This guy doesn't like precious metals.

I do object to a couple of points from skimming this thread.

1. "Plenty of supply." If there is plenty of supply, why are the United States Mint and Royal Canadian Mint stalling production of bullion coins? Last I read, yearly global production is less than 1 billion ounces, which is very small compared to global consumption. Also, it is my understanding that mines are deteriorating in quality and that the cost of mining is increasing because it is fuel-intensive.

2. "No market manipulation." How is it that more paper silver can be traded in one day than annual global production without some kind of market manipulation or distortion? And, with banking scandals such as Libor and drug money-laundering, how is it far-fetched to posit that a much smaller market like silver is likewise manipulated?

 

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Does this in any way hinder the ability to aquire masive amounts of gold if you so desired right now? There is more supply than demand, no question about it. There would be no need for million dollar ad campaigns on talk radio, TV, et cetera if there wasnt a glut of it.

I am a big fan of silver. But it is more of a pretty metal thing, not monetary. The only reason gold "is money" as they say, is because humanity has agreed on it. It is arbitrary. We agreed paper with government words on it is money and that is not different in any way. "But gold is more scarce than money you can just print" you say....so are purple colored seashells.

 

I think this post says it. I was going to buy gold just to stash away. I did and at the price I bought it at years and years ago I could sell it and double my investment. The problem I had was...I don't like gold that much...I like silver. With both of these metals I just couldn't bring myself to buy just rounds or bars...I want something interesting stamped on it...because in the end...I like gold, silver, copper, etc...but I like them in disc form with artistry and propaganda So I bought Krugerrands which are interesting to me and then I bought up gold coins from German princely states and French coins of Napoleon III and other old coins minted in gold (as for silver, I got a ton of that in coin form already). I don't like the metal, I like how the designs look when stamped on metal. In the end, I am not driven by a desire to get rich or that everything I collect needs to be able to make a profit (if this ends up the case, all the better) as I have never sold a coin in my life and, if I cared about getting rich, I wouldn't have spent, literally thousands of dollars, setting up a mint in my home to mint coins that I give away.

 

Obviously, there is a problem in acquiring massive amounts of gold and silver. As an example, the Federal Reserve refuses to give the Germans the gold they own any time soon, and has made the Germans wait 7 years for just a portion of it. 7 years!

Also, I believe Eric Sprott and other major players when they say they are having problems getting delivery of physical silver over anonymous people on message boards. The distinction here is "large physical deliveries."

Moreover, gold and silver are universally regarded as money. In Spanish, "plata" (silver) literally means money. While seashells may have been regarded as currency at some place and time in the world, they never became a universal currency. Gold and silver being universally recognized as money is not a mere coincidence, as you seem to imply.

 

The reason they have been held as money is the world has never had to deal with food shortage or water shortage. Not on a world scale. That is what would happen today in a EDITED: Forum rules scenario. The PRICE of the PM is irrelevant if you were to say need 10 ounces of silver for 1 loaf a bread. Ask an irishman during the potato famine if he wanted silver or a potato. You cant eat or drink silver and gold. Silver and gold is only money, when you actually HAVE money.

 

Well, I have heard that saying before, and honestly I am very skeptical of it. In any famine, or similar hypothetical scenario, it appears to be implied that the person is legless, immobile, and that the world is simplified to the point that there is no other option than to put food in the mouth or starve. Surely, someone in Ireland during the famine would have been willing to trade massive amounts of food for gold, or to take a wealthy Irishman with a boatload of gold to England or elsewhere on his fishing boat if need be, where there was no famine. There the Irishman with gold might live like a king and have his harem.

Let's look at Ethiopia as an example. Surely, all other things equal, an Ethiopian with a truckload of gold fares better off than an Ethiopian farmer depending on good weather to survive. The Ethiopian with a truckload of gold may be able to bribe officials, taxi drivers -- someone, somewhere! -- to get him where he needs to go. He might already have money outside the country. On the other hand, food tends to spoil. So gold has an obvious advantage over food in being a medium of exchange, even in some extreme examples. Also, these examples seem to imply that food and gold are mutually exclusive. It is likely the person living in a vulnerable area with a large amount of gold has a large stash of nonperishable food, since they both fit under survivalism or just thinking ahead.

To be honest, the idea that you "can't eat gold (or silver)" just seems like a fluoridated-brain argument.

 

I saw a movie about the famine and what they wanted was silver or gold. They didn't have it, so they were starving. Back then a crown, or a half a crown was the difference between starving and eating, since the crops were not there. Silver and gold were the real money of the Irish/English system. They used the monetary system to starve the Irish out and eventually a lot of them were shipped to Canada where they found a life.

 

I have to ask though. Isn't your conclusion tainted since as you said, gold and silver were money then. What if carved jade had been the money then, would you be saying today only jade is worthy of owning.

It gets to the huge assumption people make that pm will always be seen as innately valuable.

 

Now you are going to get it from those who believe it has a everlasting, unknown, inherent value, much greater than its paper money current price .

 

Lol i already am the redheaded stepchild here it seems, or the government plant, so might as well push the envelope further.

