Why are these metals so precious?

Originally posted by Hot_Wings

The conspiracy about gold is that its price is only related to currency values and monetary exchange.

Aren't Gold conspiracies fascinating? I'm not familiar with this one Hot_Wings, but I always enjoy a good yarn..

Nothing could be further from the truth because while gold has inherent trading value as a commodity, its primary use is for the jewelry market and not that of the currency market.

Right...commodity trade, jewelry demand...and there's one more H_W...investment demand.

50 percent of the price of gold is determined by the demand for jewelry.

Would you humor me and support this claim H_W? Tia.

The price of jewelry can be influenced by sustained fluctuations in the price of physical Gold, and the price of physical Gold is determined by supply & demand in the Gold futures market. In other words, the price of jewelry reacts to the price of Gold, not the other way around. The price of Gold would only react to a downturn in jewelry demand, if investment demand was unable to fill the gap. Investment demand (institutional funds, to a lessor degree retail horders) is driven by inflationary pressures, negative geopolitical events, but most importantly the strength of the Dollar. There was a sharp decline in jewelry demand from the Middle East last year. Imports fell, but this was partly off-set by an increase in available jewelry 'scrap' supplies. None-the less...Gold prices advanced.

Investigate the inverse relationship between Gold and the Dollar...pretty straightforward. In the final analysis, rate cuts, inflation (oil), and loss of confidence in Uncle Buck is what will eventually propel Gold above $1,000...and the price will be set in trading pits...not by the jewelry market.

The conspiracy is that they know full well that 50 percent of Gold’s demand is in the jewelry market and that the jewelry market is about to take a major hit.

Actually H_W, I think jewelry demand accounts for closer to 80% of annual Gold consumption.

If Gold & jewelry are headed for the tank, someone should warn Mr. Buffet...he recently purchased two Gold jewelry manufacturers; Bel-Oro and Aurafin, with plans to form the country's largest Gold jewelry supply group.

The Gold value in Gold jewelry items only accounts for approximately 20% of the total retail price...the majority (80%) goes to designer costs, manufacturing expenses, general overhead and profit.

I agree that the jewelry market will eventually take a hit as prices rise...initially, internet discount and small retail outlets with less operating capitol & narrow profit margins. However, Gold has gained over 100% in the past 4yrs, and the jewelry industry didn't evaporate...still alive & well

Here's an intresting one. Won't affect the POG much. Industrial clean-up: Gold based detergent

Look at why the egyptians loved it, at what science uses it for.

Originally posted by stellawayten
Today I was thinking about gold and why it is so precious and important. I am uneducated about gold so please educate me. Why is it so precious? Why is it so expensive? We don't use it for anything important that I know of. It seems to me that oil and gas should be more important but it doesn't seem to be. My queston is, is there some conspiracy that the general public doesn't know about that has something to do with gold?

No conspiracy needed. Gold is, fortunately or not, high in every property that makes a material useful. It's visually appealing, so people want it for jewelry. It's very easy to machine or work to almost insane tolerances, thanks to its relative softness and high ductility, yet it's chemically inert, and when alloyed, very strong...so people want it for a host of medical uses...dental work being one of the most visible. Those same qualities, combined with very high electrical conductivity, make it the metal of choice in microchip circuit paths, high-end stereo and audio cables, as well as plating for contacts and switch elements. The list of industrial and medical uses for gold would run several pages...add in a page or two for aerospace applications and chemical industry uses, and it's a miracle there's any gold LEFT to be used as currency backing or jewelry.

Add to all of that the fact that it's rare, and you'll see why it's expensive

The very fact the the value of gold fluctuates is the clue that it is a tool for manipulation of the masses and the markets.

I(i wish) could trade Treasury(t) bills for gold futures and simultaneously drive the price of gold and the dollar value up, then trade my dollars back for t bills and drive gold up and the dollar down, then trade gold future for dollars to drive
gold and t -bills down and the dollar up. I can do this for ever and the market will take my profit from everybody who trades behind me ! (and my alien crew)

The value in gold as far as Jewelry is concerned is held high simply by the fact that people say it is. There's really nothing that great about it, it just looks nice.

