Just how far can Covid 19 drive down the markets?
Discussion
NickCQ said:
There is a great Warren Buffet thought experiment on gold (a few years dated now but the logic holds):
Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion.
For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually).
Current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices.
A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything.
You can fondle the cube, but it will not respond.
I look at it a different way.Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion.
For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually).
Current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices.
A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything.
You can fondle the cube, but it will not respond.
Currently I own lots of zeros and ones stored on bits of silicon all over the world. Those zeros and one exist in a world where companies can have never made a profit and yet be worth billions. They exist in a world where a company on the verge of bankruptcy can increase in value multiple times over for no reason. They exist in a world where many companies have lost a years income and are still apparently worth more than they were last year.
I also hold a small percentage of that in a physical form that I can hold in my hand and that will always have value.
I would never advocate holding substantial percentages of your wealth in gold but I also don't understand holding none.
i4got said:
NickCQ said:
There is a great Warren Buffet thought experiment on gold (a few years dated now but the logic holds):
Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion.
For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually).
Current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices.
A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything.
You can fondle the cube, but it will not respond.
I look at it a different way.Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion.
For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually).
Current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices.
A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything.
You can fondle the cube, but it will not respond.
Currently I own lots of zeros and ones stored on bits of silicon all over the world. Those zeros and one exist in a world where companies can have never made a profit and yet be worth billions. They exist in a world where a company on the verge of bankruptcy can increase in value multiple times over for no reason. They exist in a world where many companies have lost a years income and are still apparently worth more than they were last year.
I also hold a small percentage of that in a physical form that I can hold in my hand and that will always have value.
I would never advocate holding substantial percentages of your wealth in gold but I also don't understand holding none.
for me, i look at Gold & Silver as real money - not fiat currency - and a form of wealth preservation when used correctly that can then be used to buy more physical assets, like property.
rockin said:
I doubt you'll learn much from me on the subject... 
Gold has a very long history of popularity - not least because it's compact, relatively rare, very pretty and easy to work. But it doesn't really have any innate usefulness in the modern world other than as an electrical contact. It's not even particularly expensive when compared with some modern, exotic materials.
Gold has a traditional role as "something different" in which to put money although that seems to me always speculative. Gold never generates a return as result of anyone doing any work or thinking of a new invention. It never builds a new factory, opens more shops, introduces a new product range or enters new markets. It simply reacts to other things that are going on in the world.
Gold never pays a dividend (not a key factor to me).
Gold costs money to store and insure.
It's for these reasons I choose not to own gold. Nonetheless I recognise it may play a useful role in other peoples investment strategies. I don't own any Premium Bonds either and I wouldn't buy a BTL at present. It's all horses for courses.
Agree with this. It is an alternative for the sake of being an alternative.Gold has a very long history of popularity - not least because it's compact, relatively rare, very pretty and easy to work. But it doesn't really have any innate usefulness in the modern world other than as an electrical contact. It's not even particularly expensive when compared with some modern, exotic materials.
Gold has a traditional role as "something different" in which to put money although that seems to me always speculative. Gold never generates a return as result of anyone doing any work or thinking of a new invention. It never builds a new factory, opens more shops, introduces a new product range or enters new markets. It simply reacts to other things that are going on in the world.
Gold never pays a dividend (not a key factor to me).
Gold costs money to store and insure.
It's for these reasons I choose not to own gold. Nonetheless I recognise it may play a useful role in other peoples investment strategies. I don't own any Premium Bonds either and I wouldn't buy a BTL at present. It's all horses for courses.
i4got said:
I also hold a small percentage of that in a physical form that I can hold in my hand and that will always have value.
Puts you in a small minority of gold investors, most of whom are buying it in virtual form and never get their hands on the physical.Do you store it at home or is it possible to pay for custody?
NickCQ said:
Puts you in a small minority of gold investors, most of whom are buying it in virtual form and never get their hands on the physical.
Do you store it at home or is it possible to pay for custody?
