5 ms·

You can't eat gold, all this rant on gold is so stupid, the monetary value is merely historical. In modern economy only counts the real application of resources

by sek 15y ago

You can't eat gold, all this rant on gold is so stupid, the monetary value is merely historical. In modern economy only counts the real application of resources and nothing else. Nobody will ever introduce a new Gold standard, a resource is a bad idea for a currency. What if someone finds a gigantic Deposit or a way to cheaply produce Gold? The additional value over the real industrial utilization is a bubble, nothing else.

StrawberryFrog 15y ago
> the monetary value is merely historical In theory, yes. However, the all-time high price that one can get for gold today is actual and current.
- sek 15y ago
  A real currency is widely accepted, gold is not. Gold is very unhandy, the article is about one example why.
  - david927 15y ago
    Where is gold not accepted? In which country? It's not as handy but it is valuable because you can't make more of it.
    - StrawberryFrog 15y ago
      Gold is not accepted at my local supermarket, and probably not yours either. They take cash or card, but not gold. You have to convert it into currency first. You can do this in any country if you know where to go, but you get the point - it's not as handy as paper money. Suppose you have a 1 ounce gold coin (worth USD 1882 today) and you owe your friend $100. You have the money, but how do you pay him? Do you file bits off the coin, or do you ask for change from $1882 ?
      - _delirium 15y ago
        It'd actually be an interesting experiment to see what you could buy with smaller-denomination gold coins. I would bet some number of independent businessmen (but not large chain stores) would be willing to accept, say, the 1/10-oz American Gold Eagle as equivalent to around $180.
        StrawberryFrog 15y ago
        If that caught on, the next logical step would be for more counterfeit gold coins to come into circulation. Do these businessmen have the energy to try to detect fraud in two kinds of currency? Especially as gold coin fraud doesn't have the same harsh legal penalties as counterfeiting paper money.
      - icebraining 15y ago
        My supermarket doesn't take dollars either, doesn't mean the dollar isn't a useful currency. And we're talking about a country reserve, not exactly hand money.
        StrawberryFrog 15y ago
        The original statement was "A real currency is widely accepted, gold is not". The following question was "Where is gold not accepted?" My reply of "At the supermarket" is, I think, a succinct and correct response about the basic difference between currency and valuables. My local supermarket won't take US dollars either since I'm not in the USA. You know well enough that supermarkets in the USA do take dollars, and no supermarket anywhere takes gold (if you find one, let me know what it gives as change). The point still stands. If I'm wrong, I'd appreciate more information on why along with the down-votes.
        sek 15y ago
        This downvote == disagreeing is so annoying, this prevents discussions. It is one thing when someone gives an upvote for agreeing but downvotes are for insulting and off topic posts.
    - a3camero 15y ago
      True story (somewhat relevant): I once took over a web contract from a company that failed to deliver. Their website had a tab for helping customers start using gold for payments. I requested and accepted payment in US dollars. There is not a chance I would have accepted gold for payment.
  - StrawberryFrog 15y ago
    I mean "current" as in today, not historical. I didn't call it a currency, I said it was valuable. I agree that gold is entirely useless - you can't eat it, and it is unhandy; however the gold price today says that for all practical purposes, gold is very valuable right now. Probably because of lack of faith in paper fiat currency right now. This may change; it may be a bubble that collapses if and when faith in paper fiat currency is restored (you could read that as gold filling a temporary but valuable role as a hedge against unstable currencies). Or new deposits of gold could be found; or new ways of extracting it could arise. However the supply of gold is quite limited; it's not like diamond where the only difference between very expensive diamond and cheat-as-dirt coal is a detail of removing impurities and rearranging the atoms.
