Gold has ZERO counterparty risk.
topstuf
Posts: 14,803 ✭✭✭✭✭
Just posting to clear the issue.
Gold is an element. It requires nothing else to make it gold.
No one anywhere has to do (or not do) anything to make it be gold.
That's it. Have fun. 
2
Comments
Gold transactions may involve counterparty risk unless they are the "hand me the cash, I hand you the gold" type.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Gold is good,
Cheers, RickO
Gold is money,
Gold will get you things for your honey...
And determining the "value or amount of cash (or good or service)" between the parties. There is risk the 2 parties will not agree to the value or terms.
If i agree with derryb to trade my cow to him for an ounce of gold, but jmski says he will give me 2 ounces of gold for that same cow, then derryb has just been exposed to and realized counterparty risk.
Otherwise....the OP could substitute the word "zinc" or "iron" for "gold" and his comments would read the same.
Just posting to clear the issue.
Zinc is an element. It requires nothing else to make it zinc.
No one anywhere has to do (or not do) anything to make it be zinc
Knowledge is the enemy of fear
Your cow example is proof that counterparty risk exists ONLY after TWO parties have agreed on terms, but have not yet completed those terms. The counterparty risk lies in one of the two parties not fulfilling the agreed upon terms. While there is risk in just about any single thing, counterparty risk requires two parties.
While gold in my safe faces some risk, the only time it faces counterparty risk is when I involve a second party. If I have a second party store my gold in their "secure" vault, then there is counterparty risk.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
im going to need more info on this cow before i trade an ounce for it. Does it talk or do card tricks or something?
Like the guy above trading it, it produces hot air that can be converted to fuel.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Gold has no counterparty risk.
Injecting a TRANSACTION into the analysis just makes it idiotic.
Whew. Good. As long as we never trade our gold for anything there is no risk. Whoohoo.
Knowledge is the enemy of fear
transactions have counterparty risk, whether they involve gold, cows or hot air. When another party is involved with a promise to be fulfilled, there will always be counterparty risk until that promise is fulfilled.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I'm done. I'm going to get some fresh air. Stupidity is tiring.
I hope the air counterparty is in a good mood.
let's argue about what a "transaction" is.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
The typical slaughtered beef yields about 500 pounds of finshed meat product. Its pretty hard to find any beef at the store for under $4/pound, thus rendering the value of said cow to be about $2000.
Derryb should have offered more for the cow. Now he has an empty tummy and an element with no counterparty risk. Jmski has a nice fully belly. Cohodk is now just like derryb with an element (but twice as much), and hes also hungry.
Knowledge is the enemy of fear
So it has no value unless a transaction is made. And in order to conduct a transaction you need another party--a counter party.
Im glad topstuf has now joined you in realizing this.
Knowledge is the enemy of fear
Every definition of counter party includes the word "transaction".
Google it.
Knowledge is the enemy of fear
Except yours. Maybe you are wrong?
Of course it has value, that's why it's in my safe. While I may need another party to determine sale price, I alone can assign value. Sale price will depend on where the two parties agree on value.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
My definition specifically uses the word transaction, for without a transaction, the value of everything is simply utilitarian and probably useless.
Suppose you list an AGE on ebay for $1 and no one buys it...essentially the value is zero.
Now, of course that wouldnt happen in the world we know today, but in the world the preppers and doomsayers prepare for, this scenario is plausible.
My case here was simply that gold does have counterparty risk. If you wish to ignore that then fine, but since you usually find risk in everything, i find your reluctance to accept this to be a bit baffling.
Knowledge is the enemy of fear
And "your assigned value" is worth less than a cup of coffee. You need another party to agree to value. Thats the risk. If you cannot agree to value and conduct a transaction, your gold goes back into the safe to collect dust.
You can assign a value to anything you want, but without another party to confirm that value, the item is worthless.
You take risk in assuming another party will give your item the same value and you take risk in simply finding another party.
Knowledge is the enemy of fear
I must be living in Bizarro World.... goes with the times I suppose.
If i agree with derryb to trade my cow to him for an ounce of gold, but jmski says he will give me 2 ounces of gold for that same cow, then derryb has just been exposed to and realized counterparty risk.
It doesn't matter if jmski comes along after the deal is made and offers a better deal for the cow. The deal is over and there's no counterparty in sight. A deal's a deal and there's no bank intermediary holding title, collecting arbitrage or interest, and no agency involved in certifying the deal. The transaction took place and the cow & gold exchanged hands on the spot. No counterparty, just primary parties to the deal, which is over. Done. Fini. Completed. No counterparties were involved.
Derryb should have offered more for the cow. Now he has an empty tummy and an element with no counterparty risk. Jmski has a nice fully belly. Cohodk is now just like derryb with an element (but twice as much), and hes also hungry.
And cohodk reneged on a done deal. Hmmmmmm.
So it has no value unless a transaction is made. And in order to conduct a transaction you need another party--a counter party.
Gold has value to its owner, however he chooses to value it. It's not rocket science.
Every definition of counter party includes the word "transaction".
Google it.
Your "transactions" always assume a third party. My gold or your gold doesn't depend on anyone else to be gold.
I knew it would happen.
You should probably quit while your behind.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
The fact of the matter is, the published spot price of gold is fiction.
Those who are in "control" of this magic number are corrupt. One reason is the US and other governments allows this corruption to exist is because it serves the purpose of undermining the confidence in alternative forms of "money" (that bypasses the fiat money system - at least at the taxation level).
How can individuals and groups dampen governments ability to act corruptly?
Seems to me, in places like CA where the state governments debt obligations far outweigh the state’s ability to ever repay, it would not take about 3-4 months of severe reduction in state tax revenue to bring the entire state government to a halt.
How long before the voice of those who care about honesty and fairness, goodwill and integrity will be heard?
We are humans first, mothers and fathers to our children next, custodians of earth third and citizens of our respective nations, fourth. These must be our priorities - if we are to survive and thrive.
Let’s not forget the order of these priorities.
HJP
Unfortunately this isn't true any longer.
These markets are completely manipulated and the manipulators will blame gold owners when things go wrong. The government already doesn't like gold owners because they are using money that could be in bonds (a loan to the government), cash (a loan to the government), or stocks (a loan to the government). The bankers will have their stooges in Washington pass onerous windfall profit taxes and other restrictions on any potential profit. The bankers will keep their profits and bonuses for thinking up the new regulations.
It IS true. And I'm reneging on my promise to stay out of this thread.
PRICE has....nothing....to do with the composition of the gold.
And....furthermore.... uh......oh phooey.
No use.
^&%$^#^^^^*(^$^^
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey