Gold for storing wealth.

Gold for storing wealth

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No.63).

#gold. #gold price, #gold investment, #gold sale B.O.E., #tribal memory,

Gold for storing wealth.

Human productivity varies wildly and each person needs some method to store the surplus from his periods of high productivity for use during periods of low productivity. Gold can be used for storing that surplus or wealth over long periods.

Gold is also a highly sought after commodity with stable price, and its owner can be sure that his surplus/wealth will not disappear overnight.

However gold is not a good investment as any interest earned by lending gold bars is really small (no more than 1%). Only jewellers borrow gold bars. They want to avoid resupplying their stock at New Years and wedding seasons.

1. Gold is in constant demand.

1a. Jewellery industry and hand-craft jewellers needs it. This is due to its lustre, malleability and corrosion resistance properties.

1b. Micro electronic industry needs it to make electrically high conductance terminals and connections.

1c. Micro engineering industry needs it to prevent rust and corrosion of their mechanical components.

1d. Electronic, optical, aviation and building industries need it to make transparent metallic films.

1e. Dentistry also needs it for dental works.

1f. Surgical medicine needs it for non-allergic implants.

2. Gold is a suitable bartering medium.

2a. Gold is in constant demand.

2b. If unsold, its owner can gradually turn it into home made jewelleries and sell to his neighbours.

2c. The cost of extracting gold from the ground is remarkably unchanged over thousands of years. Advances in technology is exactly offset by scarcity. Now people have to go 3km deep below the ground to mine gold in South Africa and in Canada ([4]). Soon they may go 4km deep below ground surface to mine gold.

2d. It is corrosion resistant and does not degrade with time.

2e. Any small, light amount of gold still has a high value.

2f. Any common amount of gold can be easily subdivided.

2g. The gold content of any unprocessed gold can be economically assayed and extracted using only HNO3, HCl and Cu. The extraction process is based on a simple metal displacement reaction of Au ions in aqua regia and is a common excercise for gold jewelers.
So gold satisfies all the requirements for being a bartering medium.

3. Gold price is not over-inflated.

The long term average of gold price reflects its utility value.
The price is not over-inflated due to massive amount in storage by various Government Central Banks in the World. They would grab any opportunity to sell their overpriced stocks. The Bank of England (wrongly?) set its selling price at US$268/troy oz in its massive unloading of 200tons of gold in the period of 1999-2002.

If gold price was held up by the vicious cycle of greed-herd mentality, the cycle would have been broken up by the prolonged heavy attack by the sale from Bank of England.

Despite such tremendous attack on its price by Bank of England, gold price did not collapse like the price of tulips or real estates when their bubbles bursted.

Right after the end of its massive sale, gold price rose up to US$600/troy oz, then to the current price of US$1000+/troy oz. The sustainable price is explained by the difficulty in extracting gold from the ground [4](see also [7]; I had invested in gold miners during the low price period of 1990-2000 and had experienced at first hand the details claimed by its author).

So, contrary to claims (propaganda?) by some authors, the average price of gold is neither pushed up by any remnant of prehistoric tribal memory nor pushed up by greed, fear and herd mentality (A lie told once remains a lie but a lie told a thousand times becomes the truth [6].).

4. Using and buying gold.

Vietnamese Gold Slab

Figure: Vietnamese gold slabs for trading. This standardized slab has 37.5g of 99.99% pure gold and has been issued in individual, clear, sealed plastic bubble. Its SJC trade mark is vigorously defended by the Vietnamese government. The last 4 digits of the serial number DB 1XXXX on this slab have been blurred to protect the privacy of the owner of the slab.
4a. When gold possession is legal, people can use any suitable amount they like. They still have to stick to unprocessed gold from reputable producers.
The Vietnamese government owns the Vietnamese company SJC which issues and trade gold slabs with weghts of 0.05, 0.1, 0.2, 0.5, 1 Vietnamese ounces. The trade mark SJC is vigourously defended by Vietnamese government. The photos of one such Vietnamese 1 once (37.5g) slab are shown here in this section. SJC company sells people these gold slabs and also buy back from them.

4b. When possession of unprocessed gold is prohibited, people still can use gold rings made by reputable jewellers in weights of 0.1, 0.2, 0.3 troy ounces as their medium of exchange.

5. The costs of owning gold.

(This section has been added on 10 Aug 2017)

This varies a lot from country to country and even gold seller to gold seller. It can be anywhere between 0.6% and 2.5% for a complete cycle of buying and immediate reselling.

For example, on the date of 10 Aug 2017, the prices and sell-buy margins are:

0.55% in Vietnam, Saigon (SJC gold TP HCM 36,350,000 36,150,000)

2.5% in Australia, Melbourne, (1oz ABC Bullion Pool Allocated $1,638.30 $1,598.81)

In Vietnam, the cost for buying and then immediately reselling gold slabs (such as the one pictured in this blog) is about 0.55%. This compares well with the foreign exchange cost of 0.2% for buying USD then immediately reselling it.
On the other hand, the Vietnamese VND inflation rate has been designed to be 7% (= 4% against USD + 3% by USD),. Only after 1 monrhs the person who bought gold has already been ahead.

