Why should I invest in Gold coins?

This is incorrect. They are not equivalent.

In the first case you clearly own the company and clearly own the assets. However, the moment you reorganize the company so that it can issue stock then you no longer own the assets. The company owns the assets and instead you own shareholder equity in the company via that stock. That equity is defined as the assets owned by the company minus the liabilities of the company. These are hugely different situations and not just mere notations on paper.

Second, stock is NOT a notation of legal ownership of a firm. It is a legal claim on the shareholder equity as defined by the balance sheet of the firm. It's expressed in $. Shareholders do not get their name on the firm's deeds, access to the firms bank accounts, etc etc. This is the legal basis for how a public company operates which is what we are talking about.

 

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This is wrong again. Owning stock gives you a fractional ownership in the business. Shareholder equity is merely a bookkeeping itme on the balance sheet that is the residual of carrying value of the assets and liabilities. This has nothing to do with intrinsic value which includes other factors such as revenue, earnings, cash flow, liquidation value, dividends [for some methodologies] and intangibles [which yes, have value]. At times, the intrinsic value of an asset [and therefore the business and the stock] can greatly exceed the cost of the asset on the balance sheet that works it's way into shareholder equity. This is very basic Business 101, and you seem completely aware of it.

I feel bad for the fatamites out there who may read the stuff you post and believe any of it.

 

You are offering up an opinion and an incorrect one at that. I've given a link to the SEC.GOV document that explains exactly what common stock ownership means and that is reflected above. If this is "business 101 is what you got when you were educated, then I recommend you go and ask for your money back. They rooked you son.

One more time. Stock ownership gives you shareholder equity in a company and voting rights. It does not give you ownership of the company assets. The company owns the assets, by definition.

On this point I agree. Since the topic IS about the intrinsic value of stock I can only imagine that you keep bringing up such nonsense to distract from the mistakes you have made in this topic. The matter has already been settled. Common stock has no intrinsic value. Gold coins, on the other hand do.

 

You are playing a game of semantics to try to confuse or bore people into thinking you know something about the topic, which you don't. Let's see how this works out in the real world... You assert that stock doesn't represent fractional ownership in a business. For everyone else, there is this:

"Common stock - also called common shares, capital shares, or capital stock -- represents units of ownership in a corporation. " http://www.ag.ny.gov/bureaus/investor_protection/understanding_common_investments_a.html

You've also stated that stocks have no intrinsic value. For everyone else, this is worth a look if you want to know the truth about intrinsic value. http://educ.jmu.edu/~drakepp/investments/modules/module8.pdf

 

This is one way a particular brokerage (maybe it's an industry standard, I don't know) calculates intrinsic value of a company, but much of that value is based on capital which has no intrinsic value. It says "We refer to this price as the intrinsic value of the stock", but just because they use the word out of context doesn't make it true. It's a great method to calculate the true worth of a company, sure, but they are making a leap of faith in assuming that such value is intrinsic as well as a leap of faith that any intrinsic value of the company translates to intrinsic value of a stock.

To put it differently, if you were to take your company with you 2000 years in the past or 2000 years in the future then the intrinsic value would be worth the assets you can bring with you. The cash would be worth the paper and the ink, same as the company title, or any paper stocks. Any electronic assets would be non-existent unless you had them on a thumb drive, and then it would only be worth the parts on that, collectibility notwithstanding, but face value would be nil. These things all have value today, but for it to be intrinsic it needs to be eternally constant, otherwise it is not by the nature of the thing but rather based on faith in it.

 

Haha, are you kidding? Did you even read this? Google can give you matches on words but you have to take the time to understand the context and that has nothing to do with the discussion here.

First you completely got it wrong by stating that stocks had intrinsic value simply because it represented direct ownership of the assets that make up the company. Now having been proven wrong on this, you now present a definition of intrinsic value of company stock as given in Pamela Peterson Drake's course of stock valuation. She contradicts your earlier statement on "intrinsic value".

So which is it? The definition you gave here earlier, or the one that you googled up from someone else? You both can't be right.

You are grasping at straws now and as usual have completely derailed what this topic is about. Face it son, you were wrong. Admit it and move on. I'm not the only one who has told you this this year. (and the year is only 5 days old)

 

What does it matter?

(Intrinsic value) means what it means. In the investing and financial industry it is a generally accepted term utilized to describe a stock valuation method. Google it, look it up in finance and investing text and they'll give you a definition. Whether the value this method produces is intrinsic in the literal sense or philosophical sense really doesn't matter. We can play this same game with gold if you like as value in this discussion is an abstract term referring to financial value. I can give you a list of intrinsic properties of gold but is it still not the same leap of faith that gold will have financial value 2000 years into the future. To be honest from an investing standpoint 2000 years is somewhat too longterm for me.

