Beck Didn’t Warn Me Gold Can Fall!

September 27th, 2011 at 12:13 am | 76 Comments |

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The gold market meltdown — with prices plunging in recent weeks from over $1,900 an ounce to under $1,600 — is a reminder that the precious metal is a volatile, speculative commodity. It also signals a bear market in credibility for the many right-leaning cable-news and talk-radio hosts who have touted gold relentlessly in recent years as a hedge against economic calamity.

“If you’ve been watching for any length of time, and you still haven’t looked into buying gold, what’s wrong with you?” Glenn Beck said in a video on his website in 2009. “I think you’re nuts.” His TV show, meanwhile, featured frequent calls to buy gold, interspersed with commercials for gold retailers.

Bill O’Reilly, Mark Levin, Andrew Napolitano, G. Gordon Liddy and other high-profile hosts also joined the gold bandwagon, pressing audiences to invest in gold collectible coins and other such products rather than trust their wealth to paper money. Liddy took to crumpling currency in his gold commercials.

Lately, as gold has fallen and the dollar has risen amid economic turmoil, some of the metal’s vulnerabilities as an asset have come to the fore. One is that gold prices can be vulnerable to declines in other asset classes, as gold-holding institutions and individuals may need to sell it to cover their losses in stocks or other markets. Another is that gold, often purchased as a hedge against inflation (a role it performs unevenly), can be caught in the downdraft of economic stagnation that threatens to keep inflation low or spur deflation.

A further source of volatility for gold is that — though the metal is often presented as a means of independence from untrustworthy governments and central banks — those official institutions hold enormous quantities of gold and can affect the market through actions or perceptions. Wikileaks recently released a U.S. Embassy cable suggesting that China is increasing its gold reserves to promote alternatives to the dollar as international reserve currency. Whether or not that is true, it raises the question of whether gold might fall further without support from Chinese purchases.

Often, advocates of gold as an investment have also been enthusiasts of putting the dollar back on a gold standard. Such a policy regime would have numerous problems, including instabilities in gold supply and demand, and maintaining the credibility of the gold standard in the face of a global market constantly testing the commitment of policymakers to maintaining the standard. One good consequence of gold’s current market turmoil is that it makes a gold standard restoration even more implausible.

Recent Posts by Kenneth Silber



76 Comments so far ↓

  • Oldskool

    More candidates for the answer to the question, who broke the government. Robber barons.

  • valkayec

    Ross Norman, Sharps Fixley:

    “It is not immediately clear at this juncture who was selling or why – but in placing such a huge order into the market when the least number of market participants were active tells you that they were out for dramatic effect.

    Anyone looking to offload significant amounts of metal at the best possible price would have done so when both London and New York were both open – this would have ensured they would have hit the market when it was most liquid and ensured they got the best price for their sale.

    Clearly finessing gold into the market was not their motive – they wanted a statement.”

  • TAZ

    “It has never been worth ZERO”.

    Where is the problem?

    • Rossg

      If you buy at $1,900 an ounce, the market price must maintain higher than that, else you loose money. At today’s pricing gold doesn’t have to get near zero for a lot of people to loose a lot of money. And, obviously, the winners are those who convinced the hoards to buy in the first place. My question is: if the need to get out of American currency is so great, why do these others want my dollars?

  • mannie

    Well, once Mr. Paul gets to the White House, he’s gonna straighten America out by putting it on the gold standard. Yup, the gold standard…standard gold…a standard…gold! Yup. I sure hope Mr. Paul understands the gold standard, because I cant make heads or tails out of it.

    • Henry Cameron

      Yes! Let us not upset the apple cart. Things are going so well.

      He doesn’t advocate an immediate direct conversion to a pure gold standard, but even that would be a preferable system to what we have now. Either a currency is anchored to something, or it isn’t.

      The dollar has lost 95% of its purchasing power in the last hundred years. This system doesn’t work. It shifts wealth upwards while pillaging the middle and lower class people in this country via inflation.

  • Arms Merchant

    This article is juvenile. That the dollar has risen relative to gold says nothing about the intrinsic value of either. The long term trend of gold has been up.

    Yes, gold is volatile and subject to price changes relative to other stores of value when large amounts are bought or sold. So what? Every store of value — gold, land, oil — is subject to the same effects.

