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Old 10-20-2008, 11:50 AM   #26
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Originally Posted by Johnny View Post

Then why isn't gold @$2k/oz like a like the goldbugs have told us would happen if these exact economic circumstances came to pass? A few $ over spot doesn't equal the windfall they have been forecasting.
According to my trusty inflation calculator, even if gold was now at $2k/oz you'd just be breaking even if you'd purchased it in 1980 for $800.

IMHO, gold isn't an investment, it's just a very portable asset. I had friends in college who'd had to flee Iran with only what they could fit in their pockets, and they were big advocates of keeping a stash of gold coins around the house for such eventualities.

I like it because it's shiny.


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Old 10-20-2008, 01:55 PM   #27
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"Practical purposes" PRIMARY definition is cost. If gold cost a similar amount to copper, gold and gold alloys and plating would be EVERYWHERE, and would replace the use of many other metals.

From power transmission lines and motor size (very critical) and efficiency, everything else electronic (electronic parts and circuit boards could shrink and be far more reliable), anything plated and undesirable to tarnish (from bathroom fixtures to roofs), pipelines (particularly for corrosives, but for water as well), jewelry, dishes, its hard to itemize them all.

Gold's scarcity (and thus high value) makes it impractical, NOT its fantastic utility. Currently, between 1/4th and 1/3rd of the annual gold output is used industrially. If gold was $3/lb, I am sure the entire world's output of gold would be gone in flash, discounting all demand drop because it is not an investment any more. And it STILL would be pretty and be if the best materials to make good quality lifetime jewelry.
Mumble-Jumble. Lot of words and no real examples.

Platinum, on the other hand , is valued higher than gold, but unlike gold, it has many, many, real, current practical uses. (just like copper, and nickle).

Also, it is illogical to say that for the last several thousand years (or 100 years for that matter), that gold has been highly prized because of it's 21st century possible uses.

Exclude the gold jewelry, and you can leave it locked in the vault.
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Old 10-20-2008, 02:35 PM   #28
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Mumble-Jumble. Lot of words and no real examples.

Platinum, on the other hand , is valued higher than gold, but unlike gold, it has many, many, real, current practical uses. (just like copper, and nickle).

Also, it is illogical to say that for the last several thousand years (or 100 years for that matter), that gold has been highly prized because of it's 21st century possible uses.

Exclude the gold jewelry, and you can leave it locked in the vault.
Power lines, wire, pipe and most electronics are "mumbo jumbo"? Gotcha. If gold and copper were eaually priced, copper would not be used at all in those, and many more applications.

Your understanding that practicality and utility somehow does NOT include the price and availability of a material is a unique analysis indeed.
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Old 10-20-2008, 02:40 PM   #29
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If you think of gold as an investment vehicle you aren't going to sleep well at night, fall prey to every gold bug investment scheme and gold doomer post and you are going to get boned like a fish.

A certain percentage of your total assets should be in gold to hold in case of hyper-inflation and to have some portable wealth if you need to bug out.

In my opinion, people go to precious metals too fast before they have taken care of other things in cast SHTF.

You should pay down as much debt you can, try to own your home (or almost own), quit using those credit cards, and keep enough "stuff" like food in your house before you even think about going to PM.

First things first.
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Old 10-20-2008, 08:22 PM   #30
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Originally Posted by Fiddlerdave View Post
Power lines, wire, pipe and most electronics are "mumbo jumbo"? Gotcha. If gold and copper were eaually priced, copper would not be used at all in those, and many more applications.

Your understanding that practicality and utility somehow does NOT include the price and availability of a material is a unique analysis indeed.
Say What! A miniscule demand for this, I'll tell you what.

Just consider what the price of gold would be if the price followed the same supply/demand pricing as other comodities. The Hunt brothers found that out the hard way in the silver market.

Gold and diamonds have about the same valuation rules. We can go on an on about all the neat stuff we maybe could do with diamonds too; but, in the end, they just aren't that useful in large quantities.
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Old 10-21-2008, 02:30 AM   #31
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Say What! A miniscule demand for this, I'll tell you what.

Just consider what the price of gold would be if the price followed the same supply/demand pricing as other comodities. The Hunt brothers found that out the hard way in the silver market.

