Paying in gold instead of currency

The gold bugs claim that gold is an alternative currency that cannot be hyperinflated into worthlessness like “fiat” currencies. The argument is that gold is safe because nobody can print gold. I am aware of the risks of fiat currencies. In fact, I fear hyperinflation here in the US. Until the fall of 2007, I had always regarded those predicting hyperinflation as gun-toting kooks like Howard Ruff. Helicopter Ben’s flip-flop from inflationary fears to deflationary fears in just weeks convinced me that this really isn’t your father’s Fed anymore. The scale of all these bailouts and government intervention have greatly reinforced the argument that hyperinflation is coming. That said, is gold really an alternative currency? How do you estimate the intrinsic business value of gold? If it’s such a great alternative currency, where can you use gold to pay for your housing, food, utilities, and other goods and services? At least I know that Hong Kong dollars, yen, Euros, Australian dollars, Canadian dollars, Mexican pesos, etc. are accepted as payment somewhere. At least I know that US dollars are accepted as payment here at home, and I need to keep some money in money market funds, because my landlord, utility provider, gas stations, grocery stores, and other people/entities I do business with ONLY accept US dollars as payment. If I lived in Japan, at least I’d know that all of the above providers of goods and services I need accept only yen as payment. But where can you go where gold is accepted as payment? And why does gold have to be the alternative to fiat currencies? Why not silver? Platinum? Diamonds? Titanium? Corn? Wheat? I’m not so sure that gold is safer than the fiat currencies it’s supposed to replace.

You could probably move to the Congo and just pay everyone in Cocaine. Probably would serve you just as well in Hollywood too for that matter…

I think that the thought is that if all goes to hell and currency becomes worthless we will return to a barter economy where gold will hold a great deal of value over sea shells.

If all goes to hell, gold will be more valuable than pieces of paper. But I think most of the buying is more of a currency diversification strategy than a bet on complete catastrophe.

DiehardValueInvestor Wrote: ------------------------------------------------------- > The gold bugs claim that gold is an alternative > currency that cannot be hyperinflated into > worthlessness like “fiat” currencies. The > argument is that gold is safe because nobody can > print gold. > > I am aware of the risks of fiat currencies. In > fact, I fear hyperinflation here in the US. Until > the fall of 2007, I had always regarded those > predicting hyperinflation as gun-toting kooks like > Howard Ruff. Helicopter Ben’s flip-flop from > inflationary fears to deflationary fears in just > weeks convinced me that this really isn’t your > father’s Fed anymore. The scale of all these > bailouts and government intervention have greatly > reinforced the argument that hyperinflation is > coming. > > That said, is gold really an alternative currency? > How do you estimate the intrinsic business value > of gold? If it’s such a great alternative > currency, where can you use gold to pay for your > housing, food, utilities, and other goods and > services? At least I know that Hong Kong dollars, > yen, Euros, Australian dollars, Canadian dollars, > Mexican pesos, etc. are accepted as payment > somewhere. At least I know that US dollars are > accepted as payment here at home, and I need to > keep some money in money market funds, because my > landlord, utility provider, gas stations, grocery > stores, and other people/entities I do business > with ONLY accept US dollars as payment. If I > lived in Japan, at least I’d know that all of the > above providers of goods and services I need > accept only yen as payment. But where can you go > where gold is accepted as payment? > > And why does gold have to be the alternative to > fiat currencies? Why not silver? Platinum? > Diamonds? Titanium? Corn? Wheat? I’m not so > sure that gold is safer than the fiat currencies > it’s supposed to replace. i could never understand this line of thinking, arent all asset classes subject to inflation/speculative bubbles.

DiehardValueInvestor Wrote: ------------------------------------------------------- > At least I know that Hong Kong dollars, > yen, Euros, Australian dollars, Canadian dollars, > Mexican pesos, etc. are accepted as payment > somewhere. At least I know that US dollars are > accepted as payment here at home, and I need to > keep some money in money market funds, because my > landlord, utility provider, gas stations, grocery > stores, and other people/entities I do business > with ONLY accept US dollars as payment. If I > lived in Japan, at least I’d know that all of the > above providers of goods and services I need > accept only yen as payment. But where can you go > where gold is accepted as payment? If it all goes to hell in the US (my home) I can take my gold anywhere and exchange it for the currency I need, but I don’t yet know if I need Yen, Euros, Yuan, etc. The point is that if we aren’t actually using gold to barter, it will be readily exchangable into whatever I need to conduct my business.

