Gold Isn't Money Until People Use it that Way

gold-eagle.com ^ | August 16, 2002 | Kenneth C. Griffith

[christine]

gold ping! ;) please let me know if you would like on or off of my ping list. thanks!

[Billy_bob_bob]

"Russia and China have recently begun encouraging their citizens to use gold bullion coins for their savings instead of US $100 bills."

Hello! Is this true? Is there an independant source for this info? That's a whole lot of people who might be deciding they want to own gold. Hmmmm.

[4CJ]

The private sector is now doing what governments will not or cannot do.

Excellent post.

[steve50]

The US used to own 1/3 of the worlds gold supply when we had a strong, export based industrial economy. I wonder what our percentage is now.
The big boys still use it as money, only joe sixpack is supposed to depend on the "full faith and credit" backing this fiat pump and dump scam.

[Lysander]

The reason politicians won't go for a gold standard to back our money is then they will have to keep honest books. The paper fiat currency we call money now is nothing more than a note of debt, an IOU so to speak. They can tax us by merely inflating the currency. All that the money is really tied to is minimum wage! To see what a dollar is worth go down to a fast food joint and watch what ten minutes of work is exchanged for a buck.

Give some of that paper currency to this guy if you want a change in policy!

[steve50]

Quiet please. I want to pick up some more physical while it's being supressed to cover the international banksters backsides.

If ownership of gold(real gold, not paper saying somebody has it in a vault somewhere) does become popular again the question will be what happens when they demand we turn it in again.

[jlogajan]

Sorry, but gold should treated just as any other investment -- based upon its performance in the market. And for the last couple decades it has been flatter than a pancake.

[arthurus]

Gold is THE money. Everything is ultimately valued in terms of gold.Gold is not an "investment" in that it will neverrise in value. In a wildly variable economy with minimized predictibility gold can be a store house for one's wealth. It preserves value in that gold will never lose value. Actually if you put your wealth in gold you lose a bit because of storage and transaction costs. Gold can be used profitibly as a speculation(or disastrously) at asuch times as a long price rise (inflation) has reached its top and fluctuates for a while around that top (as apparently right now) or when a long price decrease has reached its low extent.

[DallasMike]

Excellent article.

Money is just a contract -- nothing more, nothing less. If Farmer Bob and Farmer Joe wanted to trade a bushel of peaches for a bushel of apples, we would thank it strange if they demanded that the contract be written on a gold bar. Yet that is, in effect, what the gold standard people wish. Most strange.

[arthurus]

A gold standard does not require a gold currency, though a gold currency would go much farther in keeping the government honest. All that is necessary is for the fed to have by law only one goal- to keep the price of gold stable by buying and selling bonds, i.e. adding and subtracting liquidity.

As the demand for liquidity rises, the fed buys bonds pushing "money" into the system to keep the price of gold from declining (deflation). As less liquidity is needed the fed sells bonds to take "money" out of the system to keep gold from rising in price (inflation).

The result is that the dollar remains a stable unit of currency. Prices rise and fall because of changes in the pattern of demand and supply, of changes in relative scarcity of commodities, not because there is excess money chasing the same or even a reduced amount of goods.

[steve50]

The only way to preserve your investment is to take delivery. Some reports out their claim options are oversold, more on the market than actual supplies available, it's just another paper manipulation game.

[arthurus]

That is correct and you still have storage costs, like beefed up alarms and locks and walls. Plus your money is sitting there earning no interest.

[arthurus]

The only sure way to preserve your investment is to take delivery.

[bimbo]

Central banks do hold a large percentage of the world's gold.

Have you ever asked yourself why? The only answer I can come up with is: "It's THEIR money. The pieces of colored paper they print up is YOUR money. They have the GOLD and they make the rules ... you have those pieces of paper and are their subject."

[arthurus]

claim options are oversold

Options on gold are a speculation and are not in the same class of investment as owning actual gold.

[arthurus]

Yeah, kinda like that.

[bimbo]

That's a whole lot of people who might be deciding they want to own gold.

There was also a gold-response in Japan a few months ago when the government decided that it would not insure accounts above $20,000. People began withdrawing the excess and buying gold - the Japanese government quickly revoked the law ... citizens with gold are no longer beholden to government paper.

[pabianice]

... and carrots aren't food until people use them that way, either...

[LurkingSince'98]

could you please add me to your ping list.
Gold regards,
Lurking'