    The dollar is merely a piece of paper backed by a promise. Aside from the recent flee to safety from the Euro and stock markets to Treasuries, the long term outlook of those promises look less and less credible, unless the U.S. gets its fiscal house in order. The dollar could lose most of its value overnight if enough people lost confidence in it.

    So aside from the provocative headline designed to get the hit rate up, what’s your point, Silber?

    • Florajo

      I’m fine with the idea of gold as a store of value, like oil. Personally, I have a problem with the conflict of interest that plagues Beck and Limbaugh. They pump up economic fear through overheated rhetoric, drive listeners to gold, their investment of favor increases in value, and seemingly supplies evidence that backs the message of fear. I suppose we each need to decide for ourselves how big a problem this is.

    • SteveT

      If the dollar is so worthless why does everyone quote the price of gold in dollars?

      Why not quote the price of gold in say… GOLD!

      “The dollar is merely a piece of paper backed by promises” It’s an instrument of trust and faith, just like gold. If the dollar is worthless, I assure you so will be gold.

      • Banty

        +1

        If that storied calamity comes to pass, um – what was gold for, then? So people can SELL it for goods. And, as the gold sells….. its price drops. A little too much of that, and there’s a panic.

        There’s no magic in gold. If there is a true calamity, the real items of value will be knowledge and skills and relationships.

    • ottovbvs

      “what’s your point, Silber?”

      That gold is an asset class like any other and subject to fluctuations in price. However, this is not the position of goldbugs or shills like Beck who trade on their gullibility. One would have to be fairly obtuse not to get Silber’s point which is probably the explanation for your difficulty.

    • armstp

      Gold has very little fundamental value. Its rise is all speculative and so-called “safe haven”. That means that its price can easily fall on a dime. It can easily go to $500 in an instant. It is very speculative at this point. Pay your money and take your chances.

      “The dollar is merely a piece of paper backed by a promise.”

      Gold is basically the same. Very little intrinsic value.

  • paul_gs

    Beck was promoting gold back in 2009 when it was $1000 an ounce. Now two years later, gold is $1600 an ounce. How many of your investments have gone up 60% in value in 2 years?

    • Andrew Pavelyev

      The stock portfolio (mutuall funds – mostly index funds) that I bought in very late 2008 went up 70% in value in 2 years.

    • Kevin B

      My investments tripled in two years. None of it was in gold. Mostly Apple, Boeing, AT&T, etc.

      I have a single one ounce gold coin that my father gave me 20 years ago. I don’t count it in my net worth though, since I keep it for sentimental value. I did put it in a more concealed place, though.

      • JimBob

        I have safety deposit boxes full of gold coins that I started buying in the late 90s up to early 2003. Average price paid off the top of my head, a little less than 300.

        Gold is down now because people need cash. When the next round of reports come out about how bad the economy is gold will go back up. It has had a fantastic run.

        • Banty

          Meaning – - what, people won’t need more cash if the economy tanks??

        • Banty

          For being such a genius, you sure have trouble following a conversation.

          When people who own gold, are en mass cashing on the gold in a depression economy, gold prices will drop precipitously. Long time holders (like from decades past – not Glenn Beck’s followers) *may* not see it go below their purchase prices, but still, the gold will buy less and less.

          I don’t know if even you’ll be sitting pretty or not. You can’t eat gold, for one thing. On an individual barter level, people may not want gold as it makes them targets for theft or even violence. Only skills and immediately fungible items and consumables will matter. And relationships – like people you can share a dwelling with to pool resources.

        • JimBob

          If the dollar collapses and we have riots in the streets, gold will go through the roof. It won’t go down because people start using it for economic transactions.

        • Banty

          JimBob’s earlier post, which I replied to at 10:28, was apparently removed.

        • SteveT

          Gold at $300/ounce was a fantastic investment, JimBob. If what you’re saying is true, good for you.

        • JimBob

          The Clinton Gingrich team balanced budgets and started to pay down debt. As a result price of gold fell to 253 at one point. I started buying because I knew politicians didn’t have the courage to be honest with the American people over entitlements and our demographic problems. Thanks to medical technology people are living much longer and we aren’t having enough babies.

