Saw this post in the U.S. Coin forum.....discuss!
gecko109
Posts: 8,231 ✭
"The value of silver and gold is just as much of a social construct as the value of fiat money. The value placed on these metals is older to be sure, but just as arbitrary."
Just the idea that someone could think this way scares me!
Just the idea that someone could think this way scares me!
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Comments
Loves me some shiny!
Fiat is IOU. I owe you what? Gold.
My reply, "I'll give you one of my arbitrary $100 bills if you give me an arbitrary $100 Platinum Eagle in return. Deal?"
I knew it would happen.
<< <i>The value of silver and gold is just as much of a social construct as the value of fiat money. The value placed on these metals is older to be sure, but just as arbitrary.
My reply, "I'll give you one of my arbitrary $100 bills if you give me an arbitrary $100 Platinum Eagle in return. Deal?"
I'll give him an ounce of cornmeal for every ounce of gold, since you can't eat a bill.
roadrunner
<< <i>I agree with the author. Gold is no longer the basis for money except in the minds of a very small minority. Just another commodity for possible price appreciation over time. And yes, I do own substantial amount of PM's. >>
Gold & silver will never again act as a currency.
It's not likely to ever back a currency again.
At best, some responsible government somewhere (heh, I wrote "responsible government'") may back their currency with some asset besides the taxpayer's wallet such as federally held assets like land but that scenario is still along ways off.
<< <i>theoretically isn't the statement true? Tulips anyone? >>
Agree. The value of gold and silver is just a fad that's been around since prerecorded history.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
<< <i>Gold & silver will never again act as a currency. >>
Agree. It's now a store of wealth for those that don't want to put their savings in ever depreciating paper.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
But simply that value rest in what the group determines is valuable. So the implicit value of gold is not a given per se.
The same I see bullets having a much higher value in the future then they might today. The construct will change
Loves me some shiny!
Mises on Money by Gary North on Lew Rockwell.com
edited to add link. I found it a helpful introduction to economics.
<< <i>I am not going to try and find the original post but I do not take the posted statement as equating paper with metal.
But simply that value rest in what the group determines is valuable. So the implicit value of gold is not a given per se.
The same I see bullets having a much higher value in the future then they might today. The construct will change
Here is my contention (and reply to the initial statement made):
Since money is intended to represent labor rendered or labor owed, the money itself needs to have been produced from actual labor. And furthermore, since it takes the EXACT same amount/type of material AND the EXACT same amount of LABOR to produce a $1 FRN as it does a $100 FRN, fiat money has no credibility at all. Imagine if we had in circulation 2 different silver coins. Both coins of the exact same size, weight, and composition. The only difference between the 2 coins was face value.....1 of the coins had a face value of $1, and the other had a face value of $100. The $1 face value coin would dissapear from circulation in about 3 days as everyone and their brother changed their $100 coin for 100 of the $1 coins at the banks. Fiat money is aritrary and imaginary. Gold and silver represent ACTUAL LABOR to produce, and are therefore intrinsically valuable because of it.
<< <i>
<< <i>I am not going to try and find the original post but I do not take the posted statement as equating paper with metal.
But simply that value rest in what the group determines is valuable. So the implicit value of gold is not a given per se.
The same I see bullets having a much higher value in the future then they might today. The construct will change
Here is my contention (and reply to the initial statement made):
Since money is intended to represent labor rendered or labor owed, the money itself needs to have been produced from actual labor. And furthermore, since it takes the EXACT same amount/type of material AND the EXACT same amount of LABOR to produce a $1 FRN as it does a $100 FRN, fiat money has no credibility at all. Imagine if we had in circulation 2 different silver coins. Both coins of the exact same size, weight, and composition. The only difference between the 2 coins was face value.....1 of the coins had a face value of $1, and the other had a face value of $100. The $1 face value coin would dissapear from circulation in about 3 days as everyone and their brother changed their $100 coin for 100 of the $1 coins at the banks. Fiat money is aritrary and imaginary. Gold and silver represent ACTUAL LABOR to produce, and are therefore intrinsically valuable because of it. >>
Strange things happen when I use my "worthless" fiat $... People accept it as payment. Don't they know it's worthless? The strength of a nations economy determines the value of the monetary system and Gold is no longer the basis for money. As a test, use one of your alleged 1/4 oz AGE's to make a purchase for spot value at a Department Store of your choice ... see how far that will get you.
