Gold is Money - And Nothing Else 22 comments
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Gold is Money. It's been said before, notably by the late JP Morgan. Yet today we find ourselves forgetting that gold is money.
Jim Sinclair has made some very accurate calls in his time, and is one of the most recognized experts in gold today. A recent message from Mr. Sinclair, I have bolded where he says gold is money:
As far as I am concerned:
- I do not anticipate a one month or more drop in gold. Neither does Monty Guild, so be careful not to read his general commodity comment ass-backwards.
- The worst case scenario is a chop after the low of April 28th set in, and the rally high in the low $950s. Following this the chop gives way to a break above $1034 on its way to $1200 in 2008. Write that down for the dark night of your gold soul.
- Gold is a currency, not a commodity.
- Gold while remaining as a currency is now more tied to the euro than the USDX.
- Weakness in crude, if you can call any price above $100 a barrel weak, helped gold be prone to lower prices.
- Gold?s real help moving lower was a push by COT that triggered the mindless black boxes which are as nuts on the upside as they are on the downside.
- If tonight you curse gold, keep this in mind when it crosses$1034, and please leave never to return.
- Hold my hand when you feel low as gold takes a beating, and when you feel high as a kite when higher highs happen. I will moderate both for you.
- The greatest technical analysis trick is simple to learn. Whatever your emotions say to you is totally wrong. Whenever you want to margin to the rafters it is time to eliminate debt.
Regards,
Jim
Modern economic alchemy has labeled gold nothing more than a commodity, a bygone relic, with no industrial or commercial use in todays world of paper and electronic markets.
But what happens when those who are in charge of those paper and electronic systems abuse it? What happens when people lose confidence in it? What happens when the paper becomes ever more worthless in the eyes of the world?
Quite simply, a return to gold is money. It has been money for over 5000 years. Human beings have this interesting tendancy to forget history, and what we have learned from societies past.
Economies, and nations, both regional and global have gone back and forth from ‘easy money’ to ‘disciplined money’ in a recurring pattern that so far has shown no reason of stopping.
Governments of course favor easy money, because they can print as much as they like, and spend as much as they like, with no sensible restraints on wars, emergency relief, subsidies on foolish programs, and social welfare that dwarfs the entire global gdp combined.
The bad part of course, is this propensity to print and create tens of trillions of dollars out of thin air is called inflation, and it is spreading around the globe like a cancer. Food riots, oil heading to $200 a barrel, $5.00 a gallon gas, and the sad part is, this is just the beginning.
There are, however, solutions. Investigate gold and silver. Learn why gold is money. Most importantly, learn why the cycle is again shifting back to gold is money, and what it means in terms of how high gold will truly go.
Do your research, because for the ones who bury their heads in the sand and fail to see it coming, there will be terrible losses as stock markets come down from baby boomers sucking their money out as they retire in hordes.
Some however, will be gathering wealth because they were smart enough to learn from history.
Disclosure: I own CDE, SLW, HL, AUY, SVM.TO
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This article has 22 comments:
Not true. Gold is a commodity that has been used for money for thousands of years, just as salt has been used as money. If one said, "Salt is not a commodity but money," the kookieness would be the same.
Gold is a commodity money. One of many.
There is a term: "Money Crank." Some people can go overboard.
I'll wait for $800 gold or miss the train.
I would say Gold is Money & Food & oil or a Commodity, to be paid for by Gold.
There have been many historical arguments regarding the combination of money's functions, some arguing that they need more separation and that a single unit is insufficient to deal with them all. One of these arguments is that the role of money as a medium of exchange is in conflict with its role as a store of value: its role as a store of value requires holding it without spending, whereas its role as a medium of exchange requires it to circulate. 'Financial capital' is a more general and inclusive term for all liquid instruments, whether or not they are a uniformly recognized tender.
Medium of exchange
Money is used as an intermediary for trade, in order to avoid the inefficiencies of a barter system, which are sometimes referred to as the 'double coincidence of wants problem'. Such usage is termed a medium of exchange.
Unit of account
A unit of account is a standard numerical unit of measurement of the market value of goods, services, and other transactions. Also known as a "measure" or "standard" of relative worth and deferred payment, a unit of account is a necessary prerequisite for the formulation of commercial agreements that involve debt.
* Divisible into small units without destroying its value; precious metals can be coined from bars, or melted down into bars again.
