huskerbob

Gold: The Next Reserve Currency Player

Dr. Jackpot: They have piles of oil now. Is it like living on a desert island with "no food and no way to get off"?
You may find this suprising, but some people will accept gold in exchange for currency, food, farmland, machinery, etc. You can exchange gold for lots of useful things. Maybe even an airplane to fly you out of the desert! So no need to worry about the Saudi's sitting on their piles of gold.
Nikhil- a comment from James Turk will help explain why many people worry that GLD exists only to soak up money that would otherwise support the physical gold market: "Thus, for example, when GLD adds a gold bar, there is no assurance that the gold bar really exists unless it is in the vault of the custodian, HSBC. But the prospectus discloses that HSBC uses subcustodians and even sub-subcustodians, and what's worse, "the Custodian is not liable for the acts or omissions of its subcustodians". In other words, if the subcustodian does not have the gold, GLD "Shareholders cannot be assured that the Trustee will be able to recover damages from subcustodians...for any losses relating to the safekeeping of gold by such subcustodian". This means that "Because neither the Trustee nor the Custodian oversees or monitors the activities of subcustodians who may hold the Trust's gold, failure by the subcustodians to exercise due care in the safekeeping of the Trust's gold could result in a loss to the Trust." To be blunt, these disclosures mean that there is no certainty that the gold supposedly owned by GLD really exists. After all, if there was complete certainty that the gold did exist, the objective of GLD would be to provide investors with the opportunity to own gold bullion by investing in shares of an ETF, rather than its stated objective to just track the price of gold."

How the U.S. Financial Crisis Resembles Japan’s 'Lost Decade' - And How to Play It, Part II

Puddle Jumping- Gold is not money? Maybe you should read the constitution. The U.S. of A. still mints gold and silver coins. If you haven't noticed, these are much more effective as a store of value (one of the traditional definitions of money) than our federal reserve notes. You can fill your gas tank with the same number of silver coins as you could 10 years ago. Try doing that with federal reserve notes!
The author's recommendations seem to make sense: gold as an inflation hedge and investment, and try to find investments which will grow along with the economies in other parts of the world, as the U.S. economy could be stagnant for some time.
Is that fear mongering or prudent advice? As we have finished with the biggest economic boom and longest bull run in our history, is it fear mongering to believe that we may have a lengthy cooling-off period?
Hasn't consumer spending been the engine of our economy? What are consumers going to spend now that credit is contracting, and with our savings rate less than zero?
As for gold, about 1.5% of investment dollars are in gold right now. At the height of the ugliness in the late 70's, gold had captured closer to 25% of investment dollars. This could happen again because people recognize gold as a store of value, the definition of money.

Who's to Blame for the Commodities Boom?

Sliv is correct in that there aren't enough resources for everyone. But won't the spiraling cost of commodities eventually curb the population?
There are a lot of articles mentioning the "problem" of high commodity prices. But don't those prices help solve the problems of overconsumption, pollution, overpopulation, etc.?
At least this article points out that bad fiscal policy is pushing more money into commodities instead of blaming speculators.

Who's to Blame for the Commodities Boom?

Yes! We need to end this ridiculous practice of letting the markets set prices. Why not have a central planning committee set a "fair" price for all goods and commodities, so that all can afford them, and no one is denied anything. Then we can have shortages of everything!
Like many others have stated, if the price is "wrong", profit from it! Then you can give those profits from your abilities to each according to his needs.
Shortages drive prices higher which spurs production and reduces demand which drives prices lower.
The problem now is it's harder to boost production of many commodities, but high prices will pay for research, development, and marketing of replacements(like solar for coal, algae-derived fuel for diesel, etc.), and will spur people to find alternatives or modify their consumption. If we "fix" these high prices instead of letting the market provide solutions, we should get used to permanent shortages.