Gold - Commodity or currency?

[Martinghoul]

Well, I was about to comment on the article, but I found the bit about the author hilarious. The article is also hilarious, actually. The author applauds the guy who started this gold ATM business. Have you actually seen what sorts of terms you get for the gold you buy from that machine? It's a scam, pure and simple. And yet, what does the author call the guy who started it? A "monetary entrepreneur" and a "smart businessman". Smart, yes, but "businessman" is surely too kind of a word.

As to the rest of the article, I don't have an issue with it, 'cause it's stating the obvious. Yes, the USD is not likely to keep the reserve ccy status. Yes, there will have to be an alternative. Yes, it might be a ccy that's based on a basket of commodities. I don't have a problem with that, really. I just don't see why anyone in their right mind would want that basket to contain gold with any significant weight.

Thirdly, no, my name isn't Cioffi and I have absolutely no idea what he has to do with anything.

Fourthly, I thought you left this thread for good, n_t? Yet, after what I thought was your parting shot, you come back.

 

[counter_violent]

There's a blindingly obvious reason why the west and the US in particular won't be going back to the gold standard. They don't have much of it,if any

 

[Atilla]

Well, I was about to comment on the article, but I found the bit about the author hilarious. The article is also hilarious, actually. The author applauds the guy who started this gold ATM business. Have you actually seen what sorts of terms you get for the gold you buy from that machine? It's a scam, pure and simple. And yet, what does the author call the guy who started it? A "monetary entrepreneur" and a "smart businessman". Smart, yes, but "businessman" is surely too kind of a word.

I heard Tescos might be doing this too. Who knows. But the fact that it is being touted is significant imo.

As to the rest of the article, I don't have an issue with it, 'cause it's stating the obvious. Yes, the USD is not likely to keep the reserve ccy status. Yes, there will have to be an alternative. Yes, it might be a ccy that's based on a basket of commodities. I don't have a problem with that, really. I just don't see why anyone in their right mind would want that basket to contain gold with any significant weight.

Thirdly, no, my name isn't Cioffi and I have absolutely no idea what he has to do with anything.

Fourthly, I thought you left this thread for good, n_t? Yet, after what I thought was your parting shot, you come back.

I was just being cheeky and horrible Martin apologies...

Do I sense a shift in your position above there?

Most things become tiresome after a while. It is a joy to walk away and come back once batteries recharged... Everybody needs to be in their discomfort zone otherwise there is little progress. I'm glad NT is back...

 

[new_trader]

I just don't see why anyone in their right mind would want that basket to contain gold with any significant weight.

Perhaps you should read this, it might help you understand why people in their right mind don't like fiat currencies.

http://www.soundmoneyproject.org/wp-content/uploads/2010/11/Booklet-SMP-Guide-Spread-PDF1.pdf

This article might also help you 'get it'.

http://www.soundmoneyproject.org/?p=5186

 

[Atilla]

There's a blindingly obvious reason why the west and the US in particular won't be going back to the gold standard. They don't have much of it,if any

Bilateral trade may become more pronounced.

If man can create leveraged derivative markets about selling collateralised subprime mortgage backed with insurance on those debts I'm sure they can resolve few niggly issues working out international trade payments don't you?


It's not like US is going to have much choice is it?

I don't want your dollars thank you Sam.

If you don't take our dollars we'll bomb the **** out of you?

Oh ok then we'll have another 3 trillion of your debt so you can build more weapons and go to war with little mountain goats...


You see if I wrote this in the 90s as fiction novel - No one would believe me. Even Fredrick Forsyth couldn't dream this **** up... His good that guy one of my favourite novelists...

 

[new_trader]

I'm sure we've gone over this before:

1) Gold is indestructible
2) Gold is fairly evenly distributed around the world so no country can monopolise supply
3) Gold is durable
4) Gold has 1000's years of history as money
5) Gold is portable and non-perishable, unlike some other commodities
6) Gold is rare

These are just some of the qualities that make it ideal as money.

 

[Atilla]

I'm sure we've gone over this before:

1) Gold is indestructible
2) Gold is fairly evenly distributed around the world so no country can monopolise supply
3) Gold is durable
4) Gold has 1000's years of history as money
5) Gold is portable and non-perishable, unlike some other commodities
6) Gold is rare

These are just some of the qualities that make it ideal as money.

Repetition is good... Like the music of Bolero it will eventually sink in with a great crescendo...

Basket of commodities is a start...

 

[new_trader]

Repetition is good... Like the music of Bolero it will eventually sink in with a great crescendo...

Basket of commodities is a start...

To be fair though, this whole discussion wasn't really about the gold standard per se. It came about because Martinghoul believes that the ability for a Government to inflate the money supply at will was a huge advantage. I argued to the contrary and used the gold standard to prove my point, ie- Governments should be restricted in issuing currency and expanding the money supply.

