I do not trust "electronic gold" and similar schemes.

There are all sorts of "pseudo-gold-standard" ideas being floated around out there... "virtual gold," "e-gold," "gold certificates," "Gold ETFs," etc etc.

How does any of this differ from fiat money? In a sense, isn't this how paper money itself began? As "certificates of deposit" for gold? What's to stop whoever is behind "e-gold" from artificially inflating their supposedly-gold-backed electronic pixels the same way the fed inflates the paper money supply?

The whole idea stinks to high heaven if you ask me. If you are mistrustful enough of paper/electronic currency to consider buying into gold, why on earth would you buy into any of these schemes rather than choosing real, physical gold bars or coins?

I see what you mean.
Unless its the actual Gold, then its just another form of money right?
Well kind of.
Paper money was once backed by gold holdings in a vault.
And it is no longer.
It was simply to stop people needing to carry there gold around.
So they would put it in a vault, and get a note for it.
But now, the money itself, has no backing.
There is no gold in the vault
So its like having E-gold, without any actual physical gold holdings behind it.
E-gold actually has your money, held in gold bullion.
The down side of this though, is you are liable to the fluctuations in the price of Gold vs a dollar amount.
Whereby if you just have a dollar amount, although it might be worth more or less in Euro's, its still worth the same amount in Dollars.
But then inflation comes into play.
So your $100 can buy more or less depending on inflation.
Either way, no matter what way you do it, its going to be fluctuating.

Your right... for every ounce of gold these companies have in reserve there are 100 oz of "paper" on.

If there was a demand for the metal, they simply declare bankruptcy and get the hell out of dodge with their profits... probably to one of the "American enclave" elitist compounds set up in Central and South America.

Paper is worthless... if you believe gold and silver is going to go up... get the physical metal.

reply to post by infolurker

So you buy $5000 worth of gold, you have it delivered to your house, your holding it in your hand.
The price of gold drops, you now only have $4300 worth of Gold
The problem is, with the fluctuating dollar price OF GOLD.
The Dollar, is pegged to the price of Gold.
How we used to do it was, 2 gold pieces for this, 3 gold pieces for that.
Gold didn't have a fluctuating dollar value.
It was more like a trade.
Trade 3 sheep for 4 pigs SOLD!
But then some people didn't have 4 pigs, but they had some flashy shiny metal called Gold.
And the sheep farmer liked it, so he swapped the sheep for the Gold.
It used to be purely based upon supply and demand.
If there was more sheep than pigs, sheep were worth less etc.
Now it is based upon value manipulation.

Originally posted by silent thunder

The whole idea stinks to high heaven if you ask me. If you are mistrustful enough of paper/electronic currency to consider buying into gold, why on earth would you buy into any of these schemes rather than choosing real, physical gold bars or coins?

So tell us how to invest an IRA in physical gold instead of a gold etf like GLD or GTU or CEF.

Originally posted by Make Speed Limit 45

So tell us how to invest an IRA in physical gold instead of a gold etf like GLD or GTU or CEF.

Don't know, have no clue. I don't have an IRA or a 401K or any of that sort of thing, nor have I ever owned stocks. I have two and only two forms of investment: Yen in a savings account at a normal Japanese bank (I live in Japan), and physical gold bars. I save as much as I can each month in cash in a normal banking account, and I buy physical gold several times a year.

Been doing this for over 20 years. Japan has had deflation rather than inflation for most of this time: prices of almost everything are lower than they were in the late 1980s, for example, so I don't worry about inflation eating away the value of my cash savings. Interest rate is super low, but so what.

People used to chuckle condescendingly at my lack of financial sophistication and the fact that I've never owned stocks, bonds, or gotten into any fancy financial schemes. They aren't laughing any more. Funny how that's worked out. Sort of a "hare and tortoise race" thing.

[edit on 3/26/09 by silent thunder]

You can buy bullion on line and get a certificate of ownership and the bullion can be kept by the company in their vault until you decide to sell. You can also buy it from a registered bullion dealer and take it home with you in the form of coins, bars etc.

Saw a news article on TV a couple of days ago that said the worlds gold reserves will be all mined out within 40 years. Another report I saw said that you should have about 20% of your total investment in gold.
If you look at the 5 & 10 yr histograph for the gold price

www.goldprice.com...

