GOLD PLUMMETS - SPOT CHART

http://www.kitco.com/charts/livegold.html ^

[Fitzcarraldo]

Source: www.kitco.com

[#3Fan]

Sure Germany could have done it. All they had to do was print more money just like they did. No part of backing the currency with gold prevents the government from lieing and just printing whatever they want to.

Exactly. If people carried real gold, they would not have been able to do that.

That's one thing I've never understood about gold bugs, rightly none of you trust the government, yet you all seem to think that if the government backed its currency with your favorite metal they wouldn't be able to lie and just print money anyway.

I think it's a good idea to keep enough to live on for several months. Like I said fiat currency is fine as long as there's a stable government. All intelligent people should have some gold stashed somewhere though.

[discostu]

Wasn't looking for the overall value. Was looking to show you how much "a few ounces" actually weighs in your pocket all day.

Paper money works great without a government. Paper dollars, like all currency throughout history, are backed by belief of the people, not by force of the government. You should spend a little time south of the border, the number one currency in Latin America is Yanqui Dollars even when the government specifically outlaws them (which Panama did under Noriega). Everybody likes them, and they don't tend to like the local currency.

[#3Fan]

All the gold in the world is absolutely worthless if you're the last person to think gold is cool (not likely to happen anytime soon, but it's a theoretical possibility and useful thought experiment).

A theoretical possibility but very improbable. On the other hand, it's a fact that every fiat currency in the world has become worthless except for the ones left now, which is probably 1% of all there ever were. So that makes it a 99% probability that they will go down too.

[discostu]

But carrying real gold sucks. It's heavy and hard to transport. One of the big problems Rome had was moving gold all over the empire, the stuff is just too heavy. And, of course, you're living in complete ignorance of the current economic situation. Check, credit cards and electronic transfers account for the vast majority of monetary exchanges now, people don't even carry nice light foldable paper money and you want us to go back to annoying heavy pocket tearing gold coins. Talk about living in the past.

[#3Fan]

OK a 70 foot cube AIN'T no shed. That's 343000 cubic feet. 23.3 yards per side, in other words each side of your cube is bigger than the "red zone" on a fotball field. Your shed is 7 stories tall. Each surface are is 4900 square feet. In other words "shed my a$$".

It'd be 130 by 130, by 20 feet high. Around here in farm country, we call that a shed.

[discostu]

now you're retreading. It's also a fact that every gold based currency in the world has eventually collapsed. That's what happens, societies rise, societies fall, and with them go their economies, and the form of their currency has no significant impact on that cycle.

[#3Fan]

California gold rush link http://www.duke.edu/~agf2/history391/economy.html

That link also doesn't show that a shipload of gold couldn't pay a sailor's salary. Anything can happen in a small community. Show me where there was hyperinflation of the gold price for a significant population.

[discostu]

not only do you need more practice with a tape measure, you also need more practice with basic math. 130x130x20 gives a total space of 338000 cubic feet, a full 5000 cupic feet smaller than your original "measurement".

[discostu]

California gold rush, different animal here. The ship thing was part of Spanish colonialism. And if you read the link you'll see that part of the gold rush included a significant increase in the population as well as run-a-way inflation.

[#3Fan]

that's a line I picked up from a History Channel thingy, unless find a website that the guy writing stole that line from that'll be tough (and there really isn't much on the collapse of Spanish colonialism out there). But as the link clearly shows as massive influx of gold was bad for the economy.

I saw the history channel shows and there was no mention that a shipload of gold couldn't pay a sailor's salary. The reason Spain was destroyed by gold was because they stole it, they didn't earn it, and got lazy.

[discostu]

Must be tired, my tales keep falling. That "cupic" should be "cubic" (did the same typo on the first one but caught it).

[demlosers]

Poohbah said,
Actually, it DID. Any decent history of European colonization and conflict in the New World will discuss this issue. Spain became an economic basket case because they imported too much gold from America. There was too much gold chasing not enough goods.

you said,
No, they became a basket case because they simply bought everything with the gold they stole and let their innovation suffer. Britain provided goods for Spain's gold, becoming more advanced and became a super Empire. As long as a people work for their wealth, they will be OK.