    - sek 15y ago
      When you don't believe in currency there are unlimited ways to invest your money somewhere else, when you don't believe in corporations there are much more conservative alternatives like farm land. In my opinion oil is a better investment than gold, the applications are endless but i personally wouldn't because of its volatility.
    - bdonlan 15y ago
      Gold is not entirely useless - it is used in small amounts in some electronics manufacturing (as a coating to improve conduction and resist corrosion for pins on CPUs, etc). It is also biologically inert, so if it were cheaper, it might find use in implanted prosthesics.
david927 15y ago
What if someone finds a gigantic Deposit of paper? And starts printing off currency? What makes gold valuable is that it is scarce, we know with quite a bit of certainty how much is below and above the ground, and is has a background of this usage. As we are seeing with "quantitative easing," paper is not scarce.
- sek 15y ago
  I the people lose trust in a country the currency goes down exactly because of this. This can also be a good thing, for example when the economy is not competitive and the government has always enough money to provide the basic needs. Not comparable to a resource. Everybody thinks he knows about economics but does lack basic theories, i don't want explain in every discussion how inflation works. PS: Please stop downvoting me just because you disagree.
  - david927 15y ago
    I understand the benefits of monetary inflation in an expanding economy. I also think that "the spontaneous remonetization of precious metals is a Nash equilibrium," or in other words, inevitable. Read this, from 2006: Why the Global Financial System is About To Collapse http://johnlaw0.wordpress.com/2011/08/23/why-the-global-financial-system-is-about-to-collapse-2006 http://johnlaw0.wordpress.com/2011/08/23/why-the-global-fina...
    - sek 15y ago
      I have not enough time right now to read this whole thing but i browsed it, there is enough stuff to argue with he mentions taxes and all the important elements but it sounds alarmist nonetheless. Maybe i have to take that back, but i have this problem very often when i argue about these things.
      - david927 15y ago
        Please have a read and let me know what you think. It might be alarmist but he makes a great argument.
dageshi 15y ago
People are not buying gold because they think it will become the basis of a new monetary system, they're buying it because it's one of the few assets that are small, portable can be easily and discreetly sold and which rises in value during economic uncertainty. The goal is to hold an asset which will survive the devaluation of currency and is no one else's liability and it is doing just that, right now.
- roc 15y ago
  Trick is, of the people who are buying gold, almost no-one is buying physical gold. So its physical properties are irrelevant. It's almost entirely being bought either on speculation that it will continue to rise in price, or as a hedge against inflation. And for that purpose, they might as well be buying giant stone discs that lay beneath the ocean.
randallsquared 15y ago
What if someone finds a gigantic Deposit or a way to cheaply produce Gold? Ah, yes, the Fusion Codicil: http://bit.ly/oQOxIr http://bit.ly/oQOxIr (man, linking to something with quotes in it is hard, here)
- raldi 15y ago
  http://www.google.com/search?q=%22fusion+codicil%22 http://www.google.com/search?q=%22fusion+codicil%22 Works for me. Un-percented quotation marks are not valid URL characters. What browser let you copy them out of the URL bar without escaping them?
  - randallsquared 15y ago
    Firefox. It does this with parentheses as well. But I thought I'd tried %22 and had it disappear. Could be lack of coffee.
illumin8 15y ago
