In Gold we trust.

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In Gold we trust.

http://www.usagold.com/gildedopinion/pdf/ingoldwetrust.pdf

Excellent info on Gold and where it's heading.  It's 55 pages long but if you print it off and read you'll be very happy.

Cheers!

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Re: In Gold we trust.

I have not read this but I just don't get where people are coming from with gold.  I understand the notion that gold is somehow "real money,"  but money, itself, is not real.  Money is simply a representation of value (labor value).  So if people buy into the proposition that paper money is not worth anything, how can gold be worth anything more?  Just because somebody says so?  I don't buy it.

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Re: In Gold we trust.

Anarkst,

How would you propose that trade be settled without money?  I am not talking about global trade (though the same rules apply - I just want to keep things simple).  I'm talking about how would you be paid for whatever it is you do (or did in case you're retired)?

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Re: In Gold we trust.

anarkst wrote:

I have not read this but I just don't get where people are coming from with gold.  I understand the notion that gold is somehow "real money,"  but money, itself, is not real.  Money is simply a representation of value (labor value).  So if people buy into the proposition that paper money is not worth anything, how can gold be worth anything more?  Just because somebody says so?  I don't buy it.

anarkist - the argument for storing wealth in gold or even returning commerce to a 'gold standard' is not a mal considered idea about making an abstraction real so much as a re-centering of the power structure.  Any time you allow one single entity the full legal power to counterfeit currency you run the risk that said entity will take advantage of it.  This allows them to favor themselves and anyone who becomes a primary recipient of currency (which will trade at 'current' value until it has circulated enough to depreciate others like it) and creates an unpredictable environment in which to do business.

The advantage of gold is that it takes work to produce and simultaneously has a multi-thousand year history in human culture of being traded as money.  From the perspective of someone trying to navigate the current economic climate, it has a long history of retaining relative value.  From the perspective of a monetary system reformer it primarily takes the power of 'money' creation away from the government and reduces their ability to spend without responsibility.

It's not a perfect solution, certainly, but a lot better than stashing paper in your mattress (though there are few enough paper representations of dollars in the world that they, too, are effectively rare.  If everyone demanded paper for the digits they have in the bank, we'd come several tens of trillions short).

Anyway, hope that helps.

Daniel

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Re: In Gold we trust.

ivoryjackal writes:

The advantage of gold is that it takes work to produce and simultaneously has a multi-thousand year history in human culture of being traded as money.

Money is simply an abstraction.  But let's leave that alone for a moment.  Let's say you wished to use gold or any finite material as money.  You suggest that if you can control the amount of that material, bankers/government would not be able to manipulate the supply of money and therefore de-value your storehouse of wealth.  If the material is indeed finite, and the amount of money needed by the society grows at x rate, what do you do then?  A bit of a paradox. 

Problem number two is that when you decide to allow money to represent labor value, you allow all the wonderful manipulations to occur, which essentially gut the law of supply and demand which should regulate value in the first place.  Paradox number two.

The institution of money, in and of itself, demands several other institutions to do its bidding, the most horrendous of all being banking, where the greatest deceptions take place.  These are, historically, not wonderful human beings, and are the penultimate something for nothing bottom-dwellers.

So, allowing money to represent true value (labor) can not work (very well) and has been one of the greatest con jobs of all time (right up there with, "Please, [fill in the blank], I really do love you!")

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Re: In Gold we trust.

Patrick asks:

How would you propose that trade be settled without money?

Good question.  Considering that our entire economic system grew up around the concept of money, things would need to radically change.  But then again, we are witnessing a radical change right now because money was morphed into something even more abstract, credit.  And look what happened there.

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Re: In Gold we trust.

anarkst wrote:

You suggest that if you can control the amount of that material, bankers/government would not be able to manipulate the supply of money and therefore de-value your storehouse of wealth. 

I suggested government wouldn't be able to.  I was really trying to give a bit of an overview - taking you at your word that you really didn't know what was up about it.  I wasn't looking to get into the thorny history of fractional reserve banking.  I have some opinions about it which aren't terribly clear cut, but I have no illusions about the altruism of bankers either.  Any market is probably manipulatable and my general desire would be for real free market money (which seems to default to monetary metals, but allows for trade in tobacco or cattle or any other viable currency if daddy warbucks has hoarded all the gold).  This might mean that non productive people (I'm thinking government) would have to be largely volunteer as taxation would be a tough thing to do (though I'm sure they'd find a way).

anarkst wrote:

If the material is indeed finite, and the amount of money needed by the society grows at x rate, what do you do then?  A bit of a paradox. 

