Gold is not Money

[DevilsAdvocate]

Gold is a natural resource. For hundreds of years, it was used as "money" because of it's special properties and intrinsic value. It is easily divisible, moldable, and nonreactive. Because it was prized by the wealthy (who had a more stable economic existence, and were therefore more reliable to contract with in the long term), it naturally became the medium of exchange.

However in the modern world, these special properties are no longer unique to gold. On my computer right now, I can buy shares in a company that warehouses corn, effectively entitling me to a percentage of their stock. This share is a digital certificate, that is infinitely divisible, can be carried around with me in digital form at all times, and can instantaneously be be used to buy and sell, or be converted into any other store of value I wish, such as oil, or shares in a technology company.

But gold is immutable, won't these other assets degrade in time, thus draining my value away? Surely here gold has the advantage? True, but factors like this are already priced into the share. Financial experts and traders are able to statistically analyze the chances that a certain percentage of warehoused oil, or corn, (or any asset) will degrade in a certain amount of time, and will therefore price the stock accordingly.

In the modern world, the wealthy don't even desire gold that much anymore (as much as they desire random splatters of paint on a canvas). These days, gold is mainly prized for it's properties as a conductor, and is used as an industrial resource. It isn't money, it's just a regular old asset like any other.

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In the future, a "currency" will simply be an investment plan. Different assets will be bundled together to minimize risk, and maximize stability. Your personal "currency" might contain 20% corn, 40% iron alloy, 10% gold, and 30% technology shares. Percentages adjusted by the hour to maintain a constant, stable store of value. When you go to spend your money at Starbucks, your assets will instantly be sold, and converted into the assets Starbucks uses to store their value in. There will be great competition on who can offer the most stable investment plan. Some will no doubt be enormously popular, some will be tailored to an individual's personal preferences. Overhead costs will be trivial; a single team of 10 investment analysts can manage a currency basket used by 100 million people.

Compared to one of these currency baskets, a "100% gold" currency would get trashed. It would be like your local High School JV Squad vs the New England Patriots. Who knows, there might be a few people crazy enough to put all their chips on one asset, but they'd be riding the wave of uncertainty all the way to an anxiety attack.


Gold is not the future, it is the past. Don't put your life savings on a single asset, especially not one as overhyped and controlled as gold or silver. Remember, a huge percentage of the total gold on the market is owned and controlled by governments. Don't leave the fate of your savings to politics (the domain of backwards logic and things that don't make sense).

[Ronin Truth]

Actually money is whatever the market place decides is money. Gold has some significant distinct advantages as money both currently and historically.

[Suzanimal]

[William R]

Gold is money

https://mises.org/library/gold-money-0

[acptulsa]

In the future, a "currency" will simply be an investment plan.

When? Because we went from using something as money that held its value and protected the meager savings of the poor to something that doesn't. Hardly an investment plan. Gold is a far superior investment plan.

It would be nice to have faith that we will reverse course and go from a thing with value that evaporates like water to a thing that not only holds value, but gains. But I see no sign at all that we are, in fact, reversing that trend. We seem to be going from a thing that evaporates like water to one that evaporates faster than alcohol.

[helmuth_hubener]

In the future, a "currency" will simply be an investment plan. Different assets will be bundled together to minimize risk, and maximize stability. Your personal "currency" might contain 20% corn, 40% iron alloy, 10% gold, and 30% technology shares.

The future is closer than you think!

[Zippyjuan]

Actually money is whatever the market place decides is money. Gold has some significant distinct advantages as money both currently and historically.

Gold has been used for money in the past but it is not money today. Most money today is electronic- not even paper or metal.

[erowe1]

Gold is a natural resource. For hundreds of years, it was used as "money" because of it's special properties and intrinsic value.

Gold does not have intrinsic value.

But as long as it is used as money, it's money.

[Ronin Truth]

The future is closer than you think!

Starting at just about the next second and then on.

[Ronin Truth]

Gold has been used for money in the past but it is not money today. Most money today is electronic- not even paper or metal.

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." -- Henry Ford

[Ronin Truth]

What Has Government Done to Our Money.pdf

[Ronin Truth]

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[devil21]

I love contrary indicators like "don't buy gold" posts. I can't afford physical metals but if I could I'd be a buyer.