Gold can be helpful in electronics, computers, treating certain medical conditions, in aerospace, glass making,
Geology.com
geology.com...

Think about what you are saying my friend. You admit that the gloabal Jewelry market is about to take a major hit. You also state that Jewelry production is the number one physical usage of the metal. It does not take a rocket scientist to realize that the overinflated Gold prices that we have seen recently will undoubtedly fall.

As well, If warren Buffet is buying Jewely Manufactuerers then he is not banking that Gold will "Rise" in value. No. Instead, he realizes, like I do, that gold will fall in value. What he is betting on is that Gold will fall much more dramatically in price than the finnished goods of the jewelry market. Meaning that jewelry producers are hurting right now because of gold prices therby making the companies stock cheap historically, however, when gold prices fall then these jewelry manufactueres will see huge profits because the previously high gold prices will still be priced into the finnished goods of the jewelry market. I would also bet that he is buying U.S. jewelry companies because of our dollar falling making finnished goods more attractive to the global market. IE our jewelry manufactuerers will have large international sales to clients that will not balk at paying higher costs for previous high gold prices because all they will be thinking about is the recent savings that they are getting from the exchange rate benefit that they are seeing from a falling dollar.

I would do the same as he has done and perhaps purchase the cheap stock of a jewelry manufactuerer right now. As well, you might want to short the stock of a Gold mining company that has a historically high stock price.

Sorry for the misspelling, I am in a hurry.

reply to post by Hot_Wings


I trade the markets for a living. I made my break in the tech boom. Ive made a killing in base metals and gold since the bull market started in early 2000. Right now, a very large portion of my chips are in gold. Bottom line is, its breaking out. IMO gold will be over $1000 by the end of the first quarter 08. And believe me im no gold bug, ive made just such shorting gold as I have going long.
Obviously you, as I wouldnt, listen to some random guy on a conspiracy forum of all things. But if you want me to, ill bookmark this forum and then bring it back up in about 6 months. We can compare results.

This is an article published this past Friday.

www.marketwatch.com...

Gold climbed to its "highest level since January 1980 on a combination of inflation concerns and safe-haven buying in the wake of a sensitive geopolitical environment and renewed concerns about the U.S. growth outlook," they said. "Coupled with the prospect of further Fed easing this will continue to underpin gold."

Let’s break this down shall we. According to this article, the first reason that gold hit an all time high this past Friday was because of inflation concerns. However, general market sentiment is that the housing crunch and higher gas prices will cause an economic downturn in the economy. What proof do we have of this? Well, it behooves anyone who watches the gold market to also take a gander at the copper market. In fact, I would say that the copper market is a great indicator of whether or not there is a real slowdown in the global economy.

www.bloomberg.com...

A slowdown in overseas purchases may lead to lower prices for the metal on the benchmark London Metal Exchange.

If copper is falling in price then that is a good indicator that inflation will not be as much of a concern as it has been in the last few years. As well, a general slowdown in the economy should bring down other commodity prices just as the slowdown in housing has brought down lumber prices. So, while inflation has been high this in the recent past, it should not be as high for the next few years.

The second reason that gold was high as listed previously was because of a sensitive geopolitical environment. Well, yes, the environment is sensitive, but in regards to what? What is sensitive is the Middle East and the oil supply. Which, if oil further rises in value then it would have an even further debilitating effect on the U.S. economy. This should even further slow down economic growth and, in turn, lower inflation and the usage of basic materials commodities even further. So how can oil instability (sensitive geopolitics) make gold go higher, if, in fact, it will lower inflation by causing a further decline in the economy? The answer is that it can’t from what I know.

The third reason that gold went higher (according to the article) was because of “renewed concerns about U.S. growth. Haven’t we all ready talked about the slowdown in the economy enough? They must be now talking about a still lowering in the value of the U.S. dollar? Well, if that is the case then that should further slow down our economy because our economy depends on massive imports from overseas. If the U.S dollar keeps falling then won’t that hurt most companies that depend on purchasing power in their economies of scale? Of course it will, and that, in turn, will only add to a worsening, I’m sorry, “slowing down” of the U.S. economy.