Strange things happen when I use my "worthless" fiat $... People accept it as payment. Don't they know it's worthless? The strength of a nations economy determines the value of the monetary system and Gold is no longer the basis for money. As a test, use one of your alleged 1/4 oz AGE's to make a purchase for spot value at a Department Store of your choice ... see how far that will get you. >>
Haven't tried any Department Store but my dentist will accept gold for work done.
Got quoins?
<< <i>Haven't tried any Department Store but my dentist will accept gold for work done. >>
Heck, mine will accept my IOU with Pecan Pies as interest payment.
<< <i>theoretically isn't the statement true? Tulips anyone? >>
IMHO it is quite true, how can a base metal have "intrinsic" value, how does the labor involved in getting the metal give it "worth." A social construct it is, albeit a very old one.
Edited to remove "base" metal, gold of course is a precious metal, which doesn't change my argument.
If you want to trade, I'll gladly give you the entire face value that is stamped on your AGE plus another $2.00 for every AGE that you want to sell me, and then you won't have to worry about exchanging your AGEs in that pesky department store anymore.
I knew it would happen.
<< <i>As a test, use one of your alleged 1/4 oz AGE's to make a purchase for spot value at a Department Store of your choice ... see how far that will get you.
If you want to trade, I'll gladly give you the entire face value that is stamped on your AGE plus another $2.00 for every AGE that you want to sell me, and then you won't have to worry about exchanging your AGEs in that pesky department store anymore.
"What a stupid thing to say"..... "That was nothing. I've been known to say lots dumber things than that!"
For once, I agree with you.
<< <i>
<< <i>theoretically isn't the statement true? Tulips anyone? >>
IMHO it is quite true, how can a base metal have "intrinsic" value, how does the labor involved in getting the metal give it "worth." A social construct it is, albeit a very old one.
Since when is gold a base metal?
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
<< <i>
<< <i>
<< <i>theoretically isn't the statement true? Tulips anyone? >>
IMHO it is quite true, how can a base metal have "intrinsic" value, how does the labor involved in getting the metal give it "worth." A social construct it is, albeit a very old one.
Since when is gold a base metal? >>
My error, you are , of course, correct. Gold is a precious metal, but still a metal. As someone on the coin side thread pointed out, the natives of New Guinea consider a bird feather to be a precious thing. Look, I'm not saying that gold isn't a time tested method of storing wealth, it just doesn't have any "intrinsic" value.
So, a stock certificate, once a bet on future earnings but now just a financially jimmied instrument, has intrinsic value...maybe it has some value but I don't thing we can go so far as to say a stock certificate actually represents real underlying value of a company, it is such an extrapolation of real net value that it is really just what it is offered as...a piece of paper that changes in value based on its marketable qualities. Gold has physical value that is not based on future earnings but the presence of the metal in the market place. Gold is a noble metal meaning that it is resistant to oxidation and that has significant value because it doesn't spoil or degrade like oil or coffee. Additionally, gold is rare, hence its price point much like a rare art work or archeologically significant artifact. People that want to say has no intrinsic value are right, it has no intrinsic value because it's not based on an underlying asset, it is the asset.
Many people consider gold a commodity that is traded like oil or grain or OJ futures but that is just a convenient way of lumping gold in with other things that are tradeable. Gold is used to settle international trades, much unlike OJ futures and it is guarded and stored in secure locations because of its rarity and value, unlike timber or grain. Commodities actually are treated like and act like consumables but gold is not really consumed except for modest industrial and personal vanity uses. This is where gold differs from commodities, it is not really consumed but it is similar to commodities because it is bought and sold in the market place, it is simply rare.
These discussions are interesting but some of the opinions are suprising.
Edited for clarification of a point
<< <i>but gold is not really consumed except for modest industrial and personal vanity uses. This is where gold differs from commodities, it is not really consumed but it is similar to commodities because it is bought and sold in the market place. >>
Mmm..modest? Jewelery consistently accounts for over two-thirds of gold demand.
Industrial, medical and dental uses account for around 11% of gold demand.
And did you know: Since 2002 total demand for gold from goldsmiths and jewelers, and dentists, and general industry, has come to about 22,500 tonnes. But during the same period, more than 29,000 tonnes has come on to the market. That’s in eight years. So if supply has consistently exceeded user demand, how come the price of gold has still been rising?
In a word, hoarding. Gold investors, or hoarders, have made up all the difference. They are the only reason total “demand” has exceeded supply. If only a small % of that group decides to start taking profits ... well I'm sure you know that scenario.
