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Friday Not Metal Porn. An illustration of why we do what we do. And perhaps a warning.

WeissWeiss Posts: 9,922 ✭✭✭✭✭

Here's one of those Venezuelan gold coins I acquired recently.
These are the larger coins in the series, denominated at 60 Bolivares. Each contains 22.2 grams of 90% pure gold, or exactly 20 grams of .999 pure gold--call it 2/3 of a troy ounce.

And while it's not entirely clear if these exact pieces were ever monetized and spent, the Venezuelans had a long history of gold coinage. Their most common gold coin, the 10 Bolivare, was about 1/6th the weight of this 60 Bolivare coin. Gold is gold, right?

This piece features Chief Guaicaipuro, arguably the most fierce and powerful chief who fought against the Spanish Conquistadores in the mid-1500s. He's a national folk hero of Venezuela.

And here is a recent (2017) banknote from Venezuela that also features Guaicaipuro. You'll notice the note has an interesting vertical design--something becoming more common around the world. As with our modern notes, this banknote features many anti-counterfeiting protections: the holographic embedded strand woven through the center of the note, optically variable ink (OVI) which changes color as the bill tilts in light. There is micro-printing throughout. Also like our currency, there are embedded strands of colored fiber. It's intaglio printed, with raised lettering in certain areas you can feel with your fingers. And of course there is a large watermark in the purple center area, with an image of revolutionary icon Simon Bolivar (for whom the currency is named) visible in bright light. In other words, they feel like a nice, new, legit piece of valuable currency.

And this is where things get interesting, or terrifying, depending on your perspective.

Because that bill is 2,000 Bolivares. That's roughly 33 times the face value of the gold coin above. These notes had been issued in an attempt to curb inflation quickly becoming hyperinflation. In 2016, when these notes were introduced, that 2,000 Hard Bolivare note had the purchasing power of about five cents. But the inflation didn't stop.

Within just two years, or mid-Summer of 2018, that 2,000 Bolivare bill that had been worth about 5 US cents had a value of less than 1/10th of 1 cent.

Remember we're not talking about historical World War II Germany or Hungary. This is within the last 4 years. And it's not half-way around the world. Venezuela is in our own hemisphere. My wife and I have vacationed in Aruba, 15 miles off the coast of Venezuela!

Imagine if you'd put your trust, your hope, your life savings into these Bolivare notes.

In April of 2020, the Bolivare was trading at 144,697 to a dollar. By December 2020, the rate was a 1,000,000 to a dollar. By May of last year, the rate was 3,000,000 to a dollar.

So here is a full "brick" of official signed, sealed, authentic, monetized 2,000 Bolivare notes from 2017. One thousand crisp, brand-new bills, in 10 packs of 100 each, all counted and wrapped neatly. Two million Bolivares, total.

And while that 1955 Venezuelan gold 60 Bolivare coin has held its value well with a gold value alone of about $1000 in US dollars, that entire brick of 2,000,000 paper Venezuelan Bolivares from 2017 is absolutely worthless. It was barely worth the paper it was printed on the day it came off the presses.

This is why people hold physical gold and silver.

We are like children who look at print and see a serpent in the last letter but one, and a sword in the last.
--Severian the Lame

Comments

  • 1630Boston1630Boston Posts: 13,770 ✭✭✭✭✭

    Interesting, thanks for posting this @Weiss

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  • rickoricko Posts: 98,724 ✭✭✭✭✭

    @Weiss.... Thanks for that informative post - classic example of the value of gold vs. paper currency. Cheers, RickO

  • CladiatorCladiator Posts: 17,917 ✭✭✭✭✭

    Scary sh*t, I pray we never have to deal with things as severe as that here, thanks for the post. I dug out those Onza's for your new pron thread...


  • WeissWeiss Posts: 9,922 ✭✭✭✭✭

    @Cladiator said:
    Scary sh*t, I pray we never have to deal with things as severe as that here, thanks for the post. I dug out those Onza's for your new pron thread...

    LOVE ❤️ those onzas!

    We are like children who look at print and see a serpent in the last letter but one, and a sword in the last.
    --Severian the Lame
  • GoldminersGoldminers Posts: 3,563 ✭✭✭✭✭
    edited October 16, 2022 3:06PM

    This is a fun somewhat related 7-minute-long sort of rap style video from 2010: Hayek vs Keynes, which provides some interesting insight on how currency vs gold volatility like this can happen.

    Things can get bad very fast when other major countries start selling instead of buying your government's debt.

    At least it is worth a chuckle or two. It is helpful to click on the CC for the captioning.

    https://www.youtube.com/watch?v=d0nERTFo-Sk

  • SoCalBigMarkSoCalBigMark Posts: 2,784 ✭✭✭✭✭

    Wassup homie and why do you have that brick?

  • WeissWeiss Posts: 9,922 ✭✭✭✭✭

    @SoCalBigMark said:
    Wassup homie and why do you have that brick?

    Big Mark!

    We are like children who look at print and see a serpent in the last letter but one, and a sword in the last.
    --Severian the Lame
  • WeissWeiss Posts: 9,922 ✭✭✭✭✭

    @Cladiator said:
    Scary sh*t, I pray we never have to deal with things as severe as that here, thanks for the post. I dug out those Onza's for your new pron thread...


    Nice subtle but interesting varieties you've got there, @Cladiator

    On the reverses, particularly the 1979s (top picture), you can see the left scale pan either points to "U" in "Una" or it points to the "N". There's also a difference between the spacing of "DE MODENA", but I have a hard time telling those apart.

    We are like children who look at print and see a serpent in the last letter but one, and a sword in the last.
    --Severian the Lame
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