        • Rillion

          If there is an event that causes people to stop using the dollar as currency and people start buying and selling things using gold, the best investment would have been a few guns and as many bullets as you could stockpile. In the event you can’t pay in dollars, a loaded gun > gold.

  • indy

    Uh, the company beck was hawking, which if I remember correctly was goldline, had markups of about 100% and bid-ask spreads of around 35%. That cuts into any profits handsomely. Apple, BTW, has gone up 224% in 2 years and > 10000% since I bought it.

    • TJ Parker

      And let’s not forget that gold is taxable as a collectible, not an investment: hence the long-term capital gains rate is 28%, not 15%.

      AAPL was sitting at $90 for a couple months in 2008-9. (Armageddon v.1.0 + initial announcements about Jobs’ cancer.) My AAPL investment from that time is up well over 300%.

  • SteveThompson

    As shown in this WikiLeaks Department of State cable release, China has plans for the reserve currencies of the world including the euro and the U.S. dollar and for the use of gold as a substitute:

    http://viableopposition.blogspot.com/2011/09/chinas-plan-for-gold-and-fiat.html

    If this is indeed the case, China will most likely be looking at the recent gold price decline as a buying opportunity.

    • ottovbvs

      Mr Thompson or whoever you are. If China wished to make the Yuan a reserve currency it would have to be priced realistically which would mean a revaluation between 30% and 50%. Is that going to happen?

    • Florajo

      I also doubt there are sufficient quantities of gold on the planet to allow China to pursue it heavily without causing themselves extreme difficulty in entering their positions (and having credible exit strategies)

      Gold’s scarcity cuts both ways for big players.

  • ottovbvs

    Once again. Gold is a precious metal with little utility outside of jewellry production and some limited uses in industrial and medical processes. It is however, seen as a store of value by many and this accounts for its primary role which is as a vehicle for speculation and/or a hedge against inflation. The decline in gold is the consequence of profit taking by gold investors like hedge funds who were overlong in this asset class and think the big run up is over. It’s also the consequence (as Silber points out) of margin calls or the need for re-balancing brought about the decline in value of other asset classes. The other factor at play is opportunity cost. When there is widespread uncertainty and the return on other ultra safe asset classes like US T bills is negative in real terms (as it is at present) the opportunity cost of holding gold is negligible. However, when the return on other asset classes starts to rise then so does the opportunity cost of being in gold and it’s at this point that the price of gold will start to fall dramatically. If the US economy was performing at optimum levels gold would be under $1000 an ounce…and it will be. As for the gold standard this became obsolete 80 years ago along the Charleston and fantasies about returning to it are strictly the province of cranks. And for those cranks posting here boasting about their gold gains over the past few years, as several posters have pointed out certain individual stocks have in fact performed much better. But who am I to discourage these mainly right wing Republican fantasists from upping their ante on gold.

    • Banty

      “However, when the return on other asset classes starts to rise then so does the opportunity cost of being in gold and it’s at this point that the price of gold will start to fall dramatically. If the US economy was performing at optimum levels gold would be under $1000 an ounce…and it will be. ”

      Which makes it OK to hold as a hedge item in a balanced portfolio. But – jumping on it the past couple of years? Remember what they say about, y’know, buying low and selling high. It should have been placed in that portfolio years ago. Now? Wait until it drops.

      Like any other asset.

      “As for the gold standard this became obsolete 80 years ago along the Charleston and fantasies about returning to it are strictly the province of cranks.”

      Yep. Can’t tie a worldwide economy to a limited asset like that. People who go in for that idea, don’t understand that all economy, aside from subsistence farming/herding (and even that, really), depends on a larger society. I think they’re fundamentally uneasy with the idea of a medium of exchange that is a convention.

      • ottovbvs

        “Which makes it OK to hold as a hedge item in a balanced portfolio.”

        Of course, which is what all those hedge funds have done and now they are taking their profit. Nowhere did I say having gold as part of one’s portolio was irrational but it’s not the holy grail just an asset class like any other. Long dated T bills for example which are having one of their best ever years (see link). So much for the predictions of devalued dollars…. inflation through the roof…. collapse in demand for T bills at the end of QE 2 that we’ve heard from various right wing economically illiterate loonies here.

        http://www.bloomberg.com/news/2011-09-25/betting-on-bernanke-returns-28-for-treasuries-as-twist-divides-investors.html

        • Banty

          “Nowhere did I say having gold as part of one’s portolio was irrational but it’s not the holy grail just an asset class like any other.”