It's my understanding that the black death lead europe out of feudalism because it decimated the work force so much that landlords had to compete (bid up) for serfs.  Seems to me a great example of monetary revaluation that works out in favor of the little people (though we're not speaking strictly of currency here).

I think you probably know the answers, but again, I'll take you at face value.  If currency supply is finite and population grows, currency will tend to become more valuable per unit.  Not bad unless you're in debt.  Vice versa (and the problem we have with federal reserve notes) if the supply increases beyond the pace of population growth, it becomes less valuable.  Post peak oil future with shrinking population means gold, per weight, becomes worth less.  I suspect, though, that in such scenario, this would be the least of my worries.

I'm way not smart enough to offer solutions to world economies.  I'm just about smart enough to offer options for local economies, any of which would probably only be possible in a much different future (but isn't that why we're here to start with?).  My decision to store a portion of my long term wealth in traditional monetary metals has as much to do with my desire to get out of the Gman's game as it does with faith in the stuff's history or future.

Perhaps rather than posing questions that you know the answer to you could let me in on what your thinking is - how do you envision an ideal economy?  locally, globally, I don't care, just genuinely curious.

Daniel

[edited to finish a thought I'd left undone]

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Re: In Gold we trust.

Anark,

I understand your argument and agree that the monetary system is at the heart of most (if not 99%) of humanities evil.  Personally, I think not having a monetary system would be wonderful.

This is the Utopia of the future.

http://thevenusproject.com/a-new-social-design/essay

But we're not there yet.  And in the mean time, I have to protect my family as best I can.  This means that I have to protect them from the evil that is the Fed/US Dollar/Current Monetary System.  Gold does that.

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Re: In Gold we trust.

Thanks for the info LR, I briefly scanned it, but I'll make sure to read it when time allows.

I still think gold will not embark on a significant bull run from its current prices, as there are too many people who bought it as a inflation hedge and therefore will abandon their positions in it during the next phase of de-leveraging. Besides, bull markets of this magnitude, never begin in a positive sentiment environment, they always begin in a negative sentiment environment. A plunge to $600/oz gold should flush out the overly-bullish traders and provide a good buying opportunity.

Thanks for the info, you always seem to find unique and valuable perspectives on gold.

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Re: In Gold we trust.

Anark,

Quote:
Money is simply an abstraction.  But let's leave that alone for a moment.  Let's say you wished to use gold or any finite material as money. 

Not necessarily... it's a necessary intermediary that is easily divisible, manageable and uncommon enough to make it "valuable".
Money represents the most logical and appropriate form of exchange available to use at present.
"Radical change" alarms me, because with scarcity of resources, I'd hate to see something like water used as currency.
I have zero faith in utopianism, or general "progreessive" concepts (no offense LogansRun) like the Venus Project. If humans are going to progress, it'll be through expanse of habitat and spacefaring.
Our own nature precludes any sort of meaningful social changes to truly "modify" our instinctual behavior. If kept on Earth, we'll continue to replay these same pathetic cycles until the sun burns out. If allowed to conquer space, we'll play them on different fields, over different resources and they might ultimately become too costly to pursue.

Even if you were to develope a perfect, unitarian and civil society, it'd just be low hanging fruit for sweaty, violent men with AK-47's.

Precious metals serve in this role as currency, and should provide a fairly safe "net" of "wealth" should our fiat money system fail.

Cheers,

Aaron

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Re: In Gold we trust.

ivoryjackal questions:

Perhaps rather than posing questions that you know the answer to you could let me in on what your thinking is - how do you envision an ideal economy?  locally, globally, I don't care, just genuinely curious.

Fair enough.  I guess what I am attempting to do is get down the the heart of the matter, that is, challenge basic assumptions.

And I hate to be the one to break this to you, but there aren't any answers.  The endpoint(s) of intellectualism is either insanity or the transcendence to non-intellectualism.  Unfortunately, man almost always chooses the former.

[Your Honor, I would beg the court to allow me to continue here.  This digression has relevance to my point.  Thank you.]

The truly great historical minds, The Buddha, Jesus, Mohammad, and the like, all transcended intellectualism.  They were able to see things differently.  But, that's another story for another day.

Let's take a smattering of institutions; representative (republican) democracy, marriage, public schools, all based on the notion that man can be organized into a functional society.  Evidence might suggest otherwise. 

I am simply suggesting that when it comes to Man, anything beyond one on one social intercourse initiates the short path to Hell.

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Re: In Gold we trust.

Logansrun writes:

But we're not there yet.  And in the mean time, I have to protect my family as best I can.  This means that I have to protect them from the evil that is the Fed/US Dollar/Current Monetary System.  Gold does that.

