Comments on: Gold Standard: The Long-Run Value

By: Biker Pete

Biker Pete — Mon, 08 Jun 2009 00:07:37 +0000

Thanks, Lachlan. I have two close friends whose passion is prospecting. They do fairly well. One, a plumber, did so well while digging trenches, etc., he now prospects more than he plumbs. The other is a chalkie who retired early.

What is interesting on my patch is that I can actually see where someone has already been looking for colour near the cutting on the road which passes our property. Don't know how they went... . The cutting is already shedding promising material... rose quartz everywhere. The hillside on the northwest side is substantial... and I need an earthmover to carve decent section out, so I can see more.

I may combine that job with construction of a second pool on my creek. Hands full at the moment... .

By: Lachlan

Lachlan — Sun, 07 Jun 2009 23:34:42 +0000

Gidday Biker Pete
A metal detecting trip to WA will possibly become a reality for me over the next couple years. Lucky you to live where you do. Another friend of mine returned from WA recently with a beautiful 4 1/2oz nugget.Crumbs, for me, even if it doesnt work out theres its a plenty good reason to travel the continent (something Ive done little of). I see gold prospecting kinda like the stock market. Lots of downside risk so better to choose a course of action with high upside ie prospecting fields with a history of large nuggets OR in your case probable virgin ground with the right geology. If you do stumble on to something, and your the first there.....its payday!
We have some highly mineralised areas over here in Qld. I have managed to find some beatifull small nuggets with (sub 15g) with a low cost VLF detector. However in those mineralised areas it is mostly too noisy to use. In contrast I have also an expensive machine (GP 3000) which is dead quiet in the same ground.
I hope you do get a break to try out your own ground someday. Good luck if you do

By: Greg Atkinson

Greg Atkinson — Sun, 07 Jun 2009 12:57:35 +0000

Rick e...hard to say where will be in 2010-2011. The thing about the global economy is that it is not that efficient in terms of getting stuff to where it is needed. I mean we have no shortage of food actually, yet people starve. You often hear people say that there will be a food crisis in the years ahead but what this really means is that there will be a food distribution crisis. In many developed countries people are getting ill from being fat when in other countries people cannot get enough food to eat and die...doesn't this sort of say something? (even in Australia we have people that go hungry and yet we throw away vast amounts of food)

My point is in a rather roundabout way, that there is plenty of room for improvement in terms of how the global economy operates. So while I can appreciate the view that suggests the markets will slump again I also see plenty of areas where if we get things sorted, global growth can return and the free market can deliver a better standard of living to many more people.

Oh my goodness, I am starting to sound like a G20 protester

By: Biker Pete

Biker Pete — Sun, 07 Jun 2009 10:53:35 +0000

Lachlan: Yes, gold's persistence is impressive, but its attributes have been universally accepted thru' time. Interestingly, when my grandfather and my great uncles trekked the Holland Track from Coolgardie at the turn of the century, with horsedrawn drays, taking up five large acreages to the west along the way, one of the six properties they bought (from Alexander Forrest, Twiggy's great, great uncle) was Golden Valley. A little stream still crosses its northern boundary... and near the stream, my great uncle picked up a nugget the size of his thumb. To this day, the family argues whether this nugget was carried there and discarded by an Aboriginal on walkabout, carried by a flood eons before... or if some other explanation exists. (It was the least attractive property of the six!) The property was renamed in the mid-forties... and recently sold for many, many more millions than my uncle paid... naturally. The question remains: Our Aboriginal people must have, hundreds of times, picked up nuggets of such allure that they were kept as interesting tokens, perhaps to be discarded for one reason or another... . What did they make of it? We know, as stone-age people, it probably had the most minimal value... a mere curiosity, perhaps.

My own experience with gold so far is minimal. I could relate a half dozen interesting anecdotes from my six years in the goldfields; but the most interesting may yet be to come. Twenty years ago, when we bought our rural holding, we realised we were in a communication dead zone. This interfered with every aspect of telecommunications, but particularly with telephone, radio, TV and (later) internet. Two satellite dishes are still necessary. About 2004, I was advised that aerial surveys had identified the primary cause of this greyout as 'mineralisation' in the hillside above us. Then two years ago I learned that in our part of the state, the occurrence of gold is often adjacent rose quartz. Guess what the north-west of our property is composed of?! I haven't had time to do more than amass a few bucketfuls of promising quartz exposed by heavy rain, for hand dolly-crushing at some future time, but I figure I'll run another road up into our property at that very location in the future; citing the need for a second fire exit. Fossicking the cutting's debris should keep me busy and fit for the next coupla decades. Maybe the missus will give me a good metal detector as a retirement present next year(?) More excitement than digging another sixty soakwells for her!! (Type a colon, then a bracket...) Result Cheers!