6. Storing wealth using gold.

Example: You want to buy a $80000 house and each year you can only save up $20000.

If you save your fiat money, then after 4 years you will have $80000. If yearly inflation is 6% the price of that house will be then

$8000×(1+6%)×(1+6%)×(1+6%)×(1+6%) = $100998 .

So you are $20998 short of your target!

If you bought gold for the first 3 and 1/2 years then after 4 years you will have in hand

$10000*(1.03)^7 + $10000*(1.03)^6 + $10000*(1.03)^5 + $10000*(1.03)^4 + $10000*(1.03)^3 + $10000*(1.03)^2 + $10000*(1.03) (gold to sell) + $10000(cash)

= $10000*((1.03)^8-1)/((1.03)-1) = $10000*8.89233 = $88,923.

In this case you are only $100998 – $88923 = $12075 short of your target!

So gold is much better than cash (fiat money) for storing wealth. You are still short of target since the actual value of your new cash saving reduces every year.

7. Conclusions.

Gold is much better than cash even in any medium term (abour 3 years duration) financial plan.

You can also see why many governments want to outlaw the possession of unprocessed gold: Their fiat currencies are inferior to gold.

Please note that this author is neither associated with gold industry nor having any interest/betting on gold price movement.

Disclosure of interests:

The author has no interest in any gold price betting, has neither relation with SJC of Vietnam, nor with any organization working on gold.

References:

[1]. ,

[2]. Cashless bartering for survival, posted on February 20, 2017,

[3]. tonytran2015, , https://survivaltricks.wordpress.com/2016/12/05/preparing-for-%e2%80%8bcashless-trading, posted on December 5, 2016

[4]. top ten deepest mines world South Africa, http://www.mining-technology.com/features/feature-top-ten-deepest-mines-world-south-africa/

[5]. Sale of UK gold reserves, 1999–2002, wikipedia, https://en.m.wikipedia.org/wiki/Sale_of_UK_gold_reserves,_1999%E2%80%932002

[6]. Joseph Goebbels quotes, azquotes.com, http://www.azquotes.com/author/5626-Joseph_Goebbels.

[7]. https://peoplestrusttoronto.wordpress.com/2017/05/12/the-traitors-abetting-the-deep-states-dirty-dying-war-on-gold/, accessed and added to the list on 13May2017.

Augmented after 2017 June 11:

[8]. https://us-issues.com/2017/06/11/how-gold-can-rescue-pensions/

[9]. https://centinel2012.com/2018/05/04/the-us-two-tier-monetary-system-that-ended-in-1971/

[10]. https://brittius.wordpress.com/2018/05/05/uae-drops-vat-on-gold/

[11]. http://www.goldtelegraph.com/the-u.s-government-can-still-confiscate-gold

[12]. https://www.armstrongeconomics.com/blog/

[13]. https://www.sprottmoney.com/Blog/has-the-pboc-taken-control-of-the-gold-market.html

[14]. https://lawrieongold.com/2018/07/18/how-to-avoid-gold-and-silver-investment-scams/

[15]. https://bcnn1wp.wordpress.com/2018/07/29/russia-mysteriously-liquidates-all-of-its-u-s-treasury-holdings/

[16]. https://www.theautomaticearth.com/2018/08/gold-yuan-crypto/

[17]. http://www.zealllc.com/2001/boebomb.htm

[18]. https://lawrieongold.com/2018/08/06/gold-lessons-from-venezuela/

[19]. http://news.goldseek.com/GoldSeek/1434633628.php

[20]. https://us-issues.com/2018/08/12/price-of-gold-in-venezuela/

[21]. https://goldprice.org/gold-price-australia.html

[22]. https://www.rt.com/business/441807-emerging-countries-stockpiling-gold/

[23]. http://asheepnomore.net/2017/06/13/hillary-emails-reveal-nato-killed-gaddafi-to-stop-libyan-creation-of-gold-backed-currency/

Tuesday’s announcement by the Department of Justice of a guilty plea by a former trader of JPMorgan for systemic “spoofing” and price manipulation of gold, silver, platinum and palladium traded on the COMEX and NYMEX futures exchanges (owned by the CME Group) sure seemed like a very big deal …. The infractions occurred from 2009 to 2015 and the trader admitted to engaging in a conspiracy to commit market manipulation on hundreds of occasions, with the knowledge and consent of his immediate supervisors. [24, 25]

[24]. http://silverseek.com/commentary/crack-dike-17474

[25]. https://socioecohistory.wordpress.com/2018/11/10/a-crack-in-the-gold-silver-manipulation-dike/

RELEVANT MONEY Blogs

fiatmoneyc60.jpg

crystalballc70.jpg

divider43.jpg

polymeraust100dollars

Click here go to Divider63D400 Home Page (Navigation-Survival-How To-Money).

