$5 Indian Half Eagle & $20 Saint-Gauden Double Eagle Prices 1 1

[Coinbuf]

On 7/23/2022 at 9:29 AM, GoldFinger1969 said:

But the price was artificially suppressed for decades prior to 1973.  The "history" of the price is false, since government dictated it.

If gold was $800 in 1979-80...and even if you use a pre-bubble spike price of $500 -- it still is less than 4x higher after 42 years.  That's not 4% a year in appreciation, which I would hardly call the price today "expensive."  Global demand has increased as the number of middle-class people worldwide who can afford to buy gold every now and then has probably gone up by 1 billion people.

I don't think gold is dirt-cheap here or maybe even cheap.  Let's call it fairly-valued, neither expensive nor cheap.  As I have said before, I don't know where the next $300 move in gold is, but I am very sure that the next $1,000 is up.  

When we have newcomers join this site with 1 or 2 posts to this site, CB, and they are asking us if a common Saint for $3,200 might move up to $5,000 in a few years.....then you'll know it's time to take profits. 

You are justifying the price by trying to compare to other items, I am not.   Justification helps people feel good about what they buy, but it does not make those items cheap.   I have bought many coins that were cheap when compared to the same coin in another holder or with a sticker, but that did not make it any less expensive.

Edited July 23, 2022 by Coinbuf

[EagleRJO]

On 7/23/2022 at 11:49 AM, GoldFinger1969 said:

For many Saints, you don't have to go down that low in grade to buy one that is available for spot gold, maybe with a modest premium.  Why spend $1,730 now for an XF or AU coin when for a few hundred more you can buy an MS nice-looking one ?  Of course, if a particular year is more scarce, then of course you may have to drop in grades.  Do you plan on getting only 1 or 2 of the coins or a decent amount over time ?

For now, I am just looking into 1 or 2 early $5 Gold Half Eagles, and then maybe 1 or 2 early $20 Gold Double Eagles in the more common years.  However, I really like these coins and I have a feeling once I get a few in my hands (literally) I will really like them and my bullion buying days will be over ;-).

I may end up adding a number over time, and I do want them to all fit together.  So, I am thinking to target an AU grade which appears will be reasonable for most in general, and then of course go up in grade to an MS if not too much more or drop down a grade to an XF minimum overall for less common ones.

On 7/23/2022 at 11:49 AM, GoldFinger1969 said:

Well, I would NOT use the NGC or PCGS price graphs as accurate, thought I think for the most part they are in the ballpark.  The most recent pricing, which in this case shows a sizeable drop, is most likely to be off and you should check out HA/GC auctions.

IDK, I was just checking out the link you gave me before that that for pricing ... referenced below:

On 7/23/2022 at 1:17 AM, GoldFinger1969 said:

If you click on the price for a 1909-D you will see the price has fallen (?) almost $700 in a couple of months.  The price was flat going back years at about $2,700 or so.

Just kidding, because I have referenced the NGC pricing guides often which I find very handy, and the basis auction prices can be viewed right there by just clicking on the table link, which are mostly the HA and GC auctions anyway.  See the attached example for one I was looking into which was a 1909-D $5 Indian Head Half Eagle.  The graphs are just a visual representation of the auction prices.

I'm just not seeing the large recent price drop of around $700 for the Saints you are referring to, or for the Half Eagles either, and only see the $700 drop for an AU-58 $20 1909-D Saint.  I don't see the same drop for other grades/years.  Maybe you could post a screenshot of what you are referring to.

[World Colonial]

On 7/23/2022 at 2:27 PM, GoldFinger1969 said:

Most other commodities -- metals, foodstuffs, energy/oil -- have DOUBLED in the last 12-18 months.  It's not gold which is expensive, it's the other stuff. 

Yes, I know.  Look back to 1971 or even earlier.  Gold has increased a lot more.

On 7/23/2022 at 2:27 PM, GoldFinger1969 said:

I don't know how you measure "relative valuation" but it's tough to do that for non-interest bearing, non-growing assets like commodities.  I can tell you that the NASDAQ is pricey relative to the non-tech S&P 500 based on historicals, but gold and other commodities are a different breed.  

Somewhat because it's not always apples-apples but not hard to get a rough idea.

Compare the number of gold ounces it takes to buy the same thing over time.  I realize that the "same thing" is not always exactly equivalent to its prior counterpart (like cars or housing) but it's an approximation.