By: rick e

rick e — Sun, 07 Jun 2009 09:40:23 +0000

Yes, Greg I think we all should be bears and bulls why be one or the other that is emotional like betting on your favorite team to always win

Maybe we should all be
Bullish bear (yes I think this bear market will last for years) at the same time
Bearish bull (yes I think it is starting to turn into a bull market)

The end of the day is to make money egos aside

Bear market rally for me is as Bill said when the alt-a expire which will be 2010, 2011
Or when all countries stop trusting each other as eventually everyone will have a strong currency and a AAA rating
That’s why the world will not peg money to gold. That’s when people will stave around the world as the government will have no money to subsidize for food, health, jobs, and pensions, as artificial stimulus will now become subsidy this that other?

On the good side of it at least we do not need a war to print money?

Can you imagine when Gabriel looks at history of currency charts and compares them with future currency charts saying how can everyone have a strong dollar against each other, there will be massive distortions coming due to printing money?

Also if you have a new currency then nothing will change as everyone will want a AAA rating, and only the US will gain as it rights off its losses.

The cats out of the bag and every country will have a back do to printing money?

This recovery happened to fast for me, it reminds me of the movie alien, when the guy woke up out of a coma and started eating saying he was fine and then the alien exploded out of his stomach

By: dan

dan — Sun, 07 Jun 2009 08:35:05 +0000

Lachlan, you implied it yourself - why would central banks want to shy away from the control they exercised through fiat money? The answer is that people have lost faith in it. Instead the money issuers will stand, hand on heart, swearing by the gold standard, hoping that everyone will believe them, one last time. But fool me once, shame on you, fool me twice, shame on me, right?

By: Lachlan

Lachlan — Sun, 07 Jun 2009 08:11:34 +0000

Sorry dan i missed your point about diluting the value of gold backed fiat. Can they do that?....then again apparently naked shorting is looking more like a proven case all the time not to mention naked ETF's why not naked issuing of fiat. Hmmmm why am I feeling cold all of a sudden (insert smiley face).

By: Lachlan

Lachlan — Sun, 07 Jun 2009 08:02:23 +0000

Biker Pete its amazing then what a contentious substance gold has been even not that long ago in our own history...and yet now, few people except some of our oldtimers have any experience with gold. I dont think the east here has seen prohibition, just the Eureka incident which was something to do with tax or other mining regulations ..not sure.
Dan I cant see gold currency (hard currency) becoming a world wide reality but I can understand this German companies idea may work due to the past history there ie hyperinflation. People there already know the drill so to speak. Regardless its bound to be a positive for gold.
To be fair minded, although Russia and China have made indications for gold backed currency I'm still perplexed as to why such governments would opt away from the wealth control they can excersize with unbacked fiat.

By: Biker Pete

Biker Pete — Sun, 07 Jun 2009 05:43:13 +0000

Prohibition of gold mining in WA has also occurred in WA during settlement. James Mitchell, state premier, prohibited British group settlers from mining, even after they had located gold in the state's south west, for fear they'd abandon agricultural pursuits in favour of the precious metal. Whether that was the real reason, or whether a new field might have weakened the 'possession criteria' I'm not sure!

By: Biker Pete

Biker Pete — Sun, 07 Jun 2009 05:23:57 +0000

Well worth the read, Ned. Thanks. I remember during my childhood and late teens, that private ownership of gold was banned in WA, possibly so that possession alone might be grounds for conviction of any miner who had been able to ferret away a nugget or three. I remember too reading about some fairly major goldfields heists in very remote, less-policed desert locations. Not sure if the rest of Australia had this prohibition(?) The US prohibited/severely limited private ownership of gold for forty years last century. Which other countries prohibited ownership, I wonder? Certainly the flat periods on the graph coincide with the bans in the US and Australia. After Ford's and Nixon's removal of the bans, gold takes off. And it may all just be coincidence...