COMMENT #1: Mr. Armstrong, I simply wished to thanks. I’m a transformed gold bug. Your remark about how gold was $875 in 1980 and the Dow was 1,000 in comparison with at the moment can’t be ignored. I can see now that it’s extra of a faith than actuality, like local weather change absent the science. I used to be at Starbucks, and Technology X earlier than me simply paid together with his cellphone. They don’t know what cash is and don’t know of treasured metals.
I simply wish to say thanks. I now perceive they’re a hedge when confidence collapses and we’re shifting nearer to that interval day-to-day.
Thanks for the training
Kerry
QUESTION #1: Hi there; If a home price $4,000 in 1930, then it price 200 x 1930 $20 gold items to purchase the home.
A $20 greenback gold piece @ 33.4 grams of gold at the moment could be $471,000. So not a lot change besides the usual home in 1930 may have used some updates. Marvel if property corellates to gold?
Only for enjoyable; Rob
ANSWER #1: You need to watch out, for that is often a selective evaluation put out as a gross sales pitch. A loaf of Marvel Bread was 10 cents in 1930, and it’s about $5 at the moment. That’s the usual long-term inflation. This secret is that the whole lot rises and falls.
Sure, it’s good to be diversified. Simply watch out with the gold bugs. They typically inform you to promote the whole lot, for less than gold will rise. That’s simply not true, and I’ve seen so many individuals lose a fortune on that recommendation.
QUESTION #2: Mr. Armstrong,
may you clarify how futures markets have an effect on the spot value/the market value?
We hear of futures markets manipulating, affecting the market value, however how is i ask?
I heard that due to the futures markets we then get a distinct notion of the market value. Which means that if the futures are buying and selling decrease, than the market value will get decrease or if the futures are buying and selling larger than the market value will commerce larger. Is that this true??
Regards,
Pietro
ANSWER #2: It’s a idiot’s argument to attempt to clarify why gold peaked at $875 in 1980, with the Dow Jones Industrials at 1,000. As we speak, gold is $2,000, and the Dow is 33,000. So, to elucidate why gold has not risen, it have to be manipulated.
Futures present liquidity to any commodity or market. Liquidity expands the market, and thus, extra individuals get entangled. In case you closed the futures market, then the one method to commerce gold could be in bodily bullion. The variety of traders would collapse. Furthermore, producers want the futures market to promote ahead to lock in a revenue to supply. If a farmer crops a crop anticipating to get the market value when planting and one thing occurs when it goes to reap, he can lose his shirt and be out of enterprise. Future contracts are promoting your crop if you plant it, and you’re successfully promoting the danger to another person. Here’s a futures contract from Babylon throughout the nineteenth century BC. That is the best way markets have been in a position to operate for 1000’s of years.
My mom at all times instructed me there’s a time and place for the whole lot. Eliminating the futures market would quickly make gold untradable. Miners won’t operate in the event that they at all times should roll the cube, hoping gold will rise and never decline once they end refining loads. This is similar for farmers and even in funds administration.
I used to be provided $60 billion to handle as a inventory fund within the USA. As a result of there’s a battle between the SEC and the CFTC, the rule was I couldn’t HEDGE greater than 17% on the time, or that might change the definition to a futures fund from an fairness fund. I declined as a result of if I noticed a crash coming, I must promote the shares, for I might not be allowed to promote futures to cowl the danger. That’s the reason I, together with others, began the hedge fund trade again within the Nineteen Eighties: when S&P500 futures started to commerce, these two businesses had been preventing over jurisdiction. It was IMPOSSIBLE to adjust to the legislation beneath the SEC, for you’d go to jail with the CFTC. Therefore, it was the OVERREGULATION that created the hedge fund trade by pressure.
Futures are important as a result of they supply the liquidity to develop markets. As a result of gold is a global commodity, it CANNOT be manipulated to show a bull market right into a bear market. Even the manipulation claims towards the bankers are customary in buying and selling markets. They’d know the place all of the stops are, and they might gun for them. There’s at all times room for swings inside any market, however you can’t take a bull market and make a bear market at will.
And only for the document, I’ve purchased gold through the years. I purchased a hoard of $20 gold items from a central financial institution. I’ve purchased gold bars from the SS Central America that went down and triggered the Panic of 1857. Gold and silver have their place in a diversified portfolio. NO PORTFOLIO ought to ever be 100% on one factor!