          I was agreeing with you.

        • ottovbvs

          I know you were. It was just rhetorical re-emphasis of the original point.

        • indy

          Having gold and/or other commodities as part of a balanced portfolio is of course a fine idea. Paying 35% spreads for the ability to hide it under your bed is, of course, insane.

    • JimBob

      Robert Zoellick President of the World Bank sees the world returning to a Gold Standard. Compared to you he’s a giant intellectual.

      The United States economy is being destroyed by our reserve currency status.

      http://www.marketwatch.com/story/world-must-abandon-paper-reserve-currencies-2011-09-26?link=MW_latest_news

      • ottovbvs

        “Robert Zoellick President of the World Bank sees the world returning to a Gold Standard.”

        Jimbo…would you like to provide us a link to where Zoellick is predicting the world is going to return to the gold standard because the piece linked to certainly doesn’t say that. In the absence of such a link I’m going to have assume you’re in your standard operating mode…namely lying.

  • ConnerMcMaub

    Rare earth minerals are much more exciting. This months Scientific American has an article about Afghanistan’s mineral resources that the USGS has been surveying. They may have more rare earth than China which would be good for everyone but the Chinese.

    • sweatyb

      The reserves in China or in Russia or in the US are more than enough to provide what we need. However, the process for refining rare earths from the rock is expensive, arduous, and produces radioactive waste.

      Given the cost of labor and environmental concerns there’s very little profit in it which is why the one major rare earth mine in American was shut down. But, according to Wikipedia, that plant (in Mountain Pass, CA) is due to renew operations in 2012. I’d expect that once that plant starts operating, the dollar value of rare earths will fall precipitously.

  • windsorboy

    I have an acquaintance who is a big believer in buying gold. He also seems convinced that the world ecomony is going to collapse and it will be every man for himself. Need I say more?

    • Banty

      Your acquaintance is misguided even if the world economy does collapse. He is not going to hide in a hole hugging his gold, coming out once in a while to buy some foodstuffs. He might *think* so, but he’s not.

      Has he thought this through?

      • sweatyb

        yeah. What would the value of gold be in that situation? You can’t eat it or wear it or burn it for warmth. It’s not strong enough to use as a tool or a weapon. And it’s heavy and bulky which makes it hard to hide or transport.

        your crazy friend should invest in guns.

        • windsorboy

          FYI, he’s not a friend, just someone I know through work. Personally, I just stare at him like he’s an idiot when he starts in on all this stuff. It seems obvious that he had drunk the cool-aid and his mind has turned to rot.

        • MSheridan

          Right. But a piece of advice for those who do plan hopefully for the apocalypse–store the boxes of bullets away from the home. One of my college roommates was the son of a rancher who stockpiled canned food, guns and ammo in a big way. Their home (I visited there twice–a nice place with circa 1920s wiring) caught fire one day and went up like kindling. The local fire department showed up but just hosed down the nearby trees and refused to get too close, as the bullets inside were going off like popcorn.

          Most of the really heavy ordinance was buried around the property, and the food stores were mostly in one of the outbuildings, but they did lose all the other stuff that makes life comfortable when society has NOT absolutely collapsed.

        • Banty

          For an apocalypse, prepare for a barter economy.

          Something of value like gold will become a reason for theft and violence against oneself. If it’s in a bank, it still will be subject to theft.

          Weapons are good, but only for cohesive communities to defend themselves. You will NOT be able to hold off a concerted attack, and that’s actually unlikely (unless you’re storing gold). During the Arab spring, in Cairo, in Tunis, neighborhood men created guard stations – they know what to do. Not silly Idaho survivalists sitting on hundred acre lots.

          Basic survival skills (and by that I mean gardening, hunting, carpentry, etc, not orienteering and desert survival) is the first thing you need.

          The next thing you need is some skill you can barter (plumbing, carpentry, etc.)

