Hardly paranoid, cohodk. I simply don't appreciate so much intrusive "marketing research", and frankly I'm a bit tired of it. Aren't you?
Even our car dealership calls us every time we've had a repair done, saying "look, we saw that you just brought your (old) car in and we have a customer who is looking for something like that. Would you consider trading it in on a new ________?" Sheesh.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>Hardly paranoid, cohodk. I simply don't appreciate so much intrusive "marketing research", and frankly I'm a bit tired of it. Aren't you?
Even our car dealership calls us every time we've had a repair done, saying "look, we saw that you just brought your (old) car in and we have a customer who is looking for something like that. Would you consider trading it in on a new ________?" Sheesh. >>
Doesnt bother me. Sometimes a reminder call is good. If you were the car dealer you may think differently. Its all relative.
I AM the consumer and I choose what and where to buy. Some people are more easily influenced than others. I see nothing wrong with steering people who need to be steered.
Do your best to avoid circular arguments, as it will help you reason better, because better reasoning is often a result of avoiding circular arguments.
<< <i>you're missing the point. Not sure if it's intentional or not, but either way, let's try this:
Where in the world will the above object function as money? " >>
Substitute that picture for a German 2 euro coin, or British 2 pound coin. Take that euro or pound coin to any store in America and according to your theory, it's not "money" either. It would need to be exchanged for local currency, same as gold would needed to be sold/exchanged first. Obviously, there's no country in which gold is currently used by the population as money - unlike euros and pounds. But central banks' storage of gold and use of it for settlement purposes, and the historic use of gold as money, establishes that it's either money, or it's basically a substitute for money.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
You're welcome! North's writing style for some reason keeps my attention like no other, and I must follow it with the cliche'--"I don't agree with everything he writes."
He will never live down Y2K predictions--but every good guy has to have a blemish or two.
North is industrious like no other: I remember reading another piece about using time wisely (since Time is Money) and how efficiently he runs his days. He is writing articles 'in his head' from the time he wakes up, in the shower, etc.-- never a wasted moment. Until of course, he wants to trade $ for leisure, which we all should do at least one day in 7 weekly.
I have reaped many rewards for Time spent reading posts here, which others took Time in writing for the benefit of the rest of us-- point and counterpoint alike.
Time is money.
Money is whatever medium of exchange people decide.
"Money is subjective." (Mises)
Do your best to avoid circular arguments, as it will help you reason better, because better reasoning is often a result of avoiding circular arguments.
I can't take a swiss franc or pound sterling to costco or sears and buy anything without changing it first to local "money" so how is this different than gold and silver?
PEACE! This is the first day of the rest of your life.
<< <i>I can't take a swiss franc or pound sterling to costco or sears and buy anything without changing it first to local "money" so how is this different than gold and silver? >>
Try the Costco or Sears in Switzerland or Britain. Like Rick said it takes both parties to agree on it's use as money no matter what it is. When anything other than the "official" currency is used it becomes barter.
"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>I can't take a swiss franc or pound sterling to costco or sears and buy anything without changing it first to local "money" so how is this different than gold and silver? >>
Try the Costco or Sears in Switzerland or Britain. Like Rick said it takes both parties to agree on it's use as money no matter what it is. When anything other than the "official" currency is used it becomes barter. >>
Probably so. But a higher level of barter than many fiat currencies. Just depends where on the earth we are talking about.
An FRN is barter as well for a large % of the earth. It's not backed by anything tangible other than "faith" so how is that real money? Just another form of barter. In this case, mass hysteria/brainwashed induced barter. The founding fathers would be laughing their butts off at the concept of FRN's as money.
I think of gold as barter into every currency worldwide
If I had equal amounts of gold and fiat I'd spend the fiat first because its spending power is at its highest right now and will never increase, fiat 's spending power has never increased in my lifetime.
disclaimer , past performance is no guarantee of future results
Here is a related quote from James Turk in response to a question from Hard Asset Investor (HAI):
<< <i>HAI: Why would a central bank, which presumably is also buying gold for its reserves, want the price to be lower? Isn't that an investment that the bank has as well? Turk: First of all, gold is not an investment...it’s money. It’s not an investment because it’s a sterile asset. It doesn’t generate cash flow. It doesn’t have a balance sheet, management team, PE/ratio or anything like that. And in fact, gold doesn’t create wealth. Money doesn’t create wealth until you put it at risk. Money only creates wealth if you invest it or you lend it or you deposit it. But gold itself doesn’t create wealth. Dollars don’t create wealth unless you deposit them in a bank, lend it to somebody, or invest it in securities. It’s the same thing with gold. >>
Markets (governments) can remain irrational longer than an investor can remain solvent.
