Maybe gold isn't a commodity after all, Jeff Opdyke figures. Otherwise, why hasn't its price...

Maybe gold isn't a commodity after all, Jeff Opdyke figures. Otherwise, why hasn't its price dropped as inflation numbers have grown tepid? No, data show it mirrors the dollar, making it more of a currency play than anything else.

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Comments (19)
  • Diggintunnels
    , contributor
    Comments (331) | Send Message
    Gold has a dual function. Commodity and currency hedge. I believe the commodity part of the total gold value equation is much less than the currency hedge part of the total gold value in the current economic climate.
    21 Aug 2010, 08:50 AM Reply Like
  • youngman442002
    , contributor
    Comments (5123) | Send Message
    Its a safe haven...from ALL curriencies...
    21 Aug 2010, 09:17 AM Reply Like
  • Jeff Nielson
    , contributor
    Comments (2449) | Send Message
    What people should focus upon is that if gold (and silver) are "currencies", then there should be NO TAXATION on bullion - as long as it is "spent" like money, rather than traded like a "commodity".


    "Preventing Your Government From Stealing Your Gold"
    21 Aug 2010, 10:12 AM Reply Like
  • Vuke
    , contributor
    Comments (1662) | Send Message
    Very interesting link and discussion board. Most people have no idea of the freedom they could seize back from government by wresting away their power through an understanding of their weakness.


    Mahatma Ghandi punctured the balloon of the mighty British Empire through organized self interest.
    21 Aug 2010, 11:17 AM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
    With its currency label, I believe it can be manipulated as such. Why, just ask JPM about silver. What happened to that "investigation" and "pending charges" anyway?
    21 Aug 2010, 10:26 AM Reply Like
  • Stevious
    , contributor
    Comments (27) | Send Message
    Agreed, "it did mirror," but graph the US$ with gold price over the past several weeks and a glance will show that during those weeks it "did not" mirror the dollar.


    Eventually when the dollar starts to seriously devalue gold will not drop along with it, it will rise. The relationship is a mindset, but fundamentally, as we QE to infinity (than you Jim Sinclair) there will come a time when people wise up. The dollar is not what it appears.


    Four quarters from 1964 can be sold for about $15, so in 37 years the dollar's purchasing power has dropped by 93%. This will occur again, but it will be a time period of years, not decades. As in the late 70's it will be "stuff" that people will trust in, not dollars, and gold is at the top of the heap of "stuff."
    21 Aug 2010, 11:06 AM Reply Like
  • Matthew Green
    , contributor
    Comments (457) | Send Message
    1964: the Beatles burst onto the American scene, Barry Goldwater challenged LBJ, Mary Poppins was the top grossing movie, the Cardinals won the World Series, and quarters still contained a considerable amount of silver.
    21 Aug 2010, 12:39 PM Reply Like
  • Stevious
    , contributor
    Comments (27) | Send Message
    A doctor that works with me is concerned about the future and asked me: "Should I take several thousand in cash out of the bank, and keep it under my mattress?"


    I responded that it might be a good idea, but only if he buys his several thousand dollars in nickels.


    Yes, in 1964 quarters, dimes, half dollars, and silver dollars all contained 90% silver. They were "real." Politicians could not fabricate new silver out of thin air as they do with dollars in absurd quantities. That our four cupro-nickel quarters buys only 7% of the quarters of 1964 is exactly the point.


    So why did I tell Doc to keep cash in nickels? Because nickels are 75% copper and 25% nickel. In 2007-2008 at one time a nickle was worth more than a nickel (if you melted it, separated and sold the metals).


    With our current deficit, current debt, with Fannie Mae and Freddie Mac 5 trillion in the hole, with Social Security and Medicare vastly unfunded do you not think that our dollar will drop in value against other currencies eventually?


    Well, if not, a thousand dollars in nickels is still worth $1000. But if the dollar dropped in value by 50% nickels would disappear from banks. They will likely be replaced by plated steel, or plated zinc (as our copper pennies have done).


    Should we truly move into a dollar currency crisis the dollar could drop (as it did in 37 years) to 7% purchasing power--thought this could happen in a year as it did in the Weimar Republic. If so a pound of copper will rise to ~$51 dollars. The nickel content also will rise in the same manner. Now it is illegal (new law 2007) to melt or export nickles, but if you raised chickens and the dollar dropped 97% in a year what would you want--a $20 bill (doomed to possibly drop in value another 97% over the next year) or a handful of nickels? Think about it.


    By the way, laugh if you wish about a major currency debasement of 1964 if you missed that one, but did you miss a major US currency debasement in 1982 when our pennies went from copper to 99.75% zinc. Why? Today zinc is worth $0.95/lb, copper is worth $3.35/lb--need I say more.


