Its the money stupid

[expat_panama]

...All money is "fiat money".

Gold and silver can not be created artificially at will. Something will always be used as a medium of exchange in the market, and in the opinion of sound money advocates it would be better if that medium couldn't be reproduced infinitely.

Please help me out if I'm not catching your thoughts here, but my guess is you're saying that when a government pegs its money's value on gold or silver then money can't be created out of thin air in banks. Actually, For hundreds (if not thousands) of years banks have openly loaned out depositor's funds with the agreed understanding that deposits would be backed with acquired collateral.

On one day ten rich guys can deposit 100 golds each. The next day 10 middle class farmers can mortgage their farms (each worth 200 golds) for mortgage loans of 100 golds each. The first day the money supply is 1,000 gold coins backed by bank deposits totaling 1,000 golds. The second day the money supply is 2,000 gold coins backed by a thousand golds in borrowers hands plus bank assets worth 2,000 golds.

 

[editec]

It was GOLD BUGS (smithies) who likely created the first paper money.

Hell folks, they invented FRACTAL banking while they were on their own HONOR SYSTEM gold standard.

Gold is not the solution to bad government OR INFLATION, either.

Wish it was, but it ain't.

 

[ShackledNation]

...half the gold in the world is used for jewelry, a big but not the majority is used as a store of value (like money) and a much smaller amount is used for industrial uses...

Actually, most of the world's gold is at the core, and there's only about 17,000 trillion oz. of gold at the surface. Of that, only 5 trillion oz. has been mined but that doubles every 40 years or so.

...inflation due to the never ending expansion of the money supply...

Last week a truckload of bread could trade for an oz. of gold and this week it's one and a quarter. If gold were money we'd have 250,000% inflation.

I think you need to check the math there. Either way, the change in the price of gold largely reflects the devaluation of the dollar, not a change in the value of gold.

 

[expat_panama]

...I think you need to check the math there. Either way, the change in the price of gold largely reflects the devaluation of the dollar, not a change in the value of gold.

Lets look at where we stand.

→We see gold traded at $1,920/oz and three weeks later at $1,530/oz.

→You say the change is caused by the dollar being devalued.

→You think I need to check my math.
​

Care to clarify that?

 

[ShackledNation]

...I think you need to check the math there. Either way, the change in the price of gold largely reflects the devaluation of the dollar, not a change in the value of gold.

Lets look at where we stand.

→We see gold traded at $1,920/oz and three weeks later at $1,530/oz.

→You say the change is caused by the dollar being devalued.

→You think I need to check my math.
​

Care to clarify that?

Please explain how that equals 250,000% inflation.

 

[editec]

When was the last time any of you bought anything you actually needed with a gold or silver coin?

Money is that stuff which you must use to pay your TAXES.

That is one of the ways every government controls the specie.

And once a government can create VALUE in whatever they're using as the currency, they're one step away from ;degrading the value of that specie.

Every hear of CLIPPING?

That's a time tested way governments degraded the value of the specie when they used fold or silver coins.

You guys need to read some books about the history of money and economic.

 

[expat_panama]

...Please explain how that equals 250,000% inflation.

Sure.

Compound interest, what Einstein called the most powerful force in the universe. The graph had gold go from 1825 to 1570 in a week, and (1825/1570) multiplied by itself 52 times over a year is 2500. If something is multiplied by 2500 it's called a 250,000% increase.

 

[ShackledNation]

When was the last time any of you bought anything you actually needed with a gold or silver coin?

Never because government has made it illegal.

 

[ShackledNation]

...Please explain how that equals 250,000% inflation.

Sure.

Compound interest, what Einstein called the most powerful force in the universe. The graph had gold go from 1825 to 1570 in a week, and (1825/1570) multiplied by itself 52 times over a year is 2500. If something is multiplied by 2500 it's called a 250,000% increase.

Compound interest has nothing to do with the calculating the rate inflation, nor is compound interest calculated by measuring the change in price of a commodity. Compounding interest is when interest gained through an investment is redeposited into that investment so it can increase the amount of money earned via interest.

 

[expat_panama]

...Compound interest has nothing to do with the calculating the rate inflation...

Actually, every month when the headlines say "last month prices rose at an annualized rate of...", they're using an 'anualized rate' that's just the monthly change multiplied by itself twelve times.

 

[Toro]

....Gold/silver has withstood the test of time, paper money backed by nothing has proven to fail over and over again…Just look at the American dollar, today.

You mean like, today?

Paper dollars trade for five gold coins for ever four they bought last week. That must mean paper dollars are a pretty good 'investment'.

That reflects the instability of the dollar, not gold.

No, it reflects the instability of gold.

The price of gold got stupid. It went up too far, too fast. Now it is getting hammered.

Plus, risk assets are being liquidated. When a global margin call is being made, the only currency that matters is the dollar. Transactions are in dollars, not gold and silver. Gold and silver get sold when the world demands repayment.

Silver falling more than 30% twice in five months is probably a warning sign that the gold bugs are going to get their heads handed to them on a silver platter.

 

[Toro]

I suspect what most of you continue to fail to realize is tht ALL CURRENCY (including gold or silver) is an ARTIFICAL REPRESENTATION of WEALTH.

All money is an agreed upon symbol of wealth.

What is money?

It is the respresentation of human work that has already been done.

Human labor is the source of all human wealth.

Money is merely a contrivance that we use to make transferring that wealth convenient.

Money is a tool, not real wealth.

The money I have in the bank is merely a representation of work that was done in the past.