You can buy a lot more car now with gold than you could much or all of the past.  A new version of my car (Nissan Versa) is maybe 10 ounces, though thanks to government distorting the supply chains, it might be more now.  That's less than it took to buy a Model-T in 1926, according to a prior online search.  (Yes, i know it varies by car model.)

It takes somewhat more than 200 ounces to buy the median priced US home now.  Not sure that's really much more than it's been for most of the time since 1980 but it's not low either.  Of course, US housing is also now in its biggest bubble ever where it wasn't before, except prior to GFC.

I'd say this relative ratio is somewhat useful as a confirming indicator.  It's not a timing tool.  So, for example, gold was inflated at the peak in 2011.  It also increased 3X from the October 2008 low and was also historically expensive versus other things.   This didn't mean it couldn't go up more (like in 1979), but if someone is going to improve their financial position using it, you have to try to buy and sell it intermittently as it gets more and less expensive.  Holding anything "forever" will eventually cost you.

On 7/23/2022 at 2:27 PM, GoldFinger1969 said:

I just don't see any overvaluation in gold.  Doesn't mean it can't go down in price, just means that being barely double the price 42 years ago and less than the price 10 years ago should count for something in the valuation metrics.

1980 was mania peak and 2011 was a bubble peak.  I'd never use that as a starting point to measure "reasonable" valuation, just like I'd never use any other mania or bubble peak for any other asset, regardless of the asset.  (And yes, I do mean any asset.)

[EagleRJO]

On 7/23/2022 at 2:04 PM, World Colonial said:

I'd ignore the price between 1933 and about 1970 for the reason you gave.

Some might ignore prior to 1933 because of the gold exchange standard but I think it's a relatively accurate indicator of "normal" relative prices, before government took over "management" of the economy and credit started inflating to the moon.

For bullion investing many, myself included, ignore anything prior to about 1970 including before 1933 for the reason you noted.  For any effect on gold coin prices, I wouldn't know but assume you would for similar reasons.

[World Colonial]

On 7/23/2022 at 5:39 PM, EagleRJO said:

For bullion investing many, myself included, ignore anything prior to about 1970 including before 1933 for the reason you noted.  For any effect on gold coin prices, I wouldn't know but assume you would for similar reasons.

Yes.

I do think 1933 and prior is relevant in measuring gold's relative valuation but it's more theoretical than anything else.

[J P M]

On 7/23/2022 at 5:33 PM, EagleRJO said:

For now, I am just looking into 1 or 2 early $5 Gold Half Eagles, and then maybe 1 or 2 early $20 Gold Double Eagles in the more common years.  However, I really like these coins and I have a feeling once I get a few in my hands (literally) I will really like them and my bullion buying days will be over ;-).

I may end up adding a number over time, and I do want them to all fit together.  So, I am thinking to target an AU grade which appears will be reasonable for most in general, and then of course go up in grade to an MS if not too much more or drop down a grade to an XF minimum overall for less common ones.

IDK, I was just checking out the link you gave me before that that for pricing ... referenced below:

Just kidding, because I have referenced the NGC pricing guides often which I find very handy, and the basis auction prices can be viewed right there by just clicking on the table link, which are mostly the HA and GC auctions anyway.  See the attached example for one I was looking into which was a 1909-D $5 Indian Head Half Eagle.  The graphs are just a visual representation of the auction prices.

I'm just not seeing the large recent price drop of around $700 for the Saints you are referring to, or for the Half Eagles either, and only see the $700 drop for an AU-58 $20 1909-D Saint.  I don't see the same drop for other grades/years.  Maybe you could post a screenshot of what you are referring to.

One of my sweet deals, This is my 1909 D it is one of my favorite coins PCGS values it a bit higher than NGC but it matters not I just like the looks of it in the new style holder.

[EagleRJO]

@J P MashokeThat is a really nice gold coin, and one of the early 1900's half eagles I was looking into getting in AU grade (see above), or possibly going up to MS grade if not too much more, although I would likely have to then get it in a slab coffin ... lol.  I can see why it's one of your favorites.

[EagleRJO]

On 7/23/2022 at 8:00 PM, World Colonial said:

I do think 1933 and prior is relevant in measuring gold's relative valuation but it's more theoretical than anything else.

I would not use any spot prices of gold prior to the early 1970's in evaluating even relative valuation from any point of view, particularly for bullion which is what I am more familiar with.  The value of gold available in the US has been fixed in one way or another starting around 1717 when Isac Newton, as Master of the UK mint, introduced a gold-based currency standard and set a fixed price of gold for that country.