So, back to the original title of the thread, "Gold is not an investment. It’s a speculation."
it's also NOT true (as in, not always true) IMO
the only TRUE statement that can be made is: Gold is Gold.
Any other "Gold is ____" (or is not) statement can only depend on specific contextual circumstances.
Gold certainly CAN BE money, if it is used as such, but to argue that it is the ONLY money is ridiculous, as is the argument that it is always money, or never money.
Gold CAN BE an investment, it CAN BE a speculation. One can make a profit with it, or suffer a loss. But it does not HAVE TO BE either one. it can be a collector item, it can be a decrorative item, it can be a functional item. That's what's so cool about it.
But folks should be clear about what it is not. It's not magic, and it's not a guarantee of anything. It just is what it is. It's GOLD
gold is an asset class. As such it is, among other things, used for investment purposes.
All investments are speculation to some degree.
"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
But folks should be clear about what it is not. It's not magic, and it's not a guarantee of anything. It just is what it is. It's GOLD.
True enough. And much the same can be said about the currency:
But folks should be clear about what it is not. It's not magic, and it's not a guarantee of anything. It just is what it is. It's PAPER.
In my own case, I'd prefer to be overweighted in GOLD, rather than in PAPER.
Edited to add:
But folks should be clear about what it is not. It's not magic, and it's not a guarantee of anything. It just is what it is. It's ELECTRONS IN AN "ACCOUNT" (somewhere, maybe).
Q: Are You Printing Money? Bernanke: Not Literally
1. Gold is a medium of exchange (like money) to the extent it connects a consumer with a good. Like a TV set, just a medium, not the "message." 2. Gold is a "good" to the extent that it has any industrial use. 3. Gold is a "good" to the extent that it is a trade-able commodity, bought, sold and the subject of speculation like any commodity. 4. Gold is a "psychological good" to the extent that it holds the perception of being the most stable or trustworthy of all earthly mediums or goods. 5. Gold is a transient good in that moth and rust doth eventually corrupt.
Markets (governments) can remain irrational longer than an investor can remain solvent.
“Gold is money. Everything else is credit.” - J.P Morgan testimony before congress, 1912. We have been warned repeatedly since then.
"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
"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>It seems a single example of anything besides gold that is not "credit" would make his statement untrue, would it not?
One doesn't need to ask the dead person about his obviously oversimplified-to-the-point-of-Wrong statement >>
We don't know the question he was responding to.
"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
All the more reason not to take his words out of context to try to make a case for hard assets.. for thinking people with any kind of reasoning ability, it weakens the point rather than strengthens it.
I guess I would just interpret the statement to mean that gold has stable intrinsic worth while paper doesn't but not ruling out other hard asset classes like real estate and silver. If, hypothetically, a global law were passed tomorrow requiring that gold be the ONLY form of medium for all exchanges, world wide, what would you see happening in the price discovery process?
Markets (governments) can remain irrational longer than an investor can remain solvent.
The value of gold in dollars, and every other currency, changes day to day and week to week, both up and down. That's not "stable"
Also, the exchange value of any piece of gold varies wildly depending on where you take it for exchange, whether it be to the average shopkeeper (I can't take that at all as payment) to a cash for gold place (maybe half of melt) to an honest coin shop or pawn shop (melt, give or take), to a numismatist (for any collector premium)
that's not stable, and far from "universal"
If, hypothetically, a global law were passed tomorrow requiring that gold be the ONLY form of medium for all exchanges, world wide, what would you see happening in the price discovery process?
the same thing that would happen if laws were passed that ALL transactions MUST be conducted in any other physical material such as oil, sugar, wheat, or whiskey, for example:
inefficient barter transactions, hoarding, regional gluts and shortages, arbitrage, boom and bust cycles, overproduction, underproduction, panics, depressions, and eventually some common representative for the actual physical good, such as paper IOUs and fractional banking.
