Gold is valuable because it provides utility. Certainly one can create a for of money which is used solely for the purpose of being an intermediary of exchange. However, such money has the potential to quickly lose all of its “value.” If the chosen form of money has other uses, then it holds its own value.
I can’t help, but think of gold jewelry as gifts for women throughout history and the fact that women rarely had access to money until the 20th century. Women’s clothing lacked pockets since they carried no money.
Gold has been a catalyst of “value” thought time, it has seen civilizations fall and entire people move. It has always been scarce enough to retain its value, and it is globally recognized as an all encompassing form of payment ( it is not limited to one country’s currency or another’s).
I think my favorite part was reading the article about gold as money and the part about how after looking at the periodic table we got 5 metals, then the other 4 didnt hold the same properties, leaving gold as the best candidate.
Interesting to point out that the gold inflation rate is similar to the ideal inflation of the currency, recommended by the governments…
Gold as money is just impractical. Can be carried everywhere. But is store of value because you can’t sprinted to infinity like the US dollar now days.
I’ll leave this interesting short clip on the origins of gold down below. Hope you like it.
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Gold is golden,it’s retention of value is seriously impressive for all to see and no paper money will ever come near it’s strength as an asset. Bitcoin is Gold+ it’s transportability is unmatched by any other asset class. It’s finite in its supply and getting scarcer by the day. It’s totally accessible to the vast majority of the world’s population as a safe haven and even more of a second option to the corrupt banking system. Bitcoin is hope. Then there’s Defi,the possibilities are beyond belief in my view.
During the first financial crisis in 2008 I began looking for an asset class that would protect my savings and purchasing power going forward. I studied Mike Maloney, “Money as Debt” and various other YouTube videos.
It is really interesting how the property of gold makes it obvious pick for people as money. Though other noble metals- silver, platinum, rhodium and iridium fulfil many requirements to be chosen as money, none of them are complete in all respect. Not easy to produce, easily divisible, neutral, hold purchsing power, high stock to flow value, high concentration, not super scary, do not tarnish over time , salable etc.
i found a combinaton of interesting arguments why gold became the winner of all elements to become mandkinds value storage.
a) most elements are simply eiher toxic, non portable (gas, liquid) or instable and therefore not suitable to store value
b) Iron, Lead, Copper, and Aluminum. - they corrode over time and it would be too expensive to keep them free from corrosion. Aluminium on top is too light for coin making.
c) Platinum and Palladium (the noble metals) - would be resistant to erosion but they are too rare to make enough coins out of it.
c) the winners are Silver and Gold. both metals are are not too scarce (one could produce enough coins) but they are at the same time scarce enough (they cannot easily be copied). And both metals have the right physical requirements (melting point) to produce coins.
Why Gold won over Silver? seems also because of simply some “soft facts” as ie. the color of gold which remains stable and to a certain way mysterious. Silver on the other hand tarnishes easily (you know the problem of silver dishes which you have to constantly clean?. Imagine you were a king and would have built your temple with a lot of silver decoration… So Gold became also mysterious in history which added probably too its unique position as value storage.
at the end gold became the most accepted value storage only over time. Gold, the same as FIAT, became what it is not over night. And also Bitcoin would not be accepted only in within a couple of years.
interesting read on this Why do we value Gold (BBC)
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I do agree that gold is great, and does represent real money, but …
Depending on where you live, physical gold is not always available or easily accessible, and/or certainly not at spot value.
If you do own it, it’s only portable in small quantities.
Should you purchase any sizeable amount overseas, most counties will not permitted you to transport it home. More likely it would be seized and confiscated at the border; China, Russia, Thailand as examples (but there are many others).
However, my biggest concern with gold is the following …
When the financial market crashes, many governments will probably seize all the gold by executive order - as Roosevelt did once before in '33. We’ll all be forced to sell at a vastly reduced & non-negotiable fixed price. I fear history has a habit of repeating itself! And other countries might do the same.
I love to listen to the bullish sentiment of Peter Schiff, but he’ll be very sorry when he’s forced to sell his gold and probably wish he’d bought Bitcoin instead.
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I didn’t know about Roosevelt’s executive order against “hoarding” gold and other types of money in 1933, that’s really scary and feels like a way to recent event to say that we have evolved passed that so it cant happen again.
Golds durability in my view may be its most valued elemental property where in some other areas its seen as just okay, like in that it is “devisable”, “fungible” and “portable” (where the last “portable” are its biggest weakness). A’lot of the difficulties around the portability aspect in today’s day and age like @Simon_Martin pointing out in governments forcing laws and regulation against people transporting or owning gold in some extreme scenarios, may be Bitcoins and other crypto’s biggest strength’s.
A question that has occupied my head the last day or two is linked to golds biggest strength in its “durability” where it has survived through thousands of years and will likely at least survive in its physically state for thousands of years to come even if something in its position as money will change somewhere along the line. I with my very limited knowledge about the technical aspects of Bitcoin and others have a question about the certainty that these can provide in the aspect of the “durability” of one Bitcoin today and one “Bitcoin” in thousands of years in the future?
My view is that it is a’lot of uncertainty in how the technology will evolve in even 50 years so how can we predict it 1000 or 2000 years in the future?
It may be that it has “enough” certainty in “durability” aspect combined with all of it’s other strength’s that it can overtake gold as the “number 1” store of value or that gold has a place beside Bitcoin in the future in some way?
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Gold is a hard money that has stood the test of time for thousands of years. because it is rare (hard to find), hard to obtain (a lot of work involved), non reactive (does not rust or deteriorate), it is fungible and a good store of value, but it is hard to store safely, not easily divisible, not easy to transport large quantities. Therefore going forward in a digital connected world Crypto currency and specifically BTC are more suited to conducting commerce in a digital world.
I still like gold as a store of value and a hedge against inflation but I see the more practical use for BTC going forward in our technically advancing future and I think it is imperative to be on the cutting edge of this technology. Those who do not get on this train will be made irrelevant as the financial industry leap frogs into the future of hard money.
Gold as Money
Gold does not dissipate into the atmosphere, it does not burst into flames, and it does not poison or irradiate the holder. It is rare enough to make it difficult to overproduce and malleable to mint into coins, bars, and bricks. Civilizations have consistently used gold as a [material of value.
- For gold as money it has a store of value, divisible, portable so that it is liquid, durable holding its value over time, rare or difficult to produce, a medium of exchange, and a store of value. One item that is rarely mentioned is it needs to be approved by the government. Gold was removed from circulation in the U.S. for decades, and while it might have had value in other countries or on the black market, in practical terms it could not be used as money in the U.S. Another problem with gold is that if Bix Weir is correct that large amounts of gold that have not been mined in the U.S. truly exist, then it would not be rare and therefore could destroy the use of gold as money.
I think gold is still a viable and useful asset to store value for long time to come. But it is quite inconvenient to use and unsafe to travel round with loads of gold with you but still better than other types of metal such as silver and etc.
gold is the most perfect medium of exchange because it carries all the attributes like been fungible, scare, divisible, portable, etc. since the discovery of gold nothing has ever challenge it, probably until now Bitcoin can be argued can compete with gold and maybe over time we can say whether or not it was true.