4 ms·

So here's how this works. Gold bugs are big fans of buying gold. They have lots of gold. Their narrative of the financial system is that gold is the uber-ass

by tdees40 12y ago

So here's how this works. Gold bugs are big fans of buying gold. They have lots of gold. Their narrative of the financial system is that gold is the uber-asset that all other assets must be denominated in, and that fiat currency is doomed to collapse. The massive run-up of gold prices during the financial crisis played into this narrative, and despite the fact that mainstream economists, politicians, bankers, etc. still thought of it as a "barbarous relic" (Keynes), gold-bugs saw it as the key to a prosperous economy. So now, gold prices have been weak for a few years, so they have to come up with a new narrative. And that narrative is global conspiracy. So you get groups like GATA [1] and Zero Hedge [2] pushing various stories about how gold is being squirreled away somewhere mysterious, or prices are being suppressed by faceless multinationals or what-have-you. Maybe it's true! I don't know, but there's never really been any evidence, and it just sounds like someone justifying a failed investment thesis. [1] www.gata.org [2] zerohedge.com

carsongross 12y ago
It's always good to think about what evidence would convince you that the other side has a point. I lean towards the side that thinks that the central and money center banks (not faceless multinationals) are suppressing the price of gold via fractionally-reserved lending of physical gold. What would convince me that this is not the case would be a comprehensive audit of the Federal Reserve's books and gold holdings. You?
- tdees40 12y ago
  I think a dinosaur lives in the subways under Manhattan. I would be convinced otherwise only by a full audit of all subway tunnels conducted using a dinosaur scanner (which someone will need to invent). But seriously, there are lots of things that are hard to prove wrong, but that's hardly a good reason to believe them. In your case, what motive would the Fed have? Has an employee of the Fed (or any other central bank) ever blown the whistle on this massive international conspiracy? If there's no good reason to think something, there really isn't much good reason to spend time proving it wrong.
  - nosuchthing 12y ago
    I have an anti-dinosaur stone I'm willing to sell for the right price, it's very effective. Notice there are no dinosaurs around the vicinity of my stone.
    - tdees40 12y ago
      Is it made of....GOLD?
  - sopooneo 12y ago
    Proving that something does exist is much more straightforward than proving it doesn't.
  - DennisP 12y ago
    I tend to lean toward everything being fine, but motive seems obvious. It's an extremely valuable pile of stuff being held by a custodian for many decades with no external audits. I can't think of many cases of people being okay with that situation.
    - A_COMPUTER 12y ago
      I am not a goldbug but I do feel like some people are breaking their backs bending over backwards coming up with reasons to preclude any sort of audit for any reason. I read the article and yeah it sounds like there are a bunch of things that a forensic auditor would wonder about. Gold has been sitting around for half a century, and when the depositor wants it, the bank delays for years and then coughs up a tenth of the gold it promised, with all the serial numbers melted off. they say it took so long because of all the paperwork but apparently can't or won't cough up paperwork about the actual reason the bars were melted down. Isn't this what serial numbers are for? Isn't this what paperwork is for? Isn't this what auditors are for?
      - DennisP 12y ago
        And what would make it almost the perfect crime is that if Germany thinks the gold's gone, it's arguably in their best interest to just keep quiet about it. As long as everybody think's the gold's there, Germany rolls along just fine.
- ubernostrum 12y ago
  It's always good to think about what you'd do if your belief was falsified. Suppose that Ron Paul himself goes through every book, every record and every nook and cranny of Fort Knox personally with an electron microscope and announces he found only evidence that the Federal Reserve is and has been above-board with respect to the United States' gold holdings. What would you do then? Would you actually say "Well, I guess my belief was wrong and I was misled by the people who promoted it to me", or would you find a way to move the goalpost and say that you'll continue believing until some other complex and politically-hard-to-manage thing happens? And then another, and then another?
