IS Gold Money?

"Last week, Arizona, following Utah’s lead, became the second state in the union to allow gold to begin serving as a form of legal tender.

With the passage of Bill 1439, Arizonians now have the ability to shop for groceries, clothes, household items, and any other consumer product with gold. The law doesn’t differentiate between gold coins minted by the Federal Reserve and those produced by private mints, meaning that those who prefer this form of currency have options when it comes to obtaining their coinage."

more than 12 states have bills proposing the same currency flexibility of Utah and Arizona in the pipeline.

So gold is money

In Arizona, you can probably buy a house with one gold coin.

Oh, renterjoey. You really need to learn.

First of all, you can buy anything with anything, as long as that anything is legal. If you want to buy a house in heads of cattle, you're free to do so. If you want to exchange a horse for gold, you're free to. I you want to buy a $3.99 quarter of milk with some .003 ounces of gold, you can do that, too.

But what states CAN'T do is establish separate currencies. Article 1, Section 8 of the Constitution says, "Congress shall have the power "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."

Period. CONGRESS. Not the states. Arizona can do whatever it wants, EXCEPT establish it's own currency. The reason for that is very clear: under the Articles of Confederation (which, FYI, preceded our current Constitution, in case you don't know), "Currency Problems: Many states printed their own money. The national currency, meanwhile, became almost worthless."

http://www.icsd.k12.ny.us/legacy/highschool/pjordan/ushonors/Regents%20Review/Review%20Lessons/articlesofconfederation.html

Congress' sole right to coin money is because of its sole right "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes," also in that selfsame article.

Without a uniform currency, it is very difficult to regulate interstate and international commerce.

So - it remains the same: if you want to buy your house in its weight in gold you're free to do so if you can find somebody willing to take the gold (though you wouldn't be under the gold standard, because you couldn't own gold outright under it). You could buy a house in chocolate bars, too. But states cannot under any circumstance establish their own currency, whether it is in gold, silver, pig iron, or chick peas.

ps: "its own currency," not "it's."

oh stevejhx there you go again. Wrong once again. Go to a dictionary and look up the definition of money. Here I'd did it for you just to save you time.

Definition of money

mon·ey (mn)

n. pl. mon·eys or mon·ies
1. A medium that can be exchanged for goods and services and is used as a measure of their values on the market, including among its forms a commodity such as gold, an officially issued coin or note, or a deposit in a checking account or other readily liquefiable account.

So Gold is money.

That's really pretty lame, renter - because an online dictionary mentions "gold."

My dictionary - not only, just Oxford, low on the dictionary totem pole, I'm sure - says:

"money n noun a medium of exchange in the form of coins and banknotes."

Though there is no question that you could make gold into money - or beads and trinkets, or tulips, or silver, or chocolate bars, or anything else you want - unfortunately, in today's day and age, gold does not meet that definition:

"A medium that can be exchanged for goods and services..."

Nope - can't buy milk or bookkeeping services with gold.

"is used as a measure of their values on the market..."

Nope - the price of precisely NOTHING is quoted in gold.

At one time gold coins were used as currency; not now. In fact, no country in the world uses any form of gold as a currency: "No country currently uses the gold standard as the basis of its monetary system although most hold substantial gold reserves."

http://en.wikipedia.org/wiki/Gold_standard

And states can't declare it currency.

"not only" = "not online"

Bad hair day!

The point is, rjoey, governments could use gold as money if they wanted to, but it's an extremely bad idea, which is why no governments do. Because currency rates are pegged to the price of gold, you couldn't buy gold on the open market or hold it because that could cause the currency peg to fall apart, which it would because it would lead to fixed exchange rates, which ALWAYS fall apart because they're inflexible. Bretton Woods fell apart because it was inflexible.

Then, because of the peg in depressed economic times it would not be possible to increase the money supply because the money supply is tied to the amount of gold a government holds. The money supply is increased during bad economic times b/c it offsets the decrease in the velocity of money. But if the money supply is fixed, that can't happen, which is why the Great Depression saw all countries get rid of the gold standard.

