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A new book about humanity's obsession with gold

economist.com

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Re: A new book about humanity's obsession with gold

#41

Post by pydry »

XorNot wrote: post #35
rationalist wrote: post #13

Earlier quoted context omitted.

Paper/plastic currency (cash) has 0 FCF, 0 earnings, 0 dividends. The whole thesis is you trade it at a deprecated rate later. You can trade gold and cash with people a lot more easily than an equity in your brokerage account.

No the thesis of cash is that it's a legally enforced means to extinguish debts within a certain legal jurisdiction. A court cannot generally find that I must furnish someone with some weight of gold for example but they can find a monetary value in sovereign currency which I must supply.

The thesis for gold is that it holds its value in times of war when companies and governments fall apart.

Re: A new book about humanity's obsession with gold

#42

Post by djtango »

drhagen wrote: post #8

It is interesting that gold was able to retain its value after the industrial revolution. It could have gone the way of aluminum, once twice as valuable as gold, but now used in disposable drink containers. At the time of the alchemists, there was no way to know that some metals were actually distillable from common rocks and others genuinely rare and impossible to manufacture with even quite advanced technology. EDI…

I think gold's chemistry actually is why gold has been and remains a store of value.

It is rare, inert, malleable, has a low melting point and has a distinct unique colour.

All of these are quite useful for being a store of value:

- inert: gold from 10000 years ago is basically exactly the same

- malleable: it is easy to subdivide for coinage (compare with diamonds for an extreme example)

- low melting point: easy to purify (and melting temp is a decent purity check)

- distinct colour: less useful now but being so distinct from other metals makes it easier to spot vs the many silvery coloured metals

The funny thing is that all these store of value properties also make it less useful: inert means it's not reactive and has fewer forms/compounds

Malleable, lower melting temp and rare makes it a poor choice for typical metal usages...

Re: A new book about humanity's obsession with gold

#44

Post by spwa4 »

karlgkk wrote: post #33
rationalist wrote: post #13

Earlier quoted context omitted.

Paper/plastic currency (cash) has 0 FCF, 0 earnings, 0 dividends. The whole thesis is you trade it at a deprecated rate later. You can trade gold and cash with people a lot more easily than an equity in your brokerage account.

Yeah man you missed the point. Gold is not good as an investment vehicle. As a daily currency, it also has sharp downsides, but at least it’s not all bad.

I think the point is that when it comes to investment vehicles, gold generally beats cash. Oh and that means that in the last 20 years or so (ie. including the period where it didn't appreciate much), physical gold beats a balance in bank accounts.

Inflation means "interest" on gold, measured in reliable currencies like USD or EUR, is at least 4%. Far more than you will get from any bank.

Of course this goes for anything, so you might want to select something with less regulation attached to it. On the other hand, gold is really dense and "liquid" (easy to sell), which are great advantages to have for a store of wealth. And then there's the recent history of gold prices (which is due to the third world attempting to use anything but dollars but not succeeding at it, but one assumes it will end)

But yes, gold makes less than you'll probably get on the S&P500.

Re: A new book about humanity's obsession with gold

#45

Post by djtango »

jcarrano wrote: post #26
Schlagbohrer wrote: post #2

I've read elsewhere that one of gold's biggest virtues as a store of value on planet earth is that it isn't so rare as to be useless, but it's rare enough that it functions as currency or high value storage. A goldilocks material for the purpose of wealth transfer and storage.

It is also relatively easy to work, since ancient times. Iridium is the rarest metal, so rare and hard to work that it is not practical.

Yes! Exactly - there are plenty of other rare metals but many of them are really hard to work with. Iridium, Rhodium and Platinum are plenty rare but mankind has lacked the technology to do anything with them for most of history

Re: A new book about humanity's obsession with gold

#46

Post by teekert »

XorNot wrote: post #35
rationalist wrote: post #13

Earlier quoted context omitted.

Paper/plastic currency (cash) has 0 FCF, 0 earnings, 0 dividends. The whole thesis is you trade it at a deprecated rate later. You can trade gold and cash with people a lot more easily than an equity in your brokerage account.

No the thesis of cash is that it's a legally enforced means to extinguish debts within a certain legal jurisdiction. A court cannot generally find that I must furnish someone with some weight of gold for example but they can find a monetary value in sovereign currency which I must supply.

The thesis of cash is that governments and their influencers can turn some knobs and decrease its value and enrich themselves simultaneously by creating more of it. A lot of it as debt for the normals.

Re: A new book about humanity's obsession with gold

#47

Post by PowerElectronix »

Schlagbohrer wrote: post #2

I've read elsewhere that one of gold's biggest virtues as a store of value on planet earth is that it isn't so rare as to be useless, but it's rare enough that it functions as currency or high value storage. A goldilocks material for the purpose of wealth transfer and storage.

It's also chemically inert and very dense, so a coin/ingot that weights a certain amount is smaller and can be stored for long periods of time. It's so dense that it's pretty much forgery-proof, as any material you use in the forgery is either more expensive or less dense.

Re: A new book about humanity's obsession with gold

#48

Post by luka598 »

KetoManx64 wrote: post #38
carlosjobim wrote: post #5

Name one thing in the universe which is better than gold? Tip: You can't.

Better than gold in what aspect? Good luck trying to move to a different country and bringing all your gold with you without filling out a hell of a lot of forms and risking confidcation for "money laundering". Bitcoin doesn't have this problem The supply of gold is always inflating. One day we will have asteroid mining of gold and it will be inflated even more. Bitcoin doesn't have this problem. Nobody will accept y…

Doesn't bitcoin have a big potential problem of someone breaking asymmetric cryptography.

Re: A new book about humanity's obsession with gold

#50

Post by carlosjobim »

nkrisc wrote: post #17
carlosjobim wrote: post #5

Name one thing in the universe which is better than gold? Tip: You can't.

You’re lost in the desert, with no food or water but only a lump of gold. Everything is fine because nothing in the universe is better than gold.

Better than being in the desert with no food, no water and no gold.
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