          The final thing you need is relationships. Old, and newly formed. To pool resources and housing.

          This is how people get through severe downturns. We are starting already – combining households (fewer independent seniors and youths in their early 20′s). Look at how Europeans got through the aftermath of WWII. Gold might have bought a ticket abroad, but that’s about it.

          People who bought gold a long time ago made a good investment, but for more ordinary reasons. Many of us with balanced funds actually own gold but don’t know it.

          But gold won’t get you gold bugs through what you think it will get you through.

        • MSheridan

          +1 to Banty.

          I don’t think most survivalists have really thought things through to that extent, but that’s exactly right. Of course, that would entail building what is for all intents and purposes a government from the ground up, and one far more “socialistic” than modern American society. Maybe it’d just be better to not allow affairs to reach that point to begin with…

  • Southern Populist

    Given the progressive impoverishment of the American middle class, unemployment, a deteriorating economy, high levels of immigration, and other factors such as the possibility of Weimar-Argentinian style hyperinflation, I think economic collapse, rioting and chaos are real possibilities in the next 10 years.

    With hyperinflation, anything will be better than dollars.

    - DSP

    • sweatyb

      With hyperinflation, anything will be better than dollars.

      Euros?

    • Frumplestiltskin

      yea Gods DSP, what a scary world you live in. Those real possibilities that you envision will simply not happen based on Demographics alone. We are to begin to see the greatest wealth transfer in world history as baby boomers die off to be replaced by baby busters.

      • Banty

        But we’ll be weighed down until then. Some (not all) of the reason for Japan’s lost decade is the overhang of elder care responsibilities, both personal and public/government.

    • ottovbvs

      “and other factors such as the possibility of Weimar-Argentinian style hyperinflation,”

      Hyperinflation around the corner? I guess that why US long dated paper is yielding under 2%. DSP demonstrates his economic literacy once again.

  • JimBob

    Howard Buffet the great Republican congressman from Nebraska and Warren’s father understood this issue

    “But when you recall that one of the first moves by Lenin, Mussolini and Hitler was to outlaw individual ownership of gold, you begin to sense that there may be some connection between money, redeemable in gold, and the rare prize known as human liberty. Also, when you find that Lenin declared and demonstrated that a sure way to overturn the existing social order and bring about communism was by printing press paper money, then again you are impressed with the possibility of a relationship between a gold-backed money and human freedom.”

    http://www.zerohedge.com/article/howard-buffett-said-human-freedom-rests-gold-redeemable-money-called-return-gold-standard

    • windsorboy

      You know, I’ve seen this quote many times but I have not seen any historical evidence that either Hitler and Mussolini ever outlawed private possession of gold. It wouldn’t surprise me if Lenin banned gold ownership, though… he pretty much banned banned any kind of private possession.

      Perhaps you can provide me with a link to a reliable historical source for this claim?

      • JimBob

        Warren Buffet’s father is not a reliable source??

        A gold standard would also help regulate the public budget – it basically forces the government into producing balanced budgets. This is probably also why politicians hate it so much. And a gold standard is also independent of the varying economic opinions of the governments. Gold means freedom – a notion also highlighted by the fact that Lenin, Mussolini, and Hitler banned private gold ownership at the outset of their dictatorships.

        http://oilprice.com/Metals/Gold/Gold-is-Money-Nothing-Else.html

        • Banty

          “Warren Buffet’s father is not a reliable source??”

          Um, no. He was a politician and businessman, not a historian. And zerohedge is not a reliable source.

          You get an F.

        • JimBob

          No, I get an A Howard Buffett was born in 1903. He lived through the era. He was a prominent investment banker before he ran for congress. When he retired from Congress he went back to banking and then became Robert Taft’s campaign manager in 1952 for the Republican nomination for President.

        • windsorboy

          No. It’s just words in presentation as far as I’m concerned. I’ve tried to find evidence of this through various sources (Wikipedia, etc.) and nothing can be found. It seems to me to be all anecdotal.

      • ottovbvs

        “Hitler and Mussolini ever outlawed private possession of gold. ”

        Godwin’s law breached. Look nearer home. FDR effectively banned the possession of gold specie.

  • sinz54

    I invested in gold back in April 2003, when it was $370 per ounce.