People only demand gold for currency in bad economic times - inflation or deflation - or when there are bank runs. So because the amount of currency always exceeds the amount of gold, governments are forced to suspend convertibility precisely because and when people want to convert their currency: there isn't enough gold to go around. See Great Depression, above.

In cases where the gold standard exists in conjunction with fractional reserves - which it almost always does - the gold standard does nothing to prevent inflation or deflation or wild economic swings because banks can create money - not backed up by gold - simply by taking in deposits and lending them out. Then, since banking is a cyclical industry, people are happy when times are good; but when they're bad they demand their money in gold. Which is a false promise since there isn't enough gold to go around. Google "18th century financial panics" and see for yourself. In fact, since it limits the government's ability to adjust the money supply according to economic exigencies - it makes the swings worse.

If the gold standard actually did what people claim it does, I'd be all for it, and so would governments. But it doesn't. Yes central banks keep gold but it's a good thing for them to keep: a) it's worth something; b) there's not a lot of it; c) it doesn't go bad; and d) it has no practical use other than jewelry, not even fillings anymore. So taking gold off the market has no material effect because nobody needs it for anything: it's not an industrial metal because its inert; it can't be transformed into anything else. It's a good conductor but copper is better and cheaper. So why not keep it as a store of value instead of, say, sirloin steaks?

The states that currently ALLOW gold coins to be tender do not, in fact, have any appreciable commerce conducted in gold. Few if any stores or restaurants take them, banks won't take them, and they are just pretty much never actually used or accepted in practice as money, even though legally, technically its allowed.

It doesn't matter, jason - state's can't declare their own currencies, and technically it's not allowed. If the US government issues gold coins then they are valid, but the fact that they're made of gold is irrelevant. All that matters is it's the US government that issues them.

Yes you can trade gold, or chocolate bars, for anything, as a barter. But you'll have to pay the tax on that in $$$.

oh you mean like if you have Euros or any other foreign currency and want to buy something in the US but you can't because just like gold you need to exchange it for the local currency?

"oh you mean like if you have Euros or any other foreign currency and want to buy something in the US but you can't because just like gold you need to exchange it for the local currency?"

If you live in AZ and have to convert gold into dollars, its not really functioning as "money" now is it?

To be clear, there are border state areas where most businesses take Canadian dollars. How much do you want to bet that amongst those 11 states are such border states where you are 100X more likely to find a merchant that takes Loonies versus ones that take gold coins?

If you live in AZ and have to convert gold into dollars, its not really functioning as "money" now is it?

so if you go to a store and have euros on you but you have to convert your Euros into dollars then it's not really functioning as money either. Now I get it. Thanks for clearing that up.......I think

you are the one who mentioned AZ and the 11 other states, saying its money there.

Its no more money there than me bringing in items I could sell at a pawn shop are money in AZ, as far as 99% of stores and businesses are concerned.

Oh since you're talking about AZ here read this.

"Arizona Set To Use Gold & Silver As Currency"

http://www.goldcore.com/goldcore_blog/arizona-set-use-gold-silver-currency

This thread is just starting to get interesting.

"oh you mean like if you have Euros or any other foreign currency and want to buy something in the US but you can't because just like gold you need to exchange it for the local currency?"

Spot on, Joey! You finally got it. Money is money because the government says it is, just like what time it is is what time it is, because the government says it is. It's simply an exchange value.

In most of Europe, the euro is money. Here, it can be exchanged for our money, but it's not really money because for the most part you can't buy stuff with it. You can easily exchange it for our money because it's liquid, but it's not so easy to buy stuff with. Along the border between the US & Canada there are places where they accept both currencies; that's their choice, not their obligation. No one in the US is obligated to accept loonies as payment, or gold; everyone in the US is obligated to accept US dollars as payment. And Arizona can no more declare gold money than it can declare euros money.

Maybe it would be easier for you to sever the concept of "money" as a general theory from "legal tender" or "legal currency." Dollars are the legal currency here; euros in Europe. Nowhere is gold a legal currency, or legal tender. Nowhere, and under our constitution Arizona does not have the right to declare its own currency.

if u take a flight from paris to manhattan at what point does the euro go from being money to not being money? or is it like Schrodinger's cat?

