Why Gold? It's useless!! 4

[Unotec]

Didn't know where to start this useless rant but here it goes (and probably explains why I'm an engineer and not a financial guy).

We, engineers, build stuff, value things that are useful and don't mind paying a little extra for something that will outperform cheaper things.

Now, with this financial crisis all I read is BUY GOLD, actual gold coins!! (yes, the buy, put in a chest and bury in your backyard type)

If gold is useless, well, has some very limited applications, why is it that is still considered so valuable?

If you think of it, stuff like diamonds or gems in general.... They are, in a practical useful way, WORTHLESS!! The most expensive things in life are typically the most useless!

What will happen if the economy tumbles further enough that people start now looking for things they actually need instead of treasuring something they can’t eat, drink or easily build with?

Gold is practically useless as far as my limited knowledge goes, but it will apparently hold its value.

Could the root of the financial troubles be that they are based on a thing as useless as gold?

Aztecs used to value corn as a currency, Romans salt, etc...


<<A good friend will bail you out of jail, but a true friend
will be sitting beside you saying ” Damn that was fun!” - Unknown>>

 

[jmw]

Or perhaps because we no longer use the gold standard?

Gold is one of those hedges against inflation.... at times like these, whatever the real usefulness or uselessness, when everything else is dropping in value, gold will rise.

If you want proof, go figure why so many governments regulate the sale of gold.... governments never mess with anything that is useless to the people, ergo gold is useful therefore not to be entrusted to the custody of the average voter in any great quantities.

Good buys are Kruger Rands.

Gold of course, does have its uses, rather more today than ever before. In actual fact the very fact that gold is considered so desirable is counter productive to its use in practical applications because it is too expensive.

Of course, if you don't like gold, you can buy lead, very similar in many ways.... if there is any left. Most lead here in the UK appears to have been garnered in during dead of night (from church roofs) and found its way to China.

What else has been going missing? well copper power cables regularly stolen from railways and from temporary power plant installations (one kindergarten had the power cable between it and a portable generator stolen on several occasions. Despite the almost nightly raids the local police appear not to have had any ideas about how to catch anyone.


JMW

http://www.ViscoAnalyser.com

 

[ctopher]

IMO, gold jewelry is useless. Not much gold used on them as before.
Gold is needed for other uses in various industries.
Diamonds have become less useless for jewelry since they can now be grown in chambers. They are used more often in industrial uses because of them being grown.

Bottom line is it's still political because of where natural diamonds and gold are dug up.

Chris
SolidWorks/PDMWorks 08 3.1
AutoCAD 08; CATIA V5
ctopher's home (updated Aug 5, 2008)
ctopher's blog
SolidWorks Legion

 

[vc66]

The whole gold thing is a bubble in itself. It will burst soon enough.

V

 

[TheTick]

Commodities traders say copper is the metal with a Ph.D. in economics. As copper demand goes, so goes the economy.

Gold is a preserver of wealth. Minus any cyclic price behavior, an ounce of gold buys the same amount of bread today as it did 3000 years ago.

 

[Unotec]

And 3000 years ago, gold did not have the potential uses technology could give it nowadays... albeit for the price.
So.. the economy is based on a useless product.
jmw: I understand about the gold standard, but still, that does not give it any practical use or basis other than greed.
Tick: Is it a preserver of wealth just because mankind gave it a value just for the looks? How sustainable could that be in a more practical world?

Gold saw its huge up-value in the American continent when the europeans came. Before it was just an ornament, had some value but only to priests and rulers. the common person couldn't care less.

Copper, silver and other metals have a much broader practical use. Iron, since way back when!!

<<A good friend will bail you out of jail, but a true friend
will be sitting beside you saying ” Damn that was fun!” - Unknown>>

 

[TheTick]

Don't know why, it just does.

Perhaps the scarcity of gold is a built-in anti-counterfeit measure.

 

[ivymike]

Are you forgetting that gold is shiny and attracts the attention of potential mates better than most other naturally occurring elements or compounds? Diamonds are similar (perhaps superior) in this capability.

It is not at all surprising that an engineer would see such features as valueless... but the economists and marketing types seem (once again) to have it right.

 

[ewh]

I agree with tick - scarcity is the prime reason. Diamonds aren't really that scare, and their market is controlled to protect their value.
If all of the gold that has ever been mined to date were part of a cube, that cube would fit on a tennis court. It is easily recognizable, can't be counterfeited, and has universal recognition.

