Speculation & Gold

[Tucker]

What would the cost be to change to the use of gold for money? Wouldn't we have to melt down enough gold to make different denominations so we can walk into a store and buy milk and bread and receive change. Then wouldn't we have to produce enough of it to be able to give every person on the planet that earns some form of income their payment in gold. The world population has grown quite a lot in the last 100 years so is there enough to go around and would it be too expensive to do?

[Badger]

Tucker gold is based on weight like all commodities

dont forget silver...you can use any commodity you want...

This process: the cumulative development of a medium of exchange on the free market—is the only way money can become established. Money cannot originate in any other way, neither by everyone suddenly deciding to create money out of useless material, nor by government calling bits of paper “money.” For embedded in the demand for money is knowledge of the money-prices of the immediate past; in contrast to directly-used consumers’ or producers’ goods, money must have preexisting prices on which to ground a demand. But the only way this can happen is by beginning with a useful commodity under barter, and then adding demand for a medium for exchange to the previous demand for direct use (e.g., for ornaments, in the case of gold).
1 Thus, government is powerless to create money for the economy; it can only be developed by the processes of the free market.


A most important truth about money now emerges from our discussion: money is a commodity. Learning this simple lesson is one of the world’s most important tasks. So often have people talked about money as something much more or less than this. Money is not an abstract unit of account,

M Rothbard

[Tucker]

Sure, what would the costs be to produce gold/silver money in small enough denominations to be able to pay out every person on the planet with what they are worth today and then to continue on paying everyone their weekly income. That would be a huge cost and job wouldn't it. And wouldn't that put a huge strain on these resources.

[Austrokiwi]

Sure, what would the costs be to produce gold/silver money in small enough denominations to be able to pay out every person on the planet with what they are worth today and then to continue on paying everyone their weekly income. That would be a huge cost and job wouldn't it. And wouldn't that put a huge strain on these resources.

And.......gold and silver speculators would be punished as Govts would fix the price of silver and gold!

[Tucker]

Plus probably would require you to hand it back to governments so they could mass produce gold coins.

[Tucker]

With the current amount of gold above ground it works out to around $560USD per person on 2008 prices. Silver $26 USD per person.

[Badger]

Ah well only if you wish government to keep controlling the free market that government likes to uphold but governments do not practice...so there liars all of them dosnt matter which banner they fly red blue or green. Politicians are confidence tricksters owned by confidence tricksters. Only have to examine NZ or the US to see that fact....

[Tucker]

I think you will find that the governments or someone else for that matter will find a way to still controls things their way even if gold was used.

[Badger]

Perhaps, but it seemed to work ok before governments get involved, even Austro's article proved that about the use of MTT's that were used all over place untill governments stepped in and killed it off...

MTT's seem to work ok for around 250 years...our fiat currency is blowing apart after 30 years...not much longevity there...

Think Kiwi Saver will be worth much at 0%? Is it going save us at 0%?

[Tucker]

In the last 100 years the world population has gone from 2 billion to 6.

What do you mean by 0% for kiwisaver?

[Badger]

Plus probably would require you to hand it back to governments so they could mass produce gold coins.

Whats happened to the free market? Free market means no government interference or do you not believe that? Then why vote for them if those representatives do not practice what they preach?

[Badger]

And.......gold and silver speculators would be punished as Govts would fix the price of silver and gold!

Sound like the USA in the 1930's what do they say about America

"land of the free" ? dosnt look to free to me...

More like the "utopia of clowns" run buy the plutocracy for the plutocracy!

[Tucker]

This hasn't happened yet has it but they may pay you for it but I can't see how because they would need to pay you in gold for your gold unless you could come to some other arrangement. How would we then use gold as money if the governments can't get enough to produce the money to replace the current paper money. What do you suggest they could do to get the amount required?

Who do I vote for then Badger if you think no one in government is any good, do what you do and vote for no one. That really showed them.

[Badger]

What is the effect of a change in the money supply? Following the example of David Hume, one of the first economists, we may ask ourselves what would happen if, overnight, some good fairy slipped into pockets, purses, and bank vaults, and doubled our supply of money. In our example, she magically doubled our supply of gold. Would we be twice as rich? Obviously not. What makes us rich is an abundance of goods, and what limits that abundance is a scarcity of resources: namely land, labor, and capital. Multiplying coin will not whisk these resources into being. We
may feel twice as rich for the moment, but clearly all we are doing is diluting the money supply. As the public rushes out to spend its new-found wealth, prices will, very roughly, double—or at least rise until the demand is satisfied, and money no longer bids against itself for the existing goods.

Thus, we see that while an increase in the money supply, like an increase in the supply of any good, lowers its price, the change does not—unlike other goods—confer a social benefit. The public at large is not made richer. Whereas new consumer or capital goods add to standards of
living, new money only raises prices—i.e., dilutes its own purchasing power. The reason for this puzzle is that money is only useful for its exchange value. Other goods have various “real” utilities, so that an increase in their supply satisfies more consumer wants. Money has only utility for prospective exchange; its utility lies in its exchange value, or “purchasing power.”

Our law—that an increase in money does not confer a social benefit—stems from its unique use as a medium of exchange. An increase in the money supply, then, only dilutes the effectiveness of each gold ounce; on the other hand, a fall in the supply of money raises the power of each gold ounce to do its work. We come to the startling truth that it doesn’t matter what the supply of money is. Any supply will do as
well as any other supply. The free market will simply adjust by changing the purchasing power, or effectiveness of the gold-unit. There is no need to tamper with the market in order to alter the money supply that it determines.

M Rothbard
What has government done to our money.

[Austrokiwi]

No
The "right time" was last Nov. when all the bears were having a field day saying how much gold had gone down, and how all the bulls were wrong. When sentiment was at its lowest, but the fundamentals were still intact.
As usual, most people are a bit late to the party.

All markets are suffering extreme volatility at the moment. Today Gold is back under US$900 an oz.

Well most of last year I was a bear and I recall saying around November that gold would average between US$850 and US$950 an oz. I also pointed out, like others, the impossibility of the US$1200 by Christmas 2008 claim ( like snow in Auckland in February). I also stated I wouldn't be surprised if gold hit NZ$2000.00 an oz. If people are crowing about the Gold Price in NZ$ terms...................you would have done better in a leveraged foreign exchange position betting against the kiwi! I also believe I suggested any movement in gold would occur from mid January 2009 on.

Any one with gold right now has not made any profit, unless they have sold. I sold down ( not out) in September and the cash generated is being held in US$ so I have taken profits and have positioned myself to take advantage of the fall in the KIWI.

I have always been conscious of the rule that while you are holding gold all you are looking at is potential value. I have seen not one of the Bulls stating when the best time would be to take their profits. All I seem to be reading is gold is going to go up and up and up, with dismissal of any idea that Gold also can head down. It seems so like the statements of 18 months ago regarding Property never going down in value

Back in the 1980s many gold bulls lost out because they didn't know when to exit the market, they had become addicted to the idea Gold was only going to go up!

ALL the excel created graphs in the world are not going to tell us what is going to happen next week. Yes you can use the traditional models, the same ones that got hedge funds into so much trouble. I realise that this thread is about speculating in gold, but the key word is speculating!!!!!! As long as people are only risking what they can afford to loose there is no problem!