Actually Poohbah is right about gold leading to inflation that caused Spains downfall.

The first exploratory Spanish forays into South America were not always unfriendly ones - indeed they brought gifts of agricultural tools of iron, and also 'many beads, many combs, knives and scissors, coloured hats, caps, and shirts finely worked at the neck' to trade with the natives. But immediately they found gold and, fuelled by the story of 'El Dorado' (the Gilded One), started their quest for its pillage which was to last centuries. Expeditions crisscrossed the land and the gold was shipped back to Spain to be melted down for coin - coin that was to cause inflation for the whole of Europe and which was to lead to Spain's relegation to a minor power. The chronicles of those expeditions described the gold producing areas of the time.

Title: Gold-smithing in South America at the time of the Spanish Conquest.
a link: http://www.lamp.ac.uk/tairona/a6goldsmith.html

Inflation = There was too much gold chasing not enough goods.

[discostu]

Then you must not have seen "that" history channel show. Spain was destroyed by gold because the massive importing of gold had the exact same effect as Germany's mass printing of currency. Gold (like all money, and lots of stuff that's never been money) is a commodity, the more there is the less valuable it would is. That's why the usual accusation around here when the price of gold takes a plunge is "dumping", people suspect that there is now a higher quantity of gold on the market being sold which thus drags down the value.

[discostu]

Trust them college boys to be good at research. I owe you one.

[#3Fan]

Here's another goody on the CA gold rush http://www.calliope.org/gold/gold2.html

I saw no mention that a shipload of gold couldn't pay a sailor's salery on that site either.

Here's my favorite bit: * Seventy-five prefabricated iron houses shipped from China - along with Chinese carpenters. Cheaper than using local materials and labor. * Miners' soiled underwear departing by shiploads for the Sandwich Islands (Hawaii), where it was cheaper to get it laundered. * An instant 4,000% profit which Taylor himself made, selling the old newspapers he had used to cushion his belongings on the trip. * Real estate lots bought up by speculators a year ago at sixteen dollars - now worth $15,000.

San Fransisco was a town of 15000 people, a small town by today's standards. Show me where there was hyperinflation of the gold price for a significant population.

[#3Fan]

It's really bad form to drag old flame wars back to the forefront.

No, I just don't want things to get ugly like last time.

And your refusal to acknowledge basic history means that you're not worth any further effort on my part. G'Day.

What basic history?

[Chemnitz]

Derivatives can be good. They multiply the upside or the downside by a factor. It seems that some companies speculate way too much. The famous Orange County meltdown was over derivatives, but they would have been fine if they had waited a few months.

[#3Fan]

You need to do some time out in the field with a tape measure. 130x130x20 is a two story building about the size of half a football field (43.3 yards on a side). Now I've seen some pretty big buildings in farm country I'll admit, but I ain't never seen half a football field in one building... not a farm building anyway and certainly not something sane people would call a shed.

In Illinois, we call them sheds. Barns are what you keep hay and straw in. Some people call them barns, but a lot call them sheds.

[discostu]

OK #3Fan's to do list:
Learn to use a tape measure
Learn pre-algebra
Learn reading comprehension

The California Gold Rush stuff has NOTHING to do with the Spanish Colonial stuff (where the ship statement came from) except as FURTHER proof that a massive influx of gold, just like a massive influx of any other currency, will screw up an economy.

15000 people was big back then. And if you'd actually read some of these links you'd see that these economic problems hit the entirity of Californi, and spanish Colonial importing of gold totally screwed up Spain and adversly affected all of Europe.

Face it, you've lost. Massive influx of any currency, including gold, is bad.

[aristeides]

If the default of the banks can be delayed for a couple of weeks or months, can they escape the danger altogether as the derivatives expire? Or do they have to adopt the same position -- with the same risks -- in future months?