This thread keeps getting better and better, soon Guywithcat will be here to answer nyc1234.

Money becomes money as soon as you can spend it where it is legal currency. They don't take cash on airplanes. Therefore, the question is moot.

So then
hashish <> baksheesh
?

i figured that might go over your head.

how about this...do you think there a difference between printing money to offset a cyclical economic recession vs printing to compensate for a massive deleveraging due to an overabundance of debt?

Cash is illegal on an airplane?

No, 1234: Money becomes money as soon as you can spend it - so therefore it is both money and not money at the same time.

That better?

Regarding the second question, it can't be answered as you ask it. Money can be printed whenever teh central bank wants. Yes here is a "difference between printing money to offset a cyclical economic recession vs printing to compensate for a massive deleveraging due to an overabundance of debt"

It's that in the former money is printed to offset a cyclical economic recession and the other is to compensate for massive deleveraging due to an overabundance of debt. That's the difference.

However, they may in fact be the same event, as a cyclical economic recession could be caused by massive deleveraging.

I think your question is, is it always possible to print money without causing inflation?

No, it's not. But when nominal interest rates are at or near zero and therefore they can't fall, and demand is insufficient to reach full employment, there should not be inflation caused by printing money as the increase in the monetary base merely offsets the decrease in velocity.

At other times, however, that is not true, and increasing the monetary base will cause inflation.

It also depends how it's done: if the central bank increases the money supply by purchasing assets, the effect is not the same as merely printing money and depositing it in the accounts of banks. The latter will cause Zimbabwe type inflation. That is really what is meant by "printing money"; increasing the monetary base by buying assets is not "printing money," but rather performing a normal bank function, whether done by the central bank or a commercial bank.

We need to print money (physically and digitally) all the time to keep up with replacing damaged physical money, population growth and production growth. Inflation is definitely not the only outcome.

"is it always possible to print money without causing inflation?"

that's not my question. that is yours.

i'm always intrigued when people try so hard to defend a definition of a word as if words themselves are reality and not an abstraction of it. on the other hand, i learned something new, which is that apparently the US dollar is money as long as u r in a certain latitude and longitude or until someone refuses to take it and then it becomes a piece of paper and not money.

If I'm on an airplane, and someone gives me $100, I'm keeping it.

so the Euro is not considered money here unless you walk into a Bank with it. Gold is only considered money in a local coin store but once you walk out of there it is just an illusion.

If you spend on an American base airline, your credit card will be charged in US dollar denomination. Airlines don't want cash for at least two reasons: 1. They don't want to spend time giving changes. 2. Hard to keep inventory of everything and anything such as small bottles of wine.

@greensdale

of course u r going to want to check the latitude and longitude so u know what u really have in ur hands

@renterjoey

of course this depends on what bank. those that don't accept euros, well, u might as well flush it down the toilet

what US bank won't accept money? Sorry I meant to ask you what US bank won't accept the Euro?

People Express used to take US cash money money in their little aisle trolleys as payment for your airfare. Unless you hid in the bathroom for the entire flight.

"that's not my question. that is yours."

Because yours doesn't make any sense.

"so the Euro is not considered money here unless you walk into a Bank with it."

No - the euro is not money here because it's not legal tender. You can, however, find certain banks that will buy it from you - just like they some will buy barley futures - and give you dollars for it. Not all banks do that, and no bank is obligated to do that. That's the difference: they're all obligated to take dollars.

"Gold is only considered money in a local coin store but once you walk out of there it is just an illusion."

No, gold is not considered money in a local coin store any more than Cheerios are considered money in a local store. You may find a local coin store that will sell you a gold coin from Rome; it has value as a gold coin from Rome, but you can't go out and spend it.

Nor can you go out and spend a gold kruggerand. You may be able to if you go to South Africa (I've never been, so I don't know), but here all you can do is spend gold US coins.