The value of gold in dollars, and every other currency, changes day to day and week to week, both up and down. That's not "stable" >>
Has nothing to do with the stableness of the currencies involved? The value of gold doesn't really change that much. The value of what buys it is what is changing.
"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 value of gold in dollars, and every other currency, changes day to day and week to week, both up and down. That's not "stable" >>
Has nothing to do with the stableness of the currencies involved? The value of gold doesn't really change that much. The value of what buys it is what is changing. >>
I was going to say the same thing.
Maybe you could argue day to day, dollar is stable and gold varies.
But definitely long term, gold is stable and paper currency varies.
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
But definitely long term, gold is stable and paper currency varies.
Look at a 40-year chart of the price of gold in US dollars. If what you're saying were true, wouldn't the price of gold only move in one direction, up? It appears that the relative value of both things vary, not just with each other, but with the value of other things too. There may also be components of human emotion and mob psychology involved, you know, certain asset classes falling in and out of favor in a cyclical way, in response to supply and demand and all the other things?
Baley, not saying gold is perfectly stable without variation, especially not in terms of it's purchasing power against goods and other forms of currency which fluctuate more than gold does. I agree with derryb's response. Also not saying that paper currency is totally erratic in value. These are not absolutes. You may be aware of other commodities that have held the purchasing power and the globally recognized value stability that gold has held for thousands of years. My guess is that JP wasn't aware of any, neither am I, but they may exist. My reason for posing the hypothetical about gold as the only legal tender isn't to recommend it, just wondering about the dynamic of true price discovery with PMs, when other variables are more controlled as in the case of this hypothetical in which supply and demand would more purely be driving the process. I'm really just thinking out loud here, no particular axe to grind.
Markets (governments) can remain irrational longer than an investor can remain solvent.
<< <i>But definitely long term, gold is stable and paper currency varies.
Look at a 40-year chart of the price of gold in US dollars. If what you're saying were true, wouldn't the price of gold only move in one direction, up? It appears that the relative value of both things vary, not just with each other, but with the value of other things too. There may also be components of human emotion and mob psychology involved, you know, certain asset classes falling in and out of favor in a cyclical way, in response to supply and demand and all the other things? >>
I agree. Gold price like anything other asset is subject to the forces of fear and greed. I believe China's financial planning has been greatly underestimated in its affect on gold prices:
"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
There may also be components of human emotion and mob psychology involved, you know, certain asset classes falling in and out of favor in a cyclical way, in response to supply and demand and all the other things?
Another component - rational people, making rational moves with their important assets.
It may also be true that what we hear, see and think are dependent on some false information from time to time. In that kind of an environment, I contend that physical metal is preferable to electrons in "the cloud". As I recall, electrons in clouds result in lightning strikes on the ground.
Q: Are You Printing Money? Bernanke: Not Literally
gold is just a lump of metal its true, but I prefer it as money over paper because it doesn't inflate. Whatever I happen to be thinking when I put an ounce away ,fifty years later I still have an ounce.
The fiat system was created to steal the work that you do every day from you , 100 years of inflation was no accidental side effect. Inflation didn't just happen it was planned .
Gold wasn't subject to long term inflation and was too rigid a system to allow the theft required.
If I save a nickle as a boy and when I'm an old man its worth nothing then I have been robbed of my hard work. If I save in the form of gold or silver I still have a chance.
<< <i> If I save a nickle as a boy and when I'm an old man its worth nothing then I have been robbed of my hard work. If I save in the form of gold or silver I still have a chance. >>
Now days even if the nickel survives it will earn no interest. Money only works for the bankers now days.
inflation is a hidden tax, especially tough on those that save or live on fixed incomes.
"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
It's just a little something to "share the wealth" from those who spent their lives earning and saving it to those who could care less. How could anyone think that is unfair or nonsensical? I think it makes some sense to keep the nickel, though. As I consider what to do with all these statehood quarters I have kept from circulation (and clad dimes, too) I think I would be better served to convert them to nickels for the copper or ASEs for the silver. So, that is my challenge this week, some poor bank teller is going to be inundated with the stuff.
