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> Salespeople in the precious-metals industry try to pitch "currency" as paper money and "money" as a store of value, e.g. the commodity they're hocking. This i

> Salespeople in the precious-metals industry try to pitch "currency" as paper money and "money" as a store of value, e.g. the commodity they're hocking. This isn't an accepted financial or economic construct as much as a marketing one. So this is the basis behind my Dale Gribble coworker insisting that "the dollar isn't money" because we're no longer on the gold standard. I'd always wondered about that.

geggam 10y ago
To see the difference in action. Hang on to that 1000 dollars for 20 years. Buy 1000 dollars of gold and hold it over the same period of time. At the end of 20 years go see what you can purchase. You will see what stores value.
- sebastianconcpt 10y ago
  Here is a 100 year chart http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart http://www.macrotrends.net/1333/historical-gold-prices-100-y...
- JumpCrisscross 10y ago
  Nobody is arguing that gold has been a good store of value over the millenia. What's contended is that store of value is a sole definitional requirement of money. It is not. Houses hold their value over decently centuries, but nobody holds houses and money as being synonymous. A Ferrari is an incredible car, in terms of certain aspects of performance. But a BMW owner might point out that certain vintages of Ferraris come with a dismal maintenance record. That doesn't make it any less of a car. BMWs and Ferraris are just optimised for different requirements. Money is classically defined with four characteristics: a medium of exchange, a measure of value, a standard of deferred payment and a store of value. Depending on the economy, different blends of these characteristics may be desired. For example, given developed capital markets and high money velocity, medium of exchange is more important than store of value - there are other safe things (e.g. Treasuries) in which to store one's capital. Saying a dollar isn't money because it doesn't store value as well as gold is akin to saying Ferraris aren't cars because they cost too much to maintain.
  - geggam 10y ago
    Not true. Ferraris are designed to be a car they are not designed as a store of value. Ferraris are a tangible item with value inherent. Dollars are designed to store value. Without that value being assigned that paper is valueless Gold has historically been a store of value. Gold is a tangible item whose value cannot ever be valueless. ( especially now that there is TiAu )
  - sebastianconcpt 10y ago
    Properties of Currency (not money): (-) Scarcity: finite number of the symbols (fiat currency breaks this in batches, BTC are finite, gold can be considered ~finite until you mine it in other planets or use a star trek replicator) (-) Fungibility: all symbols are interchangeable, commodity like. Symbol A is identical to symbol B, and vice versa. (-) Divisibility: the symbols are easily divisible, so you can divide them to smaller and smaller portions (you can't do this with houses or Ferraris) (-) Durability: the symbols can survive the test of time and weahther and won’t be worn out or disappear (-) Transferability: the symbols can be easily transferred between owners (can't do with houses or Ferrari's)

geggam 10y ago

To see the difference in action. Hang on to that 1000 dollars for 20 years. Buy 1000 dollars of gold and hold it over the same period of time. At the end of 20 years go see what you can purchase. You will see what stores value.

sebastianconcpt 10y ago
Here is a 100 year chart http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart http://www.macrotrends.net/1333/historical-gold-prices-100-y...
JumpCrisscross 10y ago
Nobody is arguing that gold has been a good store of value over the millenia. What's contended is that store of value is a sole definitional requirement of money. It is not. Houses hold their value over decently centuries, but nobody holds houses and money as being synonymous. A Ferrari is an incredible car, in terms of certain aspects of performance. But a BMW owner might point out that certain vintages of Ferraris come with a dismal maintenance record. That doesn't make it any less of a car. BMWs and Ferraris are just optimised for different requirements. Money is classically defined with four characteristics: a medium of exchange, a measure of value, a standard of deferred payment and a store of value. Depending on the economy, different blends of these characteristics may be desired. For example, given developed capital markets and high money velocity, medium of exchange is more important than store of value - there are other safe things (e.g. Treasuries) in which to store one's capital. Saying a dollar isn't money because it doesn't store value as well as gold is akin to saying Ferraris aren't cars because they cost too much to maintain.
- geggam 10y ago
  Not true. Ferraris are designed to be a car they are not designed as a store of value. Ferraris are a tangible item with value inherent. Dollars are designed to store value. Without that value being assigned that paper is valueless Gold has historically been a store of value. Gold is a tangible item whose value cannot ever be valueless. ( especially now that there is TiAu )
- sebastianconcpt 10y ago
  Properties of Currency (not money): (-) Scarcity: finite number of the symbols (fiat currency breaks this in batches, BTC are finite, gold can be considered ~finite until you mine it in other planets or use a star trek replicator) (-) Fungibility: all symbols are interchangeable, commodity like. Symbol A is identical to symbol B, and vice versa. (-) Divisibility: the symbols are easily divisible, so you can divide them to smaller and smaller portions (you can't do this with houses or Ferraris) (-) Durability: the symbols can survive the test of time and weahther and won’t be worn out or disappear (-) Transferability: the symbols can be easily transferred between owners (can't do with houses or Ferrari's)