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In the event of a banking crisis gold has no value because you can do pretty much nothing with it and it's difficult if not impossible to exchange in any meanin

by n0us 11y ago

In the event of a banking crisis gold has no value because you can do pretty much nothing with it and it's difficult if not impossible to exchange in any meaningful denomination in most situations of a modern economy. Gold has value because of tradition and scarcity, the available supply cannot be diluted. If shit hits the wall with banks it isn't going to be gold that is scarce, it is liquidity.

adventured 11y ago
We just went through a global banking crisis, the largest in history. Gold did not lack value during that time as you're claiming. That by itself proves your position wrong. Then you contradict yourself by saying that gold is valuable because of scarcity (true), and then you say that gold won't be scarce if shit hits the wall - shit hit the wall in 2007-2009, gold remained valuable and scarce.
- hueving 11y ago
  The banking crisis (as big as it was) did not result in people losing access to their normal checking and savings accounts. So at that time people still just traded gold like any other commodity (i.e. with cash).
- mikeyouse 11y ago
  It's so weird because we just went through a global banking crisis, the largest in history -- and cash had no problem whatsoever. There just isn't a realistic scenario in which USD has 0 value and Gold is useful.
  - aianus 11y ago
    > There just isn't a realistic scenario in which USD has 0 value and Gold is useful. This happens all. the. time. The USD lost 33% of its real value between 1977 and 1981 while Gold increased in value in real terms by 65% during the same time period. USD itself has been reasonably stable since, but there's no guarantee that will continue. I'm not a crazy goldbug, I don't think we should go around trading gold shavings with each other in our day-to-day lives, but it's an indisputable fact that Gold is an excellent hedge against financial and currency crises the likes of which happen somewhere in the world all the time. Hell, right now Russia is in a currency crisis where the Ruble has lost 50% of its value in less than two years.
    - dagw 11y ago
      This happens all. the. time. You're talking about two different things. No one is disagreeing with the fact that gold is a fine hedge against local currency fluctuations. As you say that happens all the time. The question is whether gold will have any significant value after some global cataclysmic event that is so extreme that it would literally drive the value of the worlds most dominant reserve currency to basically zero.
    - dragonwriter 11y ago
      > > There just isn't a realistic scenario in which USD has 0 value and Gold is useful. > This happens all. the. time. No, it doesn't. About the only times its even approximately happened during or after the 20th Century to a national currency of a nation that had been a major world power within the preceding century have been a few cases to the losing side of major wars (and in those cases, prewar businesses are quite likely to lose their market and ability to operate as a result of the war and its loss, independently of the collapse of the currency.) It absolutely doesn't happen all the time.
aianus 11y ago
> In the event of a banking crisis gold has no value because you can do pretty much nothing with it and it's difficult if not impossible to exchange in any meaningful denomination in most situations of a modern economy. History shows us otherwise. Every financial collapse or crisis has eventually ended, gold liquidity eventually returned, and those who'd held gold instead of paper assets weathered the storm exceedingly well.

by n0us 11y ago

adventured 11y ago

We just went through a global banking crisis, the largest in history. Gold did not lack value during that time as you're claiming. That by itself proves your position wrong. Then you contradict yourself by saying that gold is valuable because of scarcity (true), and then you say that gold won't be scarce if shit hits the wall - shit hit the wall in 2007-2009, gold remained valuable and scarce.

hueving 11y ago
The banking crisis (as big as it was) did not result in people losing access to their normal checking and savings accounts. So at that time people still just traded gold like any other commodity (i.e. with cash).
mikeyouse 11y ago
It's so weird because we just went through a global banking crisis, the largest in history -- and cash had no problem whatsoever. There just isn't a realistic scenario in which USD has 0 value and Gold is useful.
- aianus 11y ago
  > There just isn't a realistic scenario in which USD has 0 value and Gold is useful. This happens all. the. time. The USD lost 33% of its real value between 1977 and 1981 while Gold increased in value in real terms by 65% during the same time period. USD itself has been reasonably stable since, but there's no guarantee that will continue. I'm not a crazy goldbug, I don't think we should go around trading gold shavings with each other in our day-to-day lives, but it's an indisputable fact that Gold is an excellent hedge against financial and currency crises the likes of which happen somewhere in the world all the time. Hell, right now Russia is in a currency crisis where the Ruble has lost 50% of its value in less than two years.
  - dagw 11y ago
    This happens all. the. time. You're talking about two different things. No one is disagreeing with the fact that gold is a fine hedge against local currency fluctuations. As you say that happens all the time. The question is whether gold will have any significant value after some global cataclysmic event that is so extreme that it would literally drive the value of the worlds most dominant reserve currency to basically zero.
  - dragonwriter 11y ago
    > > There just isn't a realistic scenario in which USD has 0 value and Gold is useful. > This happens all. the. time. No, it doesn't. About the only times its even approximately happened during or after the 20th Century to a national currency of a nation that had been a major world power within the preceding century have been a few cases to the losing side of major wars (and in those cases, prewar businesses are quite likely to lose their market and ability to operate as a result of the war and its loss, independently of the collapse of the currency.) It absolutely doesn't happen all the time.

aianus 11y ago

> In the event of a banking crisis gold has no value because you can do pretty much nothing with it and it's difficult if not impossible to exchange in any meaningful denomination in most situations of a modern economy. History shows us otherwise. Every financial collapse or crisis has eventually ended, gold liquidity eventually returned, and those who'd held gold instead of paper assets weathered the storm exceedingly well.