  - deleted 12y ago
    [deleted]
  - carsongross 12y ago
    I think what I would do, in that case, would be to come to the conclusion that it was not likely that the gold price was being artificially suppressed via fractional reserved lending. So, let's get that audit going...
NoMoreNicksLeft 12y ago
I'm not a gold bug. Banks still hold gold, they do so while ignoring other precious substances. Maybe it is a barbarous relic. But some of the vaults this stuff is held in... they've got much less of it than was believed. Where is it? Why is no one concerned? Why are there no plain and verifiable answers forthcoming?
nosuchthing 12y ago
People should really try and understand what makes things valuable beyond the beanie baby pokemon hype bandwaggon. Gold as a raw material is useful to a degree, just as diamonds are, but artificial scarcity [1] [2] and wild speculation create a mess of distortions. [1] http://www.theatlantic.com/magazine/archive/1982/02/have-you-ever-tried-to-sell-a-diamond/304575/ http://www.theatlantic.com/magazine/archive/1982/02/have-you... [2] http://archive.wired.com/wired/archive/11.09/diamond_pr.html http://archive.wired.com/wired/archive/11.09/diamond_pr.html
- orik 12y ago
  At the end of the day we live in a world governed by supply and demand. We're not going to shift to a 'usefulness' based mindset, and we should avoid shifting to the mindset that an object is equal to the sum of it's parts. Supply and Demand are king.
  - _rpd 12y ago
    In the case of gold, I think it is useful to look at the types of demand - jewelry and electronics consumption vs. currency hedge and speculation. In this way you can learn a lot about gold from bitcoin and vice versa.
  - AnimalMuppet 12y ago
    But demand for gold is not just jewelry and electronics. Demand for it as an alternative to fiat money is inversely proportional to peoples' trust in fiat money. So gold can be unneeded as an alternative for decades, and then be needed. Gold can be completely written off as a relic, a dinosaur... and then suddenly it's not.
ArkyBeagle 12y ago
Or gold was in a bubble that collapsed. The Depression proves that the gold standard doesn't work. There was no stability; there was deflation. Since the concept behind the gold standard means "gold always..." - a universal quantifier, one needs only show a counterexample to blow it out of the water.
- throwaway90446 12y ago
  Agreed that deflation is terrible. I hate paying lower prices for goods and services. Thankfully we have central banks to fight the scourge of lower prices.
  - throwaway344 12y ago
    I, on the other hand, love lower wages, higher real debts, and problems with planning.
  - ArkyBeagle 12y ago
    Deflation is terrible. We can largely blame deflation for WWII.
- WalterBright 12y ago
  > The Depression proves that the gold standard doesn't work. Not really. The government went off the gold standard in 1914 when it began printing whatever dollars it needed. A legally fixed exchange rate, however, continued. This led to an increasing disconnect between the dollar and gold, by 1929 gold was worth about twice as many dollars as the legal exchange rate. This is what lead to the banking collapse, as everyone suddenly realized this and rushed to exchange their dollars for gold at the official exchange rate. The runs persisted until the government suspended exchanging gold for dollars. We see the same thing happen in modern times every time a government decides to peg its currency to a foreign currency, and then inflate it.
  - WalterBright 12y ago
    More generally, any time two unrelated commodities' values are pegged to each other, there will inevitably be a correction, usually wrenching. Bimetalism, the attempt to peg the value of silver in relation to gold, has quite an illuminating history of failure.
dataminer 12y ago
Not a gold bug myself (its a purely speculative and non productive investment instrument), however gold's price was under pressure due to Indian government restrictions on its imports. Loosening of these restrictions is one of the factors the price of gold has appreciated even in the face of US dollar appreciation this year.
