mysaug

Why Gold Is Losing Its Shine

you can value gold at a basic level by the cost of exploring, developing, digging andf refining to come up with a break even price and then add basic 15% ROE to reach a floor value. Right now my guess is $500 an ounce. HOWEVER, the easy finds of easy gold are mostly gone so the costs to get wahtever the big bang left us is gettign harder and harder. Add environmental rules and I see base price going to $1,000 in next 5 years. There is a true demand for gold, for jewerly ( tell your wife, girlfriend you got her a silver necklace because it is just as nice as gold and see what response you get. There is also true industrial demand, though small compared to jewerly. Gold will always be a rare metal and get rarer in future. Not sure what will happen in next year, but over next 5-10 yrs going no where but up.

Rick


On May 04 12:52 PM djc wrote:

> I keep hearing that gold is a 'store of value'. How does that work
> ? How does it store value ?
>
> Theres no way to fundamentally value the stuff, other than gauging
> demand from jewelry or high-conductivity applications where silver
> just isnt good enough. So /who/ values it, and how ? It seems to
> me that with no fundamental means of valuing gold, the big holders
> (read governments) are free to decide the value at any time, in any
> place.
>
> Doesnt the fact that Gold cant be fundamentally valued make it THE
> SAME as a paper currency for all intents and purposes, in that large
> governments can manipulate its supposed value ?
>
> it is pretty stuff, but id prefer to reside in somethign like oil
> or other dollar-denominated commodities as a hedge against inflation.
>
>
> The bottom line is that I think this lack of fundamental value is
> waht makes the stuff so volatile and easily gamed.
>
> I just dont get (and please satisfy my ignorance if thats where im
> speaking from) why we would /depend/ on gold as a store of value,
> when its so impossible to /set a value/ for it.