Isn't mining more gold the same as printing more money?
- Thread starter Pekelo
- Start date
Correct. A "gold standard" doesn't negate inflation, it just tends to mute it.
As an example around 1900 the value of gold dust in the Yukon had deflated massively in terms of goods such as hay and milk. Nobody had access to fresh foods, but many had gold dust in large quantities. It could take more than an ounce of gold to buy a gallon of milk.
Just a different twist on the same theme.
Some fun facts from Wiki:
"At the end of 2009, it was estimated that all the gold ever mined totaled 165,000 tonnes. This can be represented by a cube with an edge length of about 20.28 meters. The value of this is very limited; at $1200 per ounce, 165,000 tons of gold would have a value of only 6.6 trillion dollars.
The average gold mining and extraction costs were about US$317/oz in 2007, but these can vary widely depending on mining type and ore quality; global mine production amounted to 2,471.1 tonnes"
1. So, if the US had all the gold ever mined, it could only back 6.6 trillion dollars at $1200.
2. Since the annual world output of new gold is around 2500 tonnes, the newly mined gold decreases the value of gold by 1.5% as inflation, something to think about.
Question for goldbackers: If the owners of gold backed money suddenly start to ask for the gold, what does the government do? (this what happened back in the 70s when France kept taking gold away from the US and we know how it ended)
"The Pool came unstuck when the French, under Charles de Gaulle, reneged and began to send the Dollars earned by exporting to the U.S. back and demanding Gold rather than Treasury debt paper in return. Under the terms of the Bretton Woods Agreement signed in 1944, France was legally entitled to do this. The drain on U.S. Gold became acute, and the London Gold Pool folded in April 1968. But the demand for U.S. Gold did not abate."
Bottom line:
1. Gold does inflate.
2. There is not enough gold to back the goods and services of the world.
P.S.: If you ever wondered where all those gold going:
"India is the world's largest consumer of gold, as Indians buy about 25% of the world's gold, purchasing approximately 800 tonnes of gold every year. India is also the largest importer of the yellow metal; in 2008, India imported around 400 tonnes of gold."
"At the end of 2009, it was estimated that all the gold ever mined totaled 165,000 tonnes. This can be represented by a cube with an edge length of about 20.28 meters. The value of this is very limited; at $1200 per ounce, 165,000 tons of gold would have a value of only 6.6 trillion dollars.
The average gold mining and extraction costs were about US$317/oz in 2007, but these can vary widely depending on mining type and ore quality; global mine production amounted to 2,471.1 tonnes"
1. So, if the US had all the gold ever mined, it could only back 6.6 trillion dollars at $1200.
2. Since the annual world output of new gold is around 2500 tonnes, the newly mined gold decreases the value of gold by 1.5% as inflation, something to think about.
Question for goldbackers: If the owners of gold backed money suddenly start to ask for the gold, what does the government do? (this what happened back in the 70s when France kept taking gold away from the US and we know how it ended)
"The Pool came unstuck when the French, under Charles de Gaulle, reneged and began to send the Dollars earned by exporting to the U.S. back and demanding Gold rather than Treasury debt paper in return. Under the terms of the Bretton Woods Agreement signed in 1944, France was legally entitled to do this. The drain on U.S. Gold became acute, and the London Gold Pool folded in April 1968. But the demand for U.S. Gold did not abate."
Bottom line:
1. Gold does inflate.
2. There is not enough gold to back the goods and services of the world.
P.S.: If you ever wondered where all those gold going:
"India is the world's largest consumer of gold, as Indians buy about 25% of the world's gold, purchasing approximately 800 tonnes of gold every year. India is also the largest importer of the yellow metal; in 2008, India imported around 400 tonnes of gold."
Absolutely correct unless someone wants to get into (OPM) Other Planetary Mining there will be a fixed amount gold has been valued for whatever reason and fiat currency is nothing more than a tool.
Akuma
Here is my take:
One has the option to invest in
1. stocks and real-estate
2. Treasuries
3. Commodities
3.a Gold/Silver
3.b Oil, grains etc...
4. FOREX but that is a proxy for the above
In economic expansion more fiat money flow into 1. Money are taken from 2 and 3
When 1 does not perform well but there is no major problem with the structure of the economy money go from 1 into 2. and from 3.b to 2.
When there is a big problem/fear money go into 3a. 2 does not work as the FED is killing it to force investments in 1. But the fear takes the money into 3.a
As soon as the economy starts to expand watch out if your money are in 3.a. There will be 50% or more fall.
One has the option to invest in
1. stocks and real-estate
2. Treasuries
3. Commodities
3.a Gold/Silver
3.b Oil, grains etc...
4. FOREX but that is a proxy for the above
In economic expansion more fiat money flow into 1. Money are taken from 2 and 3
When 1 does not perform well but there is no major problem with the structure of the economy money go from 1 into 2. and from 3.b to 2.
When there is a big problem/fear money go into 3a. 2 does not work as the FED is killing it to force investments in 1. But the fear takes the money into 3.a
As soon as the economy starts to expand watch out if your money are in 3.a. There will be 50% or more fall.
On this topic some complete morons posted... I can see why there are so many failed traders... think think gold doesnt decrease in value when more is mined, all else being equal. What dumbasses!
I agree with Pekelo. A government can print a trillion dollar bill using a single sheet of paper
and a few drops of ink, but suddenly increasing the supply of gold isn't so easy. Like
anything else, the price of gold does depend on supply and demand -- if some alchemist
discovered and published a way of turning iron into gold, the price of gold would
fall rather quickly to the price of iron plus the cost of the incantation.
Hm... The Finance of Alchemy?
and a few drops of ink, but suddenly increasing the supply of gold isn't so easy. Like
anything else, the price of gold does depend on supply and demand -- if some alchemist
discovered and published a way of turning iron into gold, the price of gold would
fall rather quickly to the price of iron plus the cost of the incantation.
Hm... The Finance of Alchemy?
Quote from failed_trad3r:
On this topic some complete morons posted... I can see why there are so many failed traders... think think gold doesnt decrease in value when more is mined, all else being equal. What dumbasses!
No wonder YOUR name is failed trader. The amount of new gold mined last year was 2000 tons. Out of 165,000 tons that had been mined in the world that increased the amount of gold out there by 1.21%.
The population of the world increased 1.13% in the same year. This means that gold has become more valuable in 2009 because more people were born (supply of people) vs supply of gold available now.
Now...if we mined 165,000 tons of gold last year, then yeah...gold would go down in value about 50% (to $675 per oz) What are the odds that much gold could be mined in 1 year? Zero! Thats why mining more gold is not the same as printing more money. You can double or triple the supply of money overnight. You cant do that with gold.
dumbass alert!
...all else being equal... learn to read
plus you make false assumptions. you assume demand for gold is not speculative. thats dumb