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Old 03-21-2020, 11:47 AM
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What would gold be worth if it were not considered money?


People often assert that gold has no inherent value. I have even seen that assertion on this message board several times. It is my opinion that gold has value to humans because of several of its physical properties. These properties include, but are not limited to, density, conductivity, malleabililty, inertness (resistance to corrosion), and color. Since ancient times, gold has been used as money, currency, and a medium of exchange. It has also been used a store of value.

What would be the value of gold (in terms of price per unit mass) if it were no longer used as money, currency, and a medium of exchange in any way whatsoever? I first thought about also excluding its use as a store of value, but this would be problematic as many other physical substances as well as intangible abstractions are used a store of value such as aluminum, copper, steel, pork belly futures, fiat currency, stock in corporations, etc.

I don’t think we will ever arrive at any number that everyone agrees on. I am more interested in what methodology SDMB people would propose to attempt to determine such a number.

There are a few uses for which I cannot think of a bright line rule to determine if the use is or is not use as money, currency, or a medium of exchange. For example, some uses as jewelry or collectible numismatic items containing gold might be questionable. You cannot have a good argument unless everyone agrees on some definitions. Can anyone propose more refined definitions of money, currency, or medium of exchange that would make borderline cases easier to decide?

As analogy to the uses of gold for non-monetary purposes, consider rhodium. It is also a noble metal but has never been used as money. Yet it has a price per unit mass much greater than gold's.
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Old 03-21-2020, 11:58 AM
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It would probably just be valued as much as some super-high quality steel. Its main use would be jewelry, plating, conductivity, etc. So my WAG is, maybe 3-5x as much as what the best steel sells for. So, still a lot less than it sells for today.
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Old 03-21-2020, 12:06 PM
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I don’t think we will ever arrive at any number that everyone agrees on. I am more interested in what methodology SDMB people would propose to attempt to determine such a number.
Make a list of elements and their relative supplies. How much exists, on Earth, of each element and how quickly is the existing stock gobbled up by industrial processes and other uses? Restrict the list to elements that have had no history of being used as money. See what a basic regression of their supply to their current price looks like.

Then insert the amount of gold into the equation, in order to see what the regression "predicts" would be the price of gold based on its supply. Something along those lines might "work" in a limited sense.

A problem with this suggestion is that the world supply of gold depends in part on people having sought it out for thousands of years. The supply is larger than it might otherwise be if it hadn't ever been used for money. So it's possible that this technique would give a price too low, given the potential of a much lower supply in a world where gold had never been used as money.

I'd have to think about that more, tho... The price might actually be similar even with lower supply, because the quantity supplied would increase with price. You can go round in circles forever with this kind of logic until you sit down and write out the equations properly.

Last edited by Hellestal; 03-21-2020 at 12:10 PM.
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Old 03-21-2020, 12:13 PM
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Gold is a very useful engineering material that complements the other metals we build stuff out of. It's wonderfully inert, as metals go -- it doesn't rust or corrode, and it doesn't tarnish around halogens the way silver does. Its electrical and thermal conductivity is like silver and copper, and because of the lack of corrosion I think it'd be preferable to copper in every way for electrical and plumbing uses. Gold isn't very strong, but if it were plentiful enough you'd see bridges made of it (just in thicker pieces), and they'd be pretty low maintenance. Gold has very low emissivity, and retains it. You could probably make a nicer durable roof out of gold than any other roofing material currently in use.

Last edited by Napier; 03-21-2020 at 12:14 PM.
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Old 03-21-2020, 12:22 PM
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Then insert the amount of gold into the equation, in order to see what the regression "predicts" would be the price of gold based on its supply.
No, this is the key mistake of my suggestion.

