3 ms·

Not exactly because gold has an intrinsic value.

boffinAudio 3y ago
.. and thats the point: the intrinsic value of the US Dollar is has been declining for the last year. Gold holds its value because it can always be used for the things for which it is useful - the US Dollar, not so much.
throw0101b 3y ago
> Not exactly because gold has an intrinsic value. Gold has zero intrinsic value. Like all forms of money, its value is a psychological and sociological construct to treat it as if it had value. The Incas for example simply used it for religious and ornamental purposes: * https://www.tourinperu.com/blog/inca-gold-culture-invasion-role https://www.tourinperu.com/blog/inca-gold-culture-invasion-r... Anything can be used as money, including giant rocks: * https://en.wikipedia.org/wiki/Rai_stones https://en.wikipedia.org/wiki/Rai_stones
- Darmody 3y ago
  Gold is the only currency that kept it's value through time. There's a reason people buy gold. 1kg of Argentinian gold has the same value as 1kg of American gold. And both have the same value as 1kg of gold from any ancient civilization. Big rocks as currency is purely anecdotic. Of course, if you're in the desert and you're thirsty, a bottle of water has more value to you than all the gold in the world, but that doesn't change the fact that through millennia people has seen gold as something valuable that it's not tied to an economy, a country, an empire or even a culture despite de Incas.
  - throw0101b 3y ago
    > Gold is the only currency that kept it's value through time. Papers have been written on how it does not: * https://www.nber.org/papers/w18706 https://www.nber.org/papers/w18706 * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789 See also Roy Jastram's The Golden Constant: The English and American Experience 1560 to 1976 on how it's no good against infaltion: > Andre Sharon, head of the international research department at Drexel Burnham, Inc., notes, “the value of gold essentially derives from its capacity to preserve real capital and purchasing power.”† I select this particular quotation because of the prestige of the organization and the position of the spokesman, but statements in this vein can be found in great numbers. They can be traced back for generations and in many countries. How can this proposition so contrary to statistical fact become so widely believed and quoted? Possibly because gold has preserved capital in cataclysmic cases it is easy to infer that it can be trusted to do the same in less severe circumstances. To extrapolate from gold’s protection in singular catastrophes to its use as a strategy against cyclical infation is an example of faulty inductive reasoning. * PDF: http://csinvesting.org/wp-content/uploads/2016/02/RoyJastram-TheGoldenConstant.pdf http://csinvesting.org/wp-content/uploads/2016/02/RoyJastram... * https://www.pwlcapital.com/will-gold-save-the-day/ https://www.pwlcapital.com/will-gold-save-the-day/ Having gold as one's monetary base (e.g. Gold Standard) doesn't even help in stabilizing currencies: * https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the... * https://archive.ph/FWKcL https://archive.ph/FWKcL > Big rocks as currency is purely anecdotic. Big rocks as currency is one example of how any arbitrary object can be treated as such: * https://americanhistory.si.edu/the-value-of-money/origins-money/forms-money https://americanhistory.si.edu/the-value-of-money/origins-mo... Gold (or silver) bars and coins are nothing more than shiny rocks and are just as arbitrary.
- mwbajor 3y ago
  I'm not an expert on this by any means but: Modern society needed something scarce and was hard to manufacture/process (thus ensuring price stability) to use as an intermediate currency between currencies. Those countries agreed to use gold as this intermediate currency. Other ideas have been to use groups of commodities but these incur more complexity since they're purpose is to be consumed in some process. So does this not give gold an intrinsic value? Economists regard it as a "shiny rock" but I think that is an oversimplification used to make opponents of fiat money look stupid.
  - throw0101b 3y ago
    > Modern society needed something scarce and was hard to manufacture/process (thus ensuring price stability) to use as an intermediate currency between currencies. And now we have no intermediary and no one bothers with gold when going between USD and EUR or JPY and CAD. Gold is completely useless for such exchanges in 2023 and would just add overhead. So given that it is worse than useless (being an hinderance due to an extra step) in such transactions, how can it have "intrinsic" value? If you're travelling internationally, do you exchange your domestic currency for gold, cross the border, and then exchange the gold for the destination currency? What exactly is gold useful for in 2023 besides jewelry and some minor industrial uses? Can you buy groceries? Pay property taxes? Can you show up at a car dealership with a brick or two and get a new ride? What is the value of me having gold in my possession? > Those countries agreed to use gold as this intermediate currency. It was socially agreed to it having value, but if it had "intrinsic" value, (a) no such agreement would have been needed because it would have been self-evident (the Gold Standard was only formalized in 1870), and (b) it would still be valid today. When the agreement stopped the intermediary status also stopped, showing there was nothing "intrinsic" about it: it just happened to be a convenient convention (for a time).
    - mwbajor 3y ago
      I agree with everything you are saying with the exception of the fact that it seemed to be a better intermediary than paper currency. I think that is something the "end the fed", "bring back gold" people don't understand. You're right, I cant do anything with gold alone, its actually quite useless. My argument for gold (if you even want to call it that) is more to keep politicians in check from printing more money where "printing more money" really means a politicization of the financial industry and increasing wealth inequality. The human element was less when a gold standard existed. I'd be all for a paper currency if limits to politician involvement were somehow built into it, I'm not really a fan of Gold in any sense. I've read that in 1972 some of these checks were supposed to be implemented but never were, partly because the nixon shock was supposed to be temporary and partly because polticians realized they could have more power.
krapht 3y ago
What intrinsic value? It's shiny and rare, valuable for the same reason BitCoin is. The industrial usage of gold is limited to niche uses. The Spanish price revolution crippled the Spanish state due to the huge inflation driven by New World treasure fleets. Gold is nothing special here.

