they are not currency or money. They are a commodity that we attach intrinsic value to, which has been declining and may even dissapear at one time in the future. Gold and silver is only valuable while we attach value to it and this can change at any time. It is NOT money At one point in time tulip bulbs and aliminum were much much more valuable than gold.
Whenever someone brings up the tulip bulb example it tells me a lot about them. Gold and silver have been valuable for thousands of years before they had any technological related uses. Today silver has commodity uses in addition. I consider that a bonus. PM's are commodities too. The two (money and commodity) are not mutually exclusive. We won't see PM's true worth until we see some paper assets and institutions that are involved with them, fail. That day will come, but when I don't know. Yes any item is only worth that value that society places upon it. Some items have had value placed upon them for much longer than other items. History does repeat and rhyme as well. Here's what JP Morgan had to say about gold and such. http://www.zerohedge.com/news/2014-...morgans-full-december-1912-testimony-congress Jim
https://www.ecb.europa.eu/press/pr/date/2014/html/pr140519.en.html 19 May 2014 The European Central Bank, the Nationale Bank van Belgi/Banque Nationale de Belgique, the Deutsche Bundesbank, Eesti Pank, the Central Bank of Ireland, the Bank of Greece, the Banco de Espaa, the Banque de France, the Banca d'Italia, the Central Bank of Cyprus, Latvijas Banka, the Banque centrale du Luxembourg, the Central Bank of Malta, De Nederlandsche Bank, the Oesterreichische Nationalbank, the Banco de Portugal, Banka Slovenije, Nrodn banka Slovenska, Suomen Pankki Finlands Bank, Sveriges Riksbank and the Swiss National Bank today announce the fourth Central Bank Gold Agreement (CBGA). In the interest of clarifying their intentions with respect to their gold holdings, the signatories of the fourth CBGA issue the following statement: Gold remains an important element of global monetary reserves; The signatories will continue to coordinate their gold transactions so as to avoid market disturbances; The signatories note that, currently, they do not have any plans to sell significant amounts of gold; This agreement, which applies as of 27 September 2014, following the expiry of the current agreement, will be reviewed after five years.
It looks like for the ECB gold is definitely not a currency, but it sits there in pretty good company with its "foreign" friends.... https://www.ecb.europa.eu/press/pr/wfs/html/wfs-userguide.en.html 2.2 Composition of the main balance sheet items in the weekly financial statement commentary Gold and gold receivables (asset item 1) show the gold holdings (both physical and non-physical gold) of the Eurosystem central banks at previous quarter-end market value and the value of the transactions (purchases and sales) settled since the previous quarter-end. Gold forms part of the Eurosystem official foreign reserves portfolio, although it is not actively managed. The net position of the Eurosystem in foreign currency (asset items 2 and 3 minus liability items 7, 8 and 9) includes all customer and portfolio transactions in foreign currency (including SDRs) with both euro and non-euro area residents and foreign exchange liquidity-providing operations conducted for the benefit of euro-area residents. The foreign reserves portfolio consists of US dollars, Japanese yen, gold and SDR holdings.
Here is a real easy way for some to understand the difference between "money" and "currency". Let's take a $20 bill from the 1920's and a $20 gold double eagle coin from that same time period. Back then, both were "currency" but only the gold coin was "money" as well, based on "money" being something that is, among other things, a "store of long term value". Fast forward to today, and that $20 bill from the 1920s is still worth $20 (assuming no numismatic value), but the $20 double eagle is worth roughly $1100 in gold (assuming no numismatic value). The $20 bill is still valid currency and is worth $20 but the gold coin as a store of value retained buying power much better than the cash since the 1920s, as the bill lost buying power due to inflation over the years, etc. If "currency" and "money" were the same thing, there would not be such a difference in value between the $20 bill and the gold coin. Jim
You can't with the SDR either, and that's a currency. Edit: except for the definition of Wikipedia: The XDR is not a currency per se. They instead represent a claim to currency held by IMF member countries for which they may be exchanged. But for the ECB balance sheet they go together.
Currency is spent at McDonalds. Money is stashed and hoarded. Money can be converted into currency when needed; hopefully yielding no loss of buying power over time. Jim
gold is neither money or currency it is a commodity that has intrinsic value attached to it which like aluminium in the distant past( where it was more rare than gold -- even though it is the most abundant metal in the earths crust ) can fluctuate widely. One day who is to know maybe seashells or tulip bulbs will again be more valuable than gold. Until I can use that item for direct trade without a mid way conversion with the general public it is not money or currency.
I think that your definition of money diverges a bit too much from the definition of the FED. For the FED, traveler's checks are part of the M1 money supply (i.e. Equivalent to FED notes) but you cannot use them to trade with the general public without mid-way conversion.
It's confidence and familiarity that dictates the value of anything. Practically everyone knows that gold is valuable, it's that stuff they store in Fort Knox, it's what pirates fight over. People from the first world to the third world know this. It's been that way for thousands of years, and there isn't even the slightest hint of that ever changing
The Red Indians were sold beads and blankets for their assets ... we get sold on notes of paper and numbers on a screen ... i am not sure who is really more gullible ...