Gold and diamonds have about the same valuation rules. We can go on an on about all the neat stuff we maybe could do with diamonds too; but, in the end, they just aren't that useful in large quantities.
Sigh.

There is 300,000 metric tons of copper production in the world annually now.
There is 2500 metric tons of gold production in the world annually now.

Gold is a very superior replacement for copper in more than half of copper's current usages. The entire world's annual production of gold would be consumed in a few days as a replacement for part of just copper's use, it would replace the use of other metals as well in particular applications.

Comparing gold's fantastic unused (due to cost-caused scarcity) real utility to diamonds, which really IS an artificially supported and cartel-restricted commodity market just like you describe, is absurd.
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Old 10-21-2008, 02:59 AM   #32
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BTW, the world's predicted mining is going to use up accessible gold deposits in about 60 years, copper in about 70 to 80 years. This world will be the pits.
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Old 10-21-2008, 03:46 AM   #33
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Sigh.

There is 300,000 metric tons of copper production in the world annually now.
There is 2500 metric tons of gold production in the world annually now.

Gold is a very superior replacement for copper in more than half of copper's current usages. The entire world's annual production of gold would be consumed in a few days as a replacement for part of just copper's use, it would replace the use of other metals as well in particular applications.

Comparing gold's fantastic unused (due to cost-caused scarcity) real utility to diamonds, which really IS an artificially supported and cartel-restricted commodity market just like you describe, is absurd.
You are proving my point. We have a mountain of this stuff, and it's primary value (although I support it this usage), is to fashion it into something you going to ask a girl to wear....just like diamonds.

Demand

Demand for gold is widely spread around the world. East Asia, the Indian sub-continent and the Middle East accounted for 72% of world demand in 2007. 55% of demand is attributable to just five countries - India, Italy, Turkey, USA and China, each market driven by a different set of socio-economic and cultural factors. Rapid demographic and other socio-economic changes in many of the key consuming nations are also likely to produce new patterns of demand.
Jewellery demand

Jewellery consistently accounts for around three-quarters of gold demand. In the 12 months to December 2007, this amounted to US$54 billion, making jewellery one of the world's largest categories of consumer goods. In terms of retail value, the USA is the largest market for gold jewellery, whereas India is the largest consumer in volume terms, accounting for 25% of demand in 2007.

Indian gold demand is supported by cultural and religious traditions which are not directly linked to global economic trends. For more on the role of gold in India >>

Generally, jewellery demand is driven by a combination of affordability and desirability by consumers, and tends to rise during periods of price stability or gradually rising prices, and declines in periods of price volatility. A steadily rising price reinforces the inherent value of gold jewellery, which is an intrinsic part of its desirability. Jewellery consumption in the developing markets has been expanding rapidly in recent years following a period of sustained decline, but several countries, including China, still offer considerable potential for future growth in demand.

A Passion for Gold provides insights into the factors that motivate different groups of women around the world to purchase gold jewellery and some indications of what this implies for the outlook for jewellery demand.
Investment demand

Because a significant portion of investment demand is transacted in the over-the-counter market, it is not easily measurable. However, there is no doubt that identifiable investment demand in gold has increased considerably in recent years. Since 2003 investment has representing the strongest source of growth in demand, with an increase in value terms to the end of 2007 of around 280%. Investment attracted net inflows of approximately $15bn in 2007.

There are a wide range of reasons and motivations for people and institutions seeking to invest in gold. And, clearly, a positive price outlook, underpinned by expectations that the growth in demand for the precious metal will continue to outstrip that of supply, provides a solid rationale for investment. Of the other key drivers of investment demand, one common thread can be identified: all are rooted in gold's abilities to insure against uncertainty and instability and protect against risk.

Gold investment can take many forms, and some investors may choose to combine two or more of these for flexibility. The distinction between buying physical gold and gaining exposure to movements in the gold price is not always clear, especially since it has always been possible to invest in bullion without actually taking physical delivery.