xmjee 12y ago
> So now, gold prices have been weak for a few years, so they have to come up with a new narrative. And that narrative is global conspiracy. So you get groups like GATA [1] and Zero Hedge [2] pushing various stories about how gold is being squirreled away somewhere mysterious, or prices are being suppressed by faceless multinationals or what-have-you. Maybe it's true! I don't know, but there's never really been any evidence, and it just sounds like someone justifying a failed investment thesis. I've been following the Gold bug sphere in 2006, 2007 and there's absolutely nothing new about these conspiracy theories. They have been pushing them ever since, and you haven't even scratched at Bilderberger/Illuminati/Jews/Take your influential minority.
oafitupa 12y ago
And we all know that "mainstream economists" are a good source for unbiased opinions.
- tdees40 12y ago
  Sure. Just like "mainstream climate scientists", or "mainstream doctors", amirite?
  - LanceH 12y ago
    It's a lot easier to find diametrically opposed economists. Not quite as easy as lawyers, but close.
  - sheetjs 12y ago
    https://en.wikipedia.org/wiki/List_of_scientists_opposing_the_mainstream_scientific_assessment_of_global_warming https://en.wikipedia.org/wiki/List_of_scientists_opposing_th...
  - oafitupa 12y ago
    You didn't just compare macroeconomics to actual sciences, did you?
ekianjo 12y ago
> So now, gold prices have been weak for a few years, so they have to come up with a new narrative Not sure about the narrative you describe, but it's a clear fact that it's harder and harder to buy gold anonymously, without declaring to the State where you stash it. Makes it practical the day they come to get it back and give you worthless paper instead.
- CDRdude 12y ago
  If I was a government, I wouldn't even want to take it back. Storing gold seems like a hassle compared to storing the equivalent value in regular currency.
  - joshfraser 12y ago
    Gold actually has intrinsic value. Fiat currency does not.
    - stefantalpalaru 12y ago
      Yes, but is gold's value for the electronics industry anywhere near its market price? The demand seems a lot smaller than the offer (they use about 320 tons/year - http://www.bullionstreet.com/news/electronics-industry-uses-320-tons-of-gold7500-tons-of-silver-annually/2255 http://www.bullionstreet.com/news/electronics-industry-uses-... and the metal is recyclable).
  - ekianjo 12y ago
    Really ? Why do governments keep tons of bar Gold then in the first place ? Have you ever seen the actual inflation of paper money over like, 50 years ? 1 Million USD used to be a lot of money back in the 60s-70s, nowadays it's a commodity and 1 billion is rather the new standard of "large sum".
- dragontamer 12y ago
  Harder, or easier? It was straight up illegal to own more than 5-ounces of Gold between 1933 and 1971 in the US.
Htsthbjig 12y ago
"and despite the fact that mainstream economists, politicians, bankers, etc. still thought of it as a "barbarous relic" (Keynes), gold-bugs saw it as the key to a prosperous economy." You mean the same bankers, economist and politicians of the bail out to big banking institutions? You mean the same bankers, economist and politicians of the too big to fail? the same bankers, economist and politicians that have brutally increased their wealth in the crisis while the people income has gone deep down? You need to insult people that disagree with you, calling them "bugs".
- forgotX2 12y ago
  This is like saying that all computer programmers are responsible for enriching themselves for hacking target and home depot. It is crazy that you are so easily dismissing an entire academic discipline.
dragontamer 12y ago
The only conspiracy is the Gold Bug conspiracy. The US did not have a Gold-backed dollar in practice. From 1933 onward, Executive Order 6102 was in effect, making it illegal for any individual to own more than 5 ounces of gold. The majority of people living today have never lived in a time period where you could practically exchange dollars to gold. That's the true conspiracy. The Gold-standard arguably never even existed in the first place. (At least, from 1933 onwards)