Gold still not accepted on airplanes, but is up more than Apple since w67's call to buy Apple.
http://streeteasy.com/nyc/talk/discussion/34812-w67-makes-bold-call-to-buy-aapl-sell-lic

so the bottom line is that gold is money but not currency. Gold can be exchanged for local currency in just about every country in the world. Far more than many currencies can. Countries and banks accept it as collateral for loans just as they do for reserve currencies and assets held by other banks or countries. It has once again become a tier one asset by the BIS. Gold fluctuates, the dollar fluctuates, the pound fluctuates in value but they are all still money. Gold has lasted for several thousand years as money, fiat currencies not so much.

So you are saying that the title of this thread should have been, "Is Gold Currency?"

or "gold is not the local currency" . I think stevejhx thought the title was "Is the gold standard a good idea?"

or "Gold is not money because it is too good to be money"

Oh, joey, you were doing so well, then this:

"so the bottom line is that gold is money but not currency."

Gold is NOT money. Money may be gold, or silver or copper or stainless steel or paper or a bank statement, but gold is not money.

"Gold can be exchanged for local currency in just about every country in the world."

And so can Big Macs.

"Far more than many currencies can."

That is a function of the currencies, not gold, but gold can more easily be exchanged for dollars than it can for gold.

"Countries and banks accept it as collateral for loans just as they do for reserve currencies and assets held by other banks or countries."

Just as they will accept a house (mortgage) or land or stocks or goats or tractors (chattel mortgage) and just about anything else that is liquid.

"It has once again become a tier one asset by the BIS."

So are a lot of things accepted as tier one "capital" - gold is, with a 15% deduction and marked to market.

"Gold fluctuates, the dollar fluctuates, the pound fluctuates in value but they are all still money."

No they're not. Gold is NOT MONEY. Nothing is denominated in gold. It does not have value as legal tender ANYWHERE.

"Gold has lasted for several thousand years as money, fiat currencies not so much."

So has voodoo lasted thousands of years - it don't make it right.

Ooops!

"That is a function of the currencies, not gold, but gold can more easily be exchanged for dollars than it can for gold" should say "That is a function of the currencies, not gold, but currencies can more easily be exchanged for dollars than they can for gold."

My bad!

"Gold is NOT MONEY"

don't tell that to the Central Banks who claim to hold 31,000 tonnes of it in their vaults.

if those crooks default on their short gold positions (not enough physical gold to cover), they will ban the holding of real gold again through legislation

"Gold is NOT MONEY"

and don't you dare tell that to the US citizens who had it confiscated from their bank vaults and homes by government a few decades ago.

Apple is on fire! When it hits $700 this fall bc of iPhone 6 release and a timeline of new products, w67 is thinking apple at $390 will be handily beat nyc wo the beta.

"don't tell that to the Central Banks who claim to hold 31,000 tonnes of it in their vaults."

I don't have to. Just look here:

http://www.federalreserve.gov/releases/h41/current/h41.htm

Gold represents 0.2% of the Fed's balance sheet.

Whoopie!

"Gold confiscation"?

You mean Franklin Roosevelt?

It went hand in hand with dropping the gold standard, and was mostly related to gold certificates.

No longer a material issue because we are no longer on the gold standard. You're free to own all the gold you want. But as a giant FYI, the government can confiscate anything they want - eminent domain, dude!

31,0000 tons of gold owned by central banks. enough said!

As long as you're convinced and you're happy with your conviction, renterjoey, more power to you!

It doesn't change the fact that gold is not money, however.

Very very interesting article that I'm sure you will enjoy Steve on everything you wanted to know on money. Dr, Parks even discusses the gold standard and why it won't work so here it is:

http://www.thedailybell.com/29044/Anthony-Wile-Larry-Parks-Everything-You-Ever-Wanted-to-Know-About-Money-Metals

Hmm. "Lawrence Parks holds a Ph.D. in Operations Research from the Polytechnic Institute of New York University...."

And his interview is completely incoherent.

