Physical Gold Disconnecting From Fiat Currency (merged)

[Pops]

It boils down to

"Gold held it's value for 10,000 years".
vs.
"A dollar appreciates in a savings account".

We could argue about angels on a pinhead just as well and with just as much effect.

[careinke]

It boils down to

"Gold held it's value for 10,000 years".
vs.
"A dollar appreciates in a savings account".

We could argue about angels on a pinhead just as well and with just as much effect.

I agree, but you certainly brought up some very valid points, that I had not fully appreciated. Which, when it comes down to it, is what these boards are all about for me.

[vision-master]

It boils down to

"Gold held it's value for 10,000 years".
vs.
"A dollar appreciates in a savings account".

We could argue about angels on a pinhead just as well and with just as much effect.

The past is gone pops........

Note, if accurately reported (as a component of the whole lawsuit to end NWO storyline....go to divinecosmos.com to follow this), by David Wilcock the amount of gold on the planet is 2 million tons of gold instead of the mere 120,000 tons of gold reported by officialdom global estimates. If so, it is not, as David and others who are emotionally attached to the 'lawsuit as nice and easy solution to NWO without violence, death, revolution, destruction, and horror' camp, worth anything like what they think. Ask anyone who buys metals. Ask any dealer.....the more gold, the cheaper it becomes. They, David Wilcock, and the rest of the 'lawsuit camp followers' are victims of their own ignorance of commodities markets, and the assumptions hardened into their point of view of universe.

Please note, that the 'discovery' or revealing of an additional 1.88 million tons of gold on the planet would, in an of itself, crash the financial system to rubble. What must be understood by the lawsuit aficionado's is that the whole of terrestrial humanity's exchange system is based on scarcity. It is only the rarity of certain minerals that give them 'perceived value'. If gold is plentiful, it is not valuable.

http://lightworkers.org/blog/148783/cli ... -situation

[Pops]

I agree, but you certainly brought up some very valid points, that I had not fully appreciated. Which, when it comes down to it, is what these boards are all about for me.

It is cool that we talk about such varied stuff. Unfortunately my little brain has a hard time holding on to the bumper sticker version of most of it - let alone the readers digest size.

[SeaGypsy]

Silver is an abundant by-product of copper mining. With copper booming for communications and electricity/ industrial applications worldwide, silver has likewise been brought forth in abundance.

Gold is sometimes produced in combined metals mines, but is often gone after as ore loads in isolation, with no commercial by-product.

Very different scenarios.

I think of the gold market as being much more in the realm of De Beers monopoly on top end diamonds on the one hand and directly related to oil prices as most of it is coming from very oil dense mining practices, namely ore extraction. Very few companies have the ability to produce large amounts of gold. They are all diversified to cover costs, there are no huge gold miners, who are not also huge miners in other minerals.

Crashing gold markets will not happen under peak oil. Those few holding an abundance of the stuff won't let that happen. All metals are totally dependent on oil prices, up to the point where extraction ceases. Then it's a whole different ball game for all metals.

There are serious moves towards electrification of mining in the mega mines. This could over the next 10 years result in a new set of calculations for metals extraction.

[Revi]

I know they are mining all sorts of areas in Central America. Most notably in El Salvador. They may have to kick some pesky peasants off the land, but that's the price of gold.

[Repent]

How about liquid laundry soap as currency:

http://www.thedaily.com/page/2012/03/12 ... theft-1-4/

These are criminals coming into the store to steal thousands of dollars of merchandise,” said Detective Harrison Sprague of the Prince George’s County, Md., Police Department, where Tide is known as “liquid gold” among officers.

He and other law enforcement officials across the country say Tide theft is connected to the drug trade. In fact, a recent drug sting turned up more Tide that cocaine.

“We sent in an informant to buy drugs. The dealer said, ‘I don’t have drugs, but I could sell you 15 bottles of Tide,’ ” Sprague told The Daily. “Upstairs in the drug dealer’s bedroom was about 14 bottles of Tide laundry soap. We think [users] are trading it for drugs.”

[Repent]

Truth is stranger than fiction:

http://www.youtube.com/watch?v=_6KFQ7va ... 705D0B93DA

Like they said in the movie, 'No country for old men'; You can't make this stuff up!