I’ve addressed this numerous times on this forum and since I’ve already done so today I’m not going to do it again. If you already have your mind made up that gold investors are foolish and you started this thread to illustrate your point, no worries. If you’re genuinely interested in hearing a point of view in stark contrast to your own read Murray Rothbard’s ‘The Case for a 100 Percent Gold Dollar’: Here’s a free PDF: http://mises.org/rothbard/100percent.pdf And here you can purchase the essay in book form for $4 plus shipping: http://www.mises.org:80/store/Case-for-the-100-Percent-Gold-Dollar-The-P64C0.aspx Judging by your screen name you’re most likely a Warren Buffet fan and his views of gold are no secret. If you set aside your biases going in you may finish the essay with a different point of view.

That’s gold, Jerry, gold!

Bankin’ Wrote: ------------------------------------------------------- > I’ve addressed this numerous times on this forum > and since I’ve already done so today I’m not going > to do it again. If you already have your mind > made up that gold investors are foolish and you > started this thread to illustrate your point, no > worries. If you’re genuinely interested in > hearing a point of view in stark contrast to your > own read Murray Rothbard’s ‘The Case for a 100 > Percent Gold Dollar’: > > Here’s a free PDF: > http://mises.org/rothbard/100percent.pdf > > And here you can purchase the essay in book form > for $4 plus shipping: > http://www.mises.org:80/store/Case-for-the-100-Per > cent-Gold-Dollar-The-P64C0.aspx > > Judging by your screen name you’re most likely a > Warren Buffet fan and his views of gold are no > secret. If you set aside your biases going in you > may finish the essay with a different point of > view. A very very interesting read that PDF. Quite prescient too.

newsuper Wrote: ------------------------------------------------------- > Bankin’ Wrote: > -------------------------------------------------- > ----- > > I’ve addressed this numerous times on this > forum > > and since I’ve already done so today I’m not > going > > to do it again. If you already have your mind > > made up that gold investors are foolish and you > > started this thread to illustrate your point, > no > > worries. If you’re genuinely interested in > > hearing a point of view in stark contrast to > your > > own read Murray Rothbard’s ‘The Case for a 100 > > Percent Gold Dollar’: > > > > Here’s a free PDF: > > http://mises.org/rothbard/100percent.pdf > > > > And here you can purchase the essay in book > form > > for $4 plus shipping: > > > http://www.mises.org:80/store/Case-for-the-100-Per > > > cent-Gold-Dollar-The-P64C0.aspx > > > > Judging by your screen name you’re most likely > a > > Warren Buffet fan and his views of gold are no > > secret. If you set aside your biases going in > you > > may finish the essay with a different point of > > view. > > > A very very interesting read that PDF. Quite > prescient too. I’m thrilled to hear that you read and enjoyed it. IMO anything by Murray Rothbard or Ludwig Von Mises is absolutely solid. I’d put those guys on the level of Newton and Einstein with regard to brain power.

Gold has value b/c someone is willing to buy it. take that away, and it’s worth a CDO squared.

ConvertArb Wrote: ------------------------------------------------------- > Gold has value b/c someone is willing to buy it. > take that away, and it’s worth a CDO squared. Yeah, except the fact that for pretty much the entire history of humankind there has always been a buyer for gold (except when those fancy cowrie shells ruled the roost), just at varying prices.

http://online.wsj.com/article/SB123440593696275773.html?mod=googlenews_wsj

Me and bankin’ have gone back and forth on the topic and I know he’s made some good points and I feel I’ve made a few in my time. If the currency system falls apart, there will be global civil unrest unseen by the world ever before. People think they “own” gold but they don’t actually own it, they just own a piece of paper saying they do own it. So what happens is that when the government/police lose control, the militia/mob will eventually move towards gold as a medium of exchange and will raid all gold deposits and control that flow of gold. SO, my position is that investing in gold is worthless unless you believe we will somehow skip civil unrest when all paper currency collapses. I can’t imagine how I wouldn’t eventually kill the shopkeeper for food when he doesn’t except the only form of currency I actually hold, paper. What you want to invest in is guns, sustainable food, etc. Tangible assets that cannot be stolen easy if you have protection, that way you will be able to survive and become a high ranking official in the future militia that overthrows the government. The only case where investing in physical gold would win is if the government goes totalitarian on the people and maintians that healthy level of fear, enough to suppress civil unrest and quickly unload gold as the main currency thereby relieves common folks of the menace of no medium of exchange. So 3 points: 1) there will be a lag between now and gold having tangible value, but that time will eventually come if paper currency is no longer accepted 2) some form of ruling body, whether it be current government or coup d’etat government, must have control of the system before gold will hold any value as most of the gold is stored in facilities owned by government as some entity must collect that gold and control the flow of gold 3) own physical gold and not a piece of paper saying you own it; its useless unless you hold it in your hands; its like owning a gun and saying ‘give me your money or I’ll shoot you Tuesday’