Lawrence Parks is the Executive Director of the Foundation for the Advancement of Monetary Education (FAME). He has broad experience in academia, in business, and in finance. He holds a Ph.D. in Operations Research from the Polytechnic University. Dr. Parks has studied the money issue for more than thirty years. His writings have appeared in Pensions & Investments, The Economist, The Washington Times, The Freeman, The Free Market, American Outlook, The United States Congressional Record, National Review, and others. He is an active member of many civic and social organizations, a member of The United Association for Labor Education, The National Writer’s Union, UAW 1981, AFL-CIO, and he is a frequent speaker on the Fight for Honest Monetary Weights and Measures. His focus is on how our present fiat monetary system operates to destroy savings, pensions and jobs and what to do about it.

Oh, BTW, about this "Polytechnic Institute of New York University...."

He sure is trying to sound fancy by affiliating himself with NYU, but the Polytechnic University has only been affiliated with NYU since 2008. Before that it was a 3rd-rate, though it does have the distinction of being "#9 U.S. News & World Report Best Online Graduate Engineering Programs," though it's #139 in the national list.

http://colleges.usnews.rankingsandreviews.com/best-colleges/polytechnic-institute-of-new-york-university-2796/rankings

Not exactly the greatest source in the world for monetary theory.

Which is probably why the interview is so incomprehensible.

Oh - I was a member of the National Writer's Union at one point, too, so I could get group health insurance.

His "focus" has been completely debunked by all accepted theory and empirical studies. If you want to believe him, though, feel free.

And "The Economist" doesn't publish bylines, so anybody can say that they've written for it.

Completely unsubstantiated.

"And his interview is completely incoherent."

Incoherent as in you not being the last one to post a comment here.

McDonald's gift certificates are accepted in more places in New York city accept gold coins in the entire US. Yawn.

Are McDonalds gift certificates accepted on airplanes?

Only on Air Harlem.

Reasons for gold sell off are murky at best. Nobody seems to know. My guess ETF's.
And then you have very real observed demand.

http://www.bloomberg.com/news/2013-04-26/gold-buyers-throng-indian-stores-for-second-week-on-rally-1-.html

Bullion slumped 14 percent in two days, reaching the lowest price in two years on April 16, triggering a frenzy among coin and jewelry buyers from the U.S. to India, China and Australia. The surge in demand has helped prices rally 12 percent since April 16, and jewelers in India are paying premiums of as much as $10 an ounce to secure supplies, according to the Bombay Bullion Association.

“Everyone is thinking that they will miss the bus if they don’t buy now as prices have started moving up,” said Ramesh Pahlajani, partner at Mumbai-based Bherumal Shamandas Jewellers. “Demand has been very good since last week.”

Of course the move down could be just a temporary reaction to Cyrpus needing to raise cash

http://business.financialpost.com/2013/04/23/cyprus-gold-sale/

I don't think Cyprus needing to raise cash by selling their gold would have any effect on the price of gold dropping. It's not as if they would hit the sell button on the COMEX. All they would have to do is call China and they would take their gold off their hands. What China would do is probably bury the gold in their vaults forever. Actually gold leaving weak hands like cyprus into stronger hands like China is good for gold.

I think this discussion remains very insightful.

"McDonald's gift certificates are accepted in more places in New York city accept gold coins in the entire US. Yawn."

Gold is chosen by central banks because it's the one thing that all central banks will accept. McDonald's gift certificates will not be, nor will ever be accepted.

So McDonald's gift certificates has no claim, legal or otherwise.

Gold always has a claim whether by force of law or not, because it is desired as a reserve and store of wealth by men of all cultures at all times throughout history.

Fed buys mbs, renterjoey deems mbs must be cash. Along with all those bonds.

"Gold is chosen by central banks because it's the one thing that all central banks will accept."

No. Central banks do not accept payment in gold. They hold gold as a semi-liquid asset, but it does not represent a large portion of their holdings. In the case of the Fed, 0.2%.

"because it is desired as a reserve and store of wealth by men of all cultures at all times throughout history."

Conch shells, trinkets and beads did, once, too. It's not a store of wealth any more than a house is, any more than a clock is a store of time.

But of course if you want to continue to believe your myths you're free to.

Is Time Money?

"Lawrence Parks is the Executive Director of the Foundation for the Advancement of Monetary Education (FAME)."

He's also the only employee. Classic crackpot scheme: form your own foundation, put your assets into it, and pay yourself a salary. The charity records for this outfit are a hoot; just google.

