Posted by guest , Oct 13, 2008 2:39PM

Can someone tell me why gold is the go-to investment when the apocalypse is at hand? If I am prepared to eat my neighbors in a hell-scape of anarchy, what use can be made of a few bars of bullion?

Posted by guest , Oct 13, 2008 2:40PM

Who the fuck is Merrill Lynch.

Posted by guest , Oct 13, 2008 2:41PM

Go long on Hunting Lodges and shotguns...

The fat man in Omaha is right... metal is useless if not used to hit someone over the head...

Posted by guest , Oct 13, 2008 2:42PM

@2 Jeffrey Dahmer is that you?

Posted by guest , Oct 13, 2008 2:48PM

Look at the rumor-mongerers and walk away with their tails between their legs.

Where are the speculative stories about MUFG walking away? Any more attempts to spread lies to hit the stock price? Any more attempts to beat the stock price so bad that MUFG will HAVE to back out, since their shareholders will raiser a fit?

It is completely mind-boggling that these people are allowed to publish highly speculative stories. Seriously, someone needs to prosecute these pieces of shit, like John Carney and Henry Blodget (seconds for him).

Morgan Stanley stock up 80+%! Where are the rumors about next week? I guess the scumbags are waiting to make them up and hope they actually sound believable this time. Seriously, MS needing a $60billion capital injection?! Are you kidding, John Carney and Henry Blodget?! Are are fucking kidding me?! How much are the shorts paying you for these attack stories and posts? Are you done with the vicious rumor-mongering and yelling fire and trying to tarnish a fine bank? Well, people aren't done with you. I hope you get the investigations that are coming your way and the jail time that you immoral and unethical scumbags deserve.

Posted by guest , Oct 13, 2008 2:52PM

@5 I'm not saying I want to eat my neighbors, but if one of them tried to offer me a silly-ass gold coin while they were looking all succulent and tasty after the financial system disintegrates, it would be chow-time. Now that I've typed all this, I wonder if I've been thinking about this too much.

@2

Posted by guest , Oct 13, 2008 2:52PM

Last week I said Merrill’s call on Morgan is like Jerry Garcia calling Steven Tyler a druggie. What they both went on the wagon over the weekend – WTF?

Posted by guest , Oct 13, 2008 2:52PM

Going, going.....GONE!

Morgan Stanley up 85%+

Don't mess with the Knife or his solid-as-a-rock bank.

Posted by guest , Oct 13, 2008 2:53PM

@2....Ed Gein?

Posted by guest , Oct 13, 2008 2:55PM

#6 why dont you take a quaalude or something

Posted by guest , Oct 13, 2008 2:55PM

Which is creepier, I ask you, the guy that wants to eat people or @7. I vote 7. Seconded?

Posted by guest , Oct 13, 2008 2:55PM

Going, going.....GONE!

Morgan Stanley up 85%+

Don't mess with the Knife or his solid-as-a-rock bank.

Posted by guest , Oct 13, 2008 3:01PM

"When I see [Dick Fuld] walking down the street, I think two things. One part wants me to take [Dick] out, talk to [him], be real nice and sweet and treat [him] right."

And what did the other part think?

"What [his] head would look like on a stick...”

Ed Gein (he was a little-known Lehman analyst, until recently)

Posted by guest , Oct 13, 2008 3:01PM

@6 - well said! Clusterstock had some of the most outrageously speculative rumors over the weekend. I have to sadly admit that I have lost my respect for JC. People should know better than to mess with the Knife.

Posted by guest , Oct 13, 2008 3:03PM

MS = still short. BS rally! Can't wait to here the talking no heads talk about retesting the lows. Fundamentals are still shit.

Posted by guest , Oct 13, 2008 3:04PM

the blog below's call for the bottom on Friday (well before the open) has been vindicated.

"Correct course of action here is to do the opposite of Joe Public and Sovereign funds:
Buy stocks, and sell dollar."

http://marketwarnings.blogspot.com/2008/10/dow-sp500-october-2008-bottom-buying.html

Posted by guest , Oct 13, 2008 3:09PM

@15- I second that. It was incredible what kinds of things were put out there on the morally bankrupt Clusterstock site run by the morally bankrupt Henry Blodget and his new, bend-over 'lawyer' while I shoot my corruptness in your ass, John Carney.

The rumors were SO absurd and almost bordered on the unbelievable. It would have been less surprising if they said Martians had taken over MS. Wow, I'm still shocked they were allowed to publish those lies. I wouldn't be surprised if they were being paid by some shorts to put out that kind of flammable shit. I also hope they are investigated and put in the slammer, where they can spread rumor and gossip all day long about who's assfucking who.

Posted by guest , Oct 13, 2008 3:11PM

Shorts fried.

MS stock still trash.