The growth in investment demand has been mirrored by corresponding developments in ways to invest and there are now a wide variety of investment products to suit both the private and institutional investor. More on how to invest >>
Industrial demand

Industrial and dental uses account for around 13% of gold demand (an annual average of over 425 tonnes from 2003 to 2007 inclusive). Gold's high thermal and electrical conductivity, and its outstanding resistance to corrosion, explain why over half of all industrial demand arises from its use in electrical components. Gold's use in medical applications has a long history and today, various biomedical applications make use of its bio-compatibility, resistance to bacterial colonization and corrosion, and other attributes. Recent research has uncovered a number of new practical uses for gold, including its use as a catalyst in fuel cells, chemical processing and controlling pollution. The potential to use nanoparticles of gold in advanced electronics, glazing coatings, and cancer treatments are all exciting areas of scientific research.
For more on industrial and scientific applications of gold >>
For the latest on the industrial markets and growing uses for gold visit www.utilisegold.com. www.utilisegold.com
Supply

Mine production

Gold is produced from mines on every continent except Antarctica, where mining is forbidden. Operations range from the tiny to the enormous. According to recent figures, there are around 400 operating gold mines worldwide. Today, the overall level of global mine production is relatively stable, averaging approximately 2,525 tonnes per year over the last five years. New mines that are being developed are serving to replace current production, rather than to cause any significant expansion in the global total.

The comparatively long lead times in gold production, with new mines often taking up to 10 years to come on stream, mean mining output is relatively inelastic and unable to react quickly to a change in price outlook. The incentives promised by a sustained price rally, as experienced by gold over the last half decade, are not therefore easily or rapidly translated into increased production.
Scrap

However, although gold mine production is relatively inelastic, recycled gold (or scrap) ensures there is easily traded supply when needed, and this helps to stabilise the gold price. The value of gold means that it is economically viable to recover it from most of its uses, where it is capable of being melted down, re-refined and reused. Between 2003 and 2007, recycled gold contributed an average 26% to annual supply flows.
Central banks

Central banks and supranational organisations (such as the International Monetary Fund) currently hold just over one-fifth of global above-ground stocks of gold as reserve assets (amounting to around 29,000 tonnes, dispersed across 110 organisations). On average, governments hold around 10% of their official reserves as gold, although the proportion varies country-by-country.

Although a number of central banks have increased their gold reserves in the past decade, the sector as a whole has been a net seller since 1989, contributing an average of 520 tonnes to annual supply flows in 2003-2007. Since 1999, the bulk of these sales have been regulated by the Central Bank Gold Agreement/CBGA (which stabilises sales from 15 of the world's biggest holders of gold). Net central bank sales amounted to just 500 tonnes in 2007.
For more on Central Bank gold holdings >>
For quarterly Reserve Asset statistics >>
Read about Gold Demand Trends in our detailed briefing note, which also includes commentary on supply.
Gold production

The process of producing gold can be divided into six main phases: finding the ore body; creating access to the ore body; removing the ore by mining or breaking the ore body; transporting the broken material from the mining face to the plants for treatment; processing; and refining. This basic process applies to both underground and surface operations.
The world's principal gold refineries are based near major mining centres, or at major precious metals processing centres worldwide. In terms of capacity, the largest is the Rand Refinery in Germiston, South Africa. In terms of output, the largest is the Johnson Matthey refinery in Salt Lake City, US.
Rather than buying the gold and then selling it onto the market later, the refiner typically takes a fee from the miner.
Once refined, the bullion bars (with a purity of 99.5% or higher) are sold to bullion dealers who, in turn, trade with jewellery or electronics manufacturers or investors. The role of the bullion market at the heart of the supply-demand cycle - instead of large bilateral contracts between miner and fabricator - facilitates the free flow of metal and underpins the free market mechanism.
The Gold Bars Worldwide website provides a wealth of additional information regarding the international gold bar market.
An audio/video file presenting an overview of some of the key issues covered above is now available. More>>

http://www.invest.gold.org/sites/en/...nd_and_supply/#
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Old 10-21-2008, 04:38 AM   #34
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You are proving my point. We have a mountain of this stuff, and it's primary value (although I support it this usage), is to fashion it into something you going to ask a girl to wear....just like diamonds.
Your "mountain" of gold would be a bit puny. A ton of gold makes a cube 1'3" on each side. You could maybe pave 4 football fields with these bricks from your "mountain" of the world's entire annual gold output.

The current primary usage is, as always, based on current economic factors, based primarily on its true scarcity compared to demand, all demands, industrial or cosmetic, and usahes considered ridiculous at the current prices will not be considered or even mentioned.