[SeaGypsy]

The Tide thing makes sense if you look at the 3rd world. Often in poor regions and countries, soap and other very basic consumables are high value items. A bar of soap or tube of toothpaste can cost 3 times more than 1st world retail.

[Blacksmith]

In reality it's all a matter of faith. Whether you put your faith in land, metals, credits or pieces of green cotton paper, it is all a matter of perception. As one of my friends who had lived out the war in Europe said, the most valuable currency was a potato.

[Revi]

I'm noticing that good stuff is dissapearing. I think people are beginning to get the fact that fiat currency is not worth holding on to. They would rather have useful stuff. I'm talking about cast iron pans and other cool antiques that still work. They are hard to find nowadays. I also met a young silver bug that seemed more convinced than me that the value will go up. I think the trust we used to put in a pile of paper is eroding lately.

[Repent]

I was at a Bingo hall tonight with my wife and a couple of grubby looking people were trying to get us to buy 'liquid Tide' from them.

I get the feeling that having a basement stockpile of liquid Tide will be of more practical importance that hording gold and silver- (which most people can't afford anyway's). I few dozen bottles of liquid Tide in containers in the basement as a hedge that I might have to barter them for food at some point in the near future, and if not I'll have enough laundry soap for the next several years!

Just try to pawn off gold or silver for food in an emergency race for essentials- they'll be worthless as barter.

[joewp]

The value of a currency, just like everything else, should be based on supply and demand. If demand for money happens to go up, say, 15% in one year, supply should be able to keep pace with demand. Limiting the availability of currency in those circumstances would thus harm the economy.

You're funny. There is no "demand for money". There's only a demand for what money can buy. Money is a proxy for labor, materials and land, nothing more or less.

Also, the only way a gold standard could actually work would be to fix its value, as was done prior to the abandonment of the gold standard.

Not you don't. You fix the value of the currency in relation to gold. Gold's value (or silver's, or whatever you want to use as a base) is inherent. An ounce of gold is an ounce of gold and that's it's value. Like a lot of people, you're mixing up value with price. The value of something is directly related to the means of production used to produce it. The price is a reflection of supply and demand. A custom suit in 1910 would have run you about $25, or the same as the fixed price of an ounce of gold. A custom suit today is in the $1500-1800 range, right around the market price of gold.

If you adopt a gold standard, but do not fix the price of gold,

Then you're not adopting a gold standard then, are you? The rest of the paragraph is silly since you stated an impossible premise..

you will simply trade volatility in the value of a currency for volatility in the price of gold. In other words, if in one year, demand for (gold-backed) money rises 15%, but supply of physical gold only rises 1%, the price of gold will simply rise 14% ... and so you will still be able to get a 15% rise in the money supply anyway. Same thing if demand for money happened to 15% fall in one year.

In other words, adopting a gold standard without fixing the price of gold will do absolutely nothing toward restraining money supply growth - which, of course, is one of the main reasons gold standard proponents cite for adoption of the standard.

Having explained that, we're left with only the possibility of adopting a gold standard - *and* - fixing the value of gold in order for the scheme to work. If someone wants to calculate how much US money is in circulation, and then divide that by the number of ounces of gold held by the US government, you will get an astronomical figure on how many dollars each once of gold will have to be worth. Then come back and tell me if you think that's realistic.

For the sake of argument, let's say that number is $400,000/ounce. At $400,000/ounce, every square yard of land which might possibly hold the faintest traces of gold will be stip mined up the kazoo. Alaska, Nevada, Brazil and huge swaths of Africa will become giant strip mines. Eventually someone will figure out a way to extract gold from seawater (which does contain trace amounts of gold). Once that happens, the world will be flooded with gold, and the price will come crashing down.

And at this point I have to ask, Why bother?

I usually ask "Why bother talking to someone who has no clue and won't listen anyway?", but I will this time. You demonstrate that you really don't understand economics at all here. If the dollar was set to be backed by 1/400,000 an ounce of gold, then it wouldn't be prudent to flood the world with gold, because then the price of everything else would go up, by one) by the higher supply of gold chasing after the same amount of goods and services, and 2) by the increased demand for goods and services required by all that gold mining. For instance, you need "people" to run all those machines, and you have to bid in the market for their services, causing wages to go up across the board. At a certain point, the $400,000 fixed price of gold wouldn't be enough to cover expenses and mining would stop. Even before that, since there's less tailors making suits (since gold mining pays better) the relative prices of suits would go up, making that industry more attractive than gold mining.

