Sincere Honest Gold Question

it's cashflow.

Many gold dealers make their money by charging commissions on the gold transactions. They buy gold from some people under spot price and then turn around to sell that gold to other people over spot price. The difference between their price below spot when buying and price above spot when selling is their profit.

These companies aren't in business to hold gold, they are in business in order to be a "middleman" and make money conducting the ultimate transaction between two other parties.

About gold having a "perceived value" - the value of everything is perceived in some way. If you look at federal reserve notes, when it comes down to it they are just a type of paper with ink on it -- but most people perceive that paper+ink to have a value (a "perceived" value).

The value of gold is probably in part due simply to the "perception" as well as the fact that it is in limited quantity. You cannot simply make more of it. Paper+ink federal reserve notes you can make as many of them as you wish, as long as you have paper and ink or a computer (for making digital money).

Most governments are anti-gold because they do not have enough control over it. With paper money, the gov can print it whenever they want to.

They are just very different animals.

One good example about gold is in how it holds its purchasing power / value. Check out the following chart: http://www.kitco.com/ind/Turk/images/feb252008_1.gif that shows the price of oil in terms of gold and federal reserve notes. 75 years ago you could purchase a barrel of oil (or something else of similar perceived value) for 3 to 4 grams of gold. Today, you can still buy that same barrel of oil for that quantity of gold. In terms of dollars, the price of oil skyrocketed - but what actually happened was that the paper money lost value, so it took more paper money to buy that oil (the "perceived" value of the federal reserve notes was less, so it could not purchase or trade for as much oil).

Everyone around me (I work for Stanford) has absolutely no idea what you and I know. This business doesn't attract financial analysts... The way they have made money has on rare coins and generics (pre 1933 coin)... Bullion is the commodity with very little money made on it... If I sold 50,000 of gold my take would be 100 dollars.... No one around is thinking about a dollar default... Now if anything if people are smart and they sell alot of gold, they can always buy it because they are in the middle of the flow... The Gold business has not attracted much attention till now and for the most part is not understood. I do wish I would have started earlier because all rare coins have done is become more rare and only gone up in value....

concluded. Gold and silver may or may not be used as currency in the future but gold and silver are used in industry and jewelry so no matter what happens it would have some value. Will it pan out as some are pushing I don't know and with efforts pushing for a NWO I don't think anyone knows for sure. Use your own judgment it will be as good as anyone else's..

someone else's gold at a profit...

with buying gold for themselves, then for family and friends.

then it turned into a little side business.

some of those side businesses probably took off

there has to be someone who is the middle man who's job it is to supply the demand.. just like any other good. if no one would "supply" where would you go to buy?

"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson

I am more concerned about the return of my money than the return on my money. --Mark Twain

People who sell gold for a business make money by buying large quntities, marking it up, and selling it. Rinse and repeat. It is a business. They are not doing this with their persoanl stock. It is inventory. They may do this with borrowed money so in a sense the gold really isn't even theirs to keep. What you ask is like asking why a furniture store doesn't just keep their furniture since they think it is so good. Gold dealers are in the business of DEALING gold and profit from the markup like dealers of everything else. Of course they can take their profits and invest them in their own gold and you really have no idea how much they might have in their personal stock.

Everything in the world only has "perceived" value. ALL economic valuations are subjective. But those subjective valuations are influenced by supply and demand. Gold has been valued as money through all of history and, unlike the paper dollar, has the benefit of being of finite supply that cannot be controlled by government or banks. As such, gold is a historically supported form of money of stable supply. So when historically suspect fiat money becomes unstable, gold looks attractive. But if you think paper is better, by all means indulge yourself. There is going to be PLENTY to go around.