Cosmetic diamonds are scarce only due to cartel control of both existing stocks AND new production, industrial diamonds are so common and exceed usage that they are just a little more expensive than dirt. And with the possible exception of extremely large diamonds of pure quality, purity and size are phenomenom not even valid for metal ores.
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Old 10-21-2008, 05:31 AM   #35
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Your "mountain" of gold would be a bit puny. A ton of gold makes a cube 1'3" on each side. You could maybe pave 4 football fields with these bricks from your "mountain" of the world's entire annual gold output.....

You can't get around the fact that its supply vastly out-paces its demand. The price should go down if not artifically inflated.

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As we can see from the histogram, these applications have provided a steady annual offtake for gold of around 350-400 tonnes, the
bulk of which is centred on electronics applications, with dental as the second largest.....
http://www.lbma.org.uk/docs/conf2003...MAConf2003.pdf
application.
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Old 10-21-2008, 11:07 AM   #36
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Anyone remember the PBS show on gold where Julia Child show cooked using a skillet made of gold and commented about its superior heat conductivity?
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Old 10-21-2008, 11:17 AM   #37
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Gold is global insurance for your money, which is why the U.S. Mint suspended sales of gold coins. . .they don't do that for paper.

http://www.marketwatch.com/news/story/investors-find-true-value-gold/story.aspx?guid={37DA7BFB-782F-4F89-B0AD-117CAA742A41}

ETA: I purchased 40 ozs of gold at $258 and sold them at $918. Do the math. . .weak dollar + high oil = profit on gold.
Gold has value....sometimes, a great deal of value. Even at the current price of $770 I'd still be making a huge profit.

AETA: To the nefarious internet individual(s) attempting to locate me -- don't bother.
(a) I don't keep PMs at my residences.
(b) If I did I'd never have mentioned the above.
(c) The only PM I keep at home is lead. . .

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Old 10-21-2008, 12:01 PM   #38
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Just wait until the Dow correlation breaks.
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Old 10-21-2008, 12:45 PM   #39
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Gold is global insurance for your money, which is why the U.S. Mint suspended sales of gold coins. . .they don't do that for paper.

http://www.marketwatch.com/news/story/investors-find-true-value-gold/story.aspx?guid={37DA7BFB-782F-4F89-B0AD-117CAA742A41}

ETA: I purchased 40 ozs of gold at $258 and sold them at $918. Do the math. . .weak dollar + high oil = profit on gold.
Gold has value....sometimes, a great deal of value. Even at the current price of $770 I'd still be making a huge profit.
Yea you can make a huge profit on it....just like a pyramid scheme. You just don't want to be the last one buying.

Remember the dot-com stocks? People made millions on those too; until everyone wised up to the fact that the real value (assets) were mostly imaginary.

Gold is like religion. It was sold as precious to ancient culible masses (long before it had any value other than cosmetic); and just like religion it has it's clergy that urge people to keep the faith.

Finally...... I may want to buy a gold skillet as long as I'm not limited to plastic-wear to use it.
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Old 10-21-2008, 12:54 PM   #40
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You just don't want to be the last one buying.

That applies to every investment.
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Old 10-21-2008, 12:54 PM   #41
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In what do we trust?
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Old 10-21-2008, 02:10 PM   #42
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All of the gold that has ever been mined would be a cube of about 62 feet per side. In other words, it would fit in most people's back yard (although the weight would probably kill the grass).

Since that's all we have, it wouldn't be possible to make very much wire or pipe with it.

If a solid gold asteroid landed in everyone's back yard, then the first thing that would happen would probably be that all of the world's copper mines would immediately shut down. Chances are, gold would make good water pipes. Even if it's not quite as good as copper (I'm really not sure) for pipe purposes, the new cheaper cost would make it the material of choice.

The same is also true for electric wire. Copper actually has slightly better conductivity. Silver is better than either. The reason aluminum is used in many applications today is because it's cheaper than copper. It's not quite as good, but it's cheaper.

If gold were cheaper than copper or aluminum (which it would be if there were a big chunk in everyone's back yard), then it would be the material of choice. If physical weight were important, then aluminum would win out. So you probably wouldn't see many gold beer cans. But again, if the price of gold is significantly cheaper, then you would see gold beer cans, even if they wind up weighing a little bit more than the superior aluminum ones. For applications like transmission lines, gold-clad steel wire would replace copper-clad steel. They might need to use more gold than they did copper, but hey, it's cheap.