For me it looks a bit expensive at the moment however, If you don't have much confidence in the stock markets and currencies for the forseeable future then maybe it starts to look attractive.

PEACE,
RK

Originally posted by Rigel Kent
You can buy bullion on line and get a certificate of ownership and the bullion can be kept by the company in their vault until you decide to sell.

Here's the thing, though. Either you have it in your own physocal possesion(which I would consider to mean having it somewhere around your home or property or a safety deposit box at a bank, for example), or you don't. In the latter case, somebody else has it and they have given you some kind of certificate or electronic pixels, etc. that allow you to claim it. Are they trustworthy? Perhaps. But over time, anyone with that sort of arrangement going will tend to notice something: A smaller number of people actually claim their gold than the total number of certificate-holders. So nothing is to stop these people from printing up extra certificates that are not actually backed by physical gold and then selling them.

This is precisely the history of European currency itself. Paper money in Europe began with goldsmith's certificates of deposit. (In Asia it began with imperial fiat, which is another story, although the two stories end in the same place.) After awhile, the temptation among goldsmiths to print up and sell extra certificates became too strong to resist, since most people never claimed their physical gold. Over time, they became bankers and certificates of deposit became paper money, which itself became increasingly divorced from the physical gold that supposedly backed it.

What is to stop the precise same thing from happening with today's "certificates of deposit" or "e-gold?" I do believe that many people selling these things would be honest and turn over any gold upon request. But I'm equally sure there will be others who are less scrupulous and will increasingly inflate the supply of "certificates" without bothering to back the physical gold that follows. From what we have seen of the lack of morality and shenanagens in the financial world lately, who could ever doubt this would happen? Eventually, mark my words well: there will be a major scandal with one of those types of schemes, where, Bernie-Madoff-style, the certificates or e-bytes or whatever will be revealed by some company to be unbacked by gold. The moment this happens, the legitimacy of ALL such schemes (even the honest ones) will be called into question, and there will be a panic withdrawal of physical gold by investors. When that happens, we will almost certainly see that much if not most of the "certificates" is not backed by any physical gold at all. At that point, the value of actual, physical gold on hand that you can touch and call your own the same way you can call your toothbrush your own will skyrocket.

Mark my words, I am virtually 100% sure events will play out that way within the next 5 to 10 years at the latest.

I'm not one of those gold hoarders who thinks civilization itself will collapse to the point where you are actually trading snippets of gold leaf for loaves of bread or whatever. I believe we will continue to have paper money and other forms of investments. But anything that can be inflated (paper, electronic bytes, etc) without backing WILL BE. This I believe. And anything physical of value you can actually carry and touch, be it gold, barrels of oil, rolls of copper wire, etc. will become more and more valuable in currency terms over the next decade.

That's the way I'm playing it, anyway.

Yes, that is a very valid point about the printing of extra certificates, i suppose in the light of what has been happening of late in the world of finance, such crooked schemes can not be ruled out.
I was likening it to the buying of fine wines and having them stored by a registered "wine house" but your point is valid. As you imply, the only safe way to truly own it is have it in one's possession.
In UK we have an old saying:

"A bird in the hand is worth 2 in the bush"

PEACE,
RK

Originally posted by Rigel Kent
You can buy bullion on line and get a certificate of ownership and the bullion can be kept by the company in their vault until you decide to sell. You can also buy it from a registered bullion dealer and take it home with you in the form of coins, bars etc.

A certificate of ownership is nothing more then a piece of paper that may be worth gold or good for toilet paper.
one of these companies could load all the gold on a plane and be gone within hours leaving you with worthless certificate of ownership. and them living the good life in brazil

Saw a news article on TV a couple of days ago that said the worlds gold reserves will be all mined out within 40 years. Another report I saw said that you should have about 20% of your total investment in gold.
If you look at the 5 & 10 yr histograph for the gold price

Take it from someone that worked in the mining industry for 30 years and worked my way up to mine superintendent.
Less then 1/10 of 1% of the recoverable with modern technology gold has been mined.
That leaves99.99 % of the gold that can be recovered still out there in the ground.

these gold dealer don't want to have gold in there vaults in there name when the next gold cycle starts so they will tell you anything to get you to buy it. They want you to own it till the next gold bottom when they can buy it from you cheap that they will hold it till it cycles again and they need to get rid of it before it drops again,

The question is will the powers in control let that gold be mined.
The environmentalist have already said they want to ban all gold mining in the US.
They have banned all new open pit gold mines in Calif already.

in gold and stock if you fallow the market you will loose money.
if you lead the market and buy at the lows and get out at the tops you will make money

For me it looks a bit expensive at the moment however, If you don't have much confidence in the stock markets and currencies for the foreseeable future then maybe it starts to look attractive.