LR, what I am saying is that if "they" can manipulate paper money, they can manipulate gold money.  What they can not do is manipulate your labor. 

When there are so many people out there telling me to buy, buy, buy, intuitively, I am wanting to sell, sell, sell, or better, run as fast as I can in the opposite direction.

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Re: In Gold we trust.

Anarkst,

The difference is Gold is still universally recognized as currency.
The Dollar may not be.

Cheers,

Aaron

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Re: In Gold we trust.

JAG wrote:

Thanks for the info LR, I briefly scanned it, but I'll make sure to read it when time allows.

I still think gold will not embark on a significant bull run from its current prices, as there are too many people who bought it as a inflation hedge and therefore will abandon their positions in it during the next phase of de-leveraging. Besides, bull markets of this magnitude, never begin in a positive sentiment environment, they always begin in a negative sentiment environment. A plunge to $600/oz gold should flush out the overly-bullish traders and provide a good buying opportunity.

Thanks for the info, you always seem to find unique and valuable perspectives on gold.

Few people seem to doubt that gold will retain its purchasing power over the long run.  But as you pointed out, Jeff, so much of this depends on timing.  For example, if I buy gold at $900+ today but then decide in a few years to cash it in and buy a house, I might be i big trouble if deflation and deleveraging torpedo the spot price to $600.  

But if I'm holding it for the very long term, it doesn't matter so much what happens in the next few years.  Sure, it would benefit me more to buy at $600 than at $900, but even if I got in at $900 the point is preserving purchasing power in the long term.

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Re: In Gold we trust.

Chris,

Despite what I said, Its not like I'm selling any of my $900 gold. I totally agree with your point on purchasing power. I concur that $600 or $5000 gold in the future will have the same purchasing power that $900 gold has today. My comments were specifically related to the bull market expectation for gold, not its purchasing power.

(edited for clarification)

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Re: In Gold we trust.

Aaron writes:

The difference is Gold is still universally recognized as currency.
The Dollar may not be.

But only until they figure it out.

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Re: In Gold we trust.

Anarkst,

I disagree.
I think in the interim, people won't want anything to do with Gold. Right now, people see the long term potential, and are using history as a guide.

When we collapse, be it now, or 500 years from now, people won't want anything that they can't eat, drink or that doesn't help them eat, drink, cure illness or help them defend themselves.

Some time after that, it'll be too cumbersome to trade labor or goods and currency will rebound.
More likely than not, that currency will be precious metals.

That's just my take on it. We might never collapse.

Aaron

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Re: In Gold we trust.

JAG wrote:

Chris,

Despite what I said, Its not like I'm selling any of my $900 gold. I totally agree with your point on purchasing power. I concur that $600 or $5000 gold in the future will have the same purchasing power that $900 gold has today. My comments were specifically related to the bull market expectation for gold, not its purchasing power.

(edited for clarification)

Hi Jeff,

I think I understood where you were coming from.  To clarify my point, I was simply saying that a lot of the decision about whether to buy gold right now depends on timing.  For long-term preservation of purchasing power, it's a no brainer.  But if someone is looking for a place to store money that they'll need to get to in 3-5 years, it may not be the best bet.  (I'm coming to this from a somewhat personal perspective, but more on that in another thread).

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Re: In Gold we trust.

Chris Kresser wrote:

To clarify my point, I was simply saying that a lot of the decision about whether to buy gold right now depends on timing.  For long-term preservation of purchasing power, it's a no brainer.  But if someone is looking for a place to store money that they'll need to get to in 3-5 years, it may not be the best bet.  (I'm coming to this from a somewhat personal perspective, but more on that in another thread).

My fault...I understand your point now.

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Re: In Gold we trust.

anarkst wrote:

And I hate to be the one to break this to you, but there aren't any answers.  The endpoint(s) of intellectualism is either insanity or the transcendence to non-intellectualism.  Unfortunately, man almost always chooses the former.

Good grief. Just read Zen Training: Methods and Philosophy (Shambhala Classics) by Katsuki Sekida and put this mindset behind you. (I know, you already read it, right?)

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Re: In Gold we trust.

Aaron,

Whether gold goes up, down, or stays at $9xx. for next millennium is inconsequential.  If people are switching from paper to gold money for security or preservation, I believe they are going to be in for a great surprise.  If they are doing it speculatively, then they are going down the 'something for nothing' road with all its contradictions..

Money does not work (very well).  Representative democracy does not work (very well).  Marriage does not work (very well).  Mass education does not work (very well), etc.  My contention is that these institutions can not work (very well).  The reasons are fundamental. 

Educating, as Chris is doing through his course, is creating an alternative reality.  If you take it further, you end up truly confronting the base etiology, our 'self.'

