I once read — maybe the writer was being slightly silly? — that the scrap price (salvage price) of obsolete computers followed the price of gold!
[quote="RioRico, post:20, topic:849662"]
Has anyone tracked gold prices per past epidemics? What are the historical responses? [/me too lazy too look it up]
[/QUOTE]
Which epidemic? Has there been a pandemic on this scale since the world went off the gold standard? Until recently, the price of gold was often a fixed constant! From 1839 to 1861, and again from 1879 to 1932, gold sold in New York City for $20.67 per ounce. During most of those periods, the same ounce sold in London for 4 pounds, 4 shillings and ten pence.
Here is some data which might be interesting, pulled from 'Net, on laborer's wages in England before, during and after the Black Death of 1347-1352 and the Spanish flu of 1918-1920. (There was little change during the Third Plague Pandemic of 1855–1859.) Shown are nominal wages, and real wages using 2010 pounds. (The ratio of the two figures shows the relative price of a "consumer bundle.") However these data show that the loss of many working-age people led to a rise in wages. The current pandemic is NOT expected to get that bad!
1346 £1.86 £1,347
1347 £1.85 £1,137
1348 £1.81 £1,102
1349 £2.01 £1,481
1350 £3.44 £2,147
1351 £3.53 £1,896
1352 £3.22 £1,550
1353 £3.05 £1,784
1354 £3.17 £1,911
1355 £3.09 £1,815
1356 £3.26 £1,822
1357 £3.22 £1,749
...
1910 £71 £5,645
1911 £71 £5,613
1912 £72 £5,567
1913 £72 £5,543
1914 £80 £5,957
1915 £82 £5,111
1916 £89 £4,701
1917 £101 £4,415
1918 £133 £5,047
1919 £165 £5,901
1920 £237 £7,427
1921 £178 £6,152
1922 £140 £5,941
1923 £140 £6,217
1924 £157 £6,976
1925 £158 £7,038
When you have figured out how to eat gold (or wipe your ass with it) come back. People are hoarding things with intrinsic value, which gold doesn’t have.
“Hey, you. Go pound gold!” Hmm. Nope. Just doesn’t have the same ring to it.
It’s notable that silver, copper, etc. prices are falling quite a bit (with a bit of an uptick in recent days). Those have more industrial uses so people are expecting an industrial downturn. The declines are the worst since 2011.
I often wonder why folks feel the need to come into threads like this and take potshots at gold as a store of value because it’s “useless” or nearly so. It’s almost as if they’re offended that some people like something they don’t like.
The whole value of gold is based on people who want it and who are willing to trade other things for it. Just exactly like every value of every other thing. There is absolutely no mystery to any of this, every single person has different things that they value, besides the things that they have to have every day. I don’t get why this one bothers some folks so much.
On the topic of the OP, I have a slightly alternative explanation: perhaps some owners of gold are selling some of it to get cash to buy soon-to-be bargains in the equity market. Those people are optimists about the eventual outcome of this episode, as they would be buying stocks in expectation that they will become more valuable when the virus has run its course or at least when things settle down again.
I mentioned this in #4: “… investors who want to buy bargain-priced stocks — or who need cash to cover margin calls — are selling gold to raise cash. But I don’t think this is the main reason.” And as Melbourne points out in #10, gold’s fall is less dramatic when quoted in Euros or Yen. Moreover Gold’s price is almost unchanged in terms of Australian Dollar or British pound — those currencies fell almost in tandem with gold since the March 9 high.
But I heartily endorse the first two paragraphs of your post. The anti-gold fever here is quite a joke. I think we could have a thread about buying Bitcoins or Beanie Babies (or Modiglianis) without discussion of whether they are suitable for use as toilet paper … but not Gold!
[quote="ftg, post:7, topic:849662"]
Note that many European countries are reducing their gold reserves since they are just a waste of money in terms of storage and other fees.
[/QUOTE]
Getting back to this: Your claim has now been debunked through 2019. Do you have a cite for European central bank gold sales in recent months? Or would you prefer to withdraw the claim?
Look, I’m not an economist, thank God. But speaking as a layman, it bothers me because I think we should be asking *why *people want it. Do they want it solely in order to sell it at some later date, or does someone down the line actually want it for its own intrinsic properties?
I don’t see it as ‘potshots’ more as a response to those who try to talk up the price of gold as a hedge against inflation, or the apocalypse. These are crazy times and it’s true that there will be bargains in equities. The problem, as always, is choosing the right ones.
Why should we be asking this? It makes no sense to me at all that anyone should care why someone else wants to own gold, any more than it matters why anyone wants to own Bitcoin or beanie babies or Modiglianis (as septimus put it). Please tell us why you think we need to know this, what actions or policies would be affected by that knowledge?
Data? YOU want to deal with the data? Let’s do so.
I will obliterate your claim above:“Note that many European countries are reducing their gold reserves since they are just a waste of money in terms of storage and other fees.”
Upthread we’ve found a source for central bank sales. In most cases the central bank’s gold stock did not change over the last decade, or changed by too little to register given the source’s 1-tonne granularity. I now present the results for all European countries whose gold stock changed by 1 tonne or more:
Belarus purchased 24 tonnes of gold during the last decade.
Belgium sold 1 tonne.
Bosnia and Herz purchased 2 tonnes.
Czech Republic sold 4 tonnes.
France purchased 1 tonne.
Germany sold a whopping 37 tonnes, 1% of its stock.
Greece purchased 1 tonne.
Hungary purchased 29 tonnes.
Poland purchased 26 tonnes.
Russia purchased 1464 tonnes
Serbia purchased 7 tonnes.
Turkey purchased 138 tonnes.
Ukraine sold 3 tonnes.
If we exclude Russia (a special case?) this is still a net purchase of 183 tonnes. Without excluding Russia, the net purchase is 1647 tonnes.
Dopers: Please raise your hand if you think this is compatible with ftg’s claim
“Note that many European countries are reducing their gold reserves since they are just a waste of money in terms of storage and other fees.”
The only significant sale was Germany’s. (IIRC that was part of an experiment — they wanted to see how long it would take the N.Y. Fed to deliver Germany’s gold!)
Simple answer: China and India. According to this article from Reuters, those two countries buy over half the world’s gold. The two countries’ gold demand fell sharply last year and for obvious reasons is doing worse now.