This was essentially the fixed price of gold that the US established indirectly with the Coinage Act of 1792.  That act established a bi-metallic gold-silver monetary system in the US, as figured out by Alexander Hamilton, with the silver dollar as the standard containing a fixed amount of pure silver (22.06g for a 26.96g coin, or 89.24%) and a fixed gold-silver value ratio of 15.  This set the price of silver at $1.29 per troy oz and gold at 15 times that or $19.39 per troy oz.

Then in 1834 the gold-silver ratio was raised to 16, which resulted in a gold price of about $20.69/oz.  They also changed to using silver that was 90% pure.  Those two things resulted in changes to the weight of gold and silver coins.  The US bi-metallic gold-silver standard continued until 1900 when the Gold Standard Act changed that to link the value of a dollar to just gold at a fixed value of about $20.67/oz.  That $20.67/oz gold currency basis continued until 1933 when FDR took the U.S. off the gold standard during the great depression and required everyone to turn in their gold at that fixed price.

Then, after FDR had pretty much confiscated everyone's gold at that relatively low price (the "Great Government Gold Heist of 1933" lol) he had the U.S. change the fixed gold currency basis to $35/oz so it was more favorable for the U.S.  That $35/oz fixed price continued until Nixon had the gold-based currency tossed for a free-market gold valuation in the early 1970's, starting with a change in the value of gold in 1972 to $38/oz and then one last one in 1973 to $42.22/oz.

So, the price of gold in the US has been officially fixed since the late 1700's thru the early 1970's, even though actual or world markets did vary somewhat, which was a downside to having a fixed precious metals-based currency.  Thats why historical price charts for the US value of gold prior to the early 1970's are not very meaningful, and are often just stopped around 1973.

Edited July 25, 2022 by EagleRJO

[EagleRJO]

Also, while doing a little research on silver dollars I discovered a couple of interesting things I didn't know.  The first is that the Coinage Act of 1792 not only set the weights/composition of the silver dollar, as well as the gold $10 Eagle, $5 Half Eagle, $2.50 Quarter Eagle and other smaller coins, but also established the "mill" or 1/10th of a cent.  Thats how we got gas prices like $4.69 & 9/10th.

The Spanish-American silver dollar, which the 1792 act was to replace, was often broken up into fractional parts for convenience.  The silver dollar would first be broken in half, then those halves could be broken in half again giving you 1/4 pieces, and finally those 1/4 pieces were sometimes broken down in half one last time to get "bits", or a total of 8 fractional pieces of a silver dollar if completely broken up.  That completely broken up Spanish silver dollar was sometimes called "bits of 8" or "pieces of 8" as people were regularly breaking them up for common use on lesser valued items or as change.  The interesting part was that 2 bits was 1/4 of a silver dollar worth 25 cents.  Hence the term "2 bits" was used for "quarters" (equal in value to 1/4 of a silver dollar), which continued for quite a while.

Also, in 1854 it was proposed to have larger value gold coins for trade including a $100 "union" coin, a $50 "half-union" coin and a $25 "quarter-union" coin.  Apparently, they never struck any of those coins, and only a pattern for the $50 half-union exists.  But who knows, maybe they did strike some $50 half-unions as proofs to try it out.  And if you can find one of those, I think it would be retirement time in the Bahamas ... lol.

Edited July 25, 2022 by EagleRJO

[J P M]

On 7/24/2022 at 1:03 AM, EagleRJO said:

@J P MashokeThat is a really nice gold coin, and one of the early 1900's half eagles I was looking into getting in AU grade (see above), or possibly going up to MS grade if not too much more, although I would likely have to then get it in a slab coffin ... lol.  I can see why it's one of your favorites.

The gold coins are real nice but also one of the most common for counterfeiters that is why I always try to go for a graded piece. This MS63 is a very nice piece hence the gold label but for most collectors in graded gold it is in the middle quality wise I have been told. I look for gold from AU 55 to MS 65 but most of the good stuff goes quick and over the top at auctions. I got this at a dealer and I was lucky to pick it up in the 2021 downswing months. The coin is slowly climbing in value up around 75% from when I picked it up. But that is just the bonus .The amazing in hand detail and look is what makes this coin a special piece to me. The photo I posted is not very good it shows the color and some luster but the trueview shows the detail on the headdress and eagle. Very cool  

[GoldFinger1969]

On 7/23/2022 at 2:49 PM, Coinbuf said:

You are justifying the price by trying to compare to other items, I am not.   Justification helps people feel good about what they buy, but it does not make those items cheap.   I have bought many coins that were cheap when compared to the same coin in another holder or with a sticker, but that did not make it any less expensive.