Gold would also make a good replacement for the zinc in pennies. Those of us who were born before the gold asteroids landed would probably still stop and pick up gold pennies off the ground. The younger generation wouldn't bother. Adopt-a-highway volunteers would complain about all of the inconsiderate people who just toss gold cans by the side of the road.

Don't think it would happen?

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An interesting case of a precious metal that is now common is that of aluminium. Although aluminium is one of the most commonly occurring elements on Earth, it was initially found to be exceedingly difficult to extract from its various ores. This made the little available pure aluminium which had been discovered (or refined at great expense) more valuable than gold. Bars of aluminium were exhibited alongside the French crown jewels at the Exposition Universelle of 1855[citation needed], and Napoleon III was said to have reserved a set of aluminium dinner plates for his most honored guests[citation needed]. Additionally, the pyramidal top to the Washington Monument is made of pure aluminium. At the time of the monument's construction, aluminium was as expensive as silver[2]. Over time, however, the price of the metal has dropped; the invention of the Hall-Héroult process in 1886 caused the high price of aluminium to permanently collapse.
http://en.wikipedia.org/wiki/Precious_metal
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Old 10-21-2008, 02:16 PM   #43
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Yea you can make a huge profit on it....just like a pyramid scheme. You just don't want to be the last one buying.
Of course not. I did the same thing with a large amount of physical copper I had sitting in a warehouse for about a decade = buy low, sell high.
Commodities are just that. But they are an excellent hedge against paper currency.

A few weeks ago someone asked me when they should buy gold. I told them back when it was $258 an ounce -- as per the email I sent them back when it was $258 an ounce.

If you believe gold's going to $1,200 or better, then go ahead and play the #'s.
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Old 10-21-2008, 02:32 PM   #44
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Anyone remember the PBS show on gold where Julia Child show cooked using a skillet made of gold and commented about its superior heat conductivity?
Maybe that gives the clearist example. Gold is very much superior at heat condctivity than copper, and resistance to corrosion (which destroys heat exchangers in normal use, necessitating extremely costly replacement) as well (which is why Egyptian gold work is still beautiful after 4000 years).

There is easily 50 tons of heat exchangers in your average power plant and their efficiency at transferring heat is a limiting factor on efficiency. That weight you feel when you pick up a window air conditioner belongs quite a bit tot he heat exchanger in it.

Now, I suppose the National Gold Council COULD have suggested that we add a few billion to cost of every power plant, and $500,000 to the cost of a window air conditioner by using gold heat exchangers instead of copper for the most efficiency, but I think the concept seemed not worth mentioning by them, in order to be taken credibly. All the ideas they advance use tiny amounts, the only practical use of a metal where an amount smaller than a roll of quarters is worth $30,000.

I have quite often considered the use of $2 worth of gold on circuit board contacts, and answered no. And if the price had been $1, I would have said yes. Every electronic designer in the world would use much more gold if at a more reasonable price, and as the price went up this year, its industrial use went down.

Gold has intrinsic value of utility at least as great as its cosmetic or artistic value, and the fact it has both is why it has been valuable in all of history.
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Old 10-23-2008, 08:15 AM   #45
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If you are worried about the falling value of your gold holdings , sleep easy .

There may be de-leveraging and a rush to the exits at this moment but the
future of gold is very very bright if this graph is correct.

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Old 10-23-2008, 10:38 AM   #46
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How many in the net?
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Old 10-24-2008, 09:17 AM   #47
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World stock indices are in meltdown right now and we have silver @8.80 and gold @ 701. They are racting the exact opposite from what we have been told and told and told they would.

I know, I know manipulation and naked shorting...

Riiiight.

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Old 10-24-2008, 09:21 AM   #48
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US Treasury bills are (for the moment) percieved as better investment than volatile precious metals, that is why gold loses value ...
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Old 10-24-2008, 09:29 AM   #49
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My local dealer is pricing gold coins at $950 each. They are selling on ebay, Buy It Now, for $939-960 for a non-collectible quality 1 oz coin.
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Old 10-24-2008, 12:41 PM   #50
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In a system failure Gold will go to $1 before it is worth anything.
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