Industrial, medical and dental uses account for around 11% of gold demand"
Nope, it is not consumed as such uses. Consumption means that it is changed from one form to another form like making a frame for a house out of timbers or burning oil in your car. Heard of Cash4gold? There is a notable difference between consumed and traded. You consume a grapefruit but you trade gold. Ever seen those gold teeth on ebay or the little Indian kids digging the gold out of computer hardware?
<< <i>"Jewelery consistently accounts for over two-thirds of gold demand.
Industrial, medical and dental uses account for around 11% of gold demand"
Nope, it is not consumed as such uses. Consumption means that it is changed from one form to another form like making a frame for a house out of timbers or burning oil in your car. Heard of Cash4gold? >>
Play in words... Consumption: the utilization of economic goods in the satisfaction of wants or in the process of production resulting chiefly in their destruction, deterioration, or transformation.
<< <i>Isn't the "value" of anything a social construct whatever the item is and whatever the medium of exchange? Personally I would rather hold gold than many other things right now. >>
I fully agree with you, but for an entirely different reason. I purchase commodities to make a profit.
Correct, when have you ever seen gold destroyed, deteriorated or transformed into some other element?
<< <i>"Consumption: the utilization of economic goods in the satisfaction of wants or in the process of production resulting chiefly in their destruction, deterioration, or transformation."
Correct, when have you ever seen gold destroyed, deteriorated or transformed into some other element? >>
I haven't ... "the utilization of economic goods in the satisfaction of wants" or ... etc ...I can think of no better reason for Gold.
Thanks for the discourse, OPA
Just an opinion.
I knew it would happen.
I knew it would happen.
Gold is no longer the basis for money except in the minds of a very small minority. Just another commodity for possible price appreciation over time
Don't tell that to the "minority" of central bankers who have 31,000 tons of gold in inventory. Why the heck would these sharp and edjumacated guys keep that much worthless tonnage around when they could be earning much more in arbitrage in forex or stock markets? And when they do lease their gold they tend to only get 0-2% on it? If it's just another commodity why aren't their vaults filled with Plat, Pall, Rhodium, Copper, Oil, or Pork Bellies? Why aren't their vaults filled with fiat currencies if it that was real money? The central bankers don't mind being in a very small minority. The less advertising the better. That's worked well for them for over 300 yrs as they have pulled monetary levers around the world to their benefit, not for the masses.
Strange things happen when I use my "worthless" fiat $... People accept it as payment. Don't they know it's worthless?
No they don't know it's worthless because if they did they wouldn't accept it. This is a game of musical chairs where the last person holding the FRN when the music stops takes the hit. Up until that point everything is ok as long as there is another player to hand off to. 99% of the sheeple have been thoroughly dumbed down via a century of fiat monetary policy. Most have no clue about how the system really works and why. The average guy on the street thinks that 3% inflation per year is a mandatory requirement for a healthy economy because that's what they've been taught in school. Don't worry though, someday they won't accept your fiat in payment and that's the day you'll want the 1/4 oz AGE around.
The strength of a nations economy determines the value of the monetary system and Gold is no longer the basis for money. As a test, use one of your alleged 1/4 oz AGE's to make a purchase for spot value at a Department Store of your choice ... see how far that will get you.
No. The strength is based on balance of payments, assets vs. debts, revenues vs. payments. Our nation is so far in debt that it no longer has any true underlying economic strength. You could actually say that the strength of the monetary system (ie gold) determines the strength of the nation's economy. Look what happened to England and the US when on the gold standards during the 19th and 20th centuries....2 of the strongest economies ever seen where immigrants flocked to their shores and all built on "sound money." But once off sound money looked what happened. Honestly our only remaining "strength" is the ability to borrow more money and create more debt. That's been the "strength" for the past 3 decades. Go figure! Use any other form of payment at the Dept Store other than US dollars and see how far that gets you (IOU, deed to your house, free dental care for a year, oil, meat, clothes, plat, wood, copper, yen, francs, uranium, TBonds, lumber, etc.). The fact that these are not accepted does not make them less valuable. Your 1/4 AGE is a poor test because you could stand on any US street corner and offer to give it away for $20 and nearly every passerby would ignore you either as a kook or a crook passing counterfeit/stolen merchandise. The Dept store is not far removed from a street corner. Take your AGE to a pawn shop, swap meet, coin shop, cash4gold shop, flea market, gun show, stamp show, coin show, antique show, and see how readily it is accepted in one of those environments towards whatever you wish to purchase. Do you think that Europeans, Asians, Africans, South Americans, etc. bartering with sovereign gold coins would experience such problems as we see in the US with simple precious metal's recognition? Remember, they don't own the world's reserve currency and currently prefer gold to it. Wasn't it just a year or two ago that the dollar was not being accepted in many places around the world? Often you couldn't buy overseas with your dollars w/o exchanging into local currencies first. Yeah, just a glimpse of what's coming down the road with fiat currencies.