* Fungible: that is, one unit or piece must be perceived as equivalent to any other, which is why diamonds, works of art or real estate are not suitable as money.
* A specific weight, or measure, or size to be verifiably countable. For instance, coins are often made with ridges around the edges, so that any removal of material from the coin (lowering its commodity value) will be easy to detect.
Store of value
To act as a store of value, a commodity, a form of money, or financial capital must be able to be reliably saved, stored, and retrieved — and be predictably useful when it is so retrieved. Fiat currency like paper or electronic currency no longer backed by gold in most countries is not considered by some economists to be a store of value.
1913 - 0.9675 troy ounces of gold was $20
2008 - 0.9675 troy ounces of gold is about $900
No comment...
That's not to say that one cannot make a pile of money from gold, as the USD declines ad nauseum. But it's not money. Money is a medium of exchange allowing items of value to be exchanged (example: your time at work in exchange for your salary). Gold is an item of value.
Thank you for some common sense. Take an ounce of of gold to the supermarket and try to give it to the cashier to buy milk and bread. Gold is money? What an asinine statement.
If anyone wants to speculate that the price of gold will go up for whatever reason that is great, I've bought gold futures myself, but don't try to tell me it's because it will replace dollars, or euro's.
The day may return--sooner than you think--when the local Doctor will gladly accept 2 chickens for an office visit.
Almost everything is "a medium of exchange" valued by supply and demand. And the supply of dollars being increasing as it is, only increases the demand for more dollars for the same chicken--it's a fiat inflation press they're running.
The only benefit in using dollars is they're easier to carry around.
Otherwise the "Barter system" excels. We'd rather trade my three fishing rods for your lawnmower than use dollars as they won't devalue on the way home. And neither party gets taxed along the way.
Gold is a commodity that functions as money (i.e. a store of value). So, gold is money.
Paper money functions simply as a medium of exchange that does not necessarily serve as a store of value. So, paper money is currency.
Gold is not a currency.
Gold is also not an investment; it doesn't pay dividends. Again, it is a store of value, so as currencies fall in value, those who hold gold become richer relative to those who hold currencies, such as dollars.
Every indicator suggests that the dollar will continue to fall. There's really nothing holding it up. As Warren Buffett states: you can't shove $2 billion down the throats of foreigners every day and not expect the dollar to fall.
It's that simple. Just own a little gold until monetary policy changes.
-Anders
Quote: "If tonight you curse gold, keep this in mind when it crosses$1034, and please leave never to return."
And, what kind of crap is this???
If you think the dollar has value well you may need to recheck your IQ, and the one who stated, " credit is currency", well your brainwashing is complete.
Liked all of mayeeden's comments.
Gold and silver are money but in the modern technology era, commodity uses have been discovered for these metals. This is especially true of silver which is being used up. So at the same time that more and more paper/credit dollars are being created, silver (real money) is being used up in mostly non-recoverable ways.
Silver is money, silver is being used up, paper and credits are expanding with the ever-growing population, available silver ounces per capita are alarmingly shrinking. Do you have your share?
The brainwashing is INDEED complete. The Constitution says NO SUCH THING! It says that STATES may not issue currency -- only the federal government can do so. The states are allowed to make their own gold and silver coins for payment of debts, but the Federal Government is allowed to issue CURRENCY -- that is money that is OTHER than silver or gold.
Wood pulp has value. Nothing else matters. If you invest in wood pulp you can not go wrong; it will always be worth something.
Salt has value. Nothing else matters. If you invest in salt you can not go wrong; it will always be worth something.
Salt, in fact, has a much longer history of being used for money than gold; so for logical consistency, maybe it would be better to transfer all your investments to salt.
For this to be valid, there would have to be a country where gold is legal tender. In that case gold would be backed by the GDP of such country or countries. The Euro is backed by some portion of the GDP of the EU. The USD is backed by the GDP of the US. As it is, gold is backed by nothing except the moment-to-moment BELIEF in its value.
Gold is not a store of value. Its value is subject to a very volatile speculation market. There are at least 3 or 4 times in just the last 30 years when gold has lost over a third of its real, inflation-adjusted purchasing power. Comparatively speaking, a stock in a large blue-chip company is a far better store of value. Or if using a commodity as a store of value, chose one that is less subject to speculation, and one in which nations don't hold enormous reserves of, which, if they sold them would destroy the value of your investment. For example, a combination of a number of non-precious metals, lead, zinc, aluminum, etc, would be a better store of value than gold.