 

I don't disagree with you, but to play devil's advocate, I think the assumption that silver and gold will always be seen as innately valuable seems to be a fairly safe one given how far back in recorded history you hear of copper, silver and gold pieces being valued and used as "money". Humans have elevated those precious metals to higher status because of whatever reasons, but they have stayed elevated for millennia and could very well continue on for more millennia. Obviously there is no guarantee of that, you're correct that tomorrow someone could claim dandelion flowers as more precious than gold, and if it stuck, I'd be the richest man in New Jersey looking at my yard...

Now, to your point of carved jade, there's been many things throughout history that have been held valuable and used for barter, or for argument's sake, "money". To me the whole concept of "money" is attaching a value of something I have, to something you want and vice versa. Heck, today's word "salary" is derived from the soldiers being compensated in salt, since back then salt was very valuable for curing and keeping meats from spoiling - those who had it were considered "well off". But, I think (and please correct me if I'm wrong), during those times they also used gold and silver as currency, so someone could by the salt from the soldier. Some value had to be attached to the gold/silver and the salt to make it an even trade, and that value was probably subjective.

The value of today's PM's is only worth what people are willing to pay to get it, how much they desire the metal as well as supply and demand. I think it's all really subjective, and as long as the human psyche continues to consider those metals precious and valuable, they will hold value, which is quantifiable in today's paper monetary system.

 

So, you're the one piloting the black helicopter circling my house...

 

You keep assigning the term "money" to gold as if money is some kind of absolute. Money is a man made idea. And it only works when there is wealth at any part of the heirchy. The Irish famined wanted crowns because thats what the wealthy men that had the potatoes wanted for the potatoes. If there were no potatoes at all the silver and gold would be meaningless. The problem is you are not seeing the forest from the trees. You need to step outside and look at it subjectively. You are inside the lexicon where you were born into a world where the human animal could afford the luxury of money and you have never seen a different scenario. It just so happens that it has been the case for millenia, for the most part. I'll give you a few scenarios that might help you see what I am saying.

Before money...we were cavemen. We needed food, water, air and shelter to survive. At some point some cavemen got good at finding food and had a surplus. Other cavemen found pretty rocks. The cavemen with the extra food liked the pretty rocks too and traded some food for some rocks. After some time they developed a standard exchange rate for x amount of rock for x amount of food. If there was no food surplus, the cavemen with the food would eat and the caveman with the rocks would die.

2nd scenario is a little more historicly factual. Fast forward thousands of years, the cavemen are now advanced human beings who farm and such things. One farmer grows corn, another farmer grows potatoes, some other guy sucks at farming finds pretty rocks in the ground. The guy with pretty rocks likes potatoes and corn but can grow neither. The guy with Corn has extra corn and likes pretty rocks but doesnt like potatoes. The guy with potatoes doesnt have enough potatoes to trade for pretty rocks but is willing to trade for corn which he can also eat when he gets sick of potatoes. The corn surplus is the only reason the guy with gold can eat in this scenario. He can trade the guy with corn directly with his gold, or trade for potatoes because the potato guy knows his gold will get him corn even though he doesnt care about gold. If there were just enough potatoes and corn for the 2 guys, the gold guy would die. Once everyone has food, they can hold the gold as "money" because it doesnt spoil as food does, and trade it again later on. But if ever everyone else decided that they no longer liked pretty rocks, then the gold is worthless. It just hasnt happened yet but that doesnt mean it cant. When food starts to run out at the highest classes, it will happen.

The last scenario is easy. If you were the only person on earth would you care about gold or food? There are tribes in the amazon who would not give you a single thing for your gold if you found yourself stranded on their land. So where is the innate value? Offer a dog if your gold bars or your steak. We are animals just like the dog.

We have proven by the successful use of paper money that rocks are arbituarily assigned value. Heck we dont even need a physical represnetation of money whatsoever anymore, just numbers in a computer can have a side of beef delivered to your door tomorrow. Money is not an absolute. There are billions of people who have lived and died and never once used gold or silver as money. Money is whatever we decide it is. It is only by custom and paradigms that gold and silver has persisted with some value.

 

Near universal acceptance of PM as valuable, in itself makes it so....until people no longer accept it much like how humans have generally stopped viewing it as, or using it as, viable currency. It was chosen by important people and societies to represent wealth because of its nature and rarity and many still see it as inherently very valuable. In the end it is valuable because we say it is, not because of any inherent value or practical use.

People rail about fiat money but gold is no different. Gold is only valuable if we say it is, otherwise we would have to find a use for it other than decorating our fingers and necks (or hoarding). The difference between oil and gold is simply that oil has SO MANY practical uses, we use petroleum based products every day in so many ways...while gold? We can buy it, wear it, stack it and it REPRESENTS wealth by the value we place on it and the currency we are willing to exchange for it. It is the paper bill of the past and to be honest, the paper bill is losing its battle with the plastic card.

