Gyroscopic Investing

I found this visual interesting. Especially that only 18% of production is going towards pure retail investment grade bullion. I wonder what this looked like in 1980. Probably not a fair comparison since "paper" gold instruments were not as prevalent. But the percentage going to jewelry production would be just as telling of an indicator.

Maybe most of you are aware of this. As I become more entrenched with this investing strategy I found myself more drawn to tracking the gold market than bonds or stocks. Which as I type this I realize is because it is what I was most ignorant of coming into this strategy.



From: http://www.trustablegold.com

One of the many interesting pieces of information on that infographic is that the U.S. produces more gold than South Africa.

One thing I try to reconcile is this:

Do we value gold as money because it looks nice and makes nice jewelry (plus has a check next to all those "traits of money"), or do we value it as jewelry because it also doubles as a monetary store of value, that can conveniently also be fashioned into decent-looking trinkets.

I have to think there's a little bit of positive feedback between the two... Gold wouldn't be so valuable if it didn't look nice, and I don't think people would pay so much for a gold ring (vs some other metal) if they didn't think it had the monetary properties it has.

Moda, I think the vast bulk of global gold jewelry is heavily influenced by the fact that gold is a saving vehicle. Indian gold jewelry is 24 carat (even for UK Indians). Non-Indian UK people typically use 9 carat gold for jewelry. That is to my mind more a case of it being predominately decorative. I'm sure decorative use was behind the tradition of gold being a recognized store of value.

Great visual!

moda0306 wrote: One thing I try to reconcile is this:

Do we value gold as money because it looks nice and makes nice jewelry (plus has a check next to all those "traits of money"), or do we value it as jewelry because it also doubles as a monetary store of value, that can conveniently also be fashioned into decent-looking trinkets.

I have to think there's a little bit of positive feedback between the two... Gold wouldn't be so valuable if it didn't look nice, and I don't think people would pay so much for a gold ring (vs some other metal) if they didn't think it had the monetary properties it has.

I agree, and I think it's durability contributes in both cases. You can recover it from a ship on the sea floor, melt and remelt. It doesn't tarnish, it doesn't die.

stone wrote: Moda, I think the vast bulk of global gold jewelry is heavily influenced by the fact that gold is a saving vehicle. Indian gold jewelry is 24 carat (even for UK Indians). Non-Indian UK people typically use 9 carat gold for jewelry. That is to my mind more a case of it being predominately decorative. I'm sure decorative use was behind the tradition of gold being a recognized store of value.

Documentaries and articles I've seen about India and the Middle East explain that people in those regions use gold jewelry not just for decoration, but also for savings and protection from fiat currency inflation.

That fact is also explicitly mentioned in Rick Steves' documentary on Iranian culture.