# $20,000.00 an ounce for Gold?



## Claudie (Feb 2, 2012)

Interesting video about the price of Gold, Silver, the economy, and what the future may hold.
http://www.youtube.com/watch?v=tj2s6vzErqY


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## kadriver (Feb 3, 2012)

I need to start skimming and stashing a few grams from each bar I produce - insurance just in case.

My wife has a safety deposit box full of karat gold - I only know about it because she's told me about it.

Every so often she will bring me a hand full to refine.

She is the only key holder, I have never seen her stash - smart woman.

kadriver


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## element47 (Feb 3, 2012)

I used to work with Mike Maloney selling bullion and he's a good guy, IMO. He has come an astoundingly long way, he sells serious loads of bullion from upscale digs on the Westside of LA. He believes what he espouses, and I know he has put in many years of study in acquiring his knowledge and later, writing his book.

If gold does what it has done in the past, during certain periods of hyperinflation, then $20,000 gold is not in any respect an unreasonable target. Keep in mind that a gallon of gas might cost $23 at the moment you can get $20,000 an oz for your gold, and a loaf of bread might be $47 so it is important to understand that the 20,000 dollars you will be able to get for your gold will not be the same dollars you see today, most particularly in terms of their purchasing power. There is really no upper limit on what gold and PMs might do in a hyperinflation. Whether we enter a hyperinflation is another story. 

I have studied PMs in terms of market values for many years. I call myself knowledgeable, not an expert. Many people have been at it for 35 years longer than I have. I really have only two ironclad conclusions:

1: Nobody can predict the future. 
2: I don't care how much you study PMs and learn about their history and distribution and how they are mined and purified and on and on and on. I don't care how much time you put in studying anything about them you wish. It is today and it always will be a non-zero possibility that the dumb metal is smarter than you are.


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## Claudie (Feb 3, 2012)

I understand some of what hyperinflation is, I've seen what it does in other countries. One thing I have often wondered is, if I owe $100,000 on my mortgage and Gold is $20,000 an ounce, can I pay my mortgage off with 5 ounces of Gold? I realize this sounds like a stupid question with an obvious answer, but will the banks raise interest to 500% or do something else to prevent people from paying them with worthless dollars?


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## patnor1011 (Feb 3, 2012)

Interest on debt will go sky high. In case of hyperinflation you end up owning them even more than you do now. :lol:


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## element47 (Feb 3, 2012)

Claudie: Yes. The mortgage debt you have (in your example) is denominated in US (I assume) dollars and for the most part, is non-callable. You can be foreclosed on (by the bank) if you drop your fire insurance or (by your HO Ass'n) fail to pay your HOA fees in the case of condo or by a contractor who performs work on your home if you fail to pay him and he can successfuly prosecute a lien; but for the most part, if you have a fixed mortgage, it means exactly that. It also means the interest rate cannot change or be changed unilaterally by the bank. The mortgage says nothing at all about what the purchasing power of those dollars is/are.


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## patnor1011 (Feb 3, 2012)

Element is right you are safe if you are on fixed interest. Variable will be changed. Banks may want to denominate mortgage in some foreign currency to keep value against hyperinflating currency but if that later will be $ then there will not be safe currency available. :lol:


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## Harold_V (Feb 3, 2012)

element47 said:


> but for the most part, if you have a fixed mortgage, it means exactly that. It also means the interest rate cannot change or be changed unilaterally by the bank. The mortgage says nothing at all about what the purchasing power of those dollars is/are.


The same logic can (and should) be applied towards the vast majority of investment plans. Save your money for retirement---invest where you can get a large percentage return annually---with no one making mention that the dollar you invest today (which may be worth 13¢), will have virtually no buying power when it's time to retire. Sure, you'll make a couple hundred percentage points on the *investment*, but in buying power, it won't be worth as much as the day it was invested. 

I am 72 years old. I can recall when first class postage was 3¢, and a penny post card was just that---1¢. Gasoline was sold routinely for 25¢/gallon, and was often around 22¢ during "gas wars". I paid $17,500 for my first house (1962) which, today, would likely be worth $175,000, perhaps more. 

