Funny how some run from bubbles flying to gold
- Thread starter aradiel
- Start date
Or maybe it's a natural economic evolutionary process. Maybe deep down, on a subconscious level for many, there is this idea that gold represents a store of value that governments cannot destroy by replication and irresponsible stewardship as they do with fiat.
Maybe the global fiat experiment that begun in 1971 is on its last legs. Maybe people are not just buying gold, but are exercising the most democratic economic vote they can by doing so.
When people buy gold, they relinquish their government notes. And what is a note? A promise to pay. And do their governments have the ability to perform their side of that promise? How will they do it?
We are watching a bottoms up monetary revolution. Many of us are participating in it.
Maybe what we are witnessing is not a currency crisis that began recently.... maybe it's the culmination of a gold crisis that began 40 years ago?
Good post.
I would like to add it's not that uncommon for paper currencies to come under severe distress during certain cycles in society.
France, which has a standard of living quite high these days according to most international reports, defaulted on it's debt 7 times these last 400 years.
To me that tells me don't be arrogant to believe we as a species have conquered the laws of nature that lead to currency debasement or government defaults.
It also tell's me don't fall in love with gold because just as it's rise now and the following years is pretty much unavoidable the same will apply to the next cycle of trust and confidence in paper assets and government currencies.
It always has.
But it isn't it also true that you hold gold because you're implicitly assuming someone will pay you for it? I.e. you own gold, because, in your mind, it represents the world's promise to pay. So, again, it's hard to see the difference between a fiat commodity, like gold, and fiat money.
Let me be the devil's advocate for a moment. Why is it that you think that people will always be willing to sell you something you need in exchange for gold? Why can't it be that, in the future, people value some other random decorative commodity, such as seashells (yes, I know I am sounding like a broken record) more than gold?
I don't rule that out, but I don't think it's a certainty either.
Thru-out history, there has always been a return to gold. Should that occur again, then gold is no longer a commodity subject to the whims of the markets. Gold becomes money that sovereigns accept.
It is possible that gold attains a high valuation, and thus, stops its journey up, and does not come down. Again, it's a possibility, not a certainty.
Debt based money has allowed a small percentage of the world to consume a disproportionate amount of resources. Up until about a couple decades ago, this was easily accomplished, as most of the world was isolated from the global marketplace.
However, now there are an additional 3-4 billion people entering the global marketplace. They produce and consume. How can we in the West continue to consume using exorbitant leverage - the old rules - when the game has changed? Do we want those 3-4 billion to use a debt based ponzi scheme to compete with us for those resources? Remember, we in the West have a lot more debt and obligations to seniors than they do. Over the long term, they would hold the advantage, as they are not as fiscally constrained as we are.
In my view, if we don't have a global medium of exchange that limits what a country can consume over and above its productive contributions in the global arena, we will blow each other up over what resources remain.
Maybe one day scientists will find that gene that makes us feel as we do when we hold gold? I don't know - but there is something innate to humans about the desire to hold gold. It has never left us - from the times we lived in caves, to the era of space exporation - gold has its hold on us.
But more to the point:
When the central banks of the world start storing seashells, then I will become a voracious buyer of seashells.
Gold has been a medium of exchange of currencies and a store of value for millenia. It has watched its representational (and nonrepresentational) paper notes and non gold coins come and go. I hold some old drachmas, Ionian Republic coins, and Byzantine coins, I also have dollars and euros. Gold's role has not changed. The paper has - as have governments and entire nations. Gold continues... paper comes and goes.