Gold is relatively rare, durable, portable, and hard to counterfeit. As a form of money it's a very good standard. Silver is all of these things too, but is more common.
Gold is relatively rare, durable, portable, and hard to counterfeit. As a form of money it's a very good standard. Silver is all of these things too, but is more common.
Williams Jenning Bryan wrote:
Gold is no different than fiat money. It is primarily valuable because other people agree on it.
Fiat money is subject to counterfeit. Gold is much more difficult to counterfeit.
They are quite different.
Quite amazing to think tht gold has been a form of currency for 5000 years. It really displays all the characteristics of a universal currency, and with markets really being the most effcient form of trade I also like the "chances" of it being around for a long long time.
I think it would be interesting to see the global supply of gold weighed against the growth of population.
Senior Software Engineer wrote:
Except gold has stood the test of time for 5000 years and all fiat currencies eventually fail. I think I will take my chances and be on the correct side of historical precedence.
True, but the fiat currencies fail because the governments backing them fail, not because there's something inherently wrong with a fiat currency. Anyway, a gold or silver coin is also fiat currency. The value of the metal in the coin does not determine the exchange value of the coin, the fiat denomination does. The value of the metal in dimes minted today is just under $.02, but the value of the metal in a dime minted prior to 1964 is $1.23. They are both in circulation and if you try to spend them they are worth $.10, not $.02 or $1.23. You only get the value of the metal if you melt down the coin.
I would think printing up trillions of dollars every year to finance a budget is a serious failure.
Gold and silver coins are not a fiat currency unless you are stupid enough to use it at face value. They are not both in circulation. Try finding a pre 64 quarter. I probably run into one every couple of years. Anyway, those can be cashed in at any respectable dealer for close to spot price. I would love someone to give me the face value of an American gold or silver eagle.
Maybe I should offer a dollar for every silver quarter out there. I would be rich beyond belief. The only problem to that is I won't get many takers.
No one has mentioned yet that gold also has value because it is an accurate store of past human labor.
financegeniuz wrote:
I usually give me girlfriend a pearl necklace
This should have given away the troll on page 1.
9/10 I'd say...
Staples Easy Button wrote:
That was easy.
I used to work at Staples, and I hated those buttons for about a minute. Then, I saw how mad one of the old cashiers that had some sort authority trip going would get when people pressed it. At that point, the easy button became awesome to me. I used to love it when she was working and somebody would come by and press every single button as fast as they could so that it would say that was easy about 40 times. I could just see the mercury beginning to boil inside of her.
Besides the sentimental value of gold there also is an increase in people willing to pay to see you compete as a result of being the best in the world. The increase in people willing to see you compete increases the price of tickets to see you compete thus raising the appearance fee received. Gold is also associated with endorsement deals and bonuses on contracts.
Gold isn't just 'relatively' rare. It's very rare. All the gold mined in the history of the human race would fit into a cube about 25m square.
That's what made it a nice media for currency (along with the aforementioned stability and portability).
I would say go to Gary North's website and also Anglo Far East's web site.
and
interesting reading.
I would say go to Gary North's website and also Anglo Far East's web site.
and
interesting reading.
Not really.
read the thread first wrote:
this has all been covered
speling wrote:
Gold isn't just 'relatively' rare. It's very rare. All the gold mined in the history of the human race would fit into a cube about 25m square.
That's what made it a nice media for currency (along with the aforementioned stability and portability).
It is relatively rare. I didn't say it was "a teensy bit rare". I mean relative in the sense that it is rare relative to other metals like silver, copper or iron. Don' try to be too cute.
Gold, like everything else, holds value relative to something else people need. If the value of fiat currency by the United States (dollars) becomes worthless and people start using gold as the common currency, what will they buy or with this gold? how will the value of things be measured? How much gold will it cost for ....a box of cereal? How much gold will it cost for....a new or used car, home, boat? How much will it take to buy a new pair of jeans for your children?
Gold is so valuable right now, because the market (buyers and sellers) say it is. That's it. But you have to remember. There are things that humans place a much , much greater value on. They just don't know it yet. Some of these extremely valauable assets are food, clothing, shelter, sex, water, family, and human intellect. What will happen is this:
The dollar will become worthless. People will use gold for a short term to trade. However, the lack of gold held by some countries and the surplus held by others will dictate the vallue of gold. In much the same way the surplus of diamonds and their relative value is controled. Countries or entities that cannot obtain enough gold to buy what they need will resort to barter trading. Barter trading will involve trading goods for goods. Rather gold for goods. The market or agreement between buyer and seller will become the measure for the goods to be exchanged by each party. This method of trade will expand until people realize that the best measure of currency is time. Because everybody has time.
To extract gold takes time. So, perhaps the measure could become the amount of time it takes to extract one internationally accepted block of gold from a typical mining shaft. Or maybe we will measure the amount of time it takes to convert a certain amount of carbon into a diamond. Then, everything would be relative to that value of time. From that point, markets can determine how much time it takes to produce a box of cereal relative to the time it takes to produce a certain size diamond from carbon. So maybe a BMW might cost 80 hours worth of time.
The point I'm trying to make is that. Gold has value as long as people say it does. But in the futre this will not be. Simply because people will realize that gold like money can be held and controled by who ever has the most gold (fiat). They can control the value of it by holding or releasing gold into the markets (inflation/deflation). However, like the sun, things such as the measure of energy and time are limitless and consistant. We will just have to decide which measure we will use. In this way economies will not have to worry so much about the value of their economies being centered around another countries currency surplus. This will force people to develop and be innovative in order to accumulate wealth (human intellect)rather than being at the mercy of another countries problems (like the dollar fiat system).
Value is defined by what you can buy not what is printed on a piece of paper.Case in point: What cost $1 in 1999 would cost $1.28 in 2008What cost $1 in 1989 would cost $1.72 in 2008. What cost $1 in 1979 would cost $2.93 in 2008. What cost $1 in 1969 would cost $5.81 in 2008. http://www.westegg.com/inflation/
anabolic wrote:
the value of the dollar if measured by the dollar will always be $1 per dollar.
Mainly, gold is not a fiat currency and has limited supply constraints, which makes it a store of value. Gold has always been recognized as a possessing value, partly because of where it sits on the Periodic Table and its nascent chemcial properties. Even the ancient Egyptians recognized its uniqueness, long before formal chemistry, relative to, say silver or platinum, which have their own supply constraints, though perhaps not as great.
It is the de facto medium of exchange between the world's central banks, who recognize that NO single paper currency backed solely by the "bona fide" commitment of its Federal government can act as THE world's reserve currency, and proper diversification is necessary. Resources, like water and oil and other commodities are going to reveal their stores of value relative to fiat currencies in the coming years. I'm not endorsing this guy's point of view, but he has a good thesis to answer the OP's question.
Personally, I'd much rather own water or energy rights... Gold is more of a flight-from-risk haven than an actual inflation hedge.
Mtn Dew wrote:
Because gold is in higher demand with less supply.
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Exactly. If no one wanted it. It would not be worth anything.
Rare items cost more.
That's why an old baseball card of a former great player is valuable. And one of you or me is free.
good point...this reminds me of the twilight zone episode where a gold thief was dying of thirst in the desert and couldn't get any water for his gold...it turns out that gold was no longer rare.