Posted on 04/02/2022 12:16:52 PM PDT by Browns Ultra Fan
I could buy the same thing for $280 in 2001 as I could for $800 in 1980? $1100 in 2015 buys as much as $1700 in 2011?
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We are talking historical value. Yes, gold had it’s ups and downs, just like all hard assets.
However, it has been proven over thousands of years to be a storage of wealth.
The same thing can not be said for any fiat currency.
In fact, every single fiat currency has eventually failed.
Every single one.
Right. Even though it dropped 70% from 1980-2001.
In fact, every single fiat currency has eventually failed. Every single one.
How are those metal backed currencies working today?
Why doesn’t someone combine a cryptocurrency with Gold?
How are those metal backed currencies working today?
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Hmm, pretty good I’d say, since a 1964 quarter is worth about $4.50, and a $50 dollar gold eagle is worth about $1900.00.
On the other hand, the dollar has lost 96% of it’s value.
Gold $1,933.3 0 (0%)
At close: Sat 4/02/2022, 10:45:48PM EST
GoldCoin $1.93
That appears to be DIRECtLY tied to gold. I was thinking of sumthin more loosely tied to it. But that does seem like a more substantial crypto.
Weird, I can't think of a single country that still issues one.
On the other hand, the dollar has lost 96% of it’s value.
My dollar is still worth a dollar. Maybe you're doing it wrong?
This is because governments will always try to pay for things with fiat promises rather than gold. It's Gresham's Law in action (aka "Good Money Drives Out Bad").
If I have 2000 fiat dollars and an oz of Gold, and I want to buy Oil (or Wheat or Rice etc) from you - I will always offer you the fiat dollars (the 'Bad Money' first). If you accept my dollars, that's great. But I would never lead with the Gold first.
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The Ruble Gold peg isn't the introduction of a Gold-backed currency. While people still accept Fiat, Gresham's Law forbids a fully exhangeable Gold-backed currency. However the peg does establish a floor to the Gold price.
This means that it's no longer possible (assuming efficient arbitrage) for the Gold price to be artificially suppressed below ₽5000 per gram.
Gold prices have long been suppressed/controlled by the issuance of synthetic (promissory, paper, IOU) Gold. That suppression mechanism should no longer work - as long as arbitrage is not somehow encumbered, and the Ruble maintains its current strength.
Weird, I can’t think of a single country that still issues one.
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Yes, exactly my point.
Could it be because it’s worth so much more than the face value of the fiat currency?
That goes for copper pennies too, and soon nickles won’t be make of nickle anymore either.
Your dollar has lost 96% of it’s buying power, that is a fact.
Gold has never gone to zero, unlike EVERY fiat currency in history.
So, yes, that makes gold the most stable monetary form of exchange in history. It is also a hedge against inflation. When inflation is low it tends to drop and rise in times of high inflation.
The whole topic of discussion is why Russia would tie it’s currency to gold? The question should really be, why wouldn’t they? What else would they back it with? Nothing?
They problem for us, is that this could also accelerate the demise of the dollar. The only reason we have gotten away with printing so much money over the years, is because of our reserve currency status. Which Biden is doing everything possible to destroy.
If Russia and China make a power play and back their currency with gold. It could cause a collapse of the last 4% of the dollar.
Who would want to use dollars backed by nothing, when they can use currency backed by gold.
There is a reason Russia and China have both been stockpiling gold.
What you're doing wrong is exhibiting circular thinking. A dollar = a dollar, yes, but the dollar is worth less with each passing day. So the dollar you use to buy you a loaf of bread today will only get you less bread tomorrow, and eventually, no bread at all.
The arbitrage will only work if someone is buying/selling at the peg. Doesn't that make it a gold-backed currency?
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Yes, exactly my point.
Your point that metal backed currencies work is helped by the fact that they're no longer used anywhere?
Your dollar has lost 96% of it’s buying power, that is a fact.
My dollar hasn't lost anything close to that much.
So, yes, that makes gold the most stable monetary form of exchange in history.
Didn't gold lose 65% (about 84%, adjusted for inflation) of its value between 1980-2001? How long did it take the dollar to lose 65% (84%)?
My dollar hasn’t lost anything close to that much.
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Okay, either you have no concept of inflation, or you are purposely acting like you don’t understand it. Either way, there is no point to this conversation anymore. This is not an arguable point.
So, keep all your cash in dollars, I’m sure that will work out fine for you.
If Russia was both buying Gold at a fixed price in Rubles and redeeming Rubles in a fixed amount of Gold then the Ruble would be a fully fungible Gold-backed currency.
(It wouldn't be wise to run such a fully redeemed currency unless the Ruble price of the Gold for redemption was a lot higher - this is because of the long history of Gold price suppression).
Simply buying Gold at a fixed price puts a floor under the Gold price. But you couldn't put your hand on your heart and say the Ruble was gold-backed unless it was redeemable in gold.
That said: the value of a nation's fiat is affected by how much Gold that nation has in its reserves, so in that illusive sense many fiat currencies have some level of gold-backing.
For now the Ruble remains backed by Oil, Nat Gas and military might: similar to the way that the USD is backed.
If the rate of price inflation in a currency is X% a year, then in 70/X years, the currency will halve in purchasing power.
If inflation was still calculated the way that it was back in 1980, the official rate of USD inflation would be above 15 percent right now (as per Shadowstats.com)
If this were true then it would take less than 5 years for the dollar's purchasing power to halve.
Why would I keep my wealth in a bunch of dollars?
Why would Russia buy a bunch of gold and then buy more gold for rubles? Why would that make anyone want to hold rubles? Isn't that the purpose of the plan?
Shadowstats is funny. They don't actually calculate inflation.
Russian Oil (and the historic devaluation of Russian assets) might make people want to buy Rubles. But I think the purpose of this floor on the Gold price really is to support the price of Gold, to switch off/damp down suppression and perhaps to force a Gold short-squeeze.
The ratio of synthetic to real Gold is at least 100 to 1. Probably way more.
When reality comes to the Gold price (and it goes way up) then all fiat currencies - and all declared reserves of Gold - will come under extreme scrutiny. Russia, China and India can certainly withstand scrutiny of their Gold reserves.
CPI is Price Inflation, but of course there is also monetary inflation - or 'classical' inflation. Don't know if shadowstats tracks that.
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