Skip to comments.Back to the gold standard?
Posted on 05/18/2006 3:30:56 PM PDT by Dazedcat
Gold is selling for more than US$700 an ounce, up from $258 in 2001.......
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Gold is a commodity. It isn't money. Over an extended period of time it is a terrible investment.
Not only is gold money, but it's legal money for the U.S., too. The fiat currency we have cirulating now is flatly unconstitutional.
lead, in my opinion, in various denominations, is a better investment.
Someone must have posted it by now.
The value of gold is a myth, huh? The value of the Dollar, on the other hand, is inversely proportional to the value of an ounce of gold. In a queer display of the dismal science, economists point to the trillions of dollars in foreign hands and declare that scarce gold is merely a "commodity". Gold goes up. The Dollar goes down. I would much rather have an ounce of gold than an ounce of dollars.
So you'd prefer that the US inflation rate be determined by Russia and South Africa than by the Fed?
If it comes to the point where dollars are worthless, you'd be better off having a lot of lead than a lot of gold (as a previous poster pointed out).
I remember reading several articles in places like the Arab News soon after 9/11 urging Muslims to get rid of their dollars and change to gold in order to undermine the US economy and government. There are probably fatwas and Friday sermons proclaiming this part of the Muslim duty of jihad against the Great Satan. I worried about it at the time, but did not see a rapid rise in gold prices. However, $700 is more than twice as much as it cost in 2001, going on 3 times.
Total ounces of gold in the world = 4.28 billion ounces.
Total amount of dollars in circulation in the world = $55 trillion.
That comes to $12850.50 an ounce
Gold is not an investement, in the same way that a share of stock is. It is only a store of value, most clearly seen when viewed over long periods of time. Its value vs. paper money can obviously fluctuate in the short term (e.g. 20 year period from 1980-2000).
Gold is REAL money and it is most valuable when it is most needed. It's value rises when faith in fiat money falls. Golds rise is telegraphing trouble ahead for the $US.
I don't disagree with your point, but in this particular instance the US has the distinction of being the #2 producer after South Africa, with Australia chasing our tail. Nevada is almost #2 all by itself. With the rapidly declining output of South Africa and solid reserves and production estimates of Nevada and other parts of the US, we will likely move into the #1 position eventually.
Thanks to sitting on what is pretty much the world's largest rift zone above sea level, the US has no shortage of heavy metals. Ironically, environmental regulations have restricted mining such that production is moving to places like South America.
The problem with tying currency to commodities is that the value of the currency has an almost arbitrary mapping to the economy. The effective value of the currency can fluctuate wildly with commodity supply, something we can control with fiat currency.
By that standard, bonds are a much better value, and diversified stocks are the best of all.
bonds and stocks are investments & gold is not. they are different. a $US bond is definately NOT a store of value
Wrong.. commoditys are money, currency is not money..
>>Not only is gold money, but it's legal money for the U.S., too. The fiat currency we have cirulating now is flatly unconstitutional.<<
Follow the yellow brick road....
Seriously , an examination of how money is created would be useful. If a bank recieves a deposit of $100 and loans out $80 of that then the money supply has just gone up by $80.
Ding! Ding! Ding! Only three posts before the word "fiat" appeared.
>>This is very interesting reading. I can personally attest for the worth of gold over the past year, thankfully.<<
It is interesting reading. And he's right about the problems with the Yuan. But its worth remembering the author is a Carter appointee.
Currency is a money substitute. It is gold that is legally money; the gold certificates are a form of paper currency.
What about silver? Is that a good investment? I'm new in the investing world but I'm thinking of investing in silver rather than gold.
Actually, silver is doing pretty good and it costs a lot less than gold does, but I don't want to give advice since I'm not a financial expert.
Yes, I have gold myself and it's doing okay now, but when I bought gold at the beginning of the Clinton years I certainly didn't have any appreciation of fiat currency.
1 : something generally accepted as a medium of exchange, a measure of value, or a means of payment: as a : officially coined or stamped metal currency b : MONEY OF ACCOUNT c : PAPER MONEY
That's known as the multiplier effect. The thing about loans is they have to be paid back. Thus, they tend to be self limiting as far as being inflationary.
Without loans, the velocity of money would have to be incredible.