    America is like a teenager in debt with a dozen credit cards, and card L, is paying on cards a,b,c,d... The only difference with a teenager is that she knows she is in deep trouble--our politicians think that there is no problem and that this can continue to infinity.


    Look in your wallet--imagine a $20 bill buying a single loaf of bread. Seems far fetched? Simply do some math, or go to usdebtclock dot org.


    Positions held: Very large bottle filled with nickels.
    21 Aug 2010, 01:59 PM Reply Like
  • auto44
    , contributor
    Comments (3573) | Send Message
    Destroying american currency the last I knew is a federal crime. So if you are going to melt coinage I would check up on this. According to a coin dealer web sight I checked recently they claim that scrap silver coin in large amounts contain about 77% silver. I assume they are allowing for wear. If you have handled old silver coins that spent time in circulation you will notice sometimes wear to the point where you can hardly recognize the coin. Modern coins don't show wear as copper and nickel are much harder substances. So if you are investing in old silver coin for non numismatic reasons do the math not based on 900 silver but more like 772 silver. The difference is hugh. The same applies to gold but I don't know the numbers.
    22 Aug 2010, 11:21 AM Reply Like
  • MiniB
    , contributor
    Comments (55) | Send Message
    According to, a nickel is currently worth 108.05% of face value.


    We're holding nickels too.
    22 Aug 2010, 04:58 PM Reply Like
  • Tony Abbate, CFA
    , contributor
    Comments (219) | Send Message
    Gold is the 'ultimate' currency. It can't be manipulated like paper currencies. Most worldwide governments are intervening into their economies with various programs. Most of these programs are akin to printing money. The appreciation of gold is reflecting this fact.
    21 Aug 2010, 11:35 AM Reply Like
  • Donald Ingram
    , contributor
    Comments (3481) | Send Message
    Since the beginning of June there has been no correlation between the dollar and gold. Usually when the dollar is up, gold is down and vise versa. Gold has now re-claimed it's true mantle of being the only true money, as can be seen with this disconnect in correlation.
    21 Aug 2010, 11:39 AM Reply Like
  • Matthew Green
    , contributor
    Comments (457) | Send Message
    It's a race to the bottom in fiat currencies. History is on the side of gold as a currency, no matter what civilizations do to push it aside. It has made comeback after comeback, 3000 years and counting.
    21 Aug 2010, 11:40 AM Reply Like
  • ebworthen
    , contributor
    Comments (2799) | Send Message
    What are sunken treasure hunters looking for?


    Gold coins.


    Gold has always been a currency.


    Gold's commodity function increased with the industrial revolution and discoveries of it's usefulness in everything from electronics to dental crowns to shielding spacecraft and astronauts from gamma radiation.


    Gold is still Gold, and one of the shrinking number of hedges against Big Brother.
    21 Aug 2010, 11:47 AM Reply Like
  • positivethoughts
    , contributor
    Comments (2064) | Send Message
    Gold is a currency that hedges against paper currency devaluation because of it's brillance and attraction to human civilization. If you look at the rise and fall of civilizations, gold has always remained a valuable assets because people are dazzled by the metal and it's beauty. Gold is like beautiful california beach model. Does anyone think that a gorgeous blonde with a killer body will ever not be in great demand by men around the world? Same with gold.
    21 Aug 2010, 12:23 PM Reply Like
  • auto44
    , contributor
    Comments (3573) | Send Message
    In some societies and different eras in Europe much larger women are/were in vogue. But gold is not only rare but rarely out of vogue. It's purchasing power may fluctuate some what as most things do but it's not fur or feathers or a zoot suit or confederate dollars or any other fiat currency.
    22 Aug 2010, 11:30 AM Reply Like
  • Papaswamp
    , contributor
    Comments (2241) | Send Message
    I think people are missing a few nuances occurring in Asia. The muslim world doesn't really like paper money... religiously gold and silver are considered the only real forms of currency. This is something to consider..especially when a few small countries are beginning to float the dinar/dirham.
    "In a move applauded by some local Muslims, the state government of Kelantan said it was introducing a new monetary system featuring standardised gold and silver coins based on the traditional dinar and dirham coins once used by the Ottoman Empire."
    21 Aug 2010, 10:08 PM Reply Like
  • auto44
    , contributor
    Comments (3573) | Send Message
    Papaswamp GOOD LORD If this trend continues they may stop calling us gold bugs or a least the negative connotation may disappear.
    22 Aug 2010, 11:35 AM Reply Like
  • Papaswamp
    , contributor
    Comments (2241) | Send Message
    I doubt it. Doesn't bother me in the least....I just sit back and smile that knowing smile.
    22 Aug 2010, 03:17 PM Reply Like
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