The final statement made was about a “further” Federal Reserve Board easing of interest rates. If the aforementioned slowing down of the economy is also lowering commodity prices then why would the fed need to lower the interest rate to combat inflation? If commodity prices continue to fall, thus lowering inflation, then why would the fed need to lower rates again? Well, it would not be because of inflation as implied in the article. Instead, the Fed might lower rates again to stimulate the economy again given the concerns about the severity of this so called “slowdown” (which is just a nice way of saying recession or depression).

In conclusion, I think that the reason that the article explained higher Gold prices was either false, or overstated. I think that Gold is going to fall and fall fast given the nature of what I see as a hard landing in the economy. And remember, when our economy goes, then so does the rest of the worlds because we are still the great consumer of the world. We are the ones who buy the most goods. We are the ones with a huge trade imbalance with places like China. That means that when we can no longer keep making purchases on our credit card, then the rest of the worlds economy will fall just like our is about too. And when the world’s economy has its legs taken out from under it then gold will also fall in value.

I think Warren Buffets purchase of Jewelry Companies is being done perhaps 2 years ahead of a major reduction in gold prices. I think that he is positioning himself to profit highly off a significantly lowered U.S. dollar with high exports of jewelry to places like Canada and the European Union. While their currencies rise and our currency falls, major exporters will profit handsomely even through a major slowdown in the economy.

If the price of gold falls and these jewelry makers and retailers can still ask a higher price for their goods then their profits will soar. Basically, the cost of doing business for them will be much lower and demand from foreigners will be much higher, giving Warren Buffet a great bottom line in these Jewelry companies.

Imagine what that would do to the stock of those Jewelry companies? If the economy suffers and gold drops then investors will flood to these jewelry stocks. I think warren buffet is banking on a drop in gold prices and I think he is moving ahead of the curve by about 2 years.

Buy stock in a jewelry company my friend and sell your gold.


[edit on 28-10-2007 by Hot_Wings]

[edit on 28-10-2007 by Hot_Wings]

[edit on 28-10-2007 by Hot_Wings]

However…I say this about gold for the longer term. I think for the shorter term you have to go with the market flow. The market loves gold right now and if we attack Iran then gold will go higher still. As well, oil will obviously be much higher also.

Everyone loves gold, and it could be that world war 3 starts soon and then gold will still be even high most likely. But of course in that case it won’t do you much good if you aren’t in possession of that gold.

More than likely, we will attack Iran and oil and gold will go higher and then after that (if ww3 doesn’t start) then all of the aforementioned things that I have all ready stated will occur with gold.

But, if we do not attack Iran and all that happens is a slowdown of the global economy then gold will suffer as I have described. It all comes down to that geopolitical equation doesn’t it? War = higher gold, Global Recession = lower gold.

If you have money in gold then sure, let your winners ride, however, you had better be ready to day trade it at a moments notice considering that it is at an all time high and many intelligent people are betting against gold right now. They are not smarter than you are, it’s just that things in the gold market can go either way to me right now and so, I would rather not be in it and instead buy stock in an exporter, as warren buffet has done.

Actually the Earthlings (Enki and aquatic family) sold gold and silver to the Extraterrestrials that needed good electrical conductors. The Extraterrestrials left their slave/robots (us) behind. We are being given a lesson in how badly we govern ourselves so we will make better servants.
As our global economy collapses the Vatican will stamp out gold and silver with the ever present .999 mark to prove it’s purity. Of course if you take such in payment you must accept the mark of 666.

Gold deffinetly is good to have because it is tangable. what if the banks computers went crazy, and then everyones money was gone? well you got gold to use now. simple as that!
Gold has never been worth nothing, and governments stockpile it for backup money all over the world.