    It’s now risen to around $1600 an ounce, more than 300% gain. Far outstripping the capital gains from ANY financial asset class such as stocks or bonds.

    How long will I hold onto gold? Until there is a major sea-change in how Washington deals with economic issues.

    Remember, it took a major sea-change to cause gold to enter its last bear market. In the 1970s, gold had soared as Keynesian economics and FDR-style welfare statism gave us ever worsening stagflation. Then the election of Reagan in 1980 signaled a turn away from the FDR welfare-state model. That continued even with Bill Clinton (“The era of big government is over”). And as a result, gold did very badly from 1981 to 2000.

    Then after 9-11, we entered into an era of loose money again–and gold soared again.

    As long as the Federal Government continues to try to fight our economic difficulties with Keynesian economic methods, I will continue to hold gold.

    Until the day we stop hearing any more talk from anyone about “stimulus packages”.

    • indy

      Hate to burst your bubble sinz, but the metal price index (Copper, Aluminum, Iron Ore, Tin, Nickel, Zinc, Lead, and Uranium — does NOT include Au) is up 335% in that same time frame.

    • windsorboy

      I have been buying stocks for years, certainly since before 2003, and I would disagree. I buy only dividend paying stocks and reinvest my dividends and never remove money from my investment accounts (they are for my retirement). According to my calculations I am doing at least as well as gold and I have the added benefit of recieving a net return of about 20% annual dividend yield on the value of the money I have invested. What I guess I am saying is that if you look strictly at stock prices then yes, probably gold has outperformed stocks, but if you look at the accumulated yield from capital gains plus quarterly dividends I am far ahead of gold.

  • Arms Merchant

    The point being missed here is that governments can’t print more gold and devalue what you have. Sure, big institutions can dump gold, and more is always being mined (as long as the cost of mining is low enough). But it’s difficult to change the overall global supply rapidly.

    Therefore, as a medium of exchange, gold is superior to, say, Zimbabwean dollars. And that’s why a backed currency (whether it’s backed by gold, oil, or a basket of goods) continues to have appeal.

    Perhaps you missed the late 70s and early 80s when double-digit inflation wiped out the savings of millions. My grandfather was one.

    • ottovbvs

      “Perhaps you missed the late 70s and early 80s when double-digit inflation wiped out the savings of millions.”

      So what? Inflation has averaged around 2.5% for the last 30 years and in fact was running far higher when Bush was president than now. The financial crisis undoubtedly wiped out far more wealth than early 80′s inflation. (around $13 trillion). And gold btw (while undoubtedly a store of value) is effectively obsolete as a medium of exchange.

    • sweatyb

      Perhaps you missed the early 1940s when the Germans invaded Poland and France. Or AD 410 when the Goths sacked Rome. The lesson of history is “Shit happens. And it’s not the shit you think is going to happen.”

      You do know that institutions and governments have loads of gold in reserve. What do you think it’s in reserve for? If hyperinflation sets in, which it wont, it will only be after the global community has already dumped its gold reserves and cratered the value of your relatively pathetic gold holdings.

      Gold is not going to save you from the apocalypse. But if you enjoy speculating on precious commodities, go for it.

  • Frumplestiltskin

    hey Sinz, only 300%, pfft. I bought Shanghai real estate in the 90′s and I have seen my investment do far, far better than that lousy 300% (and when you consider the revaluation of the Yuan it tack on an additional 25%), and what do I have to thank for that? Why the Chinese government and their own stimulus packages.
    And the best news is we own 2 adjoining apartments out in Huanglou and Disney is building their theme park either there or nearby.
    So I laugh at you and your gold.

  • Demosthenes

    I realize that goldbuggery is not necessarily rational, but I have a hard time understanding the economic framework of gold bugs. Perhaps someone could explain to me:

    1) Is it being asserted that gold is money, perhaps the only true or real type of money? Or is it being asserted that money (federal reserve notes) should or must at all times have a value that is expressed in terms of gold? If the latter is being asserted, does it not imply the former? If the former is being asserted… see question 3.

