Bank is better because i keep mine in the bank...LOL
Some people will say :" waa, not dangerous ke ask the bank to keep your valuable items ?"
Off course SD also have flaws, but the important thing is to lowered the probability of get stolen.

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Added on December 20, 2011, 2:32 pmWonder why Maybank ceased fully backed it`s MGIA with physical gold, about 6 months ago ?
If that is not about physical superiority, i dont know what it is

This post has been edited by FrancescoTop8: Dec 20 2011, 02:32 PM

Ya, this scenario can happen, but it has been 98 years wait for fiat money system to collapse, I don't have another 98 years to wait.

Paper gold is about money all the while, some paper gold account (some can), stated no conversion of physical allowed, but they will pay you equivalent to gold price in fiat money term.

But if the mentioned situation happen, economy will down to the drain, huge and severe recession, and deflation can occur, so no more inflation threat. Normalising back.

Gold price also plunge in deflation, economy recession.
Gold price surge, because there is too much money chasing too little thing. It is same across asset class, not only gold.
Economy recession, deflation, money shrink.

See how gold price plunge when 2008 global financial crisis on its height time which resulted global economy recession.
It is only aftermath, thing stablise back, + QE then gold price surge again.

Economy just like YingYang one, if you go too far on one side, it becomes bubble and huge correction factor coming.
If everyone rush to convert fiat money resulted in bubble, economy can collapse one, same with inflation, if inflation too severe, it will collapse the economy as well.
By then correction factor coming in, recession, deflation, kill the price back.

Current economy cannot work with gold as medium of exchange.

1. I prefer SD provider as I get access to it 7 days a week. Bank can declare bank holidays when there is a bank rush. SD cannot, and will not, because there is no rush fear.

2. Ceasure of full backing with physical gold is the same trick as abolishment of gold standards (yr 1971), and bank's fractional reserve. Two tricks combined into one, the advanced version.

I taught some people say bank is not safe...
Shoe box better.

Just my guess,
Gold account has been growing quite rapidly,
It may because bank won't hedge against your gold account with physical in hand, they also scare to store too many tonnes of gold in their HQ, most banks hedge using derivatives, gold futures etc.
It is wise for bank to store a few tonnes whenever customer put money in gold saving account?
Also, with so many gold account nowadays, if just 10% of the account holder demanded 100gram, 50 gram, 1kg, here and there, can cause a lot of hassle, havoc, and security risk for bank to deliver the physical gold, couple cost associated with it in the process of letting customer to convert.

They might earn little from the spread, but those troublesome process of converting can be too costly.

Physical in shoe box rulez.

This post has been edited by cherroy: Dec 20 2011, 02:41 PM

Try Zimbabwe, no sign of deflation after hyperinflation up till today. Try Argentina, no sign of deflation after hyperinflation. Try Russia, no sign of deflation after inflation. Don't get me wrong, not trying to discredit your view. Just want to create awareness that economic collapse does not necessarily mean recession + deflation.

Also, correction: paper/coin money system may be more than 100-year old. But fiat money (without gold backing) is only 40-year old. Read up on "gold standard" and you'll understand why QE is possible, and why hyperinflation is a real risk now. And why many people and central banks start buying gold.

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Added on December 20, 2011, 3:00 pmYes it is very wise for the banks not to store physical. Just ask people to part money with them as a hedge with gold when there is no gold. There is really no physical backing to hedge against. And yes, if only 10% of the account holders demand a withdrawal, it would create a bank rush. Just like if 10% of people want to withdraw their money, bank would have to announce a bank holiday. Why? Because there is no such money to give them. Similarly, there is no such gold to give them. When the accounts become so big, when people demand conversion into physical, wonder where can they get such amount of gold from the market, at such short period of time, at such low premium over spot.

This post has been edited by cruzzie73: Dec 20 2011, 03:00 PM

They have people convert all their money to gold?
People say BRIC has big future, and their economy are doing good and has tremendous future. Russia is one of BRIC.
They have no deflation because economy is growing.
I can assure you if everyone convert all their money, deflation will occur.

Gold cannot work in current economy one.
Ancient people already realise, that's why they ditch gold long long time ago.

Gold standard only applied on USD, non of other currency is "gold backed" even before 1971.

Ya, inflation is at risk, that's why I like paper gold. I never say inflation is not at risk, I deeply worry about inflation.
While, I am not saying cash vs gold.
The issue is all about paper gold vs physical gold.
Why so many people quoted the inflation story to counter my point?

Bring in inflation story doesn't alter paper gold also gain/hedge the same with physical, except added in you need to trust the bank obligation to pay you.
While paper gold eliminate ordinary theft, disaster (Tsunami, flooding), etc risk.

It is all about paper gold vs physical advantage and disadvantage.

I just view, paper gold has its advantage, and my personal view, its advantage is enough to counter its disadvantage of potential of bank default.
I am ok other disagree on it, I don't force my view, just totally discredit paper gold is totally useless and risky somehow, I feel not right, both have their advantage and disadvantage.

Yes, many buy gold for inflation hedge, but they do not fully hedge you inflation even until now, history does not lie.