I repeat:  an asset class that is barely double the price 42 years ago and BELOW the price of 10 years ago cannot be said to be overvalued, unless you want to say it's the least overvalued among other asset classes.

More people WANT to own gold than 10 or 20 or 40 years ago world-wide.

Finally, as information and transparency increase, the risk premium on assets like stocks and gold has tended to DECREASE, supporting higher prices.

[GoldFinger1969]

On 7/23/2022 at 5:33 PM, EagleRJO said:

For now, I am just looking into 1 or 2 early $5 Gold Half Eagles, and then maybe 1 or 2 early $20 Gold Double Eagles in the more common years.  However, I really like these coins and I have a feeling once I get a few in my hands (literally) I will really like them and my bullion buying days will be over ;-). I may end up adding a number over time, and I do want them to all fit together.  So, I am thinking to target an AU grade which appears will be reasonable for most in general, and then of course go up in grade to an MS if not too much more or drop down a grade to an XF minimum overall for less common ones.

I was just letting you know what you probably are aware of:  you can get some Mint State Saints for bullion or a modest premium, no need to drop into the AU range unless it's a scarcer year/mintmark.

On 7/23/2022 at 5:33 PM, EagleRJO said:

IDK, I was just checking out the link you gave me before that that for pricing ... referenced below: 

Just kidding, because I have referenced the NGC pricing guides often which I find very handy, and the basis auction prices can be viewed right there by just clicking on the table link, which are mostly the HA and GC auctions anyway.  See the attached example for one I was looking into which was a 1909-D $5 Indian Head Half Eagle.  The graphs are just a visual representation of the auction prices. I'm just not seeing the large recent price drop of around $700 for the Saints you are referring to, or for the Half Eagles either, and only see the $700 drop for an AU-58 $20 1909-D Saint.  I don't see the same drop for other grades/years.  Maybe you could post a screenshot of what you are referring to.

Yes, I was looking at the AU-58 grade since you referenced AU coins.  Different grades can move at different dollar amounts, for sure.

My point is use the charts for long-term (2-10 years) price moves but for the MOST ACCURATE RECENT PRICING, go by recent sales. 

Can't beat that.

[Coinbuf]

On 7/24/2022 at 7:58 AM, GoldFinger1969 said:

I repeat:  an asset class that is barely double the price 42 years ago and BELOW the price of 10 years ago cannot be said to be overvalued, unless you want to say it's the least overvalued among other asset classes.

More people WANT to own gold than 10 or 20 or 40 years ago world-wide.

Finally, as information and transparency increase, the risk premium on assets like stocks and gold has tended to DECREASE, supporting higher prices.

As I said you are trying to justify the price, and using a point in time where the price was in a bubble to do so, that is just bad analytics.   42 years ago was the 1980 price bubble, hardly a valid point in time to use.

[World Colonial]

On 7/24/2022 at 5:15 AM, EagleRJO said:

I would not use any spot prices of gold prior to the early 1970's in evaluating even relative valuation from any point of view, particularly for bullion which is what I am more familiar with.  

I've only owned physical gold once.  I don't own any now.

I'm looking to own it again but only at noticeably lower prices.  Once I own it, I'll probably keep a low percentage of my assets in it "for good" (as insurance) but nothing close to most or all of it.

The only reason I even pay attention to the price history prior to 1971 is to use as evidence to contradict those who claim the price should be much higher now or for most of the period since 1980 due to "manipulation".

For this purpose, I consider the entire price history relevant.  Those who argue the gold price is "manipulated" lower and think it should be much higher ignore relative value entirely.  It's nonsense because the primary purpose for owning one form of money (gold) isn't to acquire other forms of money (whatever it is), but goods and services.  I'm aware that gold (or silver) is used as a store value but it's still to buy something else (eventually).

So, when I hear that gold should or would be worth $5,000, $10,000 or whatever without "manipulation", that's nonsense.  The closest anyone could buy everything else with so little gold was only in 1979/1980 when gold (and silver) was in a mania which by definition is temporary, even if "temporary" is of undefined duration.

Relative prices change, all the time.  It makes no sense to expect to buy-and-hold anything "forever" and expect to perpetually improve their financial position.

[GoldFinger1969]

On 7/23/2022 at 5:33 PM, World Colonial said:

Yes, I know.  Look back to 1971 or even earlier.  Gold has increased a lot more.

Because the price of gold was fixed for 40 years.   Fast-forward 9 years and your comparision is no longer valid.