"Lawrence Parks is the Executive Director of the Foundation for the Advancement of Monetary Education (FAME)."

Yeah - another of his claims to fame is that his writings "appear in the Congressional Record."

HAHAHAHAHAHAHA!

I wonder which Congressman he paid to have his "writings" read into it. It's not, shall we say, a peer-reviewed journal.

Keep on bashing the author but the article was very very insightful. Excellent article.

http://www.thedailybell.com/29044/Anthony-Wile-Larry-Parks-Everything-You-Ever-Wanted-to-Know-About-Money-Metals

That's the same article you posted before, renter, and posting it again doesn't make it make any more sense. In fact, having read the interview twice I can't even figure out what he's actually espousing, beyond this gem, pardon the pun: "What this means is that, if society concludes that the money supply needs to be increased, more gold and/or silver will be mined, one will take the specie to the mint and the mint will produce the coins."

Bizarre.

Published on the website of Anthony Wile, "In 2003, Wile experienced a brief role as the Chairman of a start-up junior mining company that became the subject of a civil attack by the SEC. Wile and others fought for more than seven years at great personal and financial expense before eventually settling the case without admitting any wrongdoing..."

who is permanently barred from the securities industry because of fraud:

http://www.sec.gov/litigation/litreleases/2010/lr21696.htm

Keep on believing, Renter! Keep on believing!

"No. Central banks do not accept payment in gold. They hold gold as a semi-liquid asset, but it does not represent a large portion of their holdings"

"The biggest individual holders of gold—central banks, international organizations and governments—are believed to account for approximately 16.5 percent of the world's gold, holding about 30,700 tons." CNBC

Steve I believe Someone's ex brother-in law's friend of a friend from CNBC was sued for fraud so you should question this fact as well.

RJ, if you want to rely on an article on gold miners published on a website run by a gold-bug fraudster who was barred from the securities industry for running a scam gold-mining operation, interviewing somebody with a degree in statistics from a third-rate university and no background or qualifications in economics or finance, who invented his own institution and claims to have been "published" in the Congressional Record, feel free.

There's also a certain bridge between New York and Kings County that I can offer you for sale, if you're interested.

Steve is correct, every central bank, and I mean EVERY central bank you have heard of holds WAY more USTs than gold, more of other major government bonds, probably more fricking Canadian bonds than gold, many own stocks, corporate bonds, and other financial assets. The fact that so many central banks own investment grade bonds does not make bonds money.

Do central banks hold McDonalds gift certificates?

"...Gold Extends Slump as Investors' Appetite Wanes...

...Gold prices declined for a sixth consecutive session, as an industry report and the disclosure of scaled-back bets by some hedge funds pointed to investors' waning interest in the precious metal.

Gold for June delivery was down $10.80, or 0.8%, to $1,385.40 a troy ounce on the Comex division of the New York Mercantile Exchange...

...Gold again is approaching two-year lows...."

http://online.wsj.com/article/SB10001424127887324767004578486902146813878.html?mod=WSJ_hp_LEFTWhatsNewsCollection

Sounds like an investment, not a currency.

>Sounds like an investment, not a currency.

You came here just to say that?

I think gold as a concept has changed a lot over the last few years as the entire investment landscape has changed. No one knows how its going to shake out. For me...considering that it has no actual industrial use, Im a seller. we'll see how it goes.

>No one knows how its going to shake out.

We'll be dead by then.

i can't wait until you are.

Until I am what?

huh?

Stupid comment by mossy. You might be dead, but I think Marco is talking about a more short-term perspective. Again, inference, something you seem to lack, often willfully, stupidly, and irritatingly so. Your cleverness is greatly magnified in your own mind.

>You might be dead,

I can assure you, I am not.

Brain dead.

Is that your professional diagnosis?

"Gold Lower For 8th Session In A Row; Silver At 2.5-Year Low"

http://www.forbes.com/sites/kitconews/2013/05/20/a-m-kitco-metals-roundup-gold-lower-for-8th-session-in-a-row-silver-at-2-5-year-low/

"Silver falls; gold heads for longest slide in four years"

http://in.reuters.com/article/2013/05/20/markets-gold-idINDEE94J07020130520

That's good news now may be a great time to buy.