You can't insert the current stock of gold in our world. You'd have to estimate what the stock of gold would be in the hypothetical world, given less demand. But if you can estimate that based on a hypothetical demand for gold, you'd get your hypothetical price directly, no need for any other work.
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Old 03-21-2020, 12:24 PM
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Gold is a very useful engineering material that complements the other metals we build stuff out of. It's wonderfully inert, as metals go -- it doesn't rust or corrode, and it doesn't tarnish around halogens the way silver does. Its electrical and thermal conductivity is like silver and copper, and because of the lack of corrosion I think it'd be preferable to copper in every way for electrical and plumbing uses. Gold isn't very strong, but if it were plentiful enough you'd see bridges made of it (just in thicker pieces), and they'd be pretty low maintenance. Gold has very low emissivity, and retains it. You could probably make a nicer durable roof out of gold than any other roofing material currently in use.
Doubtful, even if it was as plentiful as steel, but - that’s the issue. Gold is rare. All the gold ever mined in history would make a cube about 70 feet on a side - around 200,000 tons. To give some perspective, the amount of iron mined is 1.8 billion tons per year, so more iron is mined in an hour than all the gold in history.
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Old 03-21-2020, 01:03 PM
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I think copper would make a better baseline than iron or steel. You can't make cars or ships or buildings out of copper (I'm sure someone will provide examples of each) but you do need it for electrical conductors and various industrial processes. And while it's much more abundant than gold, there's still a limited supply that has had an influence on price.
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Old 03-21-2020, 01:22 PM
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You are far from the first to think that:

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Old 03-21-2020, 01:29 PM
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Gold is a very useful engineering material that complements the other metals we build stuff out of. It's wonderfully inert, as metals go -- it doesn't rust or corrode, and it doesn't tarnish around halogens the way silver does.
Untrue. Gold is chemically attacked by fluorine and chlorine. (If there is a significant amount of either gas in the air then your medical problems will be more pressing than your electrical ones)

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Its electrical and thermal conductivity is like silver and copper
Its electrical conductivity is 30% less than copper. That is significant.

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Gold isn't very strong, but if it were plentiful enough you'd see bridges made of it (just in thicker pieces),
Pure gold is very soft, and not even usable for jewellery. It is alloyed with copper and silver to make it usable. Probably not a good material for structural engineering.
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Old 03-21-2020, 01:49 PM
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Gold is not money now, at least where I do my shopping. Are you saying the market price is distorted because of past use of gold coins and bullion? But once you go beyond the actual current price it becomes increasingly tangled and less meaningful to calculate what something is "really" worth.
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Old 03-21-2020, 02:00 PM
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Gold is not money now, at least where I do my shopping. Are you saying the market price is distorted because of past use of gold coins and bullion? ... .
I don't use gold for money either. I don't even have any gold. (But I wish I did.) But it is still considered to be a form of money or medium of exchange by a significant number of persons on this planet today. So this, along with its past widespread use as money and currency, is what I believe distorts it present market price.
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Old 03-21-2020, 02:11 PM
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These properties include, but are not limited to, density, conductivity, malleabililty, inertness (resistance to corrosion), and color.
I think there's an interesting question here: how important is color to gold's value? Would people still obsess with gold if it had all of the same physical properties it has now - but was a dull gray color? You don't see people talking about hoarding iridium or thallium. (Okay, thallium is highly toxic. But my point is we over-value gold because it's shiny.)
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Old 03-21-2020, 02:18 PM
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I don't use gold for money either. I don't even have any gold. (But I wish I did.) But it is still considered to be a form of money or medium of exchange by a significant number of persons on this planet today.
Wait, though, is it? How many people on the planet today actually use gold as a medium of exchange? I know in theory it is, but pretty much every country on earth uses paper money, coins of other metals, and electrons.
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Old 03-21-2020, 02:28 PM
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I think there's an interesting question here: how important is color to gold's value? Would people still obsess with gold if it had all of the same physical properties it has now - but was a dull gray color? You don't see people talking about hoarding iridium or thallium. (Okay, thallium is highly toxic. But my point is we over-value gold because it's shiny.)
Gold can be distinguished from most other metals because of its yellow color. Gold imparts a distinctive color when mixed with glass in low concentrations. Google "cranberry glass." Also, just to be pedantic, color and luster are different concepts. "Shiny" is a type of luster. So maybe we could add luster to the list of things that give gold value in addition to color. Maybe there is an industrial application where one needs a highly reflective surface that is resistant to corrosive substances. Can someone give an example?
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Old 03-21-2020, 02:30 PM
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The value of those pieces of paper in your wallet could be zero tomorrow. The value of those one ounce Krugerrand coins hidden in your sock drawer will never be zero.
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Old 03-21-2020, 02:43 PM
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Wait, though, is it? How many people on the planet today actually use gold as a medium of exchange? I know in theory it is, but pretty much every country on earth uses paper money, coins of other metals, and electrons.
I don't think you will find any recognized government that still uses the gold standard as a basis for its currency today. But I speculate that there are a great number of persons and entities that still use gold as a medium of exchange for large transactions. And many of those are probably very secretive about it.
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Old 03-21-2020, 02:50 PM
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Old 03-21-2020, 02:58 PM
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The value of those pieces of paper in your wallet could be zero tomorrow. ...
The value of those pieces of paper might be greatly reduced but I don't think it would be zero. You could sew them together and make a place mat for your dining room table. Or you could make a deck of playing cards out of them. Or you could use them to start the fire in your wood stove. Or, if you had enough of them, you could use them to insulate the walls of your cabin. Just like gold, they still have some utility even if they are no longer money.