On 7/23/2022 at 5:33 PM, World Colonial said:

Compare the number of gold ounces it takes to buy the same thing over time.  I realize that the "same thing" is not always exactly equivalent to its prior counterpart (like cars or housing) but it's an approximation.

You can buy a lot more car now with gold than you could much or all of the past.  A new version of my car (Nissan Versa) is maybe 10 ounces, though thanks to government distorting the supply chains, it might be more now.  That's less than it took to buy a Model-T in 1926, according to a prior online search.  (Yes, i know it varies by car model.) It takes somewhat more than 200 ounces to buy the median priced US home now.  Not sure that's really much more than it's been for most of the time since 1980 but it's not low either.  Of course, US housing is also now in its biggest bubble ever where it wasn't before, except prior to GFC.  I'd say this relative ratio is somewhat useful as a confirming indicator.  It's not a timing tool.  So, for example, gold was inflated at the peak in 2011.  It also increased 3X from the October 2008 low and was also historically expensive versus other things.   This didn't mean it couldn't go up more (like in 1979), but if someone is going to improve their financial position using it, you have to try to buy and sell it intermittently as it gets more and less expensive.  Holding anything "forever" will eventually cost you.

MORE gold is needed for a top-quality suit....a car....or a home (in most major metro areas) then was previous, which means they have outstripped gold in price appreciation/inflation.  

When you throw in the fact that gold cash-cost of mining is about $1,400 an ounce (maybe higher, I'll have to check) and that the wholesale price tends to approximate marginal (cash) cost, I don't see gold being way overvalued.

On 7/23/2022 at 5:33 PM, World Colonial said:

1980 was mania peak and 2011 was a bubble peak.  I'd never use that as a starting point to measure "reasonable" valuation, just like I'd never use any other mania or bubble peak for any other asset, regardless of the asset.  (And yes, I do mean any asset.)

Agreed.  Gold got taken higher in a final spike each time, in 1980 it was inflation and the Hunt Silver Debacle....in 2011-12 it was the U.S. debt downgrade and the Euro Crisis.

I even said a while back that you can use $500 as the price for gold in 1980, not the blowoff top.  Or use rolling time periods.  Or moving averages.

They'll show that gold is not that overpriced compared to its past.  Might not be cheap....might go lower....but doesn't need to be cut in half like Covid-19 stock plays 2 or 3 times every few months. 

Edited July 24, 2022 by GoldFinger1969

[World Colonial]

On 7/24/2022 at 10:58 AM, GoldFinger1969 said:

I repeat:  an asset class that is barely double the price 42 years ago and BELOW the price of 10 years ago cannot be said to be overvalued, unless you want to say it's the least overvalued among other asset classes.

That's exactly my claim, except that I don't believe it's the least overvalued either.  Other commodities are still less overvalued, but it's never been practical for most people to own it directly.

On 7/24/2022 at 10:58 AM, GoldFinger1969 said:

More people WANT to own gold than 10 or 20 or 40 years ago world-wide.

Probably true,but wanting is not the same as doing it.

On 7/24/2022 at 10:58 AM, GoldFinger1969 said:

Finally, as information and transparency increase, the risk premium on assets like stocks and gold has tended to DECREASE, supporting higher prices.

You used this argument in a recent post, but I never responded.  It's an argument for the Efficient Market Hypothesis.

Tha's all I need to say about that, for now.

Edited July 24, 2022 by World Colonial

[GoldFinger1969]

On 7/24/2022 at 11:04 AM, Coinbuf said:

As I said you are trying to justify the price, and using a point in time where the price was in a bubble to do so, that is just bad analytics.   42 years ago was the 1980 price bubble, hardly a valid point in time to use.

I said use $500 as the price of gold then.  Ignore bubble spikes....use rolling time periods or moving averages.

My point is this is NOT 1980 or 2011 for gold's price. 

[GoldFinger1969]

On 7/24/2022 at 11:13 AM, World Colonial said:

It's an argument for the Efficient Market Hypothesis.  

Let's just call it the "Semi-Efficient Market Hypothesis" and say that people have lots more information nowadays than 20 or 40 or 50 years ago. 

[GoldFinger1969]

I hope EagleRJO is OK with the way this thread has moved.  Since we discussed pricing for some gold coins he was looking at, we sort of segued into the price and valuation of gold.  I hope that is OK with him and others...if not...we can continue the debate in the Gold Price Thread which is somewhere on these forums. 