So, even if we agree on a basket of commodities without gold in it I am wondering if Martinghoul has now changed his opinion and agrees that the value of our money should NOT be controlled by a few 'elite' incompetent politicians. If not, then there is no point even discussing a basket of commodities because we have got absolutely nowhere and will just continue to go around in circles.

 

[Atilla]

To be fair though, this whole discussion wasn't really about the gold standard per se. It came about because Martinghoul believes that the ability for a Government to inflate the money supply at will was a huge advantage. I argued to the contrary and used the gold standard to prove my point, ie- Governments should be restricted in issuing currency and expanding the money supply.

So, even if we agree on a basket of commodities without gold in it I am wondering if Martinghoul has now changed his opinion and agrees that the value of our money should NOT be controlled by a few 'elite' incompetent politicians. If not, then there is no point even discussing a basket of commodities because we have got absolutely nowhere and will just continue to go around in circles.

My angle was the demise of the dollar and what may replace it. Flexible and/or Pegged exchange rates equally have failed to resolve BoP imbalances. I had high hopes for Euro but not sure anymore. Subsequently - currencies backed by gold to me is more desirable option.

 

[new_trader]

My angle was the demise of the dollar and what may replace it. Flexible and/or Pegged exchange rates equally have failed to resolve BoP imbalances. I had high hopes for Euro but not sure anymore. Subsequently - currencies backed by gold to me is more desirable option.

My angle was the reason for the demise of the $US and I agree, gold is definitely the best option. But, don't forget, ALL fiat currencies are losing value relative to gold, it's not just the demise of the $US.

 

[Martinghoul]

Perhaps you should read this, it might help you understand why people in their right mind don't like fiat currencies.

http://www.soundmoneyproject.org/wp-content/uploads/2010/11/Booklet-SMP-Guide-Spread-PDF1.pdf

This article might also help you 'get it'.

http://www.soundmoneyproject.org/?p=5186

Honestly, N_T, why do you keep doing this? Why do you think I should change my mind because you quote a variety of muppets? Have you seen me pointing you to a lot of "documents", "expert opinions", "articles", etc? No, and you know why? Because my argument is strong enough to stand on its own merit and I don't need rrandom coconuts to agree with me.

 

[Martinghoul]

I was just being cheeky and horrible Martin apologies...

Do I sense a shift in your position above there?

Most things become tiresome after a while. It is a joy to walk away and come back once batteries recharged... Everybody needs to be in their discomfort zone otherwise there is little progress. I'm glad NT is back...

It's perfectly fine, Atilla... I don't mind, although I am not sure what you mean by a shift in my position. I don't think anything's changed.

 

[Martinghoul]

To be fair though, this whole discussion wasn't really about the gold standard per se. It came about because Martinghoul believes that the ability for a Government to inflate the money supply at will was a huge advantage. I argued to the contrary and used the gold standard to prove my point, ie- Governments should be restricted in issuing currency and expanding the money supply.

So, even if we agree on a basket of commodities without gold in it I am wondering if Martinghoul has now changed his opinion and agrees that the value of our money should NOT be controlled by a few 'elite' incompetent politicians. If not, then there is no point even discussing a basket of commodities because we have got absolutely nowhere and will just continue to go around in circles.

Well, n_t, you haven't proved anything and you haven't addressed my point. Moreover, what you say suggests to me that you didn't read what I said attentively enough. You didn't even bother to understand what I told you.

The ability of a Central Bank to increase money supply is, by definition, a huge short-term advantage. That's something that can not only be demonstrated in theory (it's just basic macroeconomics), but also is supported by a plethora of empirical evidence (feel free to look it up). The point that you're trying to articulate (not very lucidly, I might add) is that the short-term advantage comes with a long-term cost (i.e. unanchored inflation expectations, moral hazard, etc). I fully acknowledge this issue and I agree it's a problem. However, and this has always been my point, it's foolish to assume that in an extremely competitive setting, your adversary is likely to unilaterally forego a short-term advantage to avoid some nebulous and uncertain future danger. Game theory is why the gold standard doesn't work.

At any rate, I have to conclude that you haven't actually been reading what I have been writing. So it's difficult for me to see the point of this discussion. Maybe it's worth you actually thinking a bit about what I have said and then responding specifically to that, rather than with something unrelated?

 

[new_trader]

Well, n_t, you haven't proved anything and you haven't addressed my point. Moreover, what you say suggests to me that you didn't read what I said attentively enough. You didn't even bother to understand what I told you.