(Or maybe they are so contaminated with coronavirus that you must expend time and resources to properly dispose of them. In which case my argument about everything having utility is stood on its head. Rather than thinking about that, I think I will go birdwatching this afternoon.)
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Old 03-21-2020, 03:07 PM
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The value of those pieces of paper in your wallet could be zero tomorrow. The value of those one ounce Krugerrand coins hidden in your sock drawer will never be zero.
Nonsense. Gold fails the desert island test. If you were going to be stranded on a desert island for a year, how much gold would you want to bring with you? The answer, of course, is none. Gold is useless on a desert island, which means its value is zero. Even if there were other people on the island, none of them would trade you their useful goods like food or water or medical supplies or pornography for your useless gold.

Gold only has value when you have a fairly sophisticated economy where people are producing excess goods and are willing to trade that excess for luxuries. And an economy like that quickly moves beyond bartering for gold and starts using money, which works a lot better as a trade good than gold does.
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Old 03-21-2020, 03:21 PM
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Checking around I found the "cost" of producing a troy ounce of gold to be variably stated at between $1000-1200. The higher figure appears on a lot of gold seller sites with dates when gold was not much above $1200. So you had to be an idiot not to buy gold from them, right? I also have doubts about the $1000 figure as well. But it's probably going to be sort of near that on average.

And that's the rub. "Average". Different mines, process, etc. have different costs. In particular, a lot of gold is obtained as a side product of mining for something else, e.g., copper. How do you figure in the cost in this case? If gold is at $500 I bet these types of "bonus" gold recovery places will still keep going. How low would it have to go for copper smelters to stop gleaning the gold? And it's as variable as can be since different copper ores have different percentages of gold associated with them.

In short: it's a very complex matter.

When gold goes down, some mines shut down. Gold goes up, some re-open.

If gold demand for bullion went away, there'd still be significant demand for it for industry and jewelry. So a few places would close. Gold prices would go down a bit (and stabilize a bit more, but not a lot)*.

I can't imagine it ever being below $800 long term. So my guess for the OP's question: $900-$1000.

* Unfortunately, commodity markets are dominated by gambling types who completely mess with actual values regardless of the item.
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Old 03-21-2020, 03:26 PM
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... Gold is useless on a desert island ... .
Nonsense. Gold would be an excellent material to use for fishing sinkers. Of course you would need fishing line and hooks as well. And gold would be a very poor material for making fishing hooks.
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Old 03-21-2020, 03:30 PM
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Nonsense. Gold would be an excellent material to use for fishing sinkers. Of course you would need fishing line and hooks as well. And gold would be a very poor material for making fishing hooks.
Also, due to gold's yellow color and shiny luster, you might could construct an awesome lure.
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Old 03-21-2020, 04:00 PM
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Let's start with some numbers. I see 3000 or 3500 tonnes of gold in annual production; and 4000 tonnes in annual sales. Does this mean 500 or 1000 tonnes were released from stocks (which are huge)? Gold sales break down as Jewelry 52%, bullion and coin 31%, dentistry and industrial 17%. Bullion stocks approach 100,000 tonnes I think. Aren't central banks still net buyers?

Anyway this is about $137 billion annual production, with production presumably determined by the price. Other very expensive minerals include platinum: about $4 billion annually, 1/3 of which is for jewelry; and natural diamonds: about $14 billion annually, all of which is for jewelry (or "cash").

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Wait, though, is it? How many people on the planet today actually use gold as a medium of exchange? I know in theory it is, but pretty much every country on earth uses paper money, coins of other metals, and electrons.
I also don't see gold being used as a money. In the movies, to move large sums of wealth around, we see diamonds in use. Almost $14 billion in new diamond production annually is one-tenth the gold figure but, unlike with gold, "artificial" diamonds and substitutes are available, so we might agree that diamonds are more "inflated" in value.