[Zippyjuan]

Martin Armstrong of Armstrong Economics on the subject: http://www.armstrongeconomics.com/ar.../what-is-money

COMMENT:

Martin,

It has been a long time since ….. has sent out a blog post, but I got one today.

When Mr. …. probably first started slamming you for calling the 2011 gold top, his …. was 7.82. It is now 28 cents, and he is still touting gold as the only real asset and debt as only and always a liability and never money. He fails to see (admit?) that while debt is, indeed a liability to the debtor, it is interest bearing money to the bondholder, since it can be used as collateral.

Of course, the Big Bang will change this, but in the meantime, sovereign debt is the “money” where most surplus capital parks.

Thanks for not being “married” to any position, especially gold these past 4 years.

-DB

REPLY: It is a shame how some people marry an idea and go down with the ship rather than admitting what goes up also goes down. Gold is NOT money. Money is WHATEVER people believe and say it is, for it must be a widely accepted MEDIUM OF EXCHANGE – nothing more. To some it is Bitcoin. To others it is euros, dollars, yen, or yuan, and to others it is their Google Wallet. Money is whatever makes someone comfortable: there is NO right or WRONG.

Right now, gold is being liquidated by the ton. It will complete the bear cycle as laid out in the International Precious Metals Report. We will be issuing the next edition soon in preparation for the change in trend.

This idea of gold seems to fall into a religion. It comes across as someone saying your religion is nonsense and only mine is real. Money has been many things to many people, but it has not always been gold. Some people confuse gold with money, assuming that is the only means to escape government. This is not true, for anything tangible survives a currency collapse. This distinction falls only between movable and non-movable assets. In times of war, the non-movable assets, like real estate, do not survive. If the system goes all the way to a Mad Max event, then the only thing that will retain value is food.

There is no situation where you can say anything is the exception and only that item will survive. That is historically just not true.

[oyarde]

I can use gold for money .

[heavenlyboy34]

Actually money is whatever the market place decides is money. Gold has some significant distinct advantages as money both currently and historically.

This^^ LMAO @ the OP. The fail is strong there.

[DevilsAdvocate]

This^^ LMAO @ the OP. The fail is strong there.

"Fail" used as a noun? Are you sure you're capable having a conversation among adults?

In all likelihood, the market will never decide that just ONE asset is "money". We have the technology to instantly transfer value from any asset to any other asset. So Frank can come into my store where I am charging .65 shares of Google stock for a pair of designer sunglasses, and buy them with oranges. My computer program instantly converts the digital certificate for oranges into the equivalent value for Apple stock at the market exchange rate. This is barter taken to the most efficient, streamlined extreme.

Remember, dollars are only an intermediary. With digital technology, that intermediary becomes superfluous.

Different exchanges might judge the relative value of shares off a chosen baseline (for example, the exchange might list that apples are 2.54 widgets, oranges are 8.76 widgets). But this will be nothing more than a consumer friendly tool to help customers judge the relative value of one good to another.

It is likely that certain commodity baskets that minimize risk will become extremely popular and fall into mainline usage. Certain stores might only accept certain trusted digital certificates, leaving the customer to take it upon themselves to convert their personal "currency" into those trusted certificates while they're standing in the checkout line.

This is the future, not government paper that everyone must use at the point of a gun. A government wouldn't know what to back their currency with, just like they have no idea how to run a business. They don't have the same market signals. They don't have the competitive environment or the feedback loop of profit and loss that guides the allocation of resources in a free market.

If you're worried that digital money will give the government a way to repress the population, stop worrying. Peer to peer encryption can insure against this, just look at Bitcoin! Paper and/or physical money might still fall into popular usage, but physical certificates are far less secure, and far more difficult to manage than digital ones. (Imagine a bank robber or a mugger trying to steal your 1's and 0's).

The future is a wonderful place, if we can get there. If everyone puts their shoulder to the wheel and pushes, we can.

[devil21]

Gold is money to bankers.

"Gold is the money of kings, silver the money of gentleman, paper the money of slaves."

What does that make computer digits the money of?

[Ronin Truth]

Gold is money to bankers.

"Gold is the money of kings, silver the money of gentleman, paper the money of slaves."

What does that make computer digits the money of?

Robots?