Gold is Not Money

Discussion in 'General Precious Metals Discussion' started by Luker, Oct 8, 2015.

  1. Luker

    Luker Member

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    Gold is Not Money


    By: Steve Saville, The Speculative Investor

    http://news.goldseek.com/SpeculativeInvestor/1444220303.php



    -- Posted Wednesday, 7 October 2015 | Share this article| 25 Comments



    Gold was money in the distant past and it will probably be money in the distant future, but there is no developed economy in which gold is money today. In this post I'll explain why.

    People who argue that gold is money often confuse what should be with what is. They explain why gold-money would be vastly superior to any of today's fiat currencies and their explanations are probably 100% correct, but they are sidestepping the issue. There is no doubt in my mind that gold is far better suited to being money than something that can be created at whim by commercial banks and central banks, but the fact is that gold is presently not money.

    Part of confusing what should be with what is sometimes involves the claim that governments can't determine what is and isn't money. This is akin to someone claiming it can't rain while standing in the middle of a rainstorm.

    The hard reality is that governments routinely do many things that they shouldn't be able to do. Governments shouldn't be able to force people into slavery, but they sometimes do it. They call it conscription or the draft. Governments shouldn't be able to steal, but they do it on a grand scale every day and call it taxation. Governments shouldn't be able to monitor almost all financial transactions and most internet communications, but they do. They call it national security or keeping us safe from terrorists and drug traffickers. Governments, either directly or via their agents, shouldn't be able to siphon away the purchasing-power of savings and wages, but they do it under the guise of economic stimulus. Governments shouldn't be able to put obstacles in the way of peaceful, voluntary transactions, in the process greatly increasing the cost of doing business and thus reducing living standards, by they do it every day and call it regulation. One particular government (that of the US) shouldn't be almost continuously intervening militarily in multiple countries around the world, but it is. They call it peace through strength or keeping the world safe for democracy.

    So, please don't insult my intelligence by asserting that governments don't have the power to determine what is money!

    Another common mistake made by people who argue that gold is money is to emphasise gold's store-of-value (meaning: store of purchasing-power since value is subjective and therefore can't be stored) quality. However, there are many things that have been good stores of value that obviously aren't money, so acting as a store of value clearly isn't the defining characteristic of money.

    Which brings me to a critical point: Before you can logically argue whether something is or isn't money, you must first have a definition of money. And since we are dealing with something that affects everyone, the definition must be practical and easily understood.

    The only practical definition of money is: the general medium of exchange or a very commonly used means of payment within an economy. By this definition, gold is not money in any developed economy today. By this definition, the US$ is money in the US, the euro is money in the euro-zone, the Yen is money in Japan, the Australian dollar is money in Australia, etc.

    Once something is the general medium of exchange it will generally be used as a unit of account. The unit-of-account function stems naturally from the medium-of-exchange function. Also, for something to be good money it should be a good long-term store of purchasing power, but, as noted above, being a good long-term store of purchasing power is clearly not the defining characteristic of money. Being a poor long-term store of purchasing power would almost certainly preclude something from being money in a free market, but we do not currently have a free market. Do not confuse what is with what should be!

    Now, I acknowledge that it is possible to concoct definitions of money that lead to the conclusion that gold is money, but such definitions either aren't practical, or are focused on a characteristic of gold that is shared by some obviously non-monetary assets, or are simply wrong.

    In conclusion, if something is money then the average person will know it is money because he will be regularly using it as a medium of exchange in his daily life. In other words, money cannot be a secret to which only an elite group is privy. Gold is therefore not money at this time. If it were, we wouldn't be in such a precarious economic situation.

    So if gold isn't money, then what is it? That's an interesting question that warrants a separate post.

    *********************************************************



    [​IMG]


    BUT, which side of the fence would you rather be on??
     
  2. Stroctor

    Stroctor New Member

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    True, the govt(s) gets to determine what money is, but they are all stacking gold as well, which shouldn't go unnoticed.
     
  3. Bobby Woodlawn

    Bobby Woodlawn New Member

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    Since this is a silver site I will deal with silver. IS SILVER MONEY? How many people here think I can buy a pizza, at my local pizzeria for 1 ASE. An 18" pie with mushroom & pepperoni is ~ $18.50 US. Right now Provident is selling 1 ASE for ~$20.25. That would be a good deal for the joint. Give me a yea or nay for the purchase. I will attempt the deal on Friday the 16th. I will also share before I try, what I expect. Who is in for the experiment? -bw
     
  4. Stroctor

    Stroctor New Member

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    I get Apmex notices, and right now ASE's are 19.77 out the door. Any quantity.

    http://www.apmex.com/product/84913/...paign=2015-10-8-2015-Silver-Eagles-Purchasers
     
  5. Stroctor

    Stroctor New Member

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    Make that 19.76, it dropped a penny!
     