Time to load up on those Gold and Silver future contracts.
It's time for commodity to play some 'QE' catching up in the coming months.

Roubini’s six-point case, in his piece for Project Syndicate:
1.Gold spikes in times of serious economic, financial and geopolitical risks — think “financial Armageddon.” But that doesn’t make it such a safe investment, says Roubini, noting sharp falls in gold prices during crisis periods of 2008 and 2009.
2.Gold performs best in times of high inflationary risks, as its popularity grows under the view that it is a hedge against inflation. But even after aggressive monetary policy by central banks, he says, global inflation is low and dropping further, and commodity prices are adjusted downwards.
3.Gold provides no income. With equities, you get dividends; with bonds, coupons and with property, rent. Now that the global economy is recovering, other assets are providing higher returns — so who needs gold, which has “vastly” underperformed since early 2009 versus stocks, he asks.
4.Real rates are headed higher on the view that the Federal Reserve and other central banks are going to back out of quantitative easing and zero-policy rates. “The time to buy gold is when the real returns on cash and bonds are negative, and falling,” and that’s not now, he says.
5.Highly indebted sovereigns are not pushing investors towards gold and away from their bonds. In fact, many of these governments have high stocks of gold, which they may dump to cut debt. Italy, for one, could be tempted to pare back on its huge holdings.
6.Political conservatives in the U.S. have hyped gold so much that it’s become counterproductive. “For this far-right fringe, gold is the only hedge against the risk posed by the government’s conspiracy to expropriate wealth,” he says.

Did some forget to tell Roubini that gold has gone up for 12 straight years while all that time he's been negative on gold. Now when gold has a down year he's coming out of the woodwork and trashing it again.

Here is a quote from Roubini on November 4 2009

My favorite quote by Roubini when gold was trading at around a 1000 that day is “Maybe it will reach $1,100 or so but $1,500 or $2,000 is nonsense,” Roubini said. meanwhile the following two years gold went up to nearly 2000.

Nov. 4 (Bloomberg) -- Nouriel Roubini, the economist who predicted the global economic crisis, said a forecast by investor Jim Rogers that gold will double to at least $2,000 an ounce is “utter nonsense.”

There is no inflation or “near-depression” to drive gold prices that high, Roubini said today at the Inside Commodities Conference in New York. If a severe depression came to pass, with investors buying canned goods and hiding out in log cabins, “maybe you want some gold in that scenario,” Roubini said.

“Maybe it will reach $1,100 or so but $1,500 or $2,000 is nonsense,” Roubini said. Gold rose to a record $1,096.20 today on the New York Mercantile Exchange’s Comex division on speculation that central banks and investors will purchase the metal to hedge against a declining dollar.

Roubini states " inflation is low and dropping further"

What a relief that is. Next time I buy food, go to the movies or want to buy/rent an apt in Manhattan I can look forward to lower prices. All I need to do is wait and watch prices drop.

http://streeteasy.com/nyc/talk/discussion/27142-dr-doom-says-hunker-down

"The Shine Is Off
Paranoid investors pushed gold to $1,900 an ounce in 2011, but the bubble has burst."

Wow, this guy goes through all the gold bug arguments one by one and destroys them. Great stuff.

http://www.slate.com/articles/business/project_syndicate/2013/06/gold_bubble_paranoid_investors_pushed_gold_to_1_900_an_ounce_in_2011_but.html

Roubini is the author...

Roubini has been wrong about gold for the past ten years:

Here is a quote from Roubini on November 4 2009

My favorite quote by Roubini when gold was trading at around a 1000 that day is “Maybe it will reach $1,100 or so but $1,500 or $2,000 is nonsense,” Roubini said. meanwhile the following two years gold went up to nearly 2000.

Nov. 4 (Bloomberg) -- Nouriel Roubini, the economist who predicted the global economic crisis, said a forecast by investor Jim Rogers that gold will double to at least $2,000 an ounce is “utter nonsense.”