Actually, I would say that if you wanted to keep a hard currency on hand for the end of the world notion then it should be silver and not gold.

Silver is a metal with important anti viral and anti-bacteriological properties. This is one of the reasons that we make silverware. Today, however, we use mostly what is called flatware which is made of steel and does not have any anti-bacteriological properties.

Silver is also cheaper than gold, however, in the end times it will be more valuable than it is today because of the complete lack of any importance given to paper money. In essence, silver should be worth about 50-75 dollars an ounce at that point. Given that silver is 13 dollars an ounce today that’s not a bad markup is it?

Gold will also see that kind of markup, yet, how on earth will anyone be able to use it as currency if gold is valued at 1500 dollars an ounce? Do you plan on trying to offer some gold dust as payment for a loaf of bread? I certainly hope not.

What you will need is a hard currency that is not so expensive and yet will obviously still increase in value. Silver, is the one that you will want. You wouldn’t want to go to market carrying something as expensive as gold in order to trade with, that is, unless it will take a lot of gold to buy what you want. If that’s the case then what you will need is not gold, but instead a lot of bullets and a gun.

Silver at this point will also increase more in value than gold will once things get going in the trading of it for goods. This is because while gold may command a high price, no one will be able to functionally trade many goods in gold without using dust as a currency. “How much gold dust for 2 loaves of bread?” “Well uh, let me see here…that’ll be about what would fit on the tip of your finger I think.” Ok, let me , oh damn…It blew away!”

See what I mean. You have to remember your history. At one time, silver was actually worth more than gold was. It was mostly because of this reason. Silver is harder, cheaper, and more abundant than gold is, so, if we had to use a metal for commerce than the preferred one for most transactions would be silver, just like it was in the past. For this reason, you can further increase the value of silver in the end times.

So, buy gold to invest with, but, buy silver for the end times.

Gold...beautiful to look at.

Gold...corresponds the heremetic 5th Element of LIGHT.

Gold...beautiful to touch.

Gold...Good...God

G...has been assigned real value (unlike paper money)

Gold...some speculate its what the hypothetical ancient alien annunaki were after

Gold...I want some.

Oil is more value to us, here on earth! say one day the ecomomy colaps. Some one aproaches you with gold, or oil to get anywhere in the world you want. what would you take this worthless pretty metal or the oil travel anywhre you need to go.

Oil is more value to us, here on earth! say one day the ecomomy colaps. Some one aproaches you with gold, or oil to get anywhere in the world you want. what would you take this worthless pretty metal or the oil travel anywhre you need to go.

Why is gold precious?

Gold is mainly precious because of its beauty and rarity, but there are also plenty of practical uses. It is also rare because it’s very expensive because it has been used in jewelry making for thousands of years.

It's shiny! me like!

(what the first caveman said upon finding a gold nugget)

This is a reply to (stellawayten), This is correct that Gold is precious because it was used for trade. ~ For those of you who need more of an answer think about it like this. Here is my theory: It is arbitrary, probably travelers traded necklaces, and gems for food and clothing when they were on the road traveling and had little else. Quickly people liked the gems or gold or silver, and it becomes a common trade commodity, (eventually subtended into a value marker, as it is soft, and can be formed into set sizes). If your thinking well thats all fine, but wouldn't some people be sitting on a huge supply of gold in mines, and why would people accept this as a trade commodity. (To that I say; look at the rate to which money is generated today,without equal rights and fairness even thought about at all). So some people have a lot of gold and can buy things, they become powerful, it becomes a symbol of power and godliness. There it is, that is my (Paul Vanderschot's) Theory. Also, and this might explain the gold rush, and like adventures: If there was a weigh, today to dig in the ground or find in caves, money, money just laying around, possible in great quantity, wouldn't people be all over the world looking for it! You can bet your behind they would. (email me [email protected] for reply this is anonymous, thanks).

I favor shark's teeth as currency....harder to mine than Gold and different sizes could represent different denominations: Great White teeth = a C note and on down the line to a sand shark = $1. Besides you can wear it as jewelry and even cut with them.