Real Money

Are precious metals now the only real money ?

 

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Don't talk anymore.

 

:bigeyes: rotflmao :goofer:

 

Very mean, but too funny.

 

money is whatever someone accepts as payment.

 

I think I know what you're trying to say - In a world of fiat money, bullion is really the only object of value that is regularly the same price (the price changes reflect currencies for the most part). So if what you're trying to ask is whether or not bullion is the only thing of material wealth left, then yes. Is US dollars could still be traded for gold or silver, then the answer would be no.

 

If only the world was that simplistic. Gold in 1980 was about $800, and was about $260 in 2001. In the meantime, to stay even with inflation, gold would have to have increased by about 110%, but instead it fell by two thirds in price relative to the almost constantly falling dollar. This is a very significant period of time, 21 years, for your theory to be continuously wrong.

I like gold a lot at the present time, but gold isn't always and forever a good holding under all economic conditions, even if there is significant inflation. Life isn't easy and bad economic theories abound on the internet.

 

I know that I really butchered the whole concept, but I was trying to orate what I thought what he meant to say.

I was more of thinking the survivalist route, that gold would retain some value while currencies die out.

But you're completely right, and I'll keep my mouth shut now

 

Please don't let me stop you from commenting. That was not my intent. It's just that there is so many pro-gold articles on the internet these days from very intelligent-sounding but incorrect folks with very little understanding of economic or markets that it pays to be careful about what you accept as fact.

And one comment about survivalists -- they have been out there continuously since at least the 70s, and they are still wrong. Nothing is really going to save you from total economic collapse, which has a small probability of happening anyway.

 

++ here, here

In an economic collapse, gold and silver will be just worthless metals. Food, water, clothes, and shelter will be the real commodities -- and metals won't buy it.

 

Money is a claim of honor.

Don't be silly... I started reading Ayn Rand 45 years ago when I was 15. I went the route with British sovereigns and Swiss 20F and all that. I still like gold. But somewhere along the way, as a numismatist, I could not deny that gold and silver are just kinds of money, as pens and pencils are writing implements. The Austrians are incomplete on this point and in fact never shed socialist ideas about the social definition of money. Any standard textbook -- as well as Marx and von Mises both -- will tell you about commodity money and its evolution. Supposedly, money serves three purposes:

Store of Value
Medium of Exchange
Unit of Account.

Those are three independent things. They can be related. (Dogs are pets. Cars are conveyences. You can put your dog in your car ... even teach him to drive... Dogs are not cars.)

Gold is a store of value. Period. You need some to balance your portfolio, to cushion against risks. Hard core gold bugs recommend having 10% of your net worth in gold.

The Dollar is a unit of account. Multinational corporations headquartered almost anywhere often choose the Dollar for bookkeeping. We all do.

Paper dollars (coins, etc.) are hardly a medium of exchange. Really for almost a century, physical money has been relatively unimportant for commerce. It is a daily convenience, to be sure, for small transactions, but most of trade and commerce is carried out electronically. Plan to travel to Europe from the USA? You might need some UKP or EUR in your pocket, but, really, your credit card is your medium of exchange. The transfers among currencies is handled electronically for a small aggio. No need for physical cash, or not much.

A couple of years ago, I got curious about Stock Certificates, scripophily. Last year, I read a biography of John Stewart Kennedy, the banker to J. J. Hill and a dozen other railroads. Paper promises -- making them and more to the point, keeping them -- built this nation. Gold had little to do with it. Physical gold was a fraction of the wealth... and is even less so today.

Nice stuff, gold. Love it. But "real" money?? You confuse yourself with mystical floating abstractions, the savage's limited epistemology in tangible, concrete objects.

What is money? Define money. Then you will know what "real" money is.

 

Here

This was the answer I was in hope of seeing !

 

LOL, most of my $$ comes in the form of physical labor and craigslisting stuff for people in trade for keeping my 250K mile truck going.

 

What's your thoughts on economic collapse?

 

Great post! You packed a lot of important concepts into it.

I like gold a lot and consider it an important portfolio asset because of the condition of the economy and currencies these days, but the day will come when holding gold is the wrong solution. We aren't there yet. I don't ever expect to walk into a store and pay for anything with gold and silver coins. This isn't to say that gold can't be money, it just isn't money at the present time.

 

Does water have intrinsic value? If not, then it would not matter whether or not all of the water on the planet disappeared tomorrow because it has no intrinsic value. I think you are probably just defining intrinsic value different from the rest of us. Anything that is useful to human existence, not unlimited in quantity, and requires at least some human effort to obtain has at least minimal intrinsic value.

 

Well, gold and silver aren't high priced becasue people want it. People want it because it is useful and has value and is therefor high priced. So I think you have it backwards. Gold and silver have characteristics not present in most other metals for applications in the electronics, medical, jewelry and other industries. Every central bank in the world owns gold and lists it as a monetary reserve asset. It isn't easy or inexpensive to mine in great quantities, so it also has a scarcity value. If silver, for example, was a lot cheaper, then the world supply would quickly disappear as every electronics manufacturer would use it for its superior performance to other materials.

And in answer to the question you ask everyone, I buy gold and silver with Federal Reserve Notes for the same reason I buy stocks or any other investment -- because they have a high probability of increasing in value relative to just holding the Federal Reserve Notes I have left over after paying my bills.

 

After the discussion last week - I believed I was the only one who had it backwards.