While I am here.....

https://www.barchart.com/futures/quotes/GC*0/technical-analysis

https://www.kitco.com/charts/techcharts_gold.html

I'll try and find a site with long-term monthly moving averages.

[Coinbuf]

On 7/24/2022 at 8:14 AM, GoldFinger1969 said:

I said use $500 as the price of gold then.  Ignore bubble spikes....use rolling time periods or moving averages.

My point is this is NOT 1980 or 2011 for gold's price. 

If you did use a rolling avg then you would see that the price of gold is much higher, the problem is that you keep using the spikes (1980, 2011) as your basis for your conclusions, that is the wrong way to go about it.

Lets try this, gas is roughly 2X what it was a year ago, is that expensive or cheap to you?   I think you would have a tough time selling your theory if you try and justify that gas is cheap because its only 2X higher to most people.   Yet you want to claim that gold is cheap because its only 4X as expensive. 

[GoldFinger1969]

On 7/24/2022 at 11:29 AM, Coinbuf said:

If you did use a rolling avg then you would see that the price of gold is much higher, the problem is that you keep using the spikes (1980, 2011) as your basis for your conclusions, that is the wrong way to go about it.

Using moving averages eliminates price spikes, CB.  And I said use LOWER pre-spike prices for gold, I don't care.  The point is the recent price is not some blow-off measured from 2020 or 2012 or 1980.

On 7/24/2022 at 11:29 AM, Coinbuf said:

Lets try this, gas is roughly 2X what it was a year ago, is that expensive or cheap to you?   I think you would have a tough time selling your theory if you try and justify that gas is cheap because its only 2X higher to most people.   Yet you want to claim that gold is cheap because its only 4X as expensive. 

A doubling in price in a little over a year is far different than something being 4X as expensive over 40 years.  One represents 50-100% annual appreciation which is unsustainable, the other represents about 3.5% annual appreciation which is certainly not unreasonable.

The fundamentals for gasoline and oil clearly changed in the last year.  Not so for gold, so if the price had mysteriously doubled in the last year or two, I'd agree with you.

Edited July 24, 2022 by GoldFinger1969

[World Colonial]

On 7/24/2022 at 11:10 AM, GoldFinger1969 said:

Because the price of gold was fixed for 40 years.   Fast-forward 9 years and your comparision is no longer valid.

I know it was fixed from 1933-1971 but the reason I wouldn't use this period while I will use it for relative valuation for the earlier period is because the economy wasn't distorted prior to 1933.

On 7/24/2022 at 11:10 AM, GoldFinger1969 said:

MORE gold is needed for a top-quality suit....a car....or a home (in most major metro areas) then was previous, which means they have outstripped gold in price appreciation/inflation.  

Gold's price has nothing to do with its supposed utility in industry.  This is the same argument used for silver by the permanent silver bulls.  I have no idea how much gold is used in a suit or car but to the extent it is, I'd attribute it to economic waste due to the credit mania.  It's no different than accounts I have read of people literally eating gold.  It's another data point indicating extreme mania psychology.

On 7/24/2022 at 11:10 AM, GoldFinger1969 said:

When you throw in the fact that gold cash-cost of mining is about $1,400 an ounce (maybe higher, I'll have to check) and that the wholesale price tends to approximate marginal (cash) cost, I don't see gold being way overvalued.

Nope, don't agree with this either. This is also the same argument silver bulls have made, for years.  Someone also recently used this argument (on another website) for US housing.

The cost to produce something doesn't determine the price, at least for anything that isn't an actual essential which gold isn't.  It may be true for food crops like wheat, corn, rice, etc. which are staples actually needed for survival but not for anything else.

On 7/24/2022 at 11:10 AM, GoldFinger1969 said:

Agreed.  Gold got taken higher in a final spike each time, in 1980 it was inflation and the Hunt Silver Debacle....in 2011-12 it was the U.S. debt downgrade and the Euro Crisis.

The price of gold is psychologically determined, like the monetary value any other (financial) asset.  All "reasons" are post-fact rationalizations.

Inflation doesn't buy anything, people do, and they do it because they are bullish (on whatever it is) regardless of the supposed reason.  It's this kind of cause-effect reasoning that leads those who believe in manipulation to claim that gold (and silver) is manipulated lower.  Since inflation supposedly has to lead to (much) higher metal prices and we have the worst inflation since 1981, therefore prices are supposedly manipulated or else one or both would be much higher.

Wrong, people have agency (they aren't robots) and can act (and do) contrary to how any of us think they "should".