Markets (governments) can remain irrational longer than an investor can remain solvent.
Gold wasn't subject to long term inflation and was too rigid a system to allow the theft required.
Gold gets a bad rap for being a "rigid" system that doesn't help promote economic growth. But the 19th century tells a different story. Even under gold standards the bankers and govt frequenty expanded the paper money supplies as needed to promote growth...or a boom if you will. This typically occurred during or following periods of war. The gold standard was only as rigid as the bankers that monitored it. But imo it was superior to a system of pure fiat that has no tangible anchor whatsoever (ie post 1971).
Gold gets a bad rap for being a "rigid" system that doesn't help promote economic growth.
I agree. That's a smoke screen supposition which ignores that good credit can be extended via paper documentation any time. Any bank or individual can extend credit if they see a good history and a good balance sheet. Anyone who says that there isn't enough gold to allow for the extension of good credit is simply UNDERVALUING gold.
Not enough gold? I call BS!!! When the value of gold can fluctuate freely, there's no constraint - only the constraint is that of making honest committments between honest individuals. It's only when dishonesty creeps into the equation that problems start happening, and the usual dishonesty is when a lender decides to make more money by lending more than he actually has in deposits.
Let's be honest about what the problem really is.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>I contend that physical metal is preferable to electrons in "the cloud". >>
Actually, a 'cloud' of electrons is kind of what metal *is*. What makes something 'metallic' are electrons that are not stuck on one specific atom, but instead spread across the whole crystal. That is what makes metals like gold such good electrical conductors, for one thing.
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
"Textbook economics teaches that an advance in price always and everywhere calls out new supplies. However, textbook economics is helpless when it comes to gold. For gold the exact opposite is true: an advance in price makes supply contract; and a very large advance may make supply disappear altogether. The reason for this paradox is that gold is a monetary metal." - Antal Fekete
"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
For gold the exact opposite is true: an advance in price makes supply contract
Antal is wrong. Higher prices give the mining companies incentive to dig (print) it out of the ground, thus increasing supplies. Is it not true that almost every ounce ever mined is still here? Supply has never decreased.
<< <i>For gold the exact opposite is true: an advance in price makes supply contract
Antal is wrong. Higher prices give the mining companies incentive to dig (print) it out of the ground, thus increasing supplies. Is it not true that almost every ounce ever mined is still here? Supply has never decreased. >>
You miss the point. He is referring to the supply that is available for sale. Strong hands get stronger as price increases. This tightening of available supply as price increases is what makes gold money.
For mining companies the incentive is already there at current prices. As long as their price realized exceeds their expense to mine it they will continue to attempt to pull all they can from the ground.
"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
Comments
Knowledge is the enemy of fear
<< <i>Gold is not an investment. >>
Ha ha. I love this.
Cash is an investment, stocks are an investment, bonds are an investment, and commodities are an investment, but not gold LOL!
–John Adams, 1826
<< <i>It's all speculation, brother. Some, like gold, are simply LESS speculative than others in this economic climate. >>
Extremely well said Mesquite! Are you channeling Bear (rip) BigE (rip)?
Liberty: Parent of Science & Industry
Even our car dealership calls us every time we've had a repair done, saying "look, we saw that you just brought your (old) car in and we have a customer who is looking for something like that. Would you consider trading it in on a new ________?" Sheesh.
I knew it would happen.
<< <i>It's all speculation, brother. Some, like gold, are simply LESS speculative than others in this economic climate. >>
Exactly!!
However with Gold you have 5000 years of backing.
With paper money you have about 120 years of backing.
Let's not forget this.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
<< <i>Hardly paranoid, cohodk. I simply don't appreciate so much intrusive "marketing research", and frankly I'm a bit tired of it. Aren't you?
Even our car dealership calls us every time we've had a repair done, saying "look, we saw that you just brought your (old) car in and we have a customer who is looking for something like that. Would you consider trading it in on a new ________?" Sheesh.
Doesnt bother me. Sometimes a reminder call is good. If you were the car dealer you may think differently. Its all relative.
I AM the consumer and I choose what and where to buy. Some people are more easily influenced than others. I see nothing wrong with steering people who need to be steered.