These are not mutually exclusive.

Posted by guest , Oct 13, 2008 3:36PM

@20 you're an idiot. gold's a speculative investment, cash isn't. why the fuck are you comparing the two.

Posted by guest , Oct 13, 2008 3:42PM

Re: #2 Regarding gold..

I'm amazed that a blog - inhabited by some of THE most cynical people on the planet - don't know the purpose of gold.

Nobody is buying gold "for THE apocalypse". It's for right BEFORE "the apocalypse", when there's still a functional police-state protecting those with the gold from the teeming-masses of dumb-asses without the gold.

As most of "finance" is just male fantasy of “the future”, you can simply imagine a world where:

1) You have the gold.
2) There's huge numbers of females without gold.
3) You now have, like - dude, total power, dude!
4) Like, dude, you are now, like totally, a god, dude!!!
5) Like, dude, unlimited sex dude, with - like - the totally hottest chics, DUDE !!!!

Gold, it's what every male urban pre-survivalist fantasy needs.

Just an FYI tho, you’ll need to buy some ammo and cigarettes for when the police-state falls apart.

Posted by guest , Oct 13, 2008 3:42PM

2: As The Architect observed, "There are levels of survival we are prepared to accept."

In a Mad Max scenario, yeah, gold is useless except to bedeck the helpless women of your underground harem. Go long shotguns and canned goods, as the saying goes.

But gold is the only asset that's not somebody else's liability. It just sits there, being gold. Why is it worth anything? Hell if I know. But for five thousand years or more it's been a more or less universally accepted store of value, except during Mad Max times (Siege of Leningrad, fall of Berlin, Katrina, etc.) That's one hell of a trendline.

In any society between "Mad Max" and "gold is outlawed," it's going to have some value. Paper currencies and assets (like, say, stock in an investment bank) can go to zero and stay there. Gold never has and likely never will. That's the answer to your question. It's not a question of what's the most "useful." That's subjective. It's not a question of creating purchasing power. Gold doesn't do that directly. It's a question of storing value. That's what gold is for. If you don't want to do that, don't buy it.

Posted by guest , Oct 13, 2008 3:43PM

@20, depends on how much you paid for the gold.

Posted by guest , Oct 13, 2008 3:48PM

Remember when that leprachaun had all that gold in Mobile, Alabama...Wish I had gotten in on that.

Posted by guest , Oct 13, 2008 3:55PM

25 turns out it was JUST A CRACKHEAD, GOT A HOLD OF DA 'RONG STUFF!

Posted by guest , Oct 13, 2008 3:57PM

21: All investments are inherently speculative. That's why they're called "investments." Otherwise they would be called "free money."

As I said, if you look at the REALLY long-term trends, holding any fiat currency is an outrageously speculative investment compared to gold. They all experience breaks eventually. Gold doesn't.

Every dollar of that 1971 cash is, today, worth about nineteen cents in purchasing power. Let's say you bought gold at the absolute market peak in 1980, and sold it at the market low in the intervening period. You didn't lose anything LIKE you lost in purchasing power holding dollars, even over the much shorter time frame. And of course with today's price you're ahead in nominal dollars and only down a small amount in purchasing power.

Gold's downside is NOT that it is "speculative." It is that it returns no revenue stream. In order to generate revenue with it, you have to sell it. That's a pretty big downside, no matter what goldbugs say, but it doesn't mean gold's a bad investment, it means you don't put all your eggs in one basket even if they're 24K.

Posted by guest , Oct 13, 2008 4:57PM

Fitch just downgraded MS from AA- to A, and keeps the outlook negative.

Someone stop these ratings agencies. Seriously. The volatility in ratings is COMPLETELY INSANE.

There needs to be some accountability for their ratings actions and at the very least they should have to open the models to explain how the ratings are formed.

They have far too much disruptive power after rating all that CRAP AAA for so long and now lowering the ratings on MS *after* a $9B capital injection? Despite Paulson's assurances that the Treasury will not let another systemically important bank fail?!

I think the ratings agencies are trying to make up for their lost revenue from structured finance by front-running their announcements.

Posted by guest , Oct 13, 2008 5:03PM

There are several problems with gold, including (sorry 20) the fact that you need to quote its value in something else. Umm, that is called currency. So, your argument is vapid and hollow. Of course a dollar put in a drawer in 1971 is worth 19 cents and gold went up. Your point is intellectually dishonest. No one takes a piece of paper and puts it in a drawer ('ceptin of course, the End-of-Days crowd). Gold is nice and pretty and shiny, is a scare commodity and it went up in value. That value is quoted in dollars or euros or yen. Not wampum, or beaver pelts or barrels of oil. Come back and a real point of absolute brilliance and clarity.

Rock on MS. Way to stay alive!