.. and thats the point: the intrinsic value of the US Dollar is has been declining for the last year. Gold holds its value because it can always be used for the things for which it is useful - the US Dollar, not so much.

throw0101b 3y ago

> Not exactly because gold has an intrinsic value. Gold has zero intrinsic value. Like all forms of money, its value is a psychological and sociological construct to treat it as if it had value. The Incas for example simply used it for religious and ornamental purposes: * https://www.tourinperu.com/blog/inca-gold-culture-invasion-role https://www.tourinperu.com/blog/inca-gold-culture-invasion-r... Anything can be used as money, including giant rocks: * https://en.wikipedia.org/wiki/Rai_stones https://en.wikipedia.org/wiki/Rai_stones

Darmody 3y ago
Gold is the only currency that kept it's value through time. There's a reason people buy gold. 1kg of Argentinian gold has the same value as 1kg of American gold. And both have the same value as 1kg of gold from any ancient civilization. Big rocks as currency is purely anecdotic. Of course, if you're in the desert and you're thirsty, a bottle of water has more value to you than all the gold in the world, but that doesn't change the fact that through millennia people has seen gold as something valuable that it's not tied to an economy, a country, an empire or even a culture despite de Incas.
- throw0101b 3y ago
  > Gold is the only currency that kept it's value through time. Papers have been written on how it does not: * https://www.nber.org/papers/w18706 https://www.nber.org/papers/w18706 * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3667789 See also Roy Jastram's The Golden Constant: The English and American Experience 1560 to 1976 on how it's no good against infaltion: > Andre Sharon, head of the international research department at Drexel Burnham, Inc., notes, “the value of gold essentially derives from its capacity to preserve real capital and purchasing power.”† I select this particular quotation because of the prestige of the organization and the position of the spokesman, but statements in this vein can be found in great numbers. They can be traced back for generations and in many countries. How can this proposition so contrary to statistical fact become so widely believed and quoted? Possibly because gold has preserved capital in cataclysmic cases it is easy to infer that it can be trusted to do the same in less severe circumstances. To extrapolate from gold’s protection in singular catastrophes to its use as a strategy against cyclical infation is an example of faulty inductive reasoning. * PDF: http://csinvesting.org/wp-content/uploads/2016/02/RoyJastram-TheGoldenConstant.pdf http://csinvesting.org/wp-content/uploads/2016/02/RoyJastram... * https://www.pwlcapital.com/will-gold-save-the-day/ https://www.pwlcapital.com/will-gold-save-the-day/ Having gold as one's monetary base (e.g. Gold Standard) doesn't even help in stabilizing currencies: * https://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/ https://www.theatlantic.com/business/archive/2012/08/why-the... * https://archive.ph/FWKcL https://archive.ph/FWKcL > Big rocks as currency is purely anecdotic. Big rocks as currency is one example of how any arbitrary object can be treated as such: * https://americanhistory.si.edu/the-value-of-money/origins-money/forms-money https://americanhistory.si.edu/the-value-of-money/origins-mo... Gold (or silver) bars and coins are nothing more than shiny rocks and are just as arbitrary.
mwbajor 3y ago
I'm not an expert on this by any means but: Modern society needed something scarce and was hard to manufacture/process (thus ensuring price stability) to use as an intermediate currency between currencies. Those countries agreed to use gold as this intermediate currency. Other ideas have been to use groups of commodities but these incur more complexity since they're purpose is to be consumed in some process. So does this not give gold an intrinsic value? Economists regard it as a "shiny rock" but I think that is an oversimplification used to make opponents of fiat money look stupid.
- throw0101b 3y ago
  > Modern society needed something scarce and was hard to manufacture/process (thus ensuring price stability) to use as an intermediate currency between currencies. And now we have no intermediary and no one bothers with gold when going between USD and EUR or JPY and CAD. Gold is completely useless for such exchanges in 2023 and would just add overhead. So given that it is worse than useless (being an hinderance due to an extra step) in such transactions, how can it have "intrinsic" value? If you're travelling internationally, do you exchange your domestic currency for gold, cross the border, and then exchange the gold for the destination currency? What exactly is gold useful for in 2023 besides jewelry and some minor industrial uses? Can you buy groceries? Pay property taxes? Can you show up at a car dealership with a brick or two and get a new ride? What is the value of me having gold in my possession? > Those countries agreed to use gold as this intermediate currency. It was socially agreed to it having value, but if it had "intrinsic" value, (a) no such agreement would have been needed because it would have been self-evident (the Gold Standard was only formalized in 1870), and (b) it would still be valid today. When the agreement stopped the intermediary status also stopped, showing there was nothing "intrinsic" about it: it just happened to be a convenient convention (for a time).
  - mwbajor 3y ago
    I agree with everything you are saying with the exception of the fact that it seemed to be a better intermediary than paper currency. I think that is something the "end the fed", "bring back gold" people don't understand. You're right, I cant do anything with gold alone, its actually quite useless. My argument for gold (if you even want to call it that) is more to keep politicians in check from printing more money where "printing more money" really means a politicization of the financial industry and increasing wealth inequality. The human element was less when a gold standard existed. I'd be all for a paper currency if limits to politician involvement were somehow built into it, I'm not really a fan of Gold in any sense. I've read that in 1972 some of these checks were supposed to be implemented but never were, partly because the nixon shock was supposed to be temporary and partly because polticians realized they could have more power.

krapht 3y ago

What intrinsic value? It's shiny and rare, valuable for the same reason BitCoin is. The industrial usage of gold is limited to niche uses. The Spanish price revolution crippled the Spanish state due to the huge inflation driven by New World treasure fleets. Gold is nothing special here.