 

It is true that "value" is a human concept and without humans value is meaningless. Humans also build societies and for more than the most primitive of societies to exist, there needs to be some sort of currency beyond pure bartering. If not, the society can never progress to the specialized tool using phase and beyond. Since recorded times gold has been given the special role of being a currency and hence this is its intrinsic value. It possesses all the qualities needed for currency and it has out lasted countless governments that have tried to replace it with some sort of government sanctioned paper where the value is ultimately determined in a court room.

The question of the OP is why should I invest in gold coin. IMO, once you understand this difference between gold coin, where the intrinsic value comes from the human need to have currency, and that of any paper investment where the value depends upon the confidence of the government the party lives under, then it should be pretty clear as to why. Why was demonstrated in this topic. Nobody can agree to the value of stocks, paper currency, paper anything and the disagreement, even amongst ladies and gentlemen, gets to the point of people being called liars, ignorant, etc by some. In comparison nobody here ever questioned the value of gold.

This dichotomy is clear enough. If humanity lasts another 2000 years, the follies of any government will continue and they will come and go, and during the periods where legal definitions of paper value are meaningless, gold will still be the ultimate currency.

 

Perhaps this is beyond your ability to comprehend since this completely refutes your statement that businesses and stocks do not have intrinsic value. I have consistently stated that intrinsic value comes from the analysis of the business including cash flow, assets, revenues, earnings, etc... Pamela provides one academic technique to demonstrate this approach. There are others. As a side bonus, Warren Buffett also refutes your claim that shareholder equity has anything to do with with intrinsic value. It becomes a matter of whether people want to believe something called a fatima, or the legal and economic definitions of intrinsic value of a business. So this is pretty much cased closed on your incorrect assertions. I noticed that you also ingored the other link I posted which confirms your error. So regardless of your bravado, anyone who looks at this will know you are wrong.

 

Now this is getting comical. LOL. The stocks and currencies trade in a market where the participants continuously adjust their estimate of value. The same is true with gold. The value changes every day, and not just in relation to currencies but what it can buy in terms of all other commodities, land and everything else. This bizzare idea that the value of gold is constant is disproven every minute of every day.

 

You posted a link that contradicts what you said and which you insisted it was correct. It isn't up to me that it has any value to this forum.

I didn't read your 2nd link because the first was enough of a waste of my time. I don't do battle of the links and if you wish to somehow prove that Ms. Drake supports what you have said, then invite her here and let her address the matter herself. Else, since you are incapable of speaking for yourself, it's up to you to prove that link is relevant to this forum. You failed to do this. Insults towards me doesn't change this. You were simply wrong, and this nonsense is nothing a distraction from that. Period.

Calling me bizarre along with the other insults is irrelevant to the topic. I will note however, since you bring this word up, that it does seem bizarre to me that you constantly troll a gold and silver forum where you have not posted anything about your ownership of gold and silver. Bizarre indeed. Your only interest seems to be to derail topics.

 

There is enough here for everyone to see the folly of fatimite economics, or accept it if they are of the same mindset. Maybe fatima knows more than Warren Buffett and folks with advanced degrees in economics. I'll leave that up to the reader. I've posted my ownership of gold many times on CoinTalk, but you may have missed it while patting yourself on the back.

 

Not that is matters, Fatima, but Cloud has posted about his purchases and sales of PM so many times that I could probably list them for him. He has not been secret about his thoughts of actions concerning PM.

Just in case you may ever level this charge against me, I will lay my actions regarding PM out one more time:

I bought thousands in face value silver around 91-94. I added items like some gold and junk silver dollars afterwards when I found them cheap. My only sales have been some junk 40% since I just didn't want them about a year ago. I continue to buy silver coins if I like the coins even if they are only worth silver value, (mainly foreign). If silver went to $50 I would consider selling, if it drops below $20 I may buy a few bags of junk silver. I am not sure where I would buy or sell gold. Platinum, if it goes lower, I may pick up a few ounces of this year. Oh, and my wife has about 8 ounces of gold jewelry we bought in Thailand. I hope now that you will deign to allow me to post in the bullion section, as being "qualified".

Btw, I would seriously love to have people who do not own an ounce of bullion post here. By trying to impune someone by saying you do not believe they own PM, what does that matter? Are you saying only those people who agree with you should be allowed to post? Maybe someone out there does NOT think owning PM is a good idea. To me, I would LOVE to hear from them, as I welcome all points of view. Do you?

 

It matters from the standpoint of misleading people into thinking that certain assets have value because of what they are, and not what they represent. If finance and investing texts choose to misuse the word they can do so, but I'm not going to agree that it's accurate when it's obviously going against the definition of the word. I'm not going to argue semantics any further because at this point it's counterproductive. My previous posts explain things perfectly clearly.

Gold does have financial value at any time in the past throughout all of human history. Sure there's no way to know whether that will be the case in 2000 years. Regardless, I used a long timeframe to illustrate the point that time is of no consequence when intrinsic value exists.