What would it cost to buy all the paintings by Amedeo Modigliani in the world? One sold for $170 million recently. Did it have that much "intrinsic worth"? (I don't mean to "pick on" Modigliani — I'm just suggesting that it isn't only gold, diamonds and beanie-babies that may be over-priced.)
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Old 03-21-2020, 05:32 PM
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Nonsense. Gold fails the desert island test. If you were going to be stranded on a desert island for a year, how much gold would you want to bring with you? The answer, of course, is none. Gold is useless on a desert island, which means its value is zero. Even if there were other people on the island, none of them would trade you their useful goods like food or water or medical supplies or pornography for your useless gold.

Gold only has value when you have a fairly sophisticated economy where people are producing excess goods and are willing to trade that excess for luxuries. And an economy like that quickly moves beyond bartering for gold and starts using money, which works a lot better as a trade good than gold does.
OK then, to continue this line of thinking, what passes the Desert Island Test that isn't perishable? Then I'd ask, why hasn't that a common, commodity basis of exchange in human history, or has it been?
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Old 03-21-2020, 06:41 PM
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OK then, to continue this line of thinking, what passes the Desert Island Test that isn't perishable? Then I'd ask, why hasn't that a common, commodity basis of exchange in human history, or has it been?
Because most people don't live on a desert island.

Did you read all my post? It was only two paragraphs long.

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Gold only has value when you have a fairly sophisticated economy where people are producing excess goods and are willing to trade that excess for luxuries. And an economy like that quickly moves beyond bartering for gold and starts using money, which works a lot better as a trade good than gold does.
This describes the economy most of us live in. One where we buy and sell the goods we want in our life (okay, this week might not be a typical example). And in an economy like that, money works better than gold.
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Old 03-21-2020, 08:58 PM
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Quoth Ynnad:

"Shiny" is a type of luster. So maybe we could add luster to the list of things that give gold value in addition to color. Maybe there is an industrial application where one needs a highly reflective surface that is resistant to corrosive substances. Can someone give an example?
I was going to mention speculum alloy, which used to be the standard material for scientific mirror optics... but on looking it up, it turns out it's actually two parts copper to one part tin.

One other thing that gold's good for is that it can be plated in extremely thin layers. The Apollo spacesuit helmets were plated with gold to reduce glare, because it was actually the cheapest material that could be used for that purpose, due to how thin the layer could be.
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Old 03-21-2020, 10:50 PM
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One other thing that gold's good for is that it can be plated in extremely thin layers. The Apollo spacesuit helmets were plated with gold to reduce glare, because it was actually the cheapest material that could be used for that purpose, due to how thin the layer could be.
In the 1960's (Apollo time) gold was about $300/oz using "current dollars."

Today, almost 700 tonnes of gold are used annually in applications where it's the cheapest material! This, despite its $1500/oz price. How many new such applications would arise were its price only $300/oz?
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Old 03-22-2020, 02:04 AM
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I’d suggest platinum as a comparison point. Very expensive (historically 33% more expensive than gold but not currently), has demand for decorative (jewelry) and industrial uses, but AFAIK has never been used as currency or to back paper currency.
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Old 03-22-2020, 04:11 AM
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I think it's actually quite hard to separate gold as jewellery from gold as commodity.

Gold jewellery and decorations have often been a way to flaunt, as well as store, excess wealth.
To imagine gold still being worn or used in this way, sans wealth-flaunting we have to imagine gold losing some of its properties, or something better than gold coming along, or some change in human psychology or society.
In other words, the answer to the hypothetical depends on the precise scenario.

Last edited by Mijin; 03-22-2020 at 04:12 AM.
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Old 03-22-2020, 06:24 AM
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Because most people don't live on a desert island.

Did you read all my post? It was only two paragraphs long.



This describes the economy most of us live in. One where we buy and sell the goods we want in our life (okay, this week might not be a typical example). And in an economy like that, money works better than gold.

Yes, I did. I get it. I'm not saying gold has special value, I'm asking the opposite. Why wouldn't we prefer to use something with intrinsic value for currency? IIRC cocoa beans were used as currency in some pre-Columbian Mesoamerican cultures; why move away from that?

The obvious answer is perishability - any other? Is there nothing durable that also happens to have intrinsic value? Wasn't payment in salt the basis for the term "salary"?