It's certainly possible to pay for a safe deposit box. Fewer banks than in the past but still available - Metrobank still have them available.Do you store it at home or is it possible to pay for custody?
NickCQ said:
A44RON said:
what's interesting about Warren Buffett is he's happy to quote that, but he has bought, held and sold A LOT of Gold & Silver in the past and present...
I didn't know that - when was he investing in it?I think Warren doesn't tell everyone what he's up to behind the scenes. I also read he sold the vast majority of his stocks at the beginning of the year
....buckle in!red_slr said:
GDP down 20% in 1 month.
FTSE100 Not great, not terrible.
The shame here is that all the focus will be on that 20% but I’d love to understand, fully, what the 80% is. What are the enterprises that can be done without dragging millions of people hours each day to work hubs. Focusing on the 80% would give some powerful insights. FTSE100 Not great, not terrible.
red_slr said:
FTSE now +0.6% LOL
It’s the weird moment. The two big questions. ‘Is there a second wave?’ And ‘What will we do this time?’The spike in the US may just be the result of increased testing in those areas. Infection rate data is almost meaningless without corresponding testing data and even then you don’t really know. The only viable data is body counts and that won’t appear for a couple of weeks or more as the medical industry becomes more efficient in dealing with the disease.
The second part is the biggy. Do you go back into lockdown where all the workers and all the future workers sit in boxes for weeks on end to protect, for the main part, those who no longer work.
It’s a very delicate subject and any wording is likely to offend someone unintentionally but in a finance forum such bluntness is hopefully understood and tolerated. The big question is really whether a/the second wave will trigger a change in splitting society out so as to save 95% from deep, long term, economic and educational damage or whether to repeat the previous/current mechanism.
Besides which, maybe the real play here is that China is economically and politically focussed and the US at a time when strength and focus could never be more critical and important to the West is a total basket case.
DonkeyApple said:
It’s the weird moment. The two big questions. ‘Is there a second wave?’ And ‘What will we do this time?’
The spike in the US may just be the result of increased testing in those areas. Infection rate data is almost meaningless without corresponding testing data and even then you don’t really know. The only viable data is body counts and that won’t appear for a couple of weeks or more as the medical industry becomes more efficient in dealing with the disease.
The second part is the biggy. Do you go back into lockdown where all the workers and all the future workers sit in boxes for weeks on end to protect, for the main part, those who no longer work.
It’s a very delicate subject and any wording is likely to offend someone unintentionally but in a finance forum such bluntness is hopefully understood and tolerated. The big question is really whether a/the second wave will trigger a change in splitting society out so as to save 95% from deep, long term, economic and educational damage or whether to repeat the previous/current mechanism.
Besides which, maybe the real play here is that China is economically and politically focussed and the US at a time when strength and focus could never be more critical and important to the West is a total basket case.
great to see you back posting in here, DA. The spike in the US may just be the result of increased testing in those areas. Infection rate data is almost meaningless without corresponding testing data and even then you don’t really know. The only viable data is body counts and that won’t appear for a couple of weeks or more as the medical industry becomes more efficient in dealing with the disease.
The second part is the biggy. Do you go back into lockdown where all the workers and all the future workers sit in boxes for weeks on end to protect, for the main part, those who no longer work.
It’s a very delicate subject and any wording is likely to offend someone unintentionally but in a finance forum such bluntness is hopefully understood and tolerated. The big question is really whether a/the second wave will trigger a change in splitting society out so as to save 95% from deep, long term, economic and educational damage or whether to repeat the previous/current mechanism.
Besides which, maybe the real play here is that China is economically and politically focussed and the US at a time when strength and focus could never be more critical and important to the West is a total basket case.
I always enjoy your posts
DonkeyApple said:
It’s the weird moment. The two big questions. ‘Is there a second wave?’ And ‘What will we do this time?’
The spike in the US may just be the result of increased testing in those areas. Infection rate data is almost meaningless without corresponding testing data and even then you don’t really know. The only viable data is body counts and that won’t appear for a couple of weeks or more as the medical industry becomes more efficient in dealing with the disease.