It is truly painful to read some of the misinformed posts on economic issues here. Here is all you need to know: - Gold is money, and has been considered money by all civilizations on earth for thousands of years. - Gold does not decay, rust, degrade, or decompose in any way over time. - Gold cannot be printed, duplicated, or fabricated in any way. - Gold, because of it's unique color and atomic weight is almost impossible to imitate. Gold is real money that holds it's value over time. It is not in a bubble. What is happening is that the bubble of fiat currency is deflating against gold. Gold holds it's value in a remarkable manner over time. You will find, for example, that a fine tailored men's suit has cost about one ounce of gold for hundreds of years. When you figure out the fiat currency is the real "stupid" you will probably wish you had some gold. But, by then, it will probably be too late.
- roel_v 15y ago
  "Gold is money, and has been considered money by all civilizations on earth for thousands of years." Actually, no - the Inca's used textiles and animals for currency, and gold was used for ceremonial purposes (that last part iirc, it's been a few years since I was in Peru). The reason was that gold was plentiful for them, so its main reason for using it now and elsewhere didn't exist for them. Apart from that, 'gold is money' doesn't even make sense. 'money' is something that has value, and 'value' is in the eye of the beholder. If you want to argue that gold has a longer historical track record as a holder of value than paper money or any other economic theory about gold, fine - but you sound like a crackpot gold bug, and if that is really the case, please take your intellectually dishonest nonsense elsewhere.
  - david927 15y ago
    So a paper dollar bill has "value"? Scarcity provides value. Read this and let's talk some more: http://johnlaw0.wordpress.com/2011/08/23/why-the-global-financial-system-is-about-to-collapse-2006/ http://johnlaw0.wordpress.com/2011/08/23/why-the-global-fina...
  - yardie 15y ago
    Gold is a fungible item but it is definitely not money. You can't walk into a supermarket and buy a weeks worth of groceries with it. You can exchange it with someone, possible the store manager, for what he thinks it's worth. This will be far less than the gold market because now he has to find a way to exchange or store it. And the cycle continues.
chopsueyar 15y ago
If someone finds a way to cheaply produce Gold, most of our problems would be solved. Once humanakind has the ability to cheaply produce elements, we can start building food replicators.
- hugh3 15y ago
  While we're talking about fantasy technology anyway, creating atoms of an element is a very different problem to rearranging existing atoms into food.
  - chopsueyar 15y ago
    Maybe we're on different pages, but in my fantasy both technologies convert energy into matter, not rearranging existing atoms into food.
tokenadult 15y ago
Page 6 of this .PDF document http://pubs.usgs.gov/of/2000/of00-389/of00-389.pdf http://pubs.usgs.gov/of/2000/of00-389/of00-389.pdf has a Figure 6 that shows a 20th Century trend line (with informative commentary) and a fluctuation graph for the price of gold in constant (inflation-adjusted) United States dollars. Other sources on "gold in constant dollars" that one can find on Google show how the price of gold has been bouncing up and down in relation to the United States dollar, usually with trend lines that only cover very recent years (when the trend has mostly been up for gold in relation to the dollar). I have a friend who invested all his personal savings in gold around 1980, when gold was last regarded as a reliable inflation hedge, and he lost a lot of money during the following decade as he had to sell off gold at declining value when he needed cash. This comment on the market not quite a decade ago, http://old.nationalreview.com/kudlow/kudlow200312150909.asp http://old.nationalreview.com/kudlow/kudlow200312150909.asp also shows that gold can bounce up and down in price, relative to the dollar. Any investment could be a safe investment if you perfectly predict the future, and for the last few years gold has looked like a very good investment, but I wouldn't count on any investment being a sure thing over the long term. "The market can remain irrational longer than you can remain solvent" is still the best advice.

