3 ms·
To be fair, he addresses gold towards the end: > By that definition, gold too is a ponzi. No, gold clearly fails to satisfy that definition on two counts. > F
by annexrichmond 5y ago
To be fair, he addresses gold towards the end:
> By that definition, gold too is a ponzi. No, gold clearly fails to satisfy that definition on two counts.
> First, few if any gold investors have expectations of profits. They generally invest in gold as a hedge -- a "store of value" -- that they hope will retain its value in case other assets go sour.
> Second, as a commodity, gold HAS a source of revenue besides the investors; namely, the purchases by consumers like jewelers and industry, who take gold out of the market (2/3 of the production) for uses other than re-sale. When one buys 1 oz of gold, one gets a chip of a metal that one can sell to those consumers, and thus obtain some money that does not come from other investors.
- loceng 5y agoThe Bitcoin Maximalist counter argument to this is usually "eventually the price will stabilize and just be a store of value."
- soco 5y agoAnd then it will be not a Ponzi scheme anymore. But until then...
- mrb 5y ago"few if any gold investors have expectations of profits" Talk to any gold investors and they will tell you the opposite: they generally expect to at least beat inflation, ie. making profits in real (not nominal) dollars. "by consumers like jewelers and industry" Purchasers and manufacturers of gold jewelry buy or build with this material primarily because it's valuable, not because of its physical properties. If they cared about physical properties above value, they would use many of the other metals that have similar or better properties at a better price. That leaves industrial use of gold, which accounts for only 10% of global gold production. It could therefore be argued, from this blog post perspective, that 90% of gold is part of the "Ponzi scheme", or that 90% of gold's value relies on a "Ponzi scheme" completely disconnected from gold's industrial use.