[World Colonial]

On 7/24/2022 at 11:16 AM, GoldFinger1969 said:

Let's just call it the "Semi-Efficient Market Hypothesis" and say that people have lots more information nowadays than 20 or 40 or 50 years ago. 

I don't agree with your conclusion.

[World Colonial]

On 7/24/2022 at 11:28 AM, GoldFinger1969 said:

I hope EagleRJO is OK with the way this thread has moved.  Since we discussed pricing for some gold coins he was looking at, we sort of segued into the price and valuation of gold.  I hope that is OK with him and others...if not...we can continue the debate in the Gold Price Thread which is somewhere on these forums. 

While I am here.....

https://www.barchart.com/futures/quotes/GC*0/technical-analysis

https://www.kitco.com/charts/techcharts_gold.html

I'll try and find a site with long-term monthly moving averages.

We can't help it.

[GoldFinger1969]

On 7/24/2022 at 11:36 AM, World Colonial said:

Nope, don't agree with this either. This is also the same argument silver bulls have made, for years.  Someone also recently used this argument (on another website) for US housing. The cost to produce something doesn't determine the price, at least for anything that isn't an actual essential which gold isn't.  It may be true for food crops like wheat, corn, rice, etc. which are staples actually needed for survival but not for anything else.

Marginal cost of production CERTAINLY matters, as do lots of other variables:  state of other asset classes, inflation, economic turmoil, Central Bank sales, etc.  If the ESG folks get their way and the cost of production for gold rises to $2,500/oz., I can assure you that will impact the price of gold (over time).

Even oil, far more liquid and traded than gold, tends to approximate the marginal cost of production over time.  But it takes time to get there as we saw in 2014-15 and 2019-20.

And again today.

On 7/24/2022 at 11:36 AM, World Colonial said:

The price of gold is psychologically determined, like the monetary value any other (financial) asset.  All "reasons" are post-fact rationalizations. Inflation doesn't buy anything, people do, and they do it because they are bullish (on whatever it is) regardless of the supposed reason.  It's this kind of cause-effect reasoning that leads those who believe in manipulation to claim that gold (and silver) is manipulated lower.  Since inflation supposedly has to lead to (much) higher metal prices and we have the worst inflation since 1981, therefore prices are supposedly manipulated or else one or both would be much higher.  Wrong, people have agency (they aren't robots) and can act (and do) contrary to how any of us think they "should".

Most people believe inflation is coming down sharply -- the embedded expectations in instruments like TIPS shows that going out 5 years.  If inflation were persistent or about to accelerate, PMs would likely be much higher.

[USAuPzlBxBob]

You guys need to lighten up a little.  I think gold will "rise" and "shine," and it will ignore the "cold out there."

Especially since it happens to be going up to 100º F here in New Jersey, today.

And the way I feel, looking at a beautiful new 84" Sub Zero in my kitchen, even though it is still uninstalled since last Tuesday due to a "cluster" installation team that left it in the middle of my kitchen — hopefully only until tomorrow, Monday — I like to see the optimistic side of things… like the excitement of using my two igloo coolers 24/7.

Been living like this since late May… so much fun… like camping out, but in my own house, and buying ice at package stores constantly, along with other things available at package stores.

Things really can only get better, right?

 

[World Colonial]

On 7/24/2022 at 11:42 AM, GoldFinger1969 said:

Marginal cost of production CERTAINLY matters, as do lots of other variables: 

It doesn't factor into hardly anyone's decision on how much to pay.  It can't because 99%+ have no clue how much the marginal cost is.  They have no reason to care either. 

On 7/24/2022 at 11:42 AM, GoldFinger1969 said:

Most people believe inflation is coming down sharply -- the embedded expectations in instruments like TIPS shows that going out 5 years.  If inflation were persistent or about to accelerate, PMs would likely be much higher.

Exactly, they believe.  That's my point.  It doesn't matter whether it does or does not.

You're using exactly the same reasoning practically everyone else does, trying to explain prices using the supposed "fundamentals".  None of it matters to the price for the reason I gave you.  The "fundamentals" don't have an independent existence where "they" go around buying or selling anything.

People buy because they expect prices to go up, at least relative to something else, regardless of the supposed "reason".  Conversely, people may have many reasons for selling, but expecting the price to increase is never one.

This all goes back to the conversation we didn't have earlier, on the Efficient Market Hypothesis.  EMH is complete bunk (more academic claptrap), not just in pricing gold but everything else.  Since there is no such thing as absolute value, no amount or volume of data or information explains or "justifies" higher or lower prices. 