by sek 15y ago

StrawberryFrog 15y ago

> the monetary value is merely historical In theory, yes. However, the all-time high price that one can get for gold today is actual and current.

sek 15y ago
A real currency is widely accepted, gold is not. Gold is very unhandy, the article is about one example why.
- david927 15y ago
  Where is gold not accepted? In which country? It's not as handy but it is valuable because you can't make more of it.
  - StrawberryFrog 15y ago
    Gold is not accepted at my local supermarket, and probably not yours either. They take cash or card, but not gold. You have to convert it into currency first. You can do this in any country if you know where to go, but you get the point - it's not as handy as paper money. Suppose you have a 1 ounce gold coin (worth USD 1882 today) and you owe your friend $100. You have the money, but how do you pay him? Do you file bits off the coin, or do you ask for change from $1882 ?
    - _delirium 15y ago
      It'd actually be an interesting experiment to see what you could buy with smaller-denomination gold coins. I would bet some number of independent businessmen (but not large chain stores) would be willing to accept, say, the 1/10-oz American Gold Eagle as equivalent to around $180.
      - StrawberryFrog 15y ago
        If that caught on, the next logical step would be for more counterfeit gold coins to come into circulation. Do these businessmen have the energy to try to detect fraud in two kinds of currency? Especially as gold coin fraud doesn't have the same harsh legal penalties as counterfeiting paper money.
    - icebraining 15y ago
      My supermarket doesn't take dollars either, doesn't mean the dollar isn't a useful currency. And we're talking about a country reserve, not exactly hand money.
      - StrawberryFrog 15y ago
        The original statement was "A real currency is widely accepted, gold is not". The following question was "Where is gold not accepted?" My reply of "At the supermarket" is, I think, a succinct and correct response about the basic difference between currency and valuables. My local supermarket won't take US dollars either since I'm not in the USA. You know well enough that supermarkets in the USA do take dollars, and no supermarket anywhere takes gold (if you find one, let me know what it gives as change). The point still stands. If I'm wrong, I'd appreciate more information on why along with the down-votes.
        sek 15y ago
        This downvote == disagreeing is so annoying, this prevents discussions. It is one thing when someone gives an upvote for agreeing but downvotes are for insulting and off topic posts.
  - a3camero 15y ago
    True story (somewhat relevant): I once took over a web contract from a company that failed to deliver. Their website had a tab for helping customers start using gold for payments. I requested and accepted payment in US dollars. There is not a chance I would have accepted gold for payment.
- StrawberryFrog 15y ago
  I mean "current" as in today, not historical. I didn't call it a currency, I said it was valuable. I agree that gold is entirely useless - you can't eat it, and it is unhandy; however the gold price today says that for all practical purposes, gold is very valuable right now. Probably because of lack of faith in paper fiat currency right now. This may change; it may be a bubble that collapses if and when faith in paper fiat currency is restored (you could read that as gold filling a temporary but valuable role as a hedge against unstable currencies). Or new deposits of gold could be found; or new ways of extracting it could arise. However the supply of gold is quite limited; it's not like diamond where the only difference between very expensive diamond and cheat-as-dirt coal is a detail of removing impurities and rearranging the atoms.
  - sek 15y ago
    When you don't believe in currency there are unlimited ways to invest your money somewhere else, when you don't believe in corporations there are much more conservative alternatives like farm land. In my opinion oil is a better investment than gold, the applications are endless but i personally wouldn't because of its volatility.
  - bdonlan 15y ago
    Gold is not entirely useless - it is used in small amounts in some electronics manufacturing (as a coating to improve conduction and resist corrosion for pins on CPUs, etc). It is also biologically inert, so if it were cheaper, it might find use in implanted prosthesics.

david927 15y ago

What if someone finds a gigantic Deposit of paper? And starts printing off currency? What makes gold valuable is that it is scarce, we know with quite a bit of certainty how much is below and above the ground, and is has a background of this usage. As we are seeing with "quantitative easing," paper is not scarce.

sek 15y ago
I the people lose trust in a country the currency goes down exactly because of this. This can also be a good thing, for example when the economy is not competitive and the government has always enough money to provide the basic needs. Not comparable to a resource. Everybody thinks he knows about economics but does lack basic theories, i don't want explain in every discussion how inflation works. PS: Please stop downvoting me just because you disagree.
- david927 15y ago
  I understand the benefits of monetary inflation in an expanding economy. I also think that "the spontaneous remonetization of precious metals is a Nash equilibrium," or in other words, inevitable. Read this, from 2006: Why the Global Financial System is About To Collapse http://johnlaw0.wordpress.com/2011/08/23/why-the-global-financial-system-is-about-to-collapse-2006 http://johnlaw0.wordpress.com/2011/08/23/why-the-global-fina...
  - sek 15y ago
    I have not enough time right now to read this whole thing but i browsed it, there is enough stuff to argue with he mentions taxes and all the important elements but it sounds alarmist nonetheless. Maybe i have to take that back, but i have this problem very often when i argue about these things.
    - david927 15y ago
      Please have a read and let me know what you think. It might be alarmist but he makes a great argument.

dageshi 15y ago

People are not buying gold because they think it will become the basis of a new monetary system, they're buying it because it's one of the few assets that are small, portable can be easily and discreetly sold and which rises in value during economic uncertainty. The goal is to hold an asset which will survive the devaluation of currency and is no one else's liability and it is doing just that, right now.

roc 15y ago
Trick is, of the people who are buying gold, almost no-one is buying physical gold. So its physical properties are irrelevant. It's almost entirely being bought either on speculation that it will continue to rise in price, or as a hedge against inflation. And for that purpose, they might as well be buying giant stone discs that lay beneath the ocean.

