4 ms·

Not really. Gold is an asset and has very little utility. Unless the gold broker physically dug up the material from the ground themselves (unlikely) then they

by mbesto 5y ago

Not really. Gold is an asset and has very little utility. Unless the gold broker physically dug up the material from the ground themselves (unlikely) then they would likely have had to put up dollars themselves to acquire the asset in the first place. Worse, if they bought the gold a year ago, they would have created negative value. Wealth creation (which then flows to those things you mentioned) is typically seen when you use a scarce material to create goods and services that drive profits that then are used for those activities. For example, let's say you bought $50M worth of gold bars, melted them and and sold them as earrings for $100M. NOW you have $50M to pay for labor, inventory, sales, etc.

missedthecue 5y ago
The gold broker likely bought them for $49.5 million and sold them for $50 million, much like market makers in any other market. (Or it could have just been a private party transaction). Either way, the $50MM still exists and is circulating, facilitating the buying and selling of things. It did not disappear or go out of circulation.
- mbesto 5y ago
  > The gold broker likely bought them for $49.5 million and sold them for $50 million If they bought a year ago, they not only would have lost money on the transaction just from the transaction alone, but would have lost even more money due to inflation. This is why assets that provide no utility (gold) rarely create value long term.
  - missedthecue 5y ago
    well no one is saying a metal create value, they're a store of value
    - mbesto 5y ago
      FYI - the parent comment implied that $50M of value was created.
  - slowhand09 5y ago
    You should google "uses of gold".
    - jazzyjackson 5y ago
      If gold was a useful raw material then the vast majority of it wouldn’t be sitting in basements. Personally I think we should be gilding more religious icons and applying leaf to pages of college text books so they don’t seem like such a raw deal.
    - mbesto 5y ago
      Palantir is going to start making earrings and selling cable wire?
Retric 5y ago
I think you misunderstood, if you buy any amount of gold the amount of currency in circulation is identical before and after sale. The only difference is who has that cash and who has gold. Essentially the gold seller must value gold at or less than the sale price and the buyer values gold at or more than the sales price just like every other transaction.
- mbesto 5y ago
  I didn't misunderstand. We're sort of saying the same thing. Palantir had $50M to spend on "something else (labor, inventory, market research, sales, etc...)" and simply shifted this opportunity to the gold broker. The parent comment implied that this new found $50M was somehow going to magically create new opportunities for the current circulating capital. It's not. The price of gold is speculative which means its very possible (and very likely) they lost money on the transaction.
  - Retric 5y ago
    Yes, but it’s clear Plantier had zero interest in using this money to make productive investments. The question then becomes what the gold seller is willing to do now. Essentially a huge pool of unproductive assets like Artwork, Gold, Bitcoin, even Cash etc which seemingly hold a great deal of economic value, but fundamentally their economically irrelevant. Buying and selling them doesn’t really consume significant resources it’s just a handoff, every dollar going in is a dollar going out to either a middleman or a previous owner.
    - mbesto 5y ago
      > Yes, but it’s clear Plantier had zero interest in using this money to make productive investments. "productive investments" - what does that even mean? When a business has cash on hand it needs to decide what it is going to do with it to produce the greatest return possible. It doesn't matter whether you put it in an appreciating asset (gold bar potentilla) or an employee salary, businesses are just looking to get the highest return on the cash they have left from operations. > Buying and selling them doesn’t really consume significant resources it’s just a handoff, Do you think Fort Knox is free to operate?

by mbesto 5y ago

missedthecue 5y ago

The gold broker likely bought them for $49.5 million and sold them for $50 million, much like market makers in any other market. (Or it could have just been a private party transaction). Either way, the $50MM still exists and is circulating, facilitating the buying and selling of things. It did not disappear or go out of circulation.

mbesto 5y ago
> The gold broker likely bought them for $49.5 million and sold them for $50 million If they bought a year ago, they not only would have lost money on the transaction just from the transaction alone, but would have lost even more money due to inflation. This is why assets that provide no utility (gold) rarely create value long term.
- missedthecue 5y ago
  well no one is saying a metal create value, they're a store of value
  - mbesto 5y ago
    FYI - the parent comment implied that $50M of value was created.
- slowhand09 5y ago
  You should google "uses of gold".
  - jazzyjackson 5y ago
    If gold was a useful raw material then the vast majority of it wouldn’t be sitting in basements. Personally I think we should be gilding more religious icons and applying leaf to pages of college text books so they don’t seem like such a raw deal.
  - mbesto 5y ago
    Palantir is going to start making earrings and selling cable wire?

Retric 5y ago

I think you misunderstood, if you buy any amount of gold the amount of currency in circulation is identical before and after sale. The only difference is who has that cash and who has gold. Essentially the gold seller must value gold at or less than the sale price and the buyer values gold at or more than the sales price just like every other transaction.

mbesto 5y ago
I didn't misunderstand. We're sort of saying the same thing. Palantir had $50M to spend on "something else (labor, inventory, market research, sales, etc...)" and simply shifted this opportunity to the gold broker. The parent comment implied that this new found $50M was somehow going to magically create new opportunities for the current circulating capital. It's not. The price of gold is speculative which means its very possible (and very likely) they lost money on the transaction.
- Retric 5y ago
  Yes, but it’s clear Plantier had zero interest in using this money to make productive investments. The question then becomes what the gold seller is willing to do now. Essentially a huge pool of unproductive assets like Artwork, Gold, Bitcoin, even Cash etc which seemingly hold a great deal of economic value, but fundamentally their economically irrelevant. Buying and selling them doesn’t really consume significant resources it’s just a handoff, every dollar going in is a dollar going out to either a middleman or a previous owner.
  - mbesto 5y ago
    > Yes, but it’s clear Plantier had zero interest in using this money to make productive investments. "productive investments" - what does that even mean? When a business has cash on hand it needs to decide what it is going to do with it to produce the greatest return possible. It doesn't matter whether you put it in an appreciating asset (gold bar potentilla) or an employee salary, businesses are just looking to get the highest return on the cash they have left from operations. > Buying and selling them doesn’t really consume significant resources it’s just a handoff, Do you think Fort Knox is free to operate?