Knowledge is the enemy of fear
<< <i>you're missing the point. Not sure if it's intentional or not, but either way, let's try this:
Where in the world will the above object function as money? " >>
Substitute that picture for a German 2 euro coin, or British 2 pound coin. Take that euro or pound coin to any store in America and according to your theory, it's not "money" either. It would need to be exchanged for local currency, same as gold would needed to be sold/exchanged first. Obviously, there's no country in which gold is currently used by the population as money - unlike euros and pounds. But central banks' storage of gold and use of it for settlement purposes, and the historic use of gold as money, establishes that it's either money, or it's basically a substitute for money.
<< <i>Time is money >>
I enjoyed that link , thanks
<< <i>
<< <i>Time is money >>
I enjoyed that link , thanks
You're welcome! North's writing style for some reason keeps my attention like no other, and I must follow it with the cliche'--"I don't agree with everything he writes."
He will never live down Y2K predictions--but every good guy has to have a blemish or two.
North is industrious like no other: I remember reading another piece about using time wisely (since Time is Money) and how efficiently he runs his days. He is writing articles 'in his head' from the time he wakes up, in the shower, etc.-- never a wasted moment. Until of course, he wants to trade $ for leisure, which we all should do at least one day in 7 weekly.
I have reaped many rewards for Time spent reading posts here, which others took Time in writing for the benefit of the rest of us-- point and counterpoint alike.
Time is money.
Money is whatever medium of exchange people decide.
"Money is subjective." (Mises)
Fred, Las Vegas, NV
<< <i>I can't take a swiss franc or pound sterling to costco or sears and buy anything without changing it first to local "money" so how is this different than gold and silver? >>
Try the Costco or Sears in Switzerland or Britain. Like Rick said it takes both parties to agree on it's use as money no matter what it is. When anything other than the "official" currency is used it becomes barter.
"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>
<< <i>I can't take a swiss franc or pound sterling to costco or sears and buy anything without changing it first to local "money" so how is this different than gold and silver? >>
Try the Costco or Sears in Switzerland or Britain. Like Rick said it takes both parties to agree on it's use as money no matter what it is. When anything other than the "official" currency is used it becomes barter. >>
So gold is not money, but barter?
Knowledge is the enemy of fear
Probably so. But a higher level of barter than many fiat currencies. Just depends where on the earth we are talking about.
An FRN is barter as well for a large % of the earth. It's not backed by anything tangible other than "faith" so how is that real money? Just another form of barter.
In this case, mass hysteria/brainwashed induced barter. The founding fathers would be laughing their butts off at the concept of FRN's as money.
I think of gold as barter into every currency worldwide
If I had equal amounts of gold and fiat I'd spend the fiat first because its spending power is at its highest right now and will never increase, fiat 's spending power has never increased in my lifetime.
disclaimer , past performance is no guarantee of future results
<< <i>HAI: Why would a central bank, which presumably is also buying gold for its reserves, want the price to be lower? Isn't that an investment that the bank has as well?
Turk: First of all, gold is not an investment...it’s money. It’s not an investment because it’s a sterile asset. It doesn’t generate cash flow. It doesn’t have a balance sheet, management team, PE/ratio or anything like that. And in fact, gold doesn’t create wealth. Money doesn’t create wealth until you put it at risk. Money only creates wealth if you invest it or you lend it or you deposit it. But gold itself doesn’t create wealth. Dollars don’t create wealth unless you deposit them in a bank, lend it to somebody, or invest it in securities. It’s the same thing with gold. >>
it's also NOT true (as in, not always true) IMO
the only TRUE statement that can be made is: Gold is Gold.
Any other "Gold is ____" (or is not) statement can only depend on specific contextual circumstances.
Gold certainly CAN BE money, if it is used as such, but to argue that it is the ONLY money is ridiculous, as is the argument that it is always money, or never money.
Gold CAN BE an investment, it CAN BE a speculation. One can make a profit with it, or suffer a loss. But it does not HAVE TO BE either one. it can be a collector item, it can be a decrorative item, it can be a functional item. That's what's so cool about it.
But folks should be clear about what it is not. It's not magic, and it's not a guarantee of anything. It just is what it is. It's GOLD
Liberty: Parent of Science & Industry
All investments are speculation to some degree.