The other is portability - once concentration of very large amounts is A Thing, nobody wants to schlep hundreds of thousands of blocks of salt to buy something expensive. So once a society reaches a level of economic development that Very Large Amounts are necessary to function (a government treasury based on large scale taxation, used to fund long term or large scale expeditures), a common proxy that is portable, non-perishable, and testable (for fakes) is needed.

"Gold as currency" lovers often cite the relatively limited and fixed amount of gold in the world as a reason to use it, to prevent inflation, which they say "destroys wealth" - a dollar becomes less valuable over just 20 years, because the government just keeps making more of it! Outrageous! And Bitcoin proponents, the ones who aren't speculators or money launderers, say it's got the same benefit of a finite minable space.

But the societal value of money isn't to preserve the buying power of stashes, right?
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Old 03-22-2020, 06:50 AM
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Gold is not money, even in theory.

Nobody's money is based on gold anymore, even in theory.

Gold and money are two entirely different things.

Thank you.
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Old 03-22-2020, 07:20 AM
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I've seen it suggested that it's actually counterproductive for a currency, or a currency standard, to be too useful. Apparently, if people are using it too much for what it's good for, there isn't enough left to use as currency.
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Old 03-22-2020, 07:33 AM
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Gold is not money, even in theory.

Nobody's money is based on gold anymore, even in theory.

Gold and money are two entirely different things.

Thank you.
Derleth: I am not saying you are wrong. But after thousands of years, a great number of people still think of gold as money. And I believe that it is that kind of thinking that gives gold an artificially high price.
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Old 03-22-2020, 07:39 AM
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Aren't central banks still net buyers?
Not so much. Western countries hate the idea of wasting money on storing gold. So, Germany, for example, has indicated it will sell off its gold reserves. The US gold reserves peaked in the 40s and 50s, some was slowly sold off since the late 50s to late 70s and has been unchanged since the late 70s. (The US would sell it all off except that would upset the nonsensical gold bugs.)

Here's a chart showing recent reserves history. Note that the scale is logarithmic. So the top few (with the US in the lead) account for most of the total and they are either steady or declining.

Russia and China have been adding to their reserves, esp. the former. Russia is a major producer so adding to its reserves is fairly easy. Both countries have less-than-respectable currencies.

No country with a stable economic system gives a fig about gold.

Gold is considered an exchange metal because people think it's an exchange metal. I.e., it's a fiat metal.

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Old 03-22-2020, 08:58 AM
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... (The US would sell it all off except that would upset the nonsensical gold bugs.)

Here's a chart showing recent reserves history. Note that the scale is logarithmic. So the top few (with the US in the lead) account for most of the total and they are either steady or declining.

Russia and China have been adding to their reserves, esp. the former. Russia is a major producer so adding to its reserves is fairly easy. Both countries have less-than-respectable currencies.

No country with a stable economic system gives a fig about gold.
The Swiss are fairly stable but their central bank still has a whopping 1040 tonnes, unchanged since 2009.

Your cite has some flaws, notably that it stops in 2014. Since then, Russia has added over 1000 tonnes to its stock; China 900 tonnes to its. Better yet, though it doesn't show when trades were made, this chart summarizes changes from 2009 to 2019. The only big declines over this period were Germany (sold 37 tonnes, 1% of its stock) and Venezuela (sold 200 tonnes!).

The U.S. central bank holds much more gold than it does foreign currency; this ratio is higher than that of other central banks.

It will be amusing to see your cite for "The US would sell it all off except that would upset the nonsensical gold bugs." (Of course, replace "nonsensical gold bugs" with "those who think the bullion may instill confidence" and it becomes tautologous.)
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Old 03-22-2020, 12:02 PM
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septimus, I saw the chart had some issues, esp. readability. Which is why I explicity mentioned Germany, Russia and China.

Your chart definitely proves that virtually no countries are increasing their gold reserves. Esp. ones whose currencies are important in international trade. (Clicking on columns helps see that.)

Some notes: New Zealand and Canada are examples of countries with healthy economies and zero gold reserves. Canada having gotten rid of their last tiny bit.

There's a lot of 0% change rows there.

