i thought that article was worthy of it's own thread, and i have started one in the PM forum, with some of my thoughts
That was FOFOA posting to zero hedge. He was torn up by all the silverbugs, so go easy on ZH That said, in the vein that FOFOA posts in, he is correct. In his 'model' of the perfect financial world, there can be only two 'monies'. One which is cheap and adaptable to the monetary whims of the country, and one that is immune to inflation as it's based in the physical, i.e. the Gold savings account. The trick I had to understanding FOFOA's model was in accepting Greshams law, in bad money drives out good. Due to this, fiat will always drive out silver, leaving gold as the 'good' money. What does this mean for silver? commodity status, like platinum \ palladium. Second, you have to understand that reward is only paid for with risk. IF you want interest, you have to move your gold to fiat. IF you don't want to worry about fiat failure, bank runs, etc, then just use gold as savings. Worried about inflation of your fiat notes, just keep your pay in a gold backed account. No interest, no inflation, no risk. Now, that said, I still favour silver. I think it has so much going for it primarily the Chinese, but one day, my silver side of the balance sheet will move to the gold side. Perhaps when the ratio looks better, perhaps when the trend doesn't look so hot, or perhaps the sky is falling and I want something portable FWIW, I don't think we will get to FOFOA's model. If we do, a mere KG of gold would be priced at near 2mil. As much as I would hope for such a day to come to pass, it sounds like the kind of 'solution' you find appealing in a confirmation bias mentality, as as such I try not to think about it.
Okay, i just read the followup article. I'm very slowly getting this idea of gold being a store of wealth. So you can trade in this or that, but then bring your currency back into gold, to store it so to speak. So gold sits there as a store of wealth. I think i need someone to sit in front of me, drawing squiggly lines and putting numbers here and there, for me to understand the difference between money, value and wealth. I'm still stuck in the old paradigm of everything worth something in US dollars. But i know that the more confused I'm getting, means i'm coming closer to understanding something that i just didn't get before. Still waiting on my Investing in Gold/Silver book, hopefully that throws some light on the subject. And I'll continue reading these posts.!!
Money is just a trading unit, it has no actual value - see Zimbwabe currency for an example. Value is what it can do for you. So an ounce of gold can buy a lot more bread than a 1million dollar Zimbwabe note. Wealth is how much value or value equivalent you have accumulated.