Mmm..modest? Jewelery consistently accounts for over two-thirds of gold demand.
That's not accurate anymore at least not on a yoy basis...maybe 3+ yrs ago it was (see chart below). Jewelry percentage dropped the last couple of years while investment demand was increasing. Jewelry accounted for 50% of total gold demand in 2009 and that was after a 20% drop from 2008. And why not as fiat currencies are being debased into the ground. Investment demand in gold was over 1,300 tons in 2009. It's hard to separate jewelry demand from investment demand since the Asian culture buys jewelry to store wealth. You can bet that they don't pay the absurd 2X to 6X markups that Americans pay for their "jewelry." I wish there was a way GFMS/WGC could separate out Western jewelry demand from Asian. The trend in 1st QTR 2010 does not a year make but jewelry has picked up at the expense of investment demand. One glaring omission from that WGC demand chart is the lack of central bank buying (+200 tons est). In previous yrs the stats counted the 500 tons of annual CB sales in the supply side yet now they don't count the net buying of 200 tons or more on the demand side.???? Interesting twist of events. What about the demands from industrial gold mining nations like China who will probably keep in-house all the gold mined in China? This central bank end using will not show up on the charts. And by the time the Chinese report about it to the world, they'll have yet another 1000 tons added to their stocks at well below market prices.
So if supply has consistently exceeded user demand, how come the price of gold has still been rising?
It's called good money being chased into hiding by bad money. The good money (ie gold) is being tucked away all over the world as the fiat barn burns. If only a small percentage of the world gets wind of where this 39 year fiat experiment is really headed, you will really see the paper burn and the PM's soar. If anyone is bailing out from here, it will be from the paper side not PM's. And whether PM's rise or fall 30% in 6 months from today's levels really has no bearing out the final outcome.
Gold demand chart
roadrunner
<< <i>wow RR, you're good >>
He's the BEST.
Do you think that Europeans, Asians, Africans, South Americans, etc. bartering with sovereign gold coins would experience such problems as we see in the US with simple precious metal's recognition? Remember, they don't own the world's reserve currency and currently prefer gold to it. Wasn't it just a year or two ago that the dollar was not being accepted in many places around the world? Often you couldn't buy overseas with your dollars w/o exchanging into local currencies first. Yeah, just a glimpse of what's coming down the road with fiat currencies.
I knew it would happen.
<< <i>Do you think that Europeans, Asians, Africans, South Americans, etc. bartering with sovereign gold coins would experience such problems as we see in the US with simple precious metal's recognition? Remember, they don't own the world's reserve currency and currently prefer gold to it. Wasn't it just a year or two ago that the dollar was not being accepted in many places around the world? Often you couldn't buy overseas with your dollars w/o exchanging into local currencies first. Yeah, just a glimpse of what's coming down the road with fiat currencies.
roadrunner >>
Not just a year or two ago. I was not able to spend USD in THAILAND ( the USA was ( is? ) LOS largest trading partner ) 10 years ago without converting to thai baht first. Better than that, I was forced to change dollars in CHINA around the same time, AND they would not accept wrinkled or word $100 bills. HAD to be new crisp ones or forget it.
Gold shops everywhere.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>Wasn't it just a year or two ago that the dollar was not being accepted in many places around the world? Often you couldn't buy overseas with your dollars w/o exchanging into local currencies first. >>
So what's so unique about that? As a rule, do we accept other nations currency's when someone visits the US? ( except for NYC..they did accept the Euro for a while) The currency markets are to volatile for small business owners to worry about exchange rates. As such, I can't blame those countries for imposing that ban. The saying "when in Rome, do as the Romans do, is also true with currency ... spend local currency.
<< <i>"The value of silver and gold is just as much of a social construct as the value of fiat money. The value placed on these metals is older to be sure, but just as arbitrary."
Just the idea that someone could think this way scares me! >>
While I would not use the word arbitrary... I do understand and agree with the quote you have selected Gecko...
The value of any item is based soley on the agreed upon value that is placed by the people involved... there has to be a mutual agreement between people that, in this case, Gold has a particular value... that agreement is based on a mutual trust... i.e. that if I acquire an amount of gold it will be accepted by others as having value... of course, the wily ways of the marketplace can "play" with the relative value... but over the course of many centuries, gold has been viewed as having a "precious" value...