  6. Porcello

    Porcello New Member

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    His definition of money seems to me the definition of currency. Gold is definitely not a currency today.
    Anyway, I really don't understand the point the author is trying to make.
     
  7. Golden ChipMunk

    Golden ChipMunk Well-Known Member

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    Gold is not money. Of course....
    Gold is mighty powerful, it speaks all Nations languages.
    Gold is accept by all countries around the world.
    In the event of Currency collapse, $$$ is worthless.
    In the event of country got invaded those papers are worthless.


    Gold vs $$$

    Gold win all the time.... ;)

    The corporations trying to confuse us, don't be a fool...
    Tell them #%..??#%#f@@%#**+#%^!!!!!!!!!!

    :/
     
  8. Caput Lupinum

    Caput Lupinum Well-Known Member Silver Stacker

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    A commodity :cool:
     
  9. Stroctor

    Stroctor New Member

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    I will use that the next time i tell someone off.
     
  10. Golden ChipMunk

    Golden ChipMunk Well-Known Member

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    I will accept Gold as payment.... Does that make it a commodity now....??
     
  11. Caput Lupinum

    Caput Lupinum Well-Known Member Silver Stacker

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    Just because you accept gold as payment, doesn't make it a medium of exchange to everyone else. Gold is a commodity
     
  12. Skyrocket

    Skyrocket Well-Known Member Silver Stacker

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    Good one! But it should read Gold and Silver. :D
     
  13. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    I'm going to insult his intelligence (it's not difficult if he's going to make inaccurate assumptions).

    Those that argue in favour of the use of gold as a form of money do not disagree with the author's statement that governments don't have the power to determine what is money. They believe, and justly so, that governments should have no role in mandating what is the commonly used medium of exchange ie should not have the power. Legislating what should constitute the commonly accepted medium of exchange is to usurp the dynamics of market forces in an attempt to control an individuals economic behaviour for the benefit of those in control of the manufacturing and distribution of whatever the mandated form of exchange may be.

    Gold may well be a commodity, as pointed out above, but it is an accepted medium of exchange so it is money, regardless of whether it has widespread adoption or not, and regardless of whether it has legislative stature as a fiat currency.

    The average person would have an intimate understanding of what form money should take if governments did not force everyone to adopt their common medium.
     
  14. Caput Lupinum

    Caput Lupinum Well-Known Member Silver Stacker

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    Until we progress to a libertarian utopia, I call commodity. Who's to say gold would be the preferable medium exchange if people were freely allowed to use whatever medium of exchange they wanted to. Unicorn sh*t may be the medium of exchange of choice
     
  15. Jislizard

    Jislizard Well-Known Member Silver Stacker

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    Our coffee shop accepts Australian silver coins as money, not for their face value but for their silver content (we have a lot of elderly customers who have held onto pre dec coins and are now spending them)

    The newspaper shop down the road was accepting Olympic $5 silver coins at $5, he got nearly the whole set, the coffee shop next door probably has the rest of the set.

    Both were independent businesses run by seniors who were savvy to the value of silver. I doubt your average McJobber would have the discretion to be able to accept anything other than bankable fiat.
     
  16. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

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    The preferable medium of exchange would be one that is selected by the vast bulk of consumers, not one that is legally forced onto all parties.

    And anyway, unicorn shit doesn't possess the necessary qualities that gold does. Unicorn shit is what we are using for money now - a fairytale.
     
  17. Caput Lupinum

    Caput Lupinum Well-Known Member Silver Stacker

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    Still doesn't mean it has to be gold and consumer taste can differ depending on what part of the world someone's living.

    Unicorn sh*t is rare and tangible. The creamy poop of a unicorn is where ice cream comes from. Totally clean, totally cool and soft served straight from a sphincter

    [youtube]http://www.youtube.com/watch?v=YbYWhdLO43Q[/youtube]
     
  18. Porcello

    Porcello New Member

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    Absolutely!

    Gold is a commodity, but a very special one. It's a commodity that is not consumed, and its price is driven by demand-to-hold.
     
  19. valuecreator

    valuecreator Well-Known Member Silver Stacker

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    When things get Darwinian, I'd rather own commodities than a promise from a politician or a banker.
     
  20. volrathy

    volrathy Active Member

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    Gold is money

    I have a 3 * $200 gold coin that is legal tender
    I also have 10 * $2 pure gold mini roo coins
    I also have 5 * $15 kangaroo 1/10oz

    All these gold are money and are legal tender and should be accepted if I walk into a bank and want to deposit it.
     

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