production per ounce for some producers was in the order of $6-10/oz and today I see more and more explorers-cum-producers running profit at costs of $680-750/oz (IGR estimate and TRY actual respectively).

As I mentioned earlier (or maybe in the other gold thread), some miners are RIGHT NOW using the very lowest grade of dirt because physical demand and price are so high that they can afford to pay the bills with what they would usually throw away as useless and keeping their good stuff for a rainy day!

 

[mayk]

Sorry, no references. I am extrapolating from slightly older data (2004ish) because below-ground reserves are not evaluated too frequently (happy for someone to provide newer data).

But if we assume total above ground gold (pretty much all the stuff ever mined is still with us) to be at 140,000ish tonnes at 2004, with below-ground reserves ESTIMATED at 50,000 tonnes we are talking below ground rates of 22% total gold remaining below ground in 2004.

Roughly 2500 tonnes a year is dug up we can see below ground reserves quickly approaching <10% if you take into account destruction and diminishing returns on what is left. Just think, less than a decade ago cost of production per ounce for some producers was in the order of $6-10/oz and today I see more and more explorers-cum-producers running profit at costs of $680-750/oz (IGR estimate and TRY actual respectively).

As I mentioned earlier (or maybe in the other gold thread), some miners are RIGHT NOW using the very lowest grade of dirt because physical demand and price are so high that they can afford to pay the bills with what they would usually throw away as useless and keeping their good stuff for a rainy day!

You think that only 50,000 tonnes reserves are left in the earth? You must be joking, right? 50,000 might be the proven reserves, not the actual reserves remaining. Many unexplored land still remains, apart from the virtually unexplored 75% of the earth under sea.

 

[So_Cynical]

^^^ New discovery's above 1 million ounces are rare, and gone are the days
of big multi million ounce, high grade discovery's.

How much gold is there ?

http://www.galmarley.com/framesets/fs_commodity_essentials_faqs.htm

In the world there are currently somewhere between 120,000 and 140,000 tonnes
of gold ‘above ground’. To visualise this imagine a single solid gold cube with edges
of about 19 metres (about three metres short of the length of a tennis court).
That's all that has ever been produced.

That's how rare it is.

Gold still underground

Where it is known about with reasonable confidence, and can be extracted economically,
un-mined gold appears on the books of mining companies as ‘reserves’. There remains as
reserves about 40% of the total of gold above ground - i.e about 50,000 tonnes. South
Africa has 50% of the world's known stock of un-mined gold.

 

[prawn_86]

From a pure theory point of view, gold is only worth what people are willing to pay for it.

If everyone suddenly decided that gold was worthless, then it would be just that.

A more specific question, which has already been answered somewhat, is; Why do people think gold is worth anything?

With this question its the supply side of the equation that comes into play.

 

[explod]

From a pure theory point of view, gold is only worth what people are willing to pay for it.

If everyone suddenly decided that gold was worthless, then it would be just that.

A more specific question, which has already been answered somewhat, is; Why do people think gold is worth anything?

With this question its the supply side of the equation that comes into play.

Yep, it is scarce

and we have "SENTIMENT"

Treasuries are down to 1% yield, but out of fear the money is pouring into them. When it is realised how they are being devalued by deflation and the printing presses then gold will be the last refuge for the immediate to medium term.

 

[projack]

That is about half what the gold lease rates are now. Can’t remember ever seeing this in the FIAT era, when gold actually pays higher dividend than the dollar.

 

[Naked shorts]

That is about half what the gold lease rates are now. Can’t remember ever seeing this in the FIAT era, when gold actually pays higher dividend than the dollar.

You can lease the stuff out too!?

 

[projack]

http://www.kitconet.com/charts/metals/leaserates/au_go_0030_lsb.gif