"Good to know you got shoes to wear when you find the floor." - [small]Robert Hunter[/small]

 

[ivymike]

and it's hard to counterfeit.

 

[mauricestoker]

I just could not figure out the attraction of gold teeth. In West Virginia it means you can't afford a toothbrush, elsewhere it's an ostentatious grille display.

 

[Unotec]

So.. the economy is/was based on something that is hard to counterfeit, scarce but not to the point to make it unavailable world wide and that has no practical use other than being basis of a monetary system?

I wonder.. You could trade a cow for a sow, a sack of corn and two chickens based on what they would produce or give you in the future.

Now we have something that has an arbitrary value assigned to it, basically a luxury value, and started trading with it and exchanging it for useful products.

That does not make sense.

On top of that, the economies are based on inflation, which means higher money supply with a finite resource as support? More money is supposed to be generated backed on gold, of which there will be no more that there is already. (Except for the american type economies that are based on inexistent money, loans). How can economies grow then? There should also be a finite amount of money. (i.e. all teh money in the world should be good to buy all the gold in the world but not an ounce more, if you were to import it from Jupiter)

And I wonder why we go into recessions/depressions or whatever you call them


<<A good friend will bail you out of jail, but a true friend
will be sitting beside you saying ” Damn that was fun!” - Unknown>>

 

[ivymike]

so you're suggesting that the total utility of all objects and devices ever created remains less than or equal to a fixed value, and nothing can be done to create additional value?

 

[Unotec]

If a device gains additional value, it is just worth more gold.

No, what I am suggesting is: that the money supply should be as finite as the gold supply, if the actual value of a currency is based in a hard asset such as gold.

What I am questioning is the actual value assigned to an otherwise useless asset.

Why, if there is another reason than 'visual appeal' is gold so valuable that a currency can be backed by it?

Why not base it on something that can actually provide value, something finite if you will, and not perishable. Lead for instance.

However, I can see that if something actually usefull, such as lead, was given the task gold has, lead would become expensive and its properties would become unattainable due to price.

<<A good friend will bail you out of jail, but a true friend
will be sitting beside you saying ” Damn that was fun!” - Unknown>>

 

[ivymike]

could it not be that we assign a value to an arbitrary object (seashells, for example) so that it can be used as a means to facilitate transactions? could it not also be that the amount of tender must increase over time if people create ever more value by modifying their surroundings?

 

[GregLocock]

I fail to understand why the efficincy of ones recycling processes, and the efficacy of a few miners, should be the controlling parameter for the growth in the world's economy.

Cheers

Greg Locock

SIGlease see FAQ731-376 for tips on how to make the best use of Eng-Tips.

 

[Tomfh]

Gold is valuable because everyone agrees it is.

 

[Ussuri]

I was working on a job recently where we had to provide reistance to overturning for a structural A-frame. The frame was to be placed in a very restricted/enclosed area, and client restrictions prevented us using 'normal' holding down arrangements. The only viable option available to us was to use a counterweight.

But with limited space, steel wasn't dense enough. We wre looking at 30 tonnes or so. Ideally 30 tonnes of platinum or tungsten. But I would have settled for gold.

We dont have any in the UK (Gordon Brown sold it) but I believe you have around 4500 tonnes in fort knox.

So gold is useful for something.

 

[ivymike]

ewh (Aerospace) 9 Mar 09 15:54
If all of the gold that has ever been mined to date were part of a cube, that cube would fit on a tennis court.

...and 1/3 of it would be sitting in Fort Knox and New York right now? That doesn't sound right. A doubles court could fit a cube 36 feet on a side, which would be about 2.5e+10g of gold at room temperature, or 25.5 tonnes (metric tons).

wiki The United States Bullion Depository holds about 4,603 tons (4,176 metric tonnes) of gold bullion (147.399 million troy ounces[1]). It is second in the United States only to the Federal Reserve Bank of New York's underground vault in Manhattan, which holds about 5,000 metric tonnes of gold in trust for many foreign nations, central banks and official international organizations.

wiki It has been estimated that all the gold in the world that has ever been refined would form a single cube 20 m (66 ft) on a side (equivalent to 8000 m³).

That'd give about 157,000 tonnes.

 

[ewh]

I didn't say that the accounting of it was correct, just that there isn't a whole lot out there.

"Good to know you got shoes to wear when you find the floor." - [small]Robert Hunter[/small]