There is no inflation or “near-depression” to drive gold prices that high, Roubini said today at the Inside Commodities Conference in New York. If a severe depression came to pass, with investors buying canned goods and hiding out in log cabins, “maybe you want some gold in that scenario,” Roubini said.

“Maybe it will reach $1,100 or so but $1,500 or $2,000 is nonsense,” Roubini said. Gold rose to a record $1,096.20 today on the New York Mercantile Exchange’s Comex division on speculation that central banks and investors will purchase the metal to hedge against a declining dollar.

roubini has been dead wrong now going on two years.....

Jun 3, 2013
Nouriel Roubini likely to be as right on gold prices as he was on the stock market crash, i.e. totally wrong

Rewind back to the dark days of 2009 when the S&P touched its lowest point in March. Stocks started to rebound and then one famous commentator stood up to call another stock market crash. Step forward Dr. Nouriel Roubini who got the subprime debacle spectacularly right and the subsequent stock market rally spectactularly wrong. That was almost four years ago.

He is making the same mistake with gold now. Perhaps in several years time when gold passes $5,000 an ounce there will be a spectacular price collapse or maybe not? But now? The big shift from paper assets to real assets has not even gotten going.

Six points

Dr. Roubini makes six points why gold is going to $1,000 an ounce. Let us refute each one in turn:
1. Margin calls will force a gold sell-off in a crisis as in 2008-9. Yes but we have already seen a correction in precious metal prices (unlike 2008-9), and don’t forget that precious metals showed the fastest recovery of any asset class post 2008-9 and went on to new highs very quickly. It may not be different this time.

2. Inflation has stayed low. Tell that to the Chinese struggling with rising food prices. That’s why we had the Arab Spring. What does it cost to put gas in the tank these days? Official inflation data stinks. Professor Roubini ought to know this is nonsense.

3. Gold earns no income. Well tell that to investors who bought 10 years ago. It’s outperformed every other major asset class since then. Do you really expect income on top?

4. The ‘arguably more positive outlook about the US and the global economy’ means the Fed may stop printing money. That’s laughable, just look at the falling output from manufacturing reported today (click here). QE to infinity looks a safe bet.

5. Central banks in troubled nations may sell their gold. Come off it professor, the central banks are all big net buyers of gold and will buy more than ever this year.

6. Extremist US politicians have overhyped gold. Yes but do you really think that has much influence in the world? Might it not be counterproductive? Nobody in China, India or the Arab world gives a fig what these guys have to say.

Totally wrong

Wrong on every count! Let’s throw in a few more thoughts. India bought more gold in the past quarter than in the past year. Sales of US gold eagle coins are up a third on a year ago. The Dubai gold souks have been struggling to keep up with demand for physical gold.
And ah, the hedge funds are starting to buy again, realizing the trend is their friend with bullion. Even they have not been tricked by the central bank intervention in the gold market in April, unlike Professor Roubini.

Like his earlier stock market call the good professor is about three or four years early. Even then we are not convinced. Gold will likely be a key part of a global currency reset to lift the world out of a currency disaster, and may never be as cheap again as it is today.
Source: http://news.goldseek.com

wrong on gold, wrong on macro economic activity, WAY wrong on global equities. Next!

actually Roubini has been wrong for the last 4 years. If you did the exact opposite Roubini predicted for the past 4 years you'd be very wealthy.

another jason faux pas, he gets this wrong yet again by his usual cut and past references that he pulls out of his a$$.

anything requiring some critical thinking and he is an epic fail......

Inflation is low throughout the world, which is precisely why the Fed is NOT going to stop printing money any time soon - not with inflation at under 1%, which is where their panic levels set in.

The Arab Spring is far more complicated than the price of bread.

And gold does not earn "income," because increases or decreases in the price of an asset are not counted as income, but rather as capital gains.

Much of the increase in the price of gold was probably due to the introduction of gold ETF's, and George Soros buying tons of the stuff.

There is no need for gold; it is all psychology. It's fine to own it and trade it & stuff it under your pillow if you want, but don't be deluded into thinking it has some magical power, or is worth something that it is not.

Gold is not money.