    2) Gold is a fungible globally-traded commodity, like oil. This means that an ounce of gold mined in the United States goes for sale on the same market as an ounce of gold mined in Congo or South Africa. Given that there is little gold left to mine in the United States, as well as the fact that it is more expensive to mine it in the United States than in Congo or South Africa, wouldn’t a gold standard essentially put our currency at the mercy of a) the gold market and b) foreign nations that can mine more gold than we can mine, faster than we can mine, cheaper than we can mine?

    3) Isn’t the whole idea of a monetary economy that money is a placeholder, a “store of value” but not something valuable in and of itself? How is arguing for a return to the gold standard different from arguing for a return to a medieval/mercantile barter economy?

    I am not an economist, nor am I trying to offend anyone, I would just like to understand the gold bugs’ position a little bit better.

  • Frumplestiltskin

    Demosthenes:
    http://goldfever.com/gold_sea.htm
    Even at the conservative estimates of 10 ppt of gold in seawater, there is a great deal of gold in solution in the oceans. Humankind has unearthed perhaps a total of 3.3 billion ounces of gold over the course of history, an amount equivalent To a cube of gold 55 feet on a side (Dworetzky 1988), but the sea water of the Earth’s oceans contain about 25 billion ounces of gold (Burk 1989). If the ability of some of these bacteria to concentrate gold around their cell membranes to the degree that they form massively dense agglomerations of hollow gold microtubuals, as the evidence suggests, then perhaps a similar bacterium may find a practical application in sea water. It is believed that these bacteria concentrated gold from solution concentrations similar to that of sea water, though perhaps not similar with regard to other constituents. If such a bacterium could be identified and grown in sufficient amounts, it might then be fixed to substrates that could then either be moved through large volumes of sea water, or placed in stationary positions in areas of relatively swift currents. Once enough time had elapsed for these bacteria to gather sufficient amounts of gold, these substrates could then be gathered and processed to recover the gold. The problems in these approaches are not trivial, and the work and research needed for an evaluation of its practicality are not simple. I believe that such research might pursue exploring the precise biochemical and bioelectrical pathways for the deposition of gold in these naturally occurring bacteria. Perhaps with a sufficient understanding of these pathways, these gold scavenging abilities might be artificially promoted or enhanced sufficiently to achieve an economic recovery of gold from sea water.

    We are perhaps but a generation or two away from genetically engineered microbe eaters. What this will mean to the world I have no idea, but I sure as hell would not hinge my hopes on something that is a genius away from losing most of its value.

  • Kenneth Silber

    I checked in earlier and saw that I was accused of being a central-planning socialist because I don’t want the government to set a fixed gold price. Seemed strange but I was probably dreaming.

    • Banty

      Yes, you were. But that post, and replies, apparently have been removed.
      This is meta, but I think that if something is removed, it’s better to indicate that it was, and leave at least the shell of the post in place.

      • Kenneth Silber

        I personally think such comments should be marked with a suitable symbol such as

        [img]http://www.webweaver.nu/clipart/img/historical/pirates/skull-and-crossbones.png[/img]

        UPDATE: Or maybe not, since I can’t get the image to actually show up.

    • Frumplestiltskin

      You gotta admit though that this line from SteveT way above was classic:
      If the dollar is so worthless why does everyone quote the price of gold in dollars?
      Why not quote the price of gold in say… GOLD!

    • indy

      Some weird shit is happening on the site. A post I made yesterday with several replies disappeared. It was an observation and had nothing that anybody could possibly take offense at, so I don’t think it was done on purpose. Jimbob’s post, while looney as ever, didn’t have anything offensive enough to be removed over either.

  • ottovbvs

    “Seemed strange but I was probably dreaming.”

    You probably were Ken since the author of this comment and his like minded financial geniuses live in dreamland.

  • Gold does not provide security for Glenn Beck viewers | Houston Gold News

    [...] The FrumForum gloats that Glenn Beck’s admonitions to buy gold, lots of physical gold in coins and other forms, has turned sour for customers just when it is supposed to have its greatest worth: The gold market meltdown — with prices plunging in recent weeks from over $1,900 an ounce to under $1,600 — is a reminder that the precious metal is a volatile, speculative commodity. It also signals a bear market in credibility for the many right-leaning cable-news and talk-radio hosts who have touted gold relentlessly in recent years as a hedge against economic calamity. [...]