Why should I invest in Gold coins?

To clarify, it was you and inflexion who changed the direction of the thread after I responded to the OP by saying, "Owning gold is a lot like owning stock in a company. You have to know what is right about it and what is wrong about it."

Read more: http://www.cointalk.com/t197183/#ixzz1ibMeN570

 

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But you never said you were wrong on your first point. Ever. So therefor I called your first point a lie. It is. I never called you personally a liar. You have over 1500 posts here, and I am sure you are completely correct on every single post.

Must be tough being that brilliant. I am not nearly so smart, I misspeak and am just plain wrong sometimes.

On this entire thread, if you do not accept the way the Financial industry terms "intrinsic" worth of common stocks, then I am wrong again. I have a Finance background, so I am sure I make assumptions as to acceptance of terms from time to time, as it appears I have done here.

 

I didn't define intrinsic, I merely pointed to the dictionary definition. It doesn't matter what I think it's defined as or what a financial institution thinks it's defined as. It has a concrete definition, and anything other than that is not accurate. I suppose the reason we disagree is because I see the nature of something as how it exists in nature, where as you are looking at it from the standpoint of what it constitutes. There's no easy way to determine which is more correct, but regardless the point I am getting at is that the intrinsic value of precious metals is not subject to the winds of change. If stocks do indeed have intrinsic value, that intrinsic value can go down to zero in a number of different cases which seems contradictory to me. If something is due to its nature it should not be subject to this sort of instability. With precious metals that is not a possibility. This is where I come from in saying that stocks don't have intrinsic value, whether or not that statement is correct.

 

I appreciate the clarification and I agree that I am not correct on all posts. This is why I would rather have a discussion on the points of the post rather than taking the tactic of pulling out guns to shot everyone who disagrees. I learn a lot from these discussions which is why I am here.

 

I tend to be a bit hard headed when I think I'm right but that's something I need to work on. It's not that I'm saying gold will always have a static value, rather that it can never have zero value. It will always have things inherent to it that are not subject to change. For an attribute to be intrinsic to something I feel it needs to be inherent regardless of what power structures are in place. Bread has intrinsic value as food, or maybe a comfortable seat were you to time travel with it. It's certainly possible that stocks will have value in the distant future if those companies manage to stick around, and if the financial markets we currently have are still intact, and if the governments we have today are still intact, and if people as a society are willing to place value on something that has no practical use. As a separate example, assuming that we are a not alone in the universe, say you were to travel to a distant galaxy to meet an unknown civilization. Which would you rather have? Intrinsic value implies that they would also put value on the same things.

 

Given that gold is only created when a star goes supernova (takes a star larger than the sun but not too large) then several billion years for the dust to coalesce into something. I suspect there is a good chance the aliens will value gold for much of the same reasons that humans do. On the other hand, beyond the novelty of it, they probably won't give much thought to a piece of paper with a dead President on it which depicts a unit of currency of a single country on the Earth, or a paper share of stock from a company in said country.

The aliens will prefer the gold coin. (unless they are Cybermen)

 

Fair points sir, I understnad your reasoning. Like I said I am sure I was using my definitions from all the classes I took and taught.

Btw, for your example of a foreign planet, what makes you so sure they would value gold at all? There are many societies here on earth that never valued gold. They LEARNED to value it simply because others valued it, and they learned they can trade this silly heavy metal to them for what they want. Being a goldbug really is a learned trait. From my readings it started with nobility and the priesthoods of early cultures desiring it for ornamentation. Common people simply learned that this is "valuable", and could be traded for what they wanted, much like a Mickey Mantle baseball card today is "valuable".

Gold by itself is valuable to the extent someone else wants it, like everything else in economics. Your examples of bread and the like were better examples of intrinsic worth, as they fulfil a basic human need, not want, but bread is not storable, so I completely understand your point.

Just as an aside, if you wanted interesting reading I would read about jade and China. For most of Chinese history China was the all powerful culture in that area of the world. The most valuable thing in the world to them was precious jade, and all cultures nearby therefor valued jade well above gold. This went on for untold centuries, with jade being the top of the food chain for a store of value. Not until significant contact with European cultures did gold in China become the preferred store of wealth. This change happened simply because the Europeans valued it so highly, and the Chinese wished to trade with them. The use of jade as the preferred store of wealth has declined steeply in the meantime, until today its just another gemstone. What would happen to modern man if we came into contact with a foreign planet, and they valued nickel more than all else and we desperately needed to trade with them for their goods and technology? Would nickel become our store of wealth, and would gold become just another metal used in jewelry? Just a thought.

 

That is all I have ever asked for Fatima. If you misspeak or were wrong on a post to simply say so. All of us are wrong from time to time, if we weren't then we have closed minds and will never learn anything. I have learned a lot here, and appreciate it as well.

 

Very true, but its also true of all elements above Iron, and we have no way of knowing if our distribution of rarity of created elements is typical or atypical in the universe. There is a distinct possibity that maybe we got shortchanged in gold but got too much nickel, (just as an example).

 

This is true. The gold found in the earth's crust is believed to have come primary from an event called the Late Heavy Bombardment. There is also gold found in places where magma makes it to the surface. Nobody knows if it is common for other solar systems to have LHBs, but there is a very good chance that an inhabitable planet, has a molten core with plates floating on top.