While it is certainly not a fad... there is no absolute certainty that gold will always be held in high regard... for now, it looks quite a safe bet that it will continue it's reign
In the SHTF scenario some think could happen... and it very well could ( remember... there have been other species over the millions of years that reigned supreme on this planet... but things do change) ... if I have a garden/farm full of food... and you are hungry... I might allow you to join me and help with the growing and harvesting... but I will have no need or desire for your gold.
Do I think some SHTF scenario could happen in our lifetime? It could... I hope it doesn't... yet I will not live my life with a tinfoil cap on my head... or hide under the covers...
Meanwhile... I stack some PM's... and store some extra food and such... but frankly... if such a scenario as the BIG SHTF were to happen, I do not think I would want to struggle to stick around... this place is enough trouble to deal with, considering the violence and prejudice that runs rampant in every aspect of our society... sometimes it's even called entertainment... if it were to become a Mad Max reality, I would want the F outta here... real quick...
Gold is only valuable IMHO... because there are many who agree that it is... plain and simple... and it was not until Humanity had risen from pure survival living into the beginnings of what we call society... it was then that the "leaders" looked for other things to do, since they had their subjects doing all the work... and humans, like some other critters, are fascinated by pretty baubles and such... I could go on and on with my take on the social history of these lifeforms, that I am presently a part of, called Human... but why bother... most folks are quite content and filled with their certainty of our superiority... funny thing is, the only critters who think that humans are all that great are humans... and if you think dogs and cats like us... well... just stop feeding them and see how long that friendship lasts...
and for all those... and I do know you are out there... who will scoff at my words and think me an eccentric weirdo... or whatever... let me just say this...
Knowledge is the enemy of fear
<< <i>Gold has value in every country = nuff said
Guess what, and so does the US $, or any major currency. I know of no country that only accepts gold as their medium for currency exchange. Do you?
<< <i>Gold has value in every country = nuff said
Correct, just no intrinsic value.
<< <i>
<< <i>Gold has value in every country = nuff said
Correct, just no intrinsic value.
If you believe that way it's your choice
<< <i>
<< <i>
<< <i>Gold has value in every country = nuff said
Correct, just no intrinsic value.
If you believe that way it's your choice
Sorry, I couldn't resist.
In all of these extreme cases , GOLD did not magically saved you but it probably made your life a lot easier than if you had none.
Simply put , nothing beats gold .
Unlike Land, houses, you can take your gold and go somewhere else.
Unlike food, gold will never spoil and can easily be concealed ( try that with a watermelon)
Unlike guns, ...hmmm...there is always someone with a bigger gun.
The fact is that nothing really works as good as gold under you standard armaggedon scenario.
Plus i thought we had agreed that "shiny" was a pretty good answer for these type of questions
Groucho Marx
True enough,,,,,,,,,,,,,,,,,,,,,,,,,,,, BUT you better have A gun IF you want to keep your gold
JMHO, GrandAm
<< <i>Throught the history of civilized mankind there S has already HTF a few times...Rome burning, the big plague, WW2 etc.
In all of these extreme cases , GOLD did not magically saved you but it probably made your life a lot easier than if you had none.
Never before in the history of mankind have there been six billion people and
most of the food canme from factories. How long will New Yorkers survive shooting
squirrels in Central Park then going home to protect their gold.
Never before have people beenm wholly dependent on the smooth operation of the
infrastructure that delivers, water, food, clothing, and shelter. Never before have
so many been dependent on medication and the "comforts" we take for granted.
If things break down you'd best bury your gold and head north. Just take a blanket
and a knife because anything more will slow you down enough to make you dinner.
infrastructure that delivers, water, food, clothing, and shelter."
Yes, and we take that for granted so much. Even a minor blip in the distribution system on a national basis and people will come completely unglued. Electrical grid faltering (no digibuks, no water wells, no cell phone service, no TV or computer), food supply/distribution system problems (no Mickey D's, no running to the store for some beers, no more smokes or steaks on the barbie), interruption of food stamps/welfare/social security checks, and that's before we consider an attack on our country by some stone age zealots or a large hurricane or a major earthquake in a significant urban area or...gasp...even $10 gasoline. That thin veneer of civility we all take as common will be quickly wiped away and we will be reminded why humans are the most feared and most successful predators on the planet. Those happy folk that think that all is well and that they will be taken care of by the leadership should give that concept further consideration. But, not to worry, things have a way of working themselves out...
Got Cash?