Gold Bullion Is Rising in All Currencies [View article]
GotLife, Good questions. Here are my answers for what it's worth:
1) No. Not at all. It means that confidence in all fiat currencies is eroding. That is reasonable and expected, as almost all central banks have been increasing liquidity (i.e. diluting the currency) to avoid deflationary forces. It is possible for all currencies to weaken (as today) or strengthen at the same time, and that can only be seen by looking at currencies versus hard assets (e.g. gold, copper, oil, etc.). Gold is probably the most stable asset since the supply can only increase at a slow steady rate due to its scarcity and cost of recovery, and its demand is mostly reflective of its monetary value, as very little is consumed. This makes it, probably, the purest monetary commodity.
2) Gold is only one form of wealth. Perhaps it is the best "zero" against which all other wealth can be measured, but regardless, all assets represent "real" wealth -- commodities, real estate, equities, even fiat currencies. The only question is which form will best retain or increase its value, and which will evaporate. Fiat currencies tend to evaporate over time by losing their value, because the temptation for governments to inflate seems too much to resist. This is not a modern phenomenon, but has happened throughout history whenever a currency becomes independent of a hard asset such as gold.
On Nov 06 03:39 PM GotLife wrote:
> These are questions, not rhetorical comments. Doesn't a rise in the > price of gold against all currencies indicate a bubble? Will it protect > erosion in your currency if all currencies are eroding simultaneously? > If only individuals or countries holding gold truly have real wealth, > how will business be conducted when 95% of the world holds zero gold, > hence zero wealth?
Gold Bullion Is Rising in All Currencies [View article]
Good questions. Here are my answers for what it's worth:
1) No. Not at all. It means that confidence in all fiat currencies is eroding. That is reasonable and expected, as almost all central banks have been increasing liquidity (i.e. diluting the currency) to avoid deflationary forces. It is possible for all currencies to weaken (as today) or strengthen at the same time, and that can only be seen by looking at currencies versus hard assets (e.g. gold, copper, oil, etc.). Gold is probably the most stable asset since the supply can only increase at a slow steady rate due to its scarcity and cost of recovery, and its demand is mostly reflective of its monetary value, as very little is consumed. This makes it, probably, the purest monetary commodity.
2) Gold is only one form of wealth. Perhaps it is the best "zero" against which all other wealth can be measured, but regardless, all assets represent "real" wealth -- commodities, real estate, equities, even fiat currencies. The only question is which form will best retain or increase its value, and which will evaporate. Fiat currencies tend to evaporate over time by losing their value, because the temptation for governments to inflate seems too much to resist. This is not a modern phenomenon, but has happened throughout history whenever a currency becomes independent of a hard asset such as gold.
On Nov 06 03:39 PM GotLife wrote:
> These are questions, not rhetorical comments. Doesn't a rise in the
> price of gold against all currencies indicate a bubble? Will it protect
> erosion in your currency if all currencies are eroding simultaneously?
> If only individuals or countries holding gold truly have real wealth,
> how will business be conducted when 95% of the world holds zero gold,
> hence zero wealth?