I am the person who will destroy China. (madman101) wrote,
I am the person who will destroy China.

In the pocket.

Gold (and silver) is a good thing, because it generally retains wealth. A century ago, you could buy a new suit for a certain amount of gold - and for that same amount today, you could buy a new suit. Inflation is irrelevant. All the better, in fact. When something scary happens in the world, people rush to buy gold, and its value goes up. When the dollar loses more and more value, (spending power), which is also called inflation, the value of gold just goes up in comparison. Gold even does well in a depression. If food or fuel get scarce and no one has or respects cash, gold and silver can act as true money. It is not a sin to own gold, as the established economic system would have you believe. The lust for gold, as for money, is a different matter.

Why has civilisation chosen gold to be so important? It's rare, for one thing. All the gold on the planet came from outer space. It's pretty, of course. Plus, it can easilly be shaped into jewelry, coins, teeth, etc. It can be melted, 'sprayed' or hammered to coat other metals, or stonework, as was done to some ancient pyramids. Gold also has weird electrical properties. This, along with granite, makes some think that those pyramids were giant capacitors, (and/or power plants), collecting and chanelling Earth energy. Today, gold is important in electric circuitry, and is in your computer right now. Besides this, gold (and silver) is an element important to your health. It can also be worn or ingested as a way to fight arthritis. Now, is any wonder that gold was one of the three healthy gifts said to have been brought by the wise men to the baby Jesus?

Being so rare and valuable, gold was used as collateral for things loaned out - and as a money for trading things back and forth. One piece of gold did not just represent, say, a goat, but it could represent a barrel of water, or a plow, or whatever you choose. That one leap into moneyhood turned awkward , tit-for-tat trade into multi-choice COMMERCE. Instead of carrying around goods, one could carry around a little portable piece of gold, good for MANY different things.

The value of all those things became vested into gold itself. Like paper money would do later, gold detached from trade and became an economy unto itself. Borrowing, lending, spending in gold made pro-bansters a bit of money. The conversion of one coinage into another made the middlemen in the temple a tidy sum. Gold was made, gold was taxed. Gold built churches. The word, "god," is a lot like the word, "gold' - but with the hell removed...

There came a point where even gold was too heavy to carry, since it was being centralised in fewer and fewer hands. That's when it got put into banks, and the banks, in turned, issued IOU's for the gold they were keeping. "I, the bank, will pay you back your gold money whenever yu request it." These IOU's were the beginning of paper currency.

Unlike gold, paper grows on trees. So, the banks could hold a hundred pounds of gold, then print up paper bills (IUO's) for a thousand pounds of gold, even though it didn't have that gold - and then they could loan out these IOU's as if they were real money. This was the beginning of capitalism. Paper money could easilly be over-printed, and thus become less and less valuable, (inflation), unless sneaky ways were found to dump it out of site, like in real estate, gambling, stock market bubbles, etc. But the more this failing paper inflated the prices of anything purchasable, GOLD would just inflate as well. $50 for an once of gold a month ago could be $100 for an once today. It isn't so much that the value of gold goes up, it is that gold HOLDS its value, while the paper money crashes.

There is one way that gold does rise in value. Inflation doesn't hit everything all at the same time. For instance, say you want to buy a motorhome on craigslist. Your gold was worth $3000 in paper money a year ago, but now it is worth $4000. Well, the desperate people on craigslist just need to SELL, and they have not YET raised the general prices of their motorhomes to be more in line with recent inflation. That means you can move in and buy a motorhome for $3000, when it should really be listed at $4000 by now. There, you have saved yourself $1000 right there - but you have also MADE an extra $1000 on your gold. The latter never would have happened if you had been dealing in cash all along - in fact, you would be about $1000 poorer. Gold gave you more purchasing power to move in to purchase items that had not been hit by the inflation.

Another example: The dollar could fall, and prices at the grocery store could rise rapidly, along with the value of your gold. But, you may be on a years lease, and your rent may not go up for another 7 months or so. You can sit on that gold, rising in value, and then cash it in when the time comes when you really need it.