Gold and silver were simply chosen by the people in power, most likely because it has few other uses save to shine and look impressive and they had the means to extract it. It became the medium in which wealth could be distributed without having to share the REAL wealth. That REAL wealth the land, the resources, the people and what they produce. Without all those other things, a limited supply of gold will only last you so long. Certainly a starving Ethiopian or Irishmen might be able to extract himself out of a bad situation if they had enough gold as it has historically been viewed as valuable...but in reality, because gold is unobtainable to most of them, and today it simply an expensive commodity, without currency to buy it, or the land to extract it from, or weapons to take it, they mostly just starved.

 

The thing about PM's is that you can't just create them into existence. The "money" we use now can be inflated at will. Silver and gold has to be mined and refined. Anyone who gets paid in them is getting something with real value. There is no counterparty risk, if it really is made of the metal it looks like.

 

First, let me add that my comment about not being able to eat silver being a "fluoridated-brain argument" may have been a little rough, and it wasn't intended as a personal attack on anyone. We can say that you can't eat paper money either, yet the whole world kills and dies for it, in starving nations or otherwise. I just think people are confusing the medium of exchange with the items exchanged, or are oversimplifying the relationship to the point of absurdity.

Second, I suspect some people have become cynical about gold and silver being money because the Federal Reserve and other central banks have engaged in unprecedented financial engineering in modern times, and have thus truly distorted the value of gold and silver. So in that sense the skeptics about gold and silver as money are correct, because they have been correct for several decades. What I argue, and what I believe others such as myself argue, is that the suppression of gold and silver is nearing an end, because the central banks really are powerless to manipulate these prices for too long. Given that the manipulation has occurred for several decades, the skepticism is somewhat justified, though.

 

Everything is finite. Cotton is finite. Ink is finite. If youre going to argue that gold is simply more finite than the cotton than why not pick something even more finite than gold and call that money? Again that has no bearing on what true value is. The only thing that matters is what people agree upon. And in a situation where food is scarce, PMs wont matter. History has never seen the population we have now so there has never been a worldwide food or water shortage. Maybe the current population doesnt cause that scenario either, I am not a gloom and doomer, but at some point...maybe in a thousand years, I dont know, but at some point we could reach 100 billion people on earth and food will be a problem. At that point PMs will have no innate value.

 

I wasn't trying to start anything, and I do think we should all remember we are friends here, share alot of views similarly, its just in some aspects of PM we disagree. My query about what if money had been jade was more of an intellectual exercise.

My view of PM is it was taught to most people its valuable. Starting with ancient mesopotamia, certain people liked it for certain reasons. They started to want to trade others for it, thereby letting others know it was "of value" to the mesopotamians. Therefor, THEY started to value it, etc etc. Similar things were done in mesoamerica and india to lesser extents. Since this was done so long ago, most people think "its always been this way", but it hasn't. It was mainly learned behavior that if I possess this thing, I can trade it to someone else for what I really want because this thing is of value. I do not view PM as being viewed by humans as "innately valuable", but "learned valuable".

Like I said, its just intellectual curiousity.

Does this mean this will change PM markets today? No. Will it change most outcomes or reasons people wish to own it? No. I just like the discussion of the nature of why we think this particular metal is worthy of owning versus any other metal, element, or "thing" its possible to own.

 

But to base money on the availability of gold and silver is just as artificial placing arbitrary limits to value. By basing currency on gold and silver you are simply artificially tying your currency to an arbitrary finite resource. You can choose numerous other commodities that are just as finite and if you wish to artificially stunt the ability to inflate currency...then you also run the risk of complete stagnation as, of course, gold and silver is finite and you are basing your monetary system on how much of these few commodities a country can amass (and certainly they will try to amass it at any cost as was the case previously) when, in fact, a nation is worth FAR MORE than just how much gold and silver it can hoard. My whole point here was to say that if I were to be paid in gold, I am NOT being paid with anything of REAL value...as the value of gold is fiat, no different than the paper currency you value gold in and buy it with...its value is not based on anything save our assessment and that assessment is not based on how valuable or useful gold is as a commodity because its not useful and was even less useful pre-industrialization.

I don't think my aversion to gold and silver as money is simple disillusionment as much as it is based on how modern economies work and how we assess a nations wealth. I simply don't think the gold standard makes sense today nor do I think it is viable or a correct and realistic way to assess the value of a nation and its currency. I think it would, in fact, be catastrophic and I think people who want to go back to the gold standard confuse real value with representation of value.

Lastly, simply because something has been held as universal and correct for a long time doesn't mean that at one point it could not be found to be flawed or less than ideal. This rethinking and change is very common through our history.

I mean no disrespect to anyone. This is a topic I hold strong opinions on but I certainly don't think anyone is stupid because they disagree. This is nothing more than a discussion about something I am very interested in and nothing more.

So your gold is useless...send it all to me and i will dispose of it for you...

 

^Agreed. When you base money on paper currency, in ideals you are basing it on a country's government's trustworthiness and the country's production of tangible wealth creation by means of several indicators which would be too long to list here. This is #1 more rewarding for better producing economies and #2 More fair than arbituarily rewarding those who can aquire more innately worthless but pretty and finite rocks from the ground that no one can eat or wear. I am also in favor of fractional reserve banking, which without we would still live in grass huts with King's and Queens ruling us all, which I know is another idea PM hoarders like to attack. But I wont get into defending it at this time.