 

My assumption for why they would value gold is because it is a finite resource, it has properties needed for technology, and it does not corrode. The jewelry aspect is not something I would include. I would think they would value silver more so than gold due to its superior properties for technological use, but that all natural resources would have some level of value.

I am actually big on jade because of it's supposed property of good luck. I almost posted about that on another site yesterday, but didn't so I'm feeling a little bit bewildered that you bring it up There is a bead store near me that has it and other stones that I've been considering paying a visit to, but I first wanted to see what other special properties other stones may have. I don't actually believe in this sort of thing, but it seemed like a fun sidebar.

 

This could be bad news for goldbugs. They'll come down, eat the gold owners for a snack, take the gold coins and burn them for fuel using some technology we can't imagine.

 

Yeah, but dirt has "value". I simply am wondering if they are an advance species will they have any use for gold, or would our uses for gold look like how we view cavemen and how they used stones for axes. Maybe they have a way to craft carbon isotopes to outperform gold's functions, and think its quaint how we use ancient materials.

I know I am sounding silly, but the ultimate point is we are taught by others to revere and value gold. Its others wanting to possess our gold that makes us value it as much as we do. If that paradigm changed, yes gold maybe would be useful a little, but its probably 10 times as plentiful as platinum so I would expect its price to be 1/10th that of platinum.

Just wild thoughts. I am sure I will never live long enough to ever have to worry about it.

Chris

 

Hey that's thinking outside the box, so props for that in and of itself =) If you've ever watched Ancient Aliens on the History channel (yes we can argue it's mainstream propaganda) they had a couple theories relating to gold. One was that a lot of the sightings in California are along a mountain range that is known to be gold rich, and the other was a mountain range in Peru that is simply gone. All that's left is a flat base as though someone just leveled and took the entire mountain long ago for its mineral resources. In any case, I agree that intrinsically gold is not as valuable as its price, but we humans have given it a special role.

 

It seems to me that if an alien had the technology to get to our solar system, it would be easier to mine asteroids rather than taking off the tops of mountains. However who knows how aliens might think.

On the earlier comment on Jade, it's a pretty and nice but it wouldn't really serve as a good currency. It fails the divisibility and fungibility tests for currency.

 

Yes sir it does. It was not used as a currency, but it was their greatest store of value. Something does not need to be a currency in order to be a store of value.

The only reason I related it, as an aside, was it was interesting in that it shows the cultural paradigm in which all choices of what is "of value" take place in. If the Chinese had expanded and become the dominant culture all over the globe, this cultural trait could have spread worldwide. Its an accident of history, in that for most of mankind's history the Chinese have been one of the two greatest civilizations and militaries in existence, except for the past few hundred years. This statement only reflects economic strength, not desirability of the culture, for my Chinese friends.

Chris

 

I'm not so sure about this. China wasn't united until about ~200-100BC. Prior to that, it was a bunch of ethnic and small fiefdoms which warred with each other. It certainly would have been no match for the Roman Republic which, by this time, had a great deal of Europe under its control.

 

Well I was just saying generally "one of two". During the Roman Republic, are you saying 400BC, 200 BC? 100BC? 44 BC? Which period? For most of Rome's Republican period, (from the overthrow of the king), they were not the strongest country on earth by any means. Only from about 212 BC was Rome probably the most powerful Mediterranean country. Before that it was Greek kingdoms. I was simply making the point that most of the history we are taught is Mediterranean area history, but all during that timeframe there was a completely different, powerful country/culture that dominated the other side of Asia completely. Both the Roman and Chinese emperors had heard of each other, but were always too far away to really see each other's power.

 

Otherwise known as Western civilization. We were taught Asian history as well. The most successful historic empire in Asia in terms of military conquest were the Huns, not the Chinese. IMO, I don't think the Chinese navy could have withstood a battle with even the Greek navy and certainly not the Roman army.

I think that Japan also deserves a mention. Like the Westerners, they mastered very advanced metal working which allowed them to fight off more powerful invaders.

 

I know we are hijacking the thread, but look up Chinese junks and see the powerful 5 masted ships that in their day would have destroyed any European fleet. I am not saying the Chinese were all powerful, just in most periods they could have taken on almost any other power in the world. The only reason the Chinese navy was disbanded was internal dissension, not a defeat.

You talk about the Roman army as if it was all powerful. Well they never could completely conquer their nearest rival, the Persians, so its pure speculation as to how they would have done with any other country. Yes, the Mongols were powerful, but they also destroyed all European and Islamic armies they came across, as well as the Chinese. They were the most powerful force in the world at that time, who was second at that moment would be open to debate. Also remember the Chinese were fighting these fierce opponents for untold centuries, they were the reason the great wall was built. I am not sure the Romans constantly fought so fierce an opponent for as long as the Chinese did. Remember, the Huns and Turks the Chinese were fighting were displacing the other people, who then became Rome's enemies. Basically, the weaker tribes, who could not fight the huns and turks themselves, end up becoming the "fierce barbarians" that Rome faced. Rome did not have to face the stronger tribes that the Chinese did.

Sorry for hijacking the thread everyone.