While. central banks buy gold is not about inflation, central banks buy gold because they have too much USD, and hedge against USD downside risk.

This post has been edited by cherroy: Dec 20 2011, 03:09 PM

sry newbie here

got few question want to ask all expert

1)Did gold investment is high risk investment ? is this investment for short term or long term

2)which bank provide trading gold online ?

3)Is this better ROI than gov bond , unit trust ?

4) IS now is the good time for buying gold ?

thx

1) Paper gold - risk of default
Physical gold - risk of being cheated in term of purity, theft, or missing entire physical gold bar.

2) So far people reported in this forum, PBB can.

3) Nobody knows the ROI, it all depended on whether gold price will rise or not, and rise how much. We have 1980 to 2002, gold yield Zero return.
While from 2004-2011, yield magnificent return.

4) This is billion dollar question.

gold is trying to break 1600.. almost same like trying to break 1800 last few weeks.. hmmm..

Thats what i said



in response to your comment



MF Global is not just about default. They sold yer gold and everything vanished*
You are left with a PAPER receipt.

You're right, most countries did not have gold standard. But as backing they have foreign reserves mostly in the form of USD. And since USD was backed by gold pre-1971, they effectively can use their foreign reservce to exchange for gold.

By the way, if you read back, I was not discussing gold vs fiat. The inflation story was used only to illustrate a scenario to show how risky is paper gold. What the banks and financial institutions are doing with these paper gold is the same trick they used to play with fiat money. No physical backing vs no physical backing, over-selling vs fractional reserve.

+1

Using paper gold at fractiional reserve IF any et al............

I never say paper gold is not without risk.

Some gold account already stated gold account cannot convert to physical gold, it is all about fiat money (investment) all the while, aka in the form of investment that tie to gold pricing.

If there is no default, if physical earn your RM1000, paper also earn you Rm1001 (due to lower spread, low maintenance cost, like safe deposit, shoe box etc.)
If the gold account stated no conversion is allowed, the risk of mentioned default due to gold conversion rush is not there to start with.

Fiat system has been there long long time.
Even you used 1971, until 2011, it has been 40 years, and not fail (or yet).
Another 40 years wait?
I don't know, I only know, I may be have another 1 x 40 years only the most.
I cannot wait that long.

If bank uses every penny of gold account with physical backing, they will out of business without charging enough spread, current a few RM spread is not enough to cover the cost.

"..In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value....."
http://www.constitution.org/mon/greenspan_gold.htm

America used to hail Alan Greesnspan as " WE DONT NEED GOLD STANDARD, WE HAVE ALAN GREENSPAN "
And now Greenspan himself proposed a gold standard.
Wait, Ron Paul (the leading candidate for 2012 presidency) also insist in gold standard

So dont drop the gold standard subject because it did have a numbers of prominent supporters.

Yes, I also wish to see it, to stop excessive money printing.

But a lot of talk only remain as talk only, when thing stablise, 99% everything forgotten.
See when global financial crisis on its height time, people said must reform the financial system, too big to fail, systemic risk need to eliminated etc.
Speculation, too lenient financial practice can cause bad etc, need tighter regulation.
Now thing stablise already, where is the reform?
Where is regulation to curb speculation?

Yes, gold standard is good, but it also create lot of problem for current economy.

Do you believe it will be adopted?

Due to political power. U.S still favour fiat money, so there`s no reform

But, in 2012, if Ron Paul managed to oust Obama, gold standard can be adopted.
Some will argue that gold standard will create a lot of problem for current economy and bla,bla,bla....but that that argument will be dwarfed by political power.

cherroy., where is your padawan / supporter of paper gold?

thanks cruzzie for helping me to convince this otai cherroy.

to all the gold gurus here,

1) you buy gold to keep for price appreciation or for trading aka speculation?

2) you buy gold to earn interest?


but why gold? why buy gold?

LOL, supporter?
Who need supporter?
This is not a war, more supporter win?
This is not win, lose or draw.
The is discussion all along, why need supporter when I am posting, is fact, and reality out there.

Need supporter to claim physical gold is better than paper gold?

Me already being convinced stored a kg of physical in shoe box...when I afford time.

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Added on December 20, 2011, 10:18 pm2) please get your fact right, gold never earn you a single cent of interest.

This post has been edited by cherroy: Dec 20 2011, 10:18 PM

Are you sure Ron Paul will do it?
I taught Obama said before being elected, said rich shouldn't enjoy tax cut and should be taxed more, or no?
I only knew, Bush tax cut being extended across,
or my memory kaput already?

Enough gold or not to back trillions of USD out there?

You don't need rocket science if every penny need to be backed by gold, we will have problem in current financial system or economy.
Simple example, festival time, when most people want to get new money note for green packet, red packet, BNM tell you, hey not enough gold, so cannot print money, use your old money.
or
one going to bank to get a housing loan, sorry, cannot give you loan, BNM has not enough gold to create/print new money. So house nobody can buy except buying with full cash, economy stalled.
Economy stalled, public suffer/angry, still got political power?

Ok, no point saying, let wait and see, very fast 2012 already may know the result.