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Re: In Gold we trust.

I guess I'm in the minority because I don't look at gold in $ figures.  I look at gold as money itself.  I look at gold as something that is precious in the minds of humans and has been for thousands of years.  The only time I think of gold in $ form is when I'm buying gold and have to figure out how many $ I have to trade for Au per Oz.

As for manipulation of price....again, I don't "Trade" in gold to make money.  I have gold and silver for survival..or to hand down to my children when I pass.  To me, it's as important as food and water in my arsenal to survive.

Aaron,  I used to believe as you do.  I don't any longer.  I appreciate the Venus Project because it's a wonderful way to live IMO.  If humans could get past what you perceive as "human nature" we would thrive in ways unimagined. 

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Re: In Gold we trust.

Jeff writes:

Good grief. Just read Zen Training: Methods and Philosophy (Shambhala Classics) by Katsuki Sekida and put this mindset behind you. (I know, you already read it, right?)

As I have disclosed previously, I have been a Zen student for over twenty years.  I have not read this particular text, but let me just say that trying to "understand" Zen is not a simple matter.  I will tell you, that in order to come to grips with the contradictions of the intellectual world, it helps to have an appreciation for the non-intellectual sphere.

I attempt to trace things back to their origins.  Intellectually, I am sure you would agree that there is only so much we can understand.  What about the rest?

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Re: In Gold we trust.

Anark,

Quote:

Aaron,

Whether gold goes up, down, or stays at $9xx. for next millennium is inconsequential.  If people are switching from paper to gold money for security or preservation, I believe they are going to be in for a great surprise.  If they are doing it speculatively, then they are going down the 'something for nothing' road with all its contradictions..

Money does not work (very well).  Representative democracy does not work (very well).  Marriage does not work (very well).  Mass education does not work (very well), etc.  My contention is that these institutions can not work (very well).  The reasons are fundamental. 

Educating, as Chris is doing through his course, is creating an alternative reality.  If you take it further, you end up truly confronting the base etiology, our 'self.'

Whether Gold goes up or down is inconsequential, for the reason that LogansRun stated - it will always have inherant value as something that's rare and shiny. People have always wanted it, people will always want it.
Even if it lost value during the dark ages, the collapse of the Soviet Union or the great depression, it has always rebounded as a viable currency.

LogansRun,

Maybe I'll change my tune in time. I'm still young yet.
I'd certainly like to be more idealistic, but my pessimism is a bully.

Cheers,

Aaron

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Re: In Gold we trust.

anarkst wrote:

I have been a Zen student for over twenty years.  

Then why do you speak of such matters? I think you might need a good whack with the keisaku.

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Re: In Gold we trust.

Beats a good whack from the kaishaku...

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Re: In Gold we trust.

Antal E. Fekete, Professor of Money and Banking at San Francisco School of Economics, wrote a persuasive article titled "Fiat Money in Death Throes." The basic premise is that gold backed currency ensures freedom, whereas irredeemable currency fosters enslavement. His appraisal of our current predicament is not overly optimistic...as the last two paragraphs show...still it's worth a read though. http://www.safehaven.com/article-13817.htm

Brad

"In Russia all tyrants believe poets to be their worst enemies...." -Yevgeny Yevtushenko

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Re: In Gold we trust.

Jeff,

My anarchistic and Zen sides are in constant battle.  Please feel free to whack me when you feel it is appropriate.  As an aside, I sort of dropped out of all things intellectual for many, many years (spent time doing serious formal practice), and decided to come back to the intellectual world not that long ago.

If I offend anyone, it is not my intention.  I know I speak rather directly, but I also try to keep in mind, the relatively of everything we put out there.  From a Zen perspective,

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Re: In Gold we trust.

Aaron wrote:

Whether Gold goes up or down is inconsequential, for the reason that LogansRun stated - it will always have inherant value as something that's rare and shiny. People have always wanted it, people will always want it.

Impermanence is swift.

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Re: In Gold we trust.

Anark,

Mind explaining the pertinence of the proverb in this situation? I don't see how it applies.
Then again, I've never been too connected to intellectualism ;)

Thanks (from the thick of skull amongst us)

Aaron

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Re: In Gold we trust.

Aaron,

If we can agree that all things come and go, sometimes, we have a tendency to get attached to particular thing, an idea, a person, etc., so when life deals us the inevitable sudden event (e.g., an unexpected break-up, death, job loss, what have you), you all of a sudden realize that your assumptions concerning the permanence of that particular thing was an illusion.

I was making reference to your comment that, "gold always..." 

Huang Po was a Tang Dynasty (approx. 650-900CE) Zen Master whose teaching was VERY direct.

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