It is not wealth but the PROMISE of wealth that I can purchase in the future.

It is the promise of exchange that gives money any value.

doubt me?

Take all the humans out of the equasion (but one) and what is money or gold, or even natural resources?

They are nothing.

They have no value if no human is there to GIVE THEM VALUE.

That dead wrong. Gold is real wealth. Gold backed currency is a claim on real wealth. Even if your characterization of money were correct, it only applies to fiat currency. That's why fiat currencies are a scam.

currency is not a "representation of work you have done in the past." currency is a medium of exchange. It has value only so long as it can be exchanged for real goods and services. A currency's value is determined by what it can be exchanged for, not how hard you had to work to get it.

Gold is not "real wealth."

Real wealth is the productive capacity of the nation. The price of gold is merely a representation of that wealth, at least in part.

 

[Toro]

...half the gold in the world is used for jewelry, a big but not the majority is used as a store of value (like money) and a much smaller amount is used for industrial uses...

Actually, most of the world's gold is at the core, and there's only about 17,000 trillion oz. of gold at the surface. Of that, only 5 trillion oz. has been mined but that doubles every 40 years or so.

...inflation due to the never ending expansion of the money supply...

Last week a truckload of bread could trade for an oz. of gold and this week it's one and a quarter. If gold were money we'd have 250,000% inflation.

Maybe, but ...

According to GFMS, in 2001, the world produced 1640 tons of gold. In 2010, the world produced 1690 tons of gold. Yet, the price went up by 500% during that time.

 

[Toro]

...half the gold in the world is used for jewelry, a big but not the majority is used as a store of value (like money) and a much smaller amount is used for industrial uses...

Actually, most of the world's gold is at the core, and there's only about 17,000 trillion oz. of gold at the surface. Of that, only 5 trillion oz. has been mined but that doubles every 40 years or so.

...inflation due to the never ending expansion of the money supply...

Last week a truckload of bread could trade for an oz. of gold and this week it's one and a quarter. If gold were money we'd have 250,000% inflation.

I disagree.

I think gold is money.

But it is also a commodity and asset. And like other assets, sometimes it goes bonkers. Like it has recently.

I also agree that the general trend in the price of gold is a reflection of the loss of confidence in the value of all fiat currencies. One day, it will end. Maybe it's ending now, I don't know.

FTR, since Nixon ended the last vestiges of the gold standard on August 15, 1971, the price of gold has risen, on average, 8%-9% per year, slightly below the return of stocks.

 

[expat_panama]

...Last week a truckload of bread could trade for an oz. of gold and this week it's one and a quarter. If gold were money we'd have 250,000% inflation.

Maybe, but ...

According to GFMS, in 2001, the world produced 1640 tons of gold. In 2010, the world produced 1690 tons of gold. Yet, the price went up by 500% during that time.

Instead of settling for "maybe", let's put in the effort to get somewhere; hard work but it's worth it.

Like getting gold out of the ground. The GFMS is a nice think tank on the gold vendors' payroll so they let slip production stats for 2001 and 2011. The USGS works for you and me and are willing to share everything--

--and it tells us that gold production takes more than a decade to respond to price swings, and it tells us that production doubles every four decades or so.

 

[expat_panama]

...I think gold is money...

The rest of us don't think that. We'll let you think what you want and we'll let you buy gold. If you try to use your gold for money then we may take your gold and put you in jail.

 

[editec]

You can use your gold as money, as long as people are willing to take it.

You just can't pay your taxes with it.

Hence its non-status as legal tender

 

[expat_panama]

You can use your gold as money, as long as people are willing to take it...

Tell that to Bernie Klaus (Liberty Dollar creator convicted in federal court | The Asheville Citizen-Times | citizen-times.com) or Dan Buczek (Jon Christian Ryter -- Cop Arrests Man Over a Silver Coin).

You can trade, you can barter, but you can't say it's 'money'.

 

[Toro]

Instead of settling for "maybe", let's put in the effort to get somewhere; hard work but it's worth it.

Well, as an investor and trader for the past two decades, I have long since learned that you speak probabalistically, not with certainty about the markets. So "maybe" the market has topped. I don't know. Do you? Work as hard as you want. If you come back to us after working hard with a certain outcome for gold, let me know, and we will work out a trade so you can profit from your certainty.

Like getting gold out of the ground. The GFMS is a nice think tank on the gold vendors' payroll so they let slip production stats for 2001 and 2011. The USGS works for you and me and are willing to share everything--

--and it tells us that gold production takes more than a decade to respond to price swings, and it tells us that production doubles every four decades or so.

I have that info from GFMS.

At some point in time, there will be a supply response. But there hasn't been thus far, and there aren't many new projects in the pipeline.

 

[Toro]

...I think gold is money...

The rest of us don't think that. We'll let you think what you want and we'll let you buy gold. If you try to use your gold for money then we may take your gold and put you in jail.

You can use your gold as money, as long as people are willing to take it...

Tell that to Bernie Klaus (Liberty Dollar creator convicted in federal court | The Asheville Citizen-Times | citizen-times.com) or Dan Buczek (Jon Christian Ryter -- Cop Arrests Man Over a Silver Coin).

You can trade, you can barter, but you can't say it's 'money'.

Of course I can.

"Gold is money."

Simply because the government says it isn't money - most of the time - doesn't mean it's true.

I'll await for the government to arrest JP Morgan and the CME Group for accepting gold as payment.

J.P. Morgan to Accept Gold as Collateral - WSJ.com
CME accepts gold as collateral for exchange trade | Reuters