Because gold is never a medium of trade/exchange.

When you go to restaurant to eat, can you pay with 1g or 2g of gold?
Can be pay with 1kg of gold when you buy a house time?
When you make credit card payment time, can you say to the bank, I pay with 10 g of gold?

Gold doesn't lose its intrinsic value?
Gold doesn't have a value at all.

Its value is based on fiat money system, aka how much you will pay to own the gold.
Ain't you see gold price now is USD18xx or 1900?
Its value is coming from or based on fiat money.

You can lose money with gold as well.
Last time 1kg of gold can buy you a bungalow.
Now 1kg of gold is not even enough to buy you medium 1000 sqft apartment.
Tell me how it is not losing "value"?

This post has been edited by cherroy: Sep 19 2011, 05:52 PM

You get hit the nail on its head, why gold cannot be used as medium of trade/exchange.
That's why gold was ditched as medium of exchange.

If there is 1oz gold, which can buy 1 chicken.
Now you grow another chicken, there is no more gold, nobody can buy from you, you cannot make a sales, except 1 chicken.
So you grow 10 chicken also no use, nobody has the gold to buy.

If later on, 1oz of gold can buy 2 chicken, why I want to grow 2 chicken in the first place, I better of with 1 chicken, I get the same amount of gold.

If my 1oz of gold can buy 2 chicken tomorrow, why I buy today? I wait for tomorrow that I can buy 2 chicken.
Wait, another day I may able to buy 3 chicken, I delay further.
No chicken is sold in the process.
Economy died down.
You hinder the growth, due to scarcity of gold.

Fiat currency is good if central banks are prudent enough to control the inflation and control the money supply according to the needs of economy.
As long as there is self-discipline on money supply, it serve good to all.

So try out restaurant or supermarket, see they accept or not...

Gold price will fall below 1300, by tomorrow?
You friend really is CONsultant?

The "tomorrow" due today,
where is the 1300 as predicted by the CONsultant?

Many people here wait 1300 until neck also long already.

Please do not post non-related issue to gold discussion.
Ty.

Economy slowdown is not because lack of oil.
Economy slowdown is because people are spending beyond their meant last time, now payback time.
There are enough oil around to support the economy.
We don't face any shortage of oil even during oil peak around USD150.
There are enough untapped oil for the rest 40-50 years without much problem, just how oil price dictated whether people interested to dig out those untapped marginal oil field, deep sea one.

Also,
Economy slowdown is not because lack of money around.
Economy slowdown is because people have no confidence to put the money into work.
Trillions of cash are sitting at sideline, in bank account that yield zero interest.
Even Apple alone has 70+ billion cash reserves, and many other big corporate has significant cash level, even locally, most well run company has ample of cash level generally.

Print money is to push the economy going, but corporate only willing to expand if they have confidence about the future growth.
And confidence cannot be built instantly through money printing.
Money printing inflated price and pushing hard on those idle cash to do something, in theory go to buy asset, investment, or expand the business due to cheap funding, but we have the result, corporate still want to have cash sitting idle due to previous fear of 2008 crisis.

Gold is over-crowded and fill with lot of short term trader, speculator, ETF, and many treat it like a stock now.
See how people everyday eager to know what is the price of today, as same as people look at stock price.

There is no new QE at the moment.
Unless we see QE3, then yes, every hard asset price will sky-rocketing again.

Gold is not a consumable item, gold amount in the market will become more and more only.
So central banks buying using USD while on the other hand gold mining keep on supplying, as long as there is balance in between, price won't go too far.

Gold price is dictated by fear, inflation expectation, and money that willing to park in gold.

Gold price highly will increase over the long term, but whether the increase will able to offset other asset class, and give decent return, still rather unknown.

We had loss decade of 20+ years for gold as well.
We had booming and magnificent run from 2005 until now.
So future will be how, still rather unknown.

It depends on how economy situation unfolding.
If economy recover well, and central banks around the world start to raise back interest rate and suck back in the liquidity, gold price may not perform well.
If economy still troublesome, which lead to central banks opt for QE, then we may see another round of upside.

Whether central banks buying or not, is not a big issue on this, it is economy situation, liquidity and general investment community expectation on it.

Gold doesn't must insure you against inflation.
In fact, for the past 30 years, it showed low correlatiom hedging against inflation.

We had period of gold price stagnant for 20 years and inflation has been double, triple or more exactly price has escalating more than 5x, 10x in the past 20 years, while gold price was little change throughout the 20 years period.

Please open a V4 for further gold related discussion.

Ty.