Joseph Kennedy got out of the stock market and put his money in gold, just before the market crashed. Then, he used the value retained in his gold to purchase now-cheap stocks, which eventually made him a fortune, and brought us JFK as president. (JFK was probably assassinated because, among other things, he fought the paper system of the big banks). So, the ability of gold to hold its value can allow you to sit on a little security, for when rough times might come, but it can also allow you to pick and chose what to buy and where to invest when the paper economy goes bad, as it inherently does from time to time. Gold is not the artifice, paper is.

The so-called economy has been doing a little better lately. So, the comparative price of gold has not been going up too much. The Korea thing gave it a boost. But whatever money is going into SAFETY has mostly been going into bonds rather than into gold. (The bond market is overdue to crash soon. When something goes overdue like this, then all that is really need for the crash is some precipitating factor in the news, such as a nuclear weapon detonation somewhere. AND, believe me, there are freaks who know this, and who will set up their investments in anticipation of just such a detonation, which they then trigger).

Another thing keeping gold low is the fact that some banks are leaning out money not equivalent to the value of gold they have on hand - and not 10 or 20 times more than the value of gold they have on hand - but TWO HUNDRED TIMES the value of gold they have on hand. This is an inherent cheapening of the gold in the short run. But once a run on gold hits, they will be up shit creek, being unable to pay people back their gold. At that point, the price of gold will spiral upwards rapidly.

Another thing helping to keep gold low is bitcoin Bitcoin, (et al), is swallowing away a lot independent investment cash that might otherwise have gone into gold. Bitcoin is cerebration to crash, but that is another post... Also, spending money on crazy risky investments, or sending loans oversees instead of here, or continuing the same policies of the past which have kept the Dollar high, all contribute to keeping gold relatively low. Trump actually wants to bring the dollar down, which will help gold, but which will also upset the world economic apple cart.

The average price of 1/4th ounce gold coin (Eagle) today is about $380, some less, some more. Last I checked, an ounce of gold is at about $1300. So, you could have four quarter-ounce coins amounting to $1600 - which is $300 more than an ounce is worth. That's just the nature of the business. Some people believe in spending a little more on tinier coins, in case the economy goes really bad. Smaller coins would be easier to use as real money, for fuel, or whatever. I simply cannot afford to buy 1-ounce coins(!)

One quarter-ounce gold Eagle happens to be worth much more than $380, and I have it, by chance. (It is buried in a park). It was minted in 2001, and is worth about $600. Considering I probably only paid two or three hundred dollars for it, that's not too bad. It is probably more valuable because it was hoarded after 9/11.

Lucky for you, there is an even better investment than gold right now, which is silver. Silver is expected to rise much more than gold soon - and it is only around $20 or so an ounce. Silver is not only similar to gold in being a money, and in being nice for jewelry, but silver also has industrial and tech uses even surpassing those of gold. These uses are expanding. And, as a smaller value coin, silver would be better to use as a money in a real-world emergency.

One problem is that so many people do not understand the great 'intrinsic' value of coins made from these metals. You could show a $1 silver dollar to a cashier, and she will only see $1 - not the $20+ which it is really worth. So, in any extreme emergency, it must be considered that not everyone will understand gold or silver, other than wanting to take it from you. So, rather than trying to strike up a little trading network, it would probably be better to find certain dealers or pawn brokers or such, and trade a little for cash every now and then. And, in case of such an emergency, other things will go almost as far: Sugar, cigarettes, liquor, oil, flour, rice, beans, gas, dog food, canned goods, and: seeds, if anyone around you has any sense.

When the Irish economy collapsed for a little while, and there were no paper bills to use, people just used checks. Sean would write a check to the pub. Then the pub would use that check and say, "Sean is good for this," and spend it on hamburger meat. Then the butcher would take that same check, and write, "The pub is good for this..."

For most of history and prehistory, people have used a particular type of tiny sea shell as money. Others have used ropes with knots tied in them. Others used matching sticks with notches or lines etched on them. Rarity helps hold the value of any money. But when push comes to shove, anything can be used - including leaves from the trees - so long as society agrees upon it. Of course, the last example is highly unlikely, in a pushy-shovey society...
Tags: economics - gold / silver / coins

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