eGold

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not tried egold, but I do have an account at goldmoney.com that I use for buying silver, and I have created an account at bullionvault.com but not used it yet.
 
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Erm, I sort of understand nations buying lots of metals, and billionaires hoarding some to stroke and play with, but why do people buy gold and silver? I mean my parents have a nugget at home but nothing more. I've never quite figured it out?

I mean jewellary perhaps, it could eventually have some sentiment attached to it but I don't understand the buying of bars and stuff.
 
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greenlizard0 said:
Erm, I sort of understand nations buying lots of metals, and billionaires hoarding some to stroke and play with, but why do people buy gold and silver? I mean my parents have a nugget at home but nothing more. I've never quite figured it out?

I mean jewellary perhaps, it could eventually have some sentiment attached to it but I don't understand the buying of bars and stuff.

Its like any commodity speculation. You buy a kilo of gold for x pounds and then 6 months later its worth y pounds.

If y > x, you've done well (after taking into account brokerage), otherwise you've done...poorly.
 
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Visage said:
Its like any commodity speculation. You buy a kilo of gold for x pounds and then 6 months later its worth y pounds.

If y > x, you've done well (after taking into account brokerage), otherwise you've done...poorly.

Ok. But I get the impression that people never really sell their metals back? Would I be right in that?

Also, who on earth do you sell it back to?
 

Bes

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Aye I think Gold (and even moreso silver IMO) are good buys at the moment. I just wish I had had the funds available to buy in immediately after the last correction.
 
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greenlizard0 said:
Ok. But I get the impression that people never really sell their metals back? Would I be right in that?

Also, who on earth do you sell it back to?

You dont actually physically get the metal you buy - its all done electronically, so buyers are automnatically matched with sellers etc....
 
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greenlizard0 said:
:confused: Now i'm really confused...
The gold never moves, physically, just the ownership (I suspect that actually, even that is not the case, and that the whole e-Gold thing is backed by synthetic (financial) derivatives, so that there is no (financial) exposure to the physical product).

Do you really think that in Trading Places, Eddie Murphy's character was ever going to take deliver of 10,000 tonnes of pork bellies?
 

Bar

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bit like dogging,

you say you are available at place x and time y

Thats adveritised and computers look for people who would like to meet up and "transact"

if anyone else will be at place x and time y then wham-bam-thank-you-maam.
 
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greenlizard0 said:
:confused: Now i'm really confused...

If i go onto a gold website, and the price is (hypothetically - ive no idea what the actual price is, but thats irrelevant) 100 dollars a kilo, I could buy 10 kilos, and have 1000 dollars taken from my account.

A month later, the nominal price of gold might be 200 dollars per kilo, making my holding worth 2000 dollars. Whether the company im trading through actually went and bought gold on my behalf is irrelevant - my account is now worth 2000 dollars.

Its similar to when you put money in the bank - the bank doesnt have a particular bucket with my name on it that they put money into - and equally when i withdraw money they check the 'theoretical' balance of my account, rather than counting up all the notes and change etc that i've paid in.

Basically its down to the notion of 'worth', and the fact that money is 'fungible' - it can be converted between different representations freely, as long as the parties doing the exchanging agree on the rate of exchange.
 

Bes

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Borris said:
The gold never moves, physically, just the ownership (I suspect that actually, even that is not the case, and that the whole e-Gold thing is backed by synthetic (financial) derivatives, so that there is no (financial) exposure to the physical product).

Do you really think that in Trading Places, Eddie Murphy's character was ever going to take deliver of 10,000 tonnes of pork bellies?
And herein lies the danger of places like e-gold if the price of gold suddenly goes up five-fold.

Also what happens if the government confiscates citzen's gold and silver holdings like they did in the US in the (thirties?).
 
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Bar said:
bit like dogging,

you say you are available at place x and time y

Thats adveritised and computers look for people who would like to meet up and "transact"

if anyone else will be at place x and time y then wham-bam-thank-you-maam.

'Economics for Doggers'
 
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Visage said:
Gold is fungible and liquid too (or, rather, gold futures are).

Bes said:
And herein lies the danger of places like e-gold if the price of gold suddenly goes up five-fold.

Also what happens if the government confiscates citzen's gold and silver holdings like they did in the US in the (thirties?).
There is no gold to confiscate.

A little further reading suggests that it's all based upon a matching algorithm pegged to short dated gold prices.

Even eGold doesn't need to hold gold - they just need an account on any futures exchange to hedge any potential financial exposure - which, as a mathcing platform, is extremely unlikely.
 
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companies like goldmoney do actually hold the physical bullion for you - you are literally buying part of a bar, and if you buy enough you can turn up in jersey and take delivery. I buy silver at goldmoney because there's no VAT to pay when selling it so long as you don't take physical delivery - you just pay the spread when buying (about 5%), and storage costs (0.2oz of silver per month)

All the physical gold and silver I've bought was from ebay or reputable coin dealers like goldline.co.uk. A couple of years ago I was picking up sovereigns for £55 each. Now you're lucky to see them on ebay for less than 80 quid. Not a bad return for a small investment.

Also if you buy sovereigns and brittanias there's no capital gains tax to pay if you make a decent profit. Krugerrands etc are liable for CGT.

You only have to look at the enormous levels of debt being racked up around the western world to see the only way out is going to be inflating the money supply to pay back. That's good for precious metals, not good for pensions and I can always give them to my kids when I have some.
 
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