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Why Gold? It's useless!! 4

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Unotec

Unotec

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Jun 13, 2006
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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>>
 
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On the contrary, gold, as well as the other precious metals that serve a primary purpose of wealth storage, have many industrial uses. Scarcity and/or cost to extract is where the inherant value lies, IMO.
 
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It seems you are arguing against the entire monetary system. I have a much bigger problem with a piece of paper I carry around that is worth less than the piece you may have because my piece has an engraved picture of Lincoln and yours has an engraved picture of Franklin. Now there is something worth debating.

Saying gold is worthless because it is just shiny is like saying the Internet is crap because all you can find on it is porn.
 
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Unotec,
Go back a few decades and remember when Nixon devalued the dollar in 72/73 by fully taking the US and by extension the rest of the world off the gold standard and arbitrarily setting a price. What happened?. Oil prices increased as a direct result of the dollar's devaluation and furthered that devaluation. A decade of stagflation. Mortgage rates over 20%. Gold prices increased by 1978 to 20 times its 1972 price falling back to approximately 10 times within months when it collapsed from its high of $800/oz. Also remember when Congress withdrew the Usery Law which limited interest rates that banks could charge; that's when thge highest interest rates were seen on mortagages until Reagan finally broke the back of the inflationary pschology gripping the US and the world.

The value of money is largely psychological - just like the value of a stock, a home, labor or any other commodity. It's what someone is willing to pay and what another is willing to accept. In 1971 I could have purchased a Shelby Cobra for $1900, by 1974 it was worth $9000, by 1979 - $90,000. Why? Rarity and perceived value. I have learned not to kick myself!

Rome went nearly bankrupt by sending its gold to China and India for silk, considered by wealthy Romans to be more valuable. India and China would only accept gold as payment. When the gold ran out,no silk for Romans.


 
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"Perceived value"- that's what it's all about.

It is reported that when the Hittites had iron and the Egyptians had only bronze, the Egyptians sent emissaries to the Hittites to discuss an fair trade weight ratio of iron for gold.

The Hittites reportedly replied that an equal weight of gold would suffice. Anyone considering a swordfight armed with bronze while the other guy has iron would understand why.

The Hittites would probably agree with what I said earlier- if you're worried about the apocalypse, a shotgun and a big box of shells is probably a better investment than gold. NONE of this stuff has any value other than what we assign to it- and these values are relatively stable only while we have the rule of law to enforce our mutual "understanding".

 
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Gold is difficult to assay.

Not in terms of chemical or physical labs performing the work; but rather in the ability of the common person to determine the purity of the sample they are looking at.

Also, due to significant density (gold is almost lea, remember?) gold is a pain in the rear to carry around for purposes of commerce. It is difficult to divide, and generally the activity of doing so removes trace value. (i.e. the kerf thickness of a saw blade, or residue in a crucible)

To counter this problem, people get together and assemble promissory notes that represent certain volumes of gold.

Now the ability to assess value, make change, and transport value has been greatly simplified. Print your note on fancy paper, and you have currency.

Currency is worthwhile (and a good thing) provided that something tangible backs it. For the same reasons that gold is valuable (scarcity), it was useless for a global economy. Does that same 'tennis court' worth of Gold represent the value of all the world's raw materials, good, and services? Of course not, unless we fancy backing our currency with denominations in 1/100,000,000,000,000 of an ounce of Gold.

Sometimes, a simple endorsement is all that is needed to give something value. Elvis' guitar is worth $$$$ because it belonged to Elvis. In the same manner, the USD used to be worth $$$$ because it represented the American ability to commerce.

Now, it seems, that the value of Americans is inflated in America's mind, and suspect everywhere else. As an American, this smarts...

...but rest assured, Gold isn't the answer either. I believe a recognition of the debts we owe, followed by the hard work and earnest effort of my fellow Americans is the redemption for the dollar we are looking for.
 
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Get some gold coins, so that you can bribe your way out of the country should the civilian militia take over and want to do away with you. Call it plan F (for final), hope it will go up in value and pray that we never go through such an unlikely scenario.
 
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I hear that in Germany there are now dispensing machines to issue small gold ingots.
Of course, the price is about 30% above the actual gold price but that might be a price some people would be prepared to pay to be able to conserve something of their fortune.
I think, Zotdoc, the scenario you outline has more chance of occuring in the Uk than Germany, though.

JMW
 
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rhodie: don't wish too much or work too hard for the "redemption" of your dollar. A high dollar gives you yet more license to buy that which others produce, and less incentive or ability for them to buy that which you produce. A high dollar is a mixed blessing, so saith the Canadian whose dollar rises as yours falls...
 
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Today is probably the worst time to buy gold. Everyone knows to buy low and sell high. If you're buying gold now, you're doing it wrong.

Also, if the economy should collapse then gold will be useless. Things of value will then become things you can eat, wear or defend yourself with.
 
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You could also buy beer with rabbits (I think the pub changed ownership some years ago and moved over to the microwave-able manufactured meals so fresh rabbits do not longer appeal to the new owners).

PS
1 UK rabbit = 1 beer = [&Delta;]Au?

In Oz (where rabbits enjoyed unlimited s*x) and I guess the rabbit population is pretty high I would guess:

"N" Oz (not oz) rabbit = 1 beer = [&Delta;]Au? where "N2 is >1


JMW
 
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Trading rabbits for beer? I would then have my wife's blessing to imbibe as much as I like! We go to much effort keeping them out of her spinach and lettuce garden. I'm becoming thirsty at the mere thought of it!
 
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The great thing about rabbits is they breed as fast as you cull them so unless you have a truly gargantuan thirst, you should do well.
You just have to persuade your nearest purveyor of beer to add local fresh food to the menu and then encourage him to include rabbit - Lots of nice recipes and especially appropriate to a country pub/restaurant.

Curiously, I had pub lunch the other day near Guildford (UK) and they had kangaroo burgers on the menu. We were forbidden to order this by my niece - I guess they don't eat shoes or pot plants - but that aside, if they can put Australian giant hopping rats on the menu you should have no trouble with rabbit.

(by the way, what is the roo to beer exchange rate in Oz?).



JMW
 
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Storage of wealth against the apocalypse???

Go to the hardware store.

1 Drill bits ( very hard to make )
2 Saw blades
3 Ammunition
4 Caulk
5 Adhesive
6 Tools


All consumables and hard to come by without trade and advanced industry.

Forget gold ( if you think of apocalypse , or China refusing dollars )

 
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