Posted by guest , Oct 13, 2008 5:10PM

@30. someone made the point on this site a few days ago which bears repeating, rating agencies "rubber stamp on the way up and backstab on the way down." They have already proven their inability to get things right, so I think when they start tossing downgrades out there 3 months after they should have, most people intuitively understand they add no value. I don't think the Fitch action will have much impact.

Posted by guest , Oct 13, 2008 5:30PM

33: Go to the corner with your wheelbarrow of gold and buy a cup of coffee. Btw, did you look up the term "fiat currency" on Wiki?

You still miss the point. You were trying to compare gold and dollars as if they are both investments. They are not one in the same.

And ad hominem (and mis-spellings and malapropisms) are not how you win debates.

I'm open for business on the "errors in my logic." Bring it. With heat, dimwit.

Posted by guest , Oct 13, 2008 5:32PM

33 Not 31, but I cant resist: don't you see the flaw in simply stating that you can buy 22x the oil or pelts or whatever with your gold purchased in 1971 vs. dollars? As 31 said, that would be true only if that dollar was put in a drawer, which is unlikely. The better comparison is the movement of gold since 1971 vs other investments. Do that and youll see that gold is sometimes a good investment, sometimes not. Certainly nothing to get orgasmic over.

Posted by guest , Oct 13, 2008 5:33PM

31: You have to quote the value of everything in something else: value is a relationship quality. It's meaningless to say, "One dollar" if there's no context for what a dollar will buy. That's what exchange rates are all about - one dollar is .66 Euros is one McDonalds' double cheeseburger, etc. It's just as valid to say a dollar is worth 1/800th oz of gold as it is to say an ounce of gold is worth 800 dollars. In fact, until 1933, US dollars were defined by law to be worth a fixed number of grains of gold or silver (depending on when it was.) By that measure over most of our history your argument is exactly backwards.

Logically, there's no difference between saying that gold has a fixed value and dollars fluctuate in relation and vice versa. The old saw (which has some problems but states the principle well) is that an ounce of gold would buy a nice suit of clothes in Caesar's Rome, Shakespeare's London, and Roosevelt's Washington. The price of suits in gold doesn't vary very much, but in denarii, pounds or dollars it moves up and down quite a bit (mostly up.) You can quibble that you wouldn't be seen dead in a toga or an $800 suit, but you can't argue with the basic idea. Gold holds value. Currencies go to zero.

You're mostly correct in that no intelligent person puts money in a drawer and leaves it sit indefinitely, but no intelligent person does that with gold, either. You should almost never be 100% in cash and you should almost never be 100% in gold, for one thing, and for another, gold forms a value storage part of a diversified portfolio. When everything else goes to Hell, gold goes to the moon.

Think of it as a backed hedge against everything else. No matter how sure you are the stock's going to go up, would you ever turn down a really low-cost put against it if you could get one? That's what gold is: it's the Universal Put. Do you have 100% offsetting hedges in your portfolio? Hell no. That is not only dumb, it won't work, assuming anything like an efficient market. You hedge your riskiest bets. Gold is a way of hedging against the possibility that ALL your bets are risky over the long term, that's all.

Posted by guest , Oct 13, 2008 9:29PM

For the record, 27 and 36 are the same person. :)

I'd add a few points to address a few of yours.

1) Gold by itself does not do that, and that is its biggest flaw. I was waiting to see if somebody would mention "gold leasing," which is not leasing at all. If I lease somebody a car or a building or a plane, it does get used but it does not get used UP. However, if I "lease" gold, the lessee will have to sell it or use it or do something with it that uses it up because otherwise it's not productive to hold. "Leasing" gold is really a sale with a 100% call option on the equivalent amount. It's a naked short on the lessee's part, and if the price goes up significantly more than he made doing whatever he did, he's fucked and the lessor will not get his gold back. It's funny how massive naked shorts are peachy-dandy when it comes to gold and silver (the open shorts on silver equate to more silver than exists on the surface of the planet) but horrible and evil when it comes to stocks.

ANYway, unlike many investments, gold benefits from inflation, but it's not a 1:1 and since gold-mining and processing got very effective along with all other forms of industrial activity over the last century, for long periods there was quite a bit of disconnect. However, if you want to use leverage with gold, it's easy to do - you buy gold stocks. Since primary gold production is pretty rare, these tend to be small caps and highly volatile, but they can be found.

2) Exactly my point.

3) This is true of any investment. :) Gold is a hedge against instability and bad times. It can also be an inflation hedge, but lots of commodities are good for that and can produce much higher returns and are easier to leverage (oil and silver are two good examples.) If you think that we'll muddle through this and the overall result will just be inflationary rather than a serious and longlasting downturn, you'd be much better off with oil, since oil responds more to inflation and will do better if the economy isn't slowing very much.