The ability of a Central Bank to increase money supply is, by definition, a huge short-term advantage. That's something that can not only be demonstrated in theory (it's just basic macroeconomics), but also is supported by a plethora of empirical evidence (feel free to look it up). The point that you're trying to articulate (not very lucidly, I might add) is that the short-term advantage comes with a long-term cost (i.e. unanchored inflation expectations, moral hazard, etc). I fully acknowledge this issue and I agree it's a problem. However, and this has always been my point, it's foolish to assume that in an extremely competitive setting, your adversary is likely to unilaterally forego a short-term advantage to avoid some nebulous and uncertain future danger. Game theory is why the gold standard doesn't work.

At any rate, I have to conclude that you haven't actually been reading what I have been writing. So it's difficult for me to see the point of this discussion. Maybe it's worth you actually thinking a bit about what I have said and then responding specifically to that, rather than with something unrelated?

I knew this was going to be futile.

The point that you're trying to articulate (not very lucidly, I might add) is that the short-term advantage comes with a long-term cost (i.e. unanchored inflation expectations, moral hazard, etc).

You aren't serious are you? This is what you think I've been trying to say? Forget it. I give up with you. Let's just ignore each other, OK?

 

[Atilla]

Well, n_t, you haven't proved anything and you haven't addressed my point. Moreover, what you say suggests to me that you didn't read what I said attentively enough. You didn't even bother to understand what I told you.

The ability of a Central Bank to increase money supply is, by definition, a huge short-term advantage. That's something that can not only be demonstrated in theory (it's just basic macroeconomics), but also is supported by a plethora of empirical evidence (feel free to look it up). The point that you're trying to articulate (not very lucidly, I might add) is that the short-term advantage comes with a long-term cost (i.e. unanchored inflation expectations, moral hazard, etc). I fully acknowledge this issue and I agree it's a problem. However, and this has always been my point, it's foolish to assume that in an extremely competitive setting, your adversary is likely to unilaterally forego a short-term advantage to avoid some nebulous and uncertain future danger. Game theory is why the gold standard doesn't work.

At any rate, I have to conclude that you haven't actually been reading what I have been writing. So it's difficult for me to see the point of this discussion. Maybe it's worth you actually thinking a bit about what I have said and then responding specifically to that, rather than with something unrelated?

This does make perfect sense.

However, are we at a tipping point in the finance industry now. I mean with the US Senate considering raising the government borrowing limit or not?

With difficult trading - will the US be able to service the debt it is laden with.

Same goes for Europe really. I appreciate nobody has the answers or a crystal ball but this is the precipice I think we are facing. Tipping Point over the edge... Like lemmings on the White Cliffs of Dover...

Oh what joy...

 

[new_trader]

This does make perfect sense.

No, it doesn't. But then again, I suppose astrology makes perfect sense to people who study it and read all the books written about it.

 

[Martinghoul]

I knew this was going to be futile.

You aren't serious are you? This is what you think I've been trying to say? Forget it. I give up with you. Let's just ignore each other, OK?

Listen, my friend... You said you unsubscribed and left with a few parting words of wisdom. Then you come back for a few posts and now you're off in a huff again? There's just no pleasing you... If you don't want to discuss, why come back to this thread at all?

 

[Martinghoul]

This does make perfect sense.

However, are we at a tipping point in the finance industry now. I mean with the US Senate considering raising the government borrowing limit or not?

With difficult trading - will the US be able to service the debt it is laden with.

Same goes for Europe really. I appreciate nobody has the answers or a crystal ball but this is the precipice I think we are facing. Tipping Point over the edge... Like lemmings on the White Cliffs of Dover...

Oh what joy...

Yes, but this, you see, is where everything gets complicated, because we're not talking about economics, but rather an uneasy combination of politics and economics. It's worth remembering that the EMU is, first and foremost, a political construct; much more so than the US. How it all evolves from here is anybody's guess, I agree.

I wanted to mention that I haven't forgotten my promise to start an "MG's serious thread" with some trades in it. It's on the ole "To do" list, but things have been rather hectic recently, so I didn't get a chance.

 

[new_trader]

Listen, my friend... You said you unsubscribed and left with a few parting words of wisdom. Then you come back for a few posts and now you're off in a huff again? There's just no pleasing you... If you don't want to discuss, why come back to this thread at all?

I came back to post some interesting articles about the gold standard not to engage in any discussion with you.

 

[Martinghoul]

No, it doesn't. But then again, I suppose astrology makes perfect sense to people who study it and read all the books written about it.

Well, n_t, I can imagine two possibilities:
a) My argument is nonsense and is simply devoid of logic; or
b) My argument is sufficiently logical and clear, but you're unable to comprehend it, because you're just too blinkered and indoctrinated

I am not sure how we can establish which one of the possibilities is the more likely one, other than by asking the audience (not that it would be in any way conclusive, either way, but still it's better than nothing). I can't be bovvered to create a poll, so, informally, if anyone reads this, could you pls go for a) or b)?