I pulled out of the gold market when it hit $950.
right now i am holding till the stock market starts going up and the unemployment number start to drop then i will buy stocks

when the next stock market boom starts gold prices will drop as people sell there gold and go back into stocks.
when stocks get up around 12000 i will sell and buy cheap gold.
and wait for the next cycle that always comes.

If you believe the so-called market experts it will not be you that makes money but them.

Right now they know they must sell all there gold because the gold bust is coming for this cycle. and they don't want to be holding it they want you to hold it when the cycle ends.


[edit on 27-3-2009 by ANNED]

Originally posted by Rigel Kent
You can buy bullion on line and get a certificate of ownership and the bullion can be kept by the company in their vault until you decide to sell.
RK

Yeah i know, but that's not physical gold. It may be better than GLD but it's still paper gold.

I love gold. Both paper and physical. Paper is more liquid, you can always sell paper. You can't always sell physical. I say buy some tradable paper gold and keep some physical on reserve for emergencies.

Originally posted by silent thunder
...What is to stop the precise same thing from happening with today's "certificates of deposit" or "e-gold?" I do believe that many people selling these things would be honest and turn over any gold upon request. But I'm equally sure there will be others who are less scrupulous and will increasingly inflate the supply of "certificates" without bothering to back the physical gold that follows. From what we have seen of the lack of morality and shenanagens in the financial world lately, who could ever doubt this would happen? Eventually, mark my words well: there will be a major scandal with one of those types of schemes, where, Bernie-Madoff-style, the certificates or e-bytes or whatever will be revealed by some company to be unbacked by gold. The moment this happens, the legitimacy of ALL such schemes (even the honest ones) will be called into question, and there will be a panic withdrawal of physical gold by investors. When that happens, we will almost certainly see that much if not most of the "certificates" is not backed by any physical gold at all. At that point, the value of actual, physical gold on hand that you can touch and call your own the same way you can call your toothbrush your own will skyrocket.

Mark my words, I am virtually 100% sure events will play out that way within the next 5 to 10 years at the latest.

Well lookie here at what I found this morning. Seeems i might not even have to wait five years:


The NYSE-Liffe futures exchange has, it seems, run out of 1 kg bars of gold. Futures markets, like NYSE-Liffe and COMEX, try hard to maintain the fiction that they will deliver physical gold, in completion of executed contracts. Indeed, to prevent fraud, U.S. law requires clearing members to keep a stockpile, of one kind or another, consisting of a minimum of 90% of metal. Up until October, 2008, it didn’t matter. Only about 1% of long buyers of paper gold futures contracts typically took delivery. Now, the situation is very different. Demand has surged and, it appears, one major futures exchange, NYSE-Liffe, and by extension, the COMEX gold warehouses it shares with its larger cousin, are unable to meet the requirements of their contracts, visa vi, delivery of 1 kg. bars.

As of December 31, 2008, the NYSE-Liffe mini-gold (YG) contract specifications were changed to read, in pertinent part, as follows:

33.2 fine troy ounces (+10%), no Less than 995 fineness. Seller’s discretion delivery of one vault receipt representing one bar or one Warehouse Depository Receipt (WDR) representing either 1/3 interest in one full size gold NYSE Liffe vault receipt or full interest in a NYSE Liffe Mini Gold vault receipt. Delivered to exchange approved vaults by exchange approved carriers.

But, before that, on August 26, 2008, it read as follows:

33.2 troy ounces (±5%) of refined gold, assaying not less than .995 fineness, contained in no more than one bar.

In summary, there is now so much demand for delivery of the mini-contracts that the exchange can no longer deliver 1 kg bars.

…

Absent legal action, clearing members are now being allowed to hand out little slips of paper, called “warehouse depository receipts” (WDR). These are being substituted for “vault receipts” (VR). The WDRs, in contrast to the VRs, merely promise the customer that he owns a 1/3 interest in a 100 ounce bar. The customer is not allowed to take delivery, unless he can accumulate 3 WDRs, which equals 1 VR.



Source:
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