"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
True enough. And much the same can be said about the currency:
But folks should be clear about what it is not. It's not magic, and it's not a guarantee of anything. It just is what it is. It's PAPER.
In my own case, I'd prefer to be overweighted in GOLD, rather than in PAPER.
Edited to add:
But folks should be clear about what it is not. It's not magic, and it's not a guarantee of anything. It just is what it is. It's ELECTRONS IN AN "ACCOUNT" (somewhere, maybe).
I knew it would happen.
2. Gold is a "good" to the extent that it has any industrial use.
3. Gold is a "good" to the extent that it is a trade-able commodity, bought, sold and the subject of speculation like any commodity.
4. Gold is a "psychological good" to the extent that it holds the perception of being the most stable or trustworthy of all earthly mediums or goods.
5. Gold is a transient good in that moth and rust doth eventually corrupt.
“Gold is money. Everything else is credit.” - J.P Morgan testimony before congress, 1912. We have been warned repeatedly since then.
"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>It's a shelter from the coming storm
“Gold is money. Everything else is credit.” - J.P Morgan testimony before congress, 1912. We have been warned repeatedly since then. >>
So physical silver is credit? certified diamonds are credit?
Liberty: Parent of Science & Industry
"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
One doesn't need to ask the dead person about his obviously oversimplified-to-the-point-of-Wrong statement
Liberty: Parent of Science & Industry
<< <i>It seems a single example of anything besides gold that is not "credit" would make his statement untrue, would it not?
One doesn't need to ask the dead person about his obviously oversimplified-to-the-point-of-Wrong statement >>
We don't know the question he was responding to.
"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
for thinking people with any kind of reasoning ability, it weakens the point rather than strengthens it.
Liberty: Parent of Science & Industry
If, hypothetically, a global law were passed tomorrow requiring that gold be the ONLY form of medium for all exchanges, world wide, what would you see happening in the price discovery process?
The value of gold in dollars, and every other currency, changes day to day and week to week, both up and down. That's not "stable"
Also, the exchange value of any piece of gold varies wildly depending on where you take it for exchange, whether it be to the average shopkeeper (I can't take that at all as payment) to a cash for gold place (maybe half of melt) to an honest coin shop or pawn shop (melt, give or take), to a numismatist (for any collector premium)
that's not stable, and far from "universal"
If, hypothetically, a global law were passed tomorrow requiring that gold be the ONLY form of medium for all exchanges, world wide, what would you see happening in the price discovery process?
the same thing that would happen if laws were passed that ALL transactions MUST be conducted in any other physical material such as oil, sugar, wheat, or whiskey, for example:
inefficient barter transactions, hoarding, regional gluts and shortages, arbitrage, boom and bust cycles, overproduction, underproduction, panics, depressions, and eventually some common representative for the actual physical good, such as paper IOUs and fractional banking.
Liberty: Parent of Science & Industry
<< <i> gold has stable intrinsic worth
The value of gold in dollars, and every other currency, changes day to day and week to week, both up and down. That's not "stable" >>
Has nothing to do with the stableness of the currencies involved? The value of gold doesn't really change that much. The value of what buys it is what is changing.
"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>
<< <i> gold has stable intrinsic worth
The value of gold in dollars, and every other currency, changes day to day and week to week, both up and down. That's not "stable" >>
Has nothing to do with the stableness of the currencies involved? The value of gold doesn't really change that much. The value of what buys it is what is changing. >>
I was going to say the same thing.
Maybe you could argue day to day, dollar is stable and gold varies.
But definitely long term, gold is stable and paper currency varies.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
Look at a 40-year chart of the price of gold in US dollars. If what you're saying were true, wouldn't the price of gold only move in one direction, up? It appears that the relative value of both things vary, not just with each other, but with the value of other things too. There may also be components of human emotion and mob psychology involved, you know, certain asset classes falling in and out of favor in a cyclical way, in response to supply and demand and all the other things?
Liberty: Parent of Science & Industry
My reason for posing the hypothetical about gold as the only legal tender isn't to recommend it, just wondering about the dynamic of true price discovery with PMs, when other variables are more controlled as in the case of this hypothetical in which supply and demand would more purely be driving the process. I'm really just thinking out loud here, no particular axe to grind.