by tdees40 12y ago

carsongross 12y ago

It's always good to think about what evidence would convince you that the other side has a point. I lean towards the side that thinks that the central and money center banks (not faceless multinationals) are suppressing the price of gold via fractionally-reserved lending of physical gold. What would convince me that this is not the case would be a comprehensive audit of the Federal Reserve's books and gold holdings. You?

tdees40 12y ago
I think a dinosaur lives in the subways under Manhattan. I would be convinced otherwise only by a full audit of all subway tunnels conducted using a dinosaur scanner (which someone will need to invent). But seriously, there are lots of things that are hard to prove wrong, but that's hardly a good reason to believe them. In your case, what motive would the Fed have? Has an employee of the Fed (or any other central bank) ever blown the whistle on this massive international conspiracy? If there's no good reason to think something, there really isn't much good reason to spend time proving it wrong.
- nosuchthing 12y ago
  I have an anti-dinosaur stone I'm willing to sell for the right price, it's very effective. Notice there are no dinosaurs around the vicinity of my stone.
  - tdees40 12y ago
    Is it made of....GOLD?
- sopooneo 12y ago
  Proving that something does exist is much more straightforward than proving it doesn't.
- DennisP 12y ago
  I tend to lean toward everything being fine, but motive seems obvious. It's an extremely valuable pile of stuff being held by a custodian for many decades with no external audits. I can't think of many cases of people being okay with that situation.
  - A_COMPUTER 12y ago
    I am not a goldbug but I do feel like some people are breaking their backs bending over backwards coming up with reasons to preclude any sort of audit for any reason. I read the article and yeah it sounds like there are a bunch of things that a forensic auditor would wonder about. Gold has been sitting around for half a century, and when the depositor wants it, the bank delays for years and then coughs up a tenth of the gold it promised, with all the serial numbers melted off. they say it took so long because of all the paperwork but apparently can't or won't cough up paperwork about the actual reason the bars were melted down. Isn't this what serial numbers are for? Isn't this what paperwork is for? Isn't this what auditors are for?
    - DennisP 12y ago
      And what would make it almost the perfect crime is that if Germany thinks the gold's gone, it's arguably in their best interest to just keep quiet about it. As long as everybody think's the gold's there, Germany rolls along just fine.
ubernostrum 12y ago
It's always good to think about what you'd do if your belief was falsified. Suppose that Ron Paul himself goes through every book, every record and every nook and cranny of Fort Knox personally with an electron microscope and announces he found only evidence that the Federal Reserve is and has been above-board with respect to the United States' gold holdings. What would you do then? Would you actually say "Well, I guess my belief was wrong and I was misled by the people who promoted it to me", or would you find a way to move the goalpost and say that you'll continue believing until some other complex and politically-hard-to-manage thing happens? And then another, and then another?
- deleted 12y ago
  [deleted]
- carsongross 12y ago
  I think what I would do, in that case, would be to come to the conclusion that it was not likely that the gold price was being artificially suppressed via fractional reserved lending. So, let's get that audit going...

NoMoreNicksLeft 12y ago

I'm not a gold bug. Banks still hold gold, they do so while ignoring other precious substances. Maybe it is a barbarous relic. But some of the vaults this stuff is held in... they've got much less of it than was believed. Where is it? Why is no one concerned? Why are there no plain and verifiable answers forthcoming?

nosuchthing 12y ago

People should really try and understand what makes things valuable beyond the beanie baby pokemon hype bandwaggon. Gold as a raw material is useful to a degree, just as diamonds are, but artificial scarcity [1] [2] and wild speculation create a mess of distortions. [1] http://www.theatlantic.com/magazine/archive/1982/02/have-you-ever-tried-to-sell-a-diamond/304575/ http://www.theatlantic.com/magazine/archive/1982/02/have-you... [2] http://archive.wired.com/wired/archive/11.09/diamond_pr.html http://archive.wired.com/wired/archive/11.09/diamond_pr.html

orik 12y ago
At the end of the day we live in a world governed by supply and demand. We're not going to shift to a 'usefulness' based mindset, and we should avoid shifting to the mindset that an object is equal to the sum of it's parts. Supply and Demand are king.
- _rpd 12y ago
  In the case of gold, I think it is useful to look at the types of demand - jewelry and electronics consumption vs. currency hedge and speculation. In this way you can learn a lot about gold from bitcoin and vice versa.
- AnimalMuppet 12y ago
  But demand for gold is not just jewelry and electronics. Demand for it as an alternative to fiat money is inversely proportional to peoples' trust in fiat money. So gold can be unneeded as an alternative for decades, and then be needed. Gold can be completely written off as a relic, a dinosaur... and then suddenly it's not.

ArkyBeagle 12y ago

Or gold was in a bubble that collapsed. The Depression proves that the gold standard doesn't work. There was no stability; there was deflation. Since the concept behind the gold standard means "gold always..." - a universal quantifier, one needs only show a counterexample to blow it out of the water.

throwaway90446 12y ago
Agreed that deflation is terrible. I hate paying lower prices for goods and services. Thankfully we have central banks to fight the scourge of lower prices.
- throwaway344 12y ago
  I, on the other hand, love lower wages, higher real debts, and problems with planning.
- ArkyBeagle 12y ago
  Deflation is terrible. We can largely blame deflation for WWII.
WalterBright 12y ago
> The Depression proves that the gold standard doesn't work. Not really. The government went off the gold standard in 1914 when it began printing whatever dollars it needed. A legally fixed exchange rate, however, continued. This led to an increasing disconnect between the dollar and gold, by 1929 gold was worth about twice as many dollars as the legal exchange rate. This is what lead to the banking collapse, as everyone suddenly realized this and rushed to exchange their dollars for gold at the official exchange rate. The runs persisted until the government suspended exchanging gold for dollars. We see the same thing happen in modern times every time a government decides to peg its currency to a foreign currency, and then inflate it.
- WalterBright 12y ago
  More generally, any time two unrelated commodities' values are pegged to each other, there will inevitably be a correction, usually wrenching. Bimetalism, the attempt to peg the value of silver in relation to gold, has quite an illuminating history of failure.