 

The only point I would make about "intrinsic" is it isn't absolute, and time will destroy it. Yes, gold has had a value for a long time, but its value is not steady by any means. Its value versus a loaf of bread, a pound of meat, etc has never been fixed. If you have enough gold most likely you could buy a car in 1000 years, but there is absolutely no way of knowing whether it will be 1 ounce or 1000 ounces required. Knowing that, how is there safety in putting aside 100 ounces today? You are guaranteeing SOME value, but no way of knowing if it will be enough.

Corporations have simply not been around very long in human history, so to infer in 1000 years ownership of a corporation would be valueless is simply your guess. Its like saying aluminum was not valuable 2000 years ago, (it was unknown), so it cannot be valuable in another 2000 years.

If I had to choose to put something in a time capsule for my descendents to open in 1000 years, and my choices were either 1000 ounces of gold, or approximately $1.5 million in stock to be held in a trust, (managed when companies were bought, etc), I would choose the stock every single time.

Maybe this doesn't answer your question directly about "intrinsic" sir, but are my thoughts on it. "Intrinsic" value is simply not absolute, and never has been, so over time its not very "intrinsic".

Edit: Btw we can agree to disagree Inflexion. I never meant this to turn into an argument. If you disagree with me, that's cool, and we will probably agree on something else in the future.

 

I'm a fan for letting people speak for themselves. I haven't laid out any charges against you. I know you own PM and you make good points for posting here and have reason to post here.

However If you and Cloud want belong to a self-appreciation society and defend each other, that is your business. I am reminded of that old fable that if you lie down with dogs you will get fleas. (actually the one it reminded me of won't get past the filters here) In that light I will mention that you called me a liar in this topic, and when I posted information to clear my name of this charge you promptly ignored all of it. You are doing yourself no favors by adopting these tactics.

I love to hear from non-bullion owners too. However when one of these parties gets to the point of trolling every topic with totally off-topic nonsense and personal attacks on other forumers who disagree, then I wonder why you don't worry about this more, rather than to attribute, yet again, something to me that I didn't say. The non-bullion owners who want to learn something can't because the the off-topic noise that gets instigated in every topic by the same parties. I only raise the issue to point out what you have said. I assume everyone here is a "big-boy" and doesn't need my assistance on weeding out trolling behavior.

 

Sir, the only time I said something like that, (and maybe I shouldn't have been so strong), is when you tried to say common stock was not ownership of a company. This is Corporate Finance 101, first day in class, basis of understanding business. Common stock IS ownership of the firm. Preferred stock, bonds, notes, and every other financial instrument is a promise to pay, a debt, the only equity of a firm is common stock. Go back to the example I gave Inflexion. In that example there was no debt and 1 million shares of stock. If that firm is sold to another firm, who gets the money? The common stock holders. Yes, if there is debt the debt gets paid first, but ONLY the face value, nothing more. It is the common stock holders who can receive the outsized profits well above their investment.

It does not matter what the par value of the stock is, what the equity in the Balance sheet is, the common stock holders get every red cent. If the firm is sold for $100 million, then each share is paid $100. Period. Common stock is ownership. This is the assertion of yours I was reacting strongly to, as I do not wish anyone reading this thread to be confused about that. If someone has this wrong, then every single thought they have about stocks is wrong.

 

I think your views contradict your earlier statements. You defined intrinsic as belonging to the nature of a thing. It is the nature of stock to provide fractional ownership in a thing that creates economic value. Now, you may prefer to use the word intrinsic to mean static, permanent and elemental [in the physical sense], but others may correctly view it in a more dynamic sense to refer to things that may grow over time. The limitations you are placing on the word exist only in your mind. This is your right and choice, but you can't impose a single, personal meaning for the word on everyone else.

 

I followed up with the fact that common stock = shareholder equity ownership of a firm. In the context this discussion was given it, it was an explanation as to WHY common stock does not have intrinsic value based on a mistaken belief that stock means ownership of a firm's assets. It doesn't. The firm owns the assets, and the stock only has a equity position on the firm based on the use of those assets by the firm. A huge difference. I said this to clarify my earlier statement and you simply ignore it as you are now.

Calling me a liar and implying that if I don't believe you that I fail at corporate finance 101, and running off isn't a much discussion. What benefit do you think the non-bullion owners, which you said you were concerned about, gets from this. In any case, this is a great example of something in which the OP, who asked about gold coin ownership, cares nothing about.

 

It's called context. Specifically the meaning as it relates to the topic at hand. I recommend you go look the word up as it is you who went off to get the opinion of someone else, who isn't a part of this discussion, and presented it as the "correct view" without regard to context of the discussion. Interestingly it also contradicts your earlier definition which you presented as the "correct view".

This is why I don't do battle of the web links by bringing in opinion pieces from others who have no bearing on the topic at hand. It's a cheap way to attempt to win a discussion but fortunately, most of us here don't buy it. Inflexion is absolutely correct.