In '72, when my interest awakened in precious metals, silver was selling for $1.74/ounce, and gold was well under $100/ounce. It was still illegal to own unless properly licensed, so it was not traded openly, as it is today. 

$20,000/ounce gold? 

Sure---why not? It isn't a reflection on the value of gold----it's a reflection of the lack of value of the dollar. I fully expect you younger guys will see the day. 

Save your gold---it's the ONLY way you can avoid the loss of buying power of the dollar. 

Harold


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## kadriver (Feb 3, 2012)

I think karat gold will be more widely accepted over refined, pure gold.

As an experiment, I took a bar I refined - with a perfect mirror finish - and asked the cash-for-gold guy what I could get for the bar. About 2 troy ounces. At first he was very excited and even picked up the phone and called his boss.

The guy scratched the ingot on a stone for an acid test - right away he became suspecious because it did not leave a nice streak like karat gold does, pure gold does not leave a nice solid streak - it kind of crumbles on the test stone.

Then he applied 22k acid (which is aqua regia) and was excited to see the crumbs remain, but then they began to dissolved. "Oh, wait a minute, its dissappearing", he said to the phone and hung up.

He re-tested with 18k, and that did not dissolve the crumbs on the stone - so he said all he could give me was scrap value for 18k - even though you could see yourself in the reflection from the surface of the bar.

Most people, including cash-for-gold buyers (unless they refine their own gold) do not know what pure gold looks or feels like.

I actually had one person (a pawn shop) try to tell me, "It's too heavy and too yellow to be gold". He must have thought I had gold plated lead!

If something bad happens, I think folks will become educated real fast about gold. But at first, karat gold will be king.

kadriver


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## element47 (Feb 3, 2012)

With all due respect, Ka, I think you've actually learned something, perhaps several things. First and foremost is to sell your beautiful gold bars to people who have the brains to appreciate it! (You already knew that, though) 

The issue with your gold is that it is not in a transactable form. If it was a US Eagle or Cana Maple Leaf or Credit Suisse ingot, it could be transacted reliably and rapidly at full value. If you wanted to retain some of your gold, you would be in bad shape keeping it in the form you produce. All metals exhibit this property. If you bring scrap copper wire into a scrapyard, if it is clean and of a certain general type, you get paid top dollar for copper. If you carefully strip off all the insulation and melt it into a convenient block instead of an industrial hairball, you'll get less for it. So if you wish to retain some gold, and I thoroughly encourage you to do so, it has to be changed into a self-assaying form. Next time you have some for sale, ask the buyer if he has any of the top 3-4-5 coin types and maybe do a partial coin, partial cash swap. He should be indifferent. 

One thing we know: Every time, without fail, we change metal into dollars or dollars into metal, or, every time we process metals, we undergo what I call "frictions" which are damn near inescapable.


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## Claudie (Feb 3, 2012)

What would stop the government from banning privately held Gold, like they have done in the past? :|


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## eeTHr (Feb 3, 2012)

States seek currencies made of silver and gold


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## Claudie (Feb 3, 2012)

I don't think they will ever allow it, remember Liberty Dollar? :|


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## element47 (Feb 3, 2012)

Claudie, what they will not do is to confiscate. What they (IMO) more likely WILL do is to impose a 90% tax on your gains from selling it, and carefully serveil bullion dealers. You want to sell your gold, you better issue an invoice that shows from whom and for how much you bought it, otherwise the IRS will impute a purchase price of $35. and you can pay a 90% tax on ($20,000 - $35) which means you pay $17,968.50 in tax and clear $2000 and change for your gold.


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## kadriver (Feb 6, 2012)

element47 said:


> So if you wish to retain some gold, and I thoroughly encourage you to do so, it has to be changed into a self-assaying form.



I agree - this is a very important point.

I think the best way to do this (if you only have unmarked pure gold) is to alloy the pure gold with enough copper to make 14k gold.

Or, just keep a stash of self-assayable, unrefined 14k scrap jewelry (my wife has a safety deposit box full of this).

14k gold is easily tested with a stone and acid by even the least experienced gold testing novice.

kadriver  edit for spelling


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