All monetary and financial values are psychologically determined.  It's an abstract concept independent from the physical world.  That's what accounts for manias and crashes too.  The consensus acts like the pricing behavior of certain assets like NFT, crypto, beanie babies, whatever...is irrational (and now many don't even believe that) while "mainstream" assets are (more or less) priced according to the "fundamentals according to EMH.

That's nonsense.

Look, I'm not arguing against buying gold, or anything else.  But there is no need to rationalize whatever decision anyone makes because that's what most people do.

I agree that 99%+ claim to buy for the reasons you included, and that's what ultimately matters.  Most of the time, the majority is wrong, especially at major turning points.  The so-called "fundamentals" are always most supportive at or near price peaks, which is why most people who use it usually eventually lose money.

[GoldFinger1969]

On 7/24/2022 at 2:11 PM, World Colonial said:

It doesn't factor into hardly anyone's decision on how much to pay.  It can't because 99%+ have no clue how much the marginal cost is.  They have no reason to care either. 

Restrict supply, price eventually rises.  If you said no more gold would ever be mined after this month, the price would double in a week.

[World Colonial]

On 7/24/2022 at 3:26 PM, GoldFinger1969 said:

Restrict supply, price eventually rises.  If you said no more gold would ever be mined after this month, the price would double in a week.

The price would increase based upon people's collective abstract belief.  No one could possibly have a way of knowing whether no gold would ever be mined again.

[EagleRJO]

On 7/24/2022 at 11:28 AM, GoldFinger1969 said:

I hope EagleRJO is OK with the way this thread has moved.  Since we discussed pricing for some gold coins he was looking at, we sort of segued into the price and valuation of gold.  I hope that is OK with him and others...if not...we can continue the debate in the Gold Price Thread which is somewhere on these forums. 

Well, I don't own the thread ...  ... and it was really about if I wait to buy some gold coins will I regret not getting them sooner rather than later since I think the spot price of gold is low now, and waiting will likely mean buying those gold coins at a higher market spot price.  So, discussing the valuation of gold as a commodity is relevant.  

On 7/24/2022 at 11:40 AM, World Colonial said:

We can't help it.

Apparently not, because you guys are just talking past each other now and going in circles again.  I am waiting for one of you guys, say GoldFinger just for example, to say ala SNL style ... "Colonial, you ignorant slut" ...

On 7/24/2022 at 11:08 AM, World Colonial said:

... I'm looking to own it again but only at noticeably lower prices.  Once I own it, I'll probably keep a low percentage of my assets in it "for good" (as insurance) but nothing close to most or all of it.

As long as you are going in eyes wide open that historically it's not a good long term investment vs say the market, and that you may have to hold it for longer than expected if there are some unexpected swings like at present. You are right that it is recommended for a portion of your holdings or funds to be in Real Assets, like gold or ETFs that only hold gold (not the ETF's linked to mining companies).  I do buy gold as a real asset I can hold in my hand that I know will always be worth something, unless say aliens land and show us how to make gold from sand, and maybe even to barter with.  Plus, it's shiny with a mint finish .

I also buy gold as a near-term investment if I think I can get the value right.  It's really hard to spot buy gold, even for experts, so I try to be cautious and only buy after what looks like a clear low pivot point and break it up into chunks to short-term dollar cost average the bulk buy just in case I get it wrong.  I also typically buy bars that are either 1 troy oz or 100 grams, as it is still fairly liquid with a decent volume discount.

On 7/24/2022 at 11:08 AM, World Colonial said:

The only reason I even pay attention to the price history prior to 1971 is to use as evidence to contradict those who claim the price should be much higher now or for most of the period since 1980 due to "manipulation".

I do agree with GoldFinger that those references just aren't valid, either for or against the present relative valuation of gold, even theoretically.  It's just a stone cold fact that the spot price of gold prior to the early 1970's was set at a continuous artificially fixed price for three centuries leading up to that in the US, and as far back as Roman Times in general ... Gold Price History From 30 BCE to Today (thebalance.com).  For historical data and references I tend to stick with info from the World Gold Council as the "gold standard" for that ... lol.  And about that, attached is the all-time historical price chart for gold with the maximum available range according to the World Gold Council.  Notice where it starts at a relative value of zero.  

Plus, wasn't gold supposed to be a good hedge against inflation (yea, I know with "everything else being equal"), and not as reactive to massive stock market fluctuations, just like ... ahhheem ... crypto currency?  So much for that.  Just my 2 (Indian head) nickels.

Edited July 25, 2022 by EagleRJO