The second part is the biggy. Do you go back into lockdown where all the workers and all the future workers sit in boxes for weeks on end to protect, for the main part, those who no longer work.
It’s a very delicate subject and any wording is likely to offend someone unintentionally but in a finance forum such bluntness is hopefully understood and tolerated. The big question is really whether a/the second wave will trigger a change in splitting society out so as to save 95% from deep, long term, economic and educational damage or whether to repeat the previous/current mechanism.
Besides which, maybe the real play here is that China is economically and politically focussed and the US at a time when strength and focus could never be more critical and important to the West is a total basket case.
All the politicians are really thinkingThe spike in the US may just be the result of increased testing in those areas. Infection rate data is almost meaningless without corresponding testing data and even then you don’t really know. The only viable data is body counts and that won’t appear for a couple of weeks or more as the medical industry becomes more efficient in dealing with the disease.
The second part is the biggy. Do you go back into lockdown where all the workers and all the future workers sit in boxes for weeks on end to protect, for the main part, those who no longer work.
It’s a very delicate subject and any wording is likely to offend someone unintentionally but in a finance forum such bluntness is hopefully understood and tolerated. The big question is really whether a/the second wave will trigger a change in splitting society out so as to save 95% from deep, long term, economic and educational damage or whether to repeat the previous/current mechanism.
Besides which, maybe the real play here is that China is economically and politically focussed and the US at a time when strength and focus could never be more critical and important to the West is a total basket case.
'f
k it let's get everyone back to work and the economy rolling again...... It's only a problem for the coffin dodgers with underlying health issues on the whole'
Trumps the only one stupid enough to say it.
It's only a matter of time imo
DonkeyApple said:
It’s the weird moment. The two big questions. ‘Is there a second wave?’ And ‘What will we do this time?’
The spike in the US may just be the result of increased testing in those areas. Infection rate data is almost meaningless without corresponding testing data and even then you don’t really know. The only viable data is body counts and that won’t appear for a couple of weeks or more as the medical industry becomes more efficient in dealing with the disease.
The second part is the biggy. Do you go back into lockdown where all the workers and all the future workers sit in boxes for weeks on end to protect, for the main part, those who no longer work.
It’s a very delicate subject and any wording is likely to offend someone unintentionally but in a finance forum such bluntness is hopefully understood and tolerated. The big question is really whether a/the second wave will trigger a change in splitting society out so as to save 95% from deep, long term, economic and educational damage or whether to repeat the previous/current mechanism.
Besides which, maybe the real play here is that China is economically and politically focussed and the US at a time when strength and focus could never be more critical and important to the West is a total basket case.
Ireland have said today they will not go back into lockdown if a second wave occurs.The spike in the US may just be the result of increased testing in those areas. Infection rate data is almost meaningless without corresponding testing data and even then you don’t really know. The only viable data is body counts and that won’t appear for a couple of weeks or more as the medical industry becomes more efficient in dealing with the disease.
The second part is the biggy. Do you go back into lockdown where all the workers and all the future workers sit in boxes for weeks on end to protect, for the main part, those who no longer work.
It’s a very delicate subject and any wording is likely to offend someone unintentionally but in a finance forum such bluntness is hopefully understood and tolerated. The big question is really whether a/the second wave will trigger a change in splitting society out so as to save 95% from deep, long term, economic and educational damage or whether to repeat the previous/current mechanism.
Besides which, maybe the real play here is that China is economically and politically focussed and the US at a time when strength and focus could never be more critical and important to the West is a total basket case.
i4got said:
Ireland have said today they will not go back into lockdown if a second wave occurs.
I doubt anyone would, UNLESS that second wave turned ferociously into something bigger than the first....and I doubt that will happen.I could envisage some tweaks (for example, they open up pubs clubs in Sept-Oct, then Nov-Dec see's a big enough spike for them to cut down or out the large gatherings).
Personally....I don't think I will bother with large gatherings this year......you know what they say....two's company....
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