randallsquared 15y ago

What if someone finds a gigantic Deposit or a way to cheaply produce Gold? Ah, yes, the Fusion Codicil: http://bit.ly/oQOxIr http://bit.ly/oQOxIr (man, linking to something with quotes in it is hard, here)

raldi 15y ago
http://www.google.com/search?q=%22fusion+codicil%22 http://www.google.com/search?q=%22fusion+codicil%22 Works for me. Un-percented quotation marks are not valid URL characters. What browser let you copy them out of the URL bar without escaping them?
- randallsquared 15y ago
  Firefox. It does this with parentheses as well. But I thought I'd tried %22 and had it disappear. Could be lack of coffee.

illumin8 15y ago

It is truly painful to read some of the misinformed posts on economic issues here. Here is all you need to know: - Gold is money, and has been considered money by all civilizations on earth for thousands of years. - Gold does not decay, rust, degrade, or decompose in any way over time. - Gold cannot be printed, duplicated, or fabricated in any way. - Gold, because of it's unique color and atomic weight is almost impossible to imitate. Gold is real money that holds it's value over time. It is not in a bubble. What is happening is that the bubble of fiat currency is deflating against gold. Gold holds it's value in a remarkable manner over time. You will find, for example, that a fine tailored men's suit has cost about one ounce of gold for hundreds of years. When you figure out the fiat currency is the real "stupid" you will probably wish you had some gold. But, by then, it will probably be too late.

roel_v 15y ago
"Gold is money, and has been considered money by all civilizations on earth for thousands of years." Actually, no - the Inca's used textiles and animals for currency, and gold was used for ceremonial purposes (that last part iirc, it's been a few years since I was in Peru). The reason was that gold was plentiful for them, so its main reason for using it now and elsewhere didn't exist for them. Apart from that, 'gold is money' doesn't even make sense. 'money' is something that has value, and 'value' is in the eye of the beholder. If you want to argue that gold has a longer historical track record as a holder of value than paper money or any other economic theory about gold, fine - but you sound like a crackpot gold bug, and if that is really the case, please take your intellectually dishonest nonsense elsewhere.
- david927 15y ago
  So a paper dollar bill has "value"? Scarcity provides value. Read this and let's talk some more: http://johnlaw0.wordpress.com/2011/08/23/why-the-global-financial-system-is-about-to-collapse-2006/ http://johnlaw0.wordpress.com/2011/08/23/why-the-global-fina...
- yardie 15y ago
  Gold is a fungible item but it is definitely not money. You can't walk into a supermarket and buy a weeks worth of groceries with it. You can exchange it with someone, possible the store manager, for what he thinks it's worth. This will be far less than the gold market because now he has to find a way to exchange or store it. And the cycle continues.

chopsueyar 15y ago

If someone finds a way to cheaply produce Gold, most of our problems would be solved. Once humanakind has the ability to cheaply produce elements, we can start building food replicators.

hugh3 15y ago
While we're talking about fantasy technology anyway, creating atoms of an element is a very different problem to rearranging existing atoms into food.
- chopsueyar 15y ago
  Maybe we're on different pages, but in my fantasy both technologies convert energy into matter, not rearranging existing atoms into food.

tokenadult 15y ago

Page 6 of this .PDF document http://pubs.usgs.gov/of/2000/of00-389/of00-389.pdf http://pubs.usgs.gov/of/2000/of00-389/of00-389.pdf has a Figure 6 that shows a 20th Century trend line (with informative commentary) and a fluctuation graph for the price of gold in constant (inflation-adjusted) United States dollars. Other sources on "gold in constant dollars" that one can find on Google show how the price of gold has been bouncing up and down in relation to the United States dollar, usually with trend lines that only cover very recent years (when the trend has mostly been up for gold in relation to the dollar). I have a friend who invested all his personal savings in gold around 1980, when gold was last regarded as a reliable inflation hedge, and he lost a lot of money during the following decade as he had to sell off gold at declining value when he needed cash. This comment on the market not quite a decade ago, http://old.nationalreview.com/kudlow/kudlow200312150909.asp http://old.nationalreview.com/kudlow/kudlow200312150909.asp also shows that gold can bounce up and down in price, relative to the dollar. Any investment could be a safe investment if you perfectly predict the future, and for the last few years gold has looked like a very good investment, but I wouldn't count on any investment being a sure thing over the long term. "The market can remain irrational longer than you can remain solvent" is still the best advice.