SUBSCRIPTION: [RSS – Posts], [RSS – Comments]

MENU: [Contents][Blog Image of Contents ][Archives ] [About]

36 thoughts on “Gold for storing wealth.

  1. What i do not understood is if truth be told
    how you’re now not really a lot more neatly-preferred than you might be right now.
    You are very intelligent. You realize thus considerably on the subject of this matter, produced
    me for my part believe it from a lot of various angles.
    Its like men and women are not interested except it’s something to accomplish with
    Girl gaga! Your individual stuffs great. At all times deal with it up!

    Like

  2. Its like you read my mind! You seem to know so much about this, such as you wrote the e-book in it or something. I believe that you just could do with some to power the message home a bit, however instead of that, that is magnificent blog. A great read. I’ll certainly be back.

    Liked by 1 person

  3. Excellent post. I was checking constantly this blog and I’m impressed! Extremely helpful information specially the last part 🙂 I care for such information a lot. I was looking for this certain info for a long time. Thank you and good luck.

    Like

  4. My wife and i felt so lucky that Albert managed to round up his research by way of the precious recommendations he acquired from your own blog. It’s not at all simplistic to simply be handing out key points which many people might have been trying to sell. Therefore we understand we need you to be grateful to because of that. Those explanations you made, the easy blog menu, the friendships you aid to engender – it is many exceptional, and it is helping our son and us know that that subject matter is cool, and that is seriously indispensable. Many thanks for the whole lot!

    Liked by 1 person

  5. whoah this weblog is wonderful i love reading your articles. Stay up the good work! You recognize, a lot of individuals are hunting around for this information, you can help them greatly. |

    Like

  6. I think this is among the most significant info for me.

    And i am happy studying your article. But wanna statement on few
    basic things, The website taste is perfect, the articles is truly great : D.
    Just right job, cheers

    Liked by 1 person

  7. Spot on with this write-up, I truly believe that this
    website needs a great deal more attention. I’ll probably be back
    again to read through more, thanks for the information!

    Like

  8. Can I simply say what a relief to discover somebody who really understands what they’re talking about online.
    You definitely know how to bring a problem to light and make it important.
    More people really need to check this out and understand this side of the story.
    I was surprised you’re not more popular since you surely possess the gift.

    Like

  9. I seriously love your website.. Very nice colors & theme. Did you create this amazing site yourself? Please reply back as I’m wanting to create my very own website and would like to find out where you got this from or just what the theme is called. Cheers!|

    Like

  10. whoah this blog is great i really like reading your posts. Keep up the great work! You already know, a lot of individuals are hunting round for this information, you can help them greatly. |

    Like

  11. Great beat ! I wish to apprentice at the same time as you amend your website, how could i subscribe for a weblog web site? The account helped me a applicable deal. I have been a little bit familiar of this your broadcast provided bright clear concept|

    Like

  12. Hi, I do believe this is a great web site. I stumbledupon it 😉 I may return yet again since I book-marked it. Money and freedom is the best way to change, may you be rich and continue to guide others.|

    Like

  13. Great post. I was checking constantly this blog and I’m impressed! Extremely helpful info particularly the last part 🙂 I care for such info a lot. I was looking for this particular information for a very long time. Thank you and good luck. |

    Like

  14. Can I just say what a comfort to find somebody that really knows what they’re talking about on the internet. You definitely know how to bring a problem to light and make it important. A lot more people have to read this and understand this side of your story. I can’t believe you aren’t more popular since you certainly have the gift.|

    Like

  15. Just wish to say your article is as surprising. The clearness in your post is just spectacular and i could assume you’re an expert on this subject. Well with your permission let me to grab your feed to keep updated with forthcoming post. Thanks a million and please keep up the gratifying work.|

    Like

  16. I must thank you for the efforts you’ve put in writing this site. I am hoping to view the same high-grade blog posts by you in the future as well. In fact, your creative writing abilities has motivated me to get my very own website now ;)|

    Like

  17. Nice post! Just a couple of comments.

    1. A typo – in 2g, I think you mean assay (not essay).

    2. In 6, the math as shown says that you’re short of your target wealth accumulation using Gold, but that’s only because you’ve shortened the time frame from 4 to 3 1/2 years. If you tack on the remaining 6 months worth of saving, then in your example, you should be just about dead on the amount you needed to buy the house.

    Liked by 1 person

    • Thank you, Bob, for the comments and

      1. I had corrected the word essay to assay.

      2. I have also corrected the shortage of saving.
      If you bought gold for the first 3 and 1/2 years then after 4 years you will have in hand
      $10000*(1.03)^7 + $10000*(1.03)^6 + $10000*(1.03)^5 + $10000*(1.03)^4 + $10000*(1.03)^3 + $10000*(1.03)^2 + $10000*(1.03) (gold to sell) + $10000(cash)
      = $10000*((1.03)^8-1)/((1.03)-1) = $10000*8.89233 = $88,923.
      In this case you are only $100998 – $88923 = $12075 short of your target!

      Thank you very much for pointing out my errors.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.