And the real point is, the market would be setting the prices in gold and determining the money supply, rather than bankers inflating and deflating it to squeeze more labor out of people for less and less return. What you don't seem to understand is that "money" isn't an end all and be all. It's merely an agreed upon number to temporarily judge the relative value of goods and services. If you like kumquats, and kumquats cost you 15 minutes of work at your job each, you might happily trade those 15 minutes for one kumquat. However, if a shortage of kumquats hits and now it costs you 1 hour of work at your job, you might pass them by in the supermarket aisle and start growing your own because you could get a kumquat for only 30 minutes working in your garden. That's how money is supposed to work. Which is why money based on something that actually takes labor and materials to produce is far more stable than someone counterfeiting bank notes with no value.

[OilFinder2]

You fix the value of the currency in relation to gold.

That's the same thing I said, just in different words.

If you adopt a gold standard, but do not fix the price of gold,

Then you're not adopting a gold standard then, are you?

Correct, you are not.

From then, in your first long paragraph you described a scenario in which (ironically!) we'd get massive inflation ... which would completely defeat the purpose of adopting a gold standard in the first place!

[joewp]

You fix the value of the currency in relation to gold.

That's the same thing I said, just in different words.

Words mean things, dude. Most people on this website would agree with Matt Simmons that the market priced oil way below its value. (It still is)

If you adopt a gold standard, but do not fix the price of gold,

Then you're not adopting a gold standard then, are you?

Correct, you are not.

From then, in your first long paragraph you described a scenario in which (ironically!) we'd get massive inflation ... which would completely defeat the purpose of adopting a gold standard in the first place!

Um, no you wouldn't. Even if there was some price inflation, the market would decide that, not Ben Bernanke, and an equilibrium would would eventually ensue. Not constant, unending inflation like we have now.

[threadbare]

Gold is an attractive, hard, rare metal with one specific important characteristic--it doesn't oxidize, rust, or form compounds naturally--that grants it a number of useful social/industrial qualities. Gold jewelery holds a shine. It's an useful coating to protect electronic welds and joints.

But the big thing is it lasts,remains the same forever. That is the prime value. You can bury gold in the dirt, and 100 years later it will still work as intended.

So not any different from Caesar's Palace roulette chips. Also non oxidizing, shiny and can be buried for 100 of years. And a lot lighter, too.

I'm not aware of the chips composition, but if they are made of something that is relatively rare, as well, you are correct.

People who hoard gold have been called 'gold bugs' and derided for being lunatics and risk takers for as long as the metal started it's long and relatively slow march upward, since around 2003 or 2004. Gold need only be more intrinsically valuable than paper to hold more value. It's ultimate use, though, is to preserve purchasing power---- and people who are hoping to make wild ass gains on it have to be aware that as a speculative play, it may have it's limits.

If gold starts to substantially threaten the global fiat system govts could take measures to turn people way off the idea of purchasing it. For example govts. may not confiscate gold, but could institute major windfall taxes on capital gains.

I have 60/40 split gold to cash. When it hits around 2300, I am going to start to sell off a bit and go 40/60 gold to cash. Of course one has to keep an eagle eye on govt and try to predict what they are going to do, how they will react to a constantly morphng dynamic economic crisis...yadayadayada.

I think at this price it's still not a bad idea to hedge any cash you have sequestered with a precious metal. It's silver I would be a bit more leery of. The upside is amazing, but it tends to swing wildly and is an industrial metal, so if there are expectations of a global slowdown, it would be hammered much more than gold.

[Revi]

Just try to pawn off gold or silver for food in an emergency race for essentials- they'll be worthless as barter.

They might not be so worthless. A lot of people made it out of Germany with small gold coins sewn into their clothes. They were able to use them to purchase the necessities when they became refugees. It could mean the difference between life and death. Gold and silver have been a recognized store of value for thousands of years. They may work better than tide as a store of value even in an emergency.