dataminer 12y ago

Not a gold bug myself (its a purely speculative and non productive investment instrument), however gold's price was under pressure due to Indian government restrictions on its imports. Loosening of these restrictions is one of the factors the price of gold has appreciated even in the face of US dollar appreciation this year.

xmjee 12y ago

> So now, gold prices have been weak for a few years, so they have to come up with a new narrative. And that narrative is global conspiracy. So you get groups like GATA [1] and Zero Hedge [2] pushing various stories about how gold is being squirreled away somewhere mysterious, or prices are being suppressed by faceless multinationals or what-have-you. Maybe it's true! I don't know, but there's never really been any evidence, and it just sounds like someone justifying a failed investment thesis. I've been following the Gold bug sphere in 2006, 2007 and there's absolutely nothing new about these conspiracy theories. They have been pushing them ever since, and you haven't even scratched at Bilderberger/Illuminati/Jews/Take your influential minority.

oafitupa 12y ago

And we all know that "mainstream economists" are a good source for unbiased opinions.

tdees40 12y ago
Sure. Just like "mainstream climate scientists", or "mainstream doctors", amirite?
- LanceH 12y ago
  It's a lot easier to find diametrically opposed economists. Not quite as easy as lawyers, but close.
- sheetjs 12y ago
  https://en.wikipedia.org/wiki/List_of_scientists_opposing_the_mainstream_scientific_assessment_of_global_warming https://en.wikipedia.org/wiki/List_of_scientists_opposing_th...
- oafitupa 12y ago
  You didn't just compare macroeconomics to actual sciences, did you?

ekianjo 12y ago

> So now, gold prices have been weak for a few years, so they have to come up with a new narrative Not sure about the narrative you describe, but it's a clear fact that it's harder and harder to buy gold anonymously, without declaring to the State where you stash it. Makes it practical the day they come to get it back and give you worthless paper instead.

CDRdude 12y ago
If I was a government, I wouldn't even want to take it back. Storing gold seems like a hassle compared to storing the equivalent value in regular currency.
- joshfraser 12y ago
  Gold actually has intrinsic value. Fiat currency does not.
  - stefantalpalaru 12y ago
    Yes, but is gold's value for the electronics industry anywhere near its market price? The demand seems a lot smaller than the offer (they use about 320 tons/year - http://www.bullionstreet.com/news/electronics-industry-uses-320-tons-of-gold7500-tons-of-silver-annually/2255 http://www.bullionstreet.com/news/electronics-industry-uses-... and the metal is recyclable).
- ekianjo 12y ago
  Really ? Why do governments keep tons of bar Gold then in the first place ? Have you ever seen the actual inflation of paper money over like, 50 years ? 1 Million USD used to be a lot of money back in the 60s-70s, nowadays it's a commodity and 1 billion is rather the new standard of "large sum".
dragontamer 12y ago
Harder, or easier? It was straight up illegal to own more than 5-ounces of Gold between 1933 and 1971 in the US.

Htsthbjig 12y ago

"and despite the fact that mainstream economists, politicians, bankers, etc. still thought of it as a "barbarous relic" (Keynes), gold-bugs saw it as the key to a prosperous economy." You mean the same bankers, economist and politicians of the bail out to big banking institutions? You mean the same bankers, economist and politicians of the too big to fail? the same bankers, economist and politicians that have brutally increased their wealth in the crisis while the people income has gone deep down? You need to insult people that disagree with you, calling them "bugs".

forgotX2 12y ago
This is like saying that all computer programmers are responsible for enriching themselves for hacking target and home depot. It is crazy that you are so easily dismissing an entire academic discipline.

dragontamer 12y ago

The only conspiracy is the Gold Bug conspiracy. The US did not have a Gold-backed dollar in practice. From 1933 onward, Executive Order 6102 was in effect, making it illegal for any individual to own more than 5 ounces of gold. The majority of people living today have never lived in a time period where you could practically exchange dollars to gold. That's the true conspiracy. The Gold-standard arguably never even existed in the first place. (At least, from 1933 onwards)