<< <i>But definitely long term, gold is stable and paper currency varies.
Look at a 40-year chart of the price of gold in US dollars. If what you're saying were true, wouldn't the price of gold only move in one direction, up? It appears that the relative value of both things vary, not just with each other, but with the value of other things too. There may also be components of human emotion and mob psychology involved, you know, certain asset classes falling in and out of favor in a cyclical way, in response to supply and demand and all the other things? >>
I agree. Gold price like anything other asset is subject to the forces of fear and greed. I believe China's financial planning has been greatly underestimated in its affect on gold prices:
"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
Knowledge is the enemy of fear
Another component - rational people, making rational moves with their important assets.
It may also be true that what we hear, see and think are dependent on some false information from time to time. In that kind of an environment, I contend that physical metal is preferable to electrons in "the cloud". As I recall, electrons in clouds result in lightning strikes on the ground.
I knew it would happen.
gold is just a lump of metal its true, but I prefer it as money over paper because it doesn't inflate. Whatever I happen to be thinking when I put an ounce away ,fifty years later I still have an ounce.
The fiat system was created to steal the work that you do every day from you , 100 years of inflation was no accidental side effect. Inflation didn't just happen it was planned .
Gold wasn't subject to long term inflation and was too rigid a system to allow the theft required.
If I save a nickle as a boy and when I'm an old man its worth nothing then I have been robbed of my hard work. If I save in the form of gold or silver I still have a chance.
<< <i>
If I save a nickle as a boy and when I'm an old man its worth nothing then I have been robbed of my hard work. If I save in the form of gold or silver I still have a chance. >>
Now days even if the nickel survives it will earn no interest. Money only works for the bankers now days.
"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 think it makes some sense to keep the nickel, though. As I consider what to do with all these statehood quarters I have kept from circulation (and clad dimes, too) I think I would be better served to convert them to nickels for the copper or ASEs for the silver. So, that is my challenge this week, some poor bank teller is going to be inundated with the stuff.
Gold gets a bad rap for being a "rigid" system that doesn't help promote economic growth. But the 19th century tells a different story.
Even under gold standards the bankers and govt frequenty expanded the paper money supplies as needed to promote growth...or a boom if you will.
This typically occurred during or following periods of war. The gold standard was only as rigid as the bankers that monitored it. But imo it was superior
to a system of pure fiat that has no tangible anchor whatsoever (ie post 1971).
I agree. That's a smoke screen supposition which ignores that good credit can be extended via paper documentation any time. Any bank or individual can extend credit if they see a good history and a good balance sheet. Anyone who says that there isn't enough gold to allow for the extension of good credit is simply UNDERVALUING gold.
Not enough gold? I call BS!!! When the value of gold can fluctuate freely, there's no constraint - only the constraint is that of making honest committments between honest individuals. It's only when dishonesty creeps into the equation that problems start happening, and the usual dishonesty is when a lender decides to make more money by lending more than he actually has in deposits.
Let's be honest about what the problem really is.
I knew it would happen.
By rigid I meant the bankers felt constrained by a money supply that only expanded 1 or 2% a year.
<< <i>I contend that physical metal is preferable to electrons in "the cloud". >>
Actually, a 'cloud' of electrons is kind of what metal *is*. What makes something 'metallic' are electrons that are not stuck on one specific atom, but instead spread across the whole crystal. That is what makes metals like gold such good electrical conductors, for one thing.
a canary in the coal mine
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
"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
Antal is wrong. Higher prices give the mining companies incentive to dig (print) it out of the ground, thus increasing supplies. Is it not true that almost every ounce ever mined is still here? Supply has never decreased.
Knowledge is the enemy of fear
<< <i>For gold the exact opposite is true: an advance in price makes supply contract
Antal is wrong. Higher prices give the mining companies incentive to dig (print) it out of the ground, thus increasing supplies. Is it not true that almost every ounce ever mined is still here? Supply has never decreased. >>
You miss the point. He is referring to the supply that is available for sale. Strong hands get stronger as price increases. This tightening of available supply as price increases is what makes gold money.
For mining companies the incentive is already there at current prices. As long as their price realized exceeds their expense to mine it they will continue to attempt to pull all they can from the ground.
"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
Knowledge is the enemy of fear