Some of the countries that have sold off some reserves are in trouble in one way or another: war, economic crisis, etc. But not all of them. E.g., Czech Republic and Australia have less but are stable. (I imagine there's a lot of pressure to maintain some gold reserve down under due to mining interests.)
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Old 03-22-2020, 12:33 PM
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Originally Posted by robardin View Post
"Gold as currency" lovers often cite the relatively limited and fixed amount of gold in the world as a reason to use it, to prevent inflation, which they say "destroys wealth" - a dollar becomes less valuable over just 20 years, because the government just keeps making more of it! Outrageous! And Bitcoin proponents, the ones who aren't speculators or money launderers, say it's got the same benefit of a finite minable space.
That argument demonstrates why gold supporters shouldn't be in charge of financial policy. A fixed economy is a bad thing. You want an economy that grows; at least as fast as your population is growing but ideally at a faster rate than population. A healthy economy should have a money supply that's proportionate to the size of the economy. A fixed finite money supply will handicap an economy and prevent it from growing beyond a certain size.
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Old 03-22-2020, 12:54 PM
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Wait, though, is it? How many people on the planet today actually use gold as a medium of exchange? I know in theory it is, but pretty much every country on earth uses paper money, coins of other metals, and electrons.
Central Banks use it as a storage of wealth. Not exactly the same thing I know but I believe countries still use it to exchange wealth.
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Old 03-22-2020, 01:23 PM
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That argument demonstrates why gold supporters shouldn't be in charge of financial policy. A fixed economy is a bad thing. You want an economy that grows; at least as fast as your population is growing but ideally at a faster rate than population. A healthy economy should have a money supply that's proportionate to the size of the economy. A fixed finite money supply will handicap an economy and prevent it from growing beyond a certain size.
This is essentially why William Jennings Bryan and co. championed a "silver standard" over a gold standard in the 19th Century; silver was being mined at a far higher rate than gold, meaning using silver as a currency basis would continually inject more into the economy than gold would allow. More of the have-nots, or havent-as-muches, would then be able to improve their economic share of the pie.

Having a government controlled currency allowed for better managing the economy's growth, but at a certain point it seems like we're back to a problem of leverage when we talk about "intrinsic value" versus "growing the wealth of a shared and sophisticated economy". Sure everybody has more money, but if everybody tries to spend their money on the same stuff that has only so much of it to go around, that stuff starts by becoming more expensive, then possibly moves to replace the money as a medium of trade (e.g., bartering for foodstuffs in wartime).
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Old 03-22-2020, 02:22 PM
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Gold would still be pretty and used for jewelry, so I suppose several times the value os silver.

Say $300 or $400 per oz.
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Old 03-22-2020, 04:17 PM
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I am surprised by the chart. A few countries, ie Haiti, have purchased a few tons of gold since 2009. Seems odd.
I confess I am suspicious, perhaps someone is building a bug-out bag? Hope not.
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Old 03-22-2020, 04:46 PM
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Central Banks use it as a storage of wealth. Not exactly the same thing I know but I believe countries still use it to exchange wealth.
Nope. The charts that have been posted show that most first world countries' gold reserves are steady or dropping. Those that are steady are not exchanging it with anybody. Those that are selling it off aren't selling it to other Western first world nations since they aren't buying it.

The odd-men out are Russia and China. Since their reserves increases are a lot more than anybody is selling, they are getting it from other sources. Russia from its own local mining companies, China from overseas. Some of the latter is from places like Germany that are selling off, but that's not enough. So they get it from private buyers.

Country to country sales are rare. As noted, some countries that are in trouble are selling gold. But that goes on the open market which is private buyer dominated. The sellers don't care who buys it as long as they get their cash.

Those videos showing pallets of gold being moved around in the NY Federal Reserve vaults are private transactions for the most part.
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Old 03-22-2020, 11:13 PM
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gold is more than worth it! gold has its own value and is much higher than any currency in the world.
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Old 03-22-2020, 11:16 PM
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gold is more than worth it! gold has its own value and is much higher than any currency in the world.
I would happily give you a 1/4 oz British Gold Guinea for $5000 in US banknotes.
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Old 03-22-2020, 11:52 PM
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Your chart definitely proves that virtually no countries are increasing their gold reserves. Esp. ones whose currencies are important in international trade. (Clicking on columns helps see that.)
I don't think we're in any big disagreement. A reason the U.S. isn't selling bullion is partly psychological, and What would be the point anyway?

But you sure know how to spin the chart! China and Russia ARE important countries and have been increasing their gold reserves HUGELY. Making the aggregate central bank increase large. China is the 2nd-biggest economy in the world; calling its currency "unimportant in international trade" may be an exaggeration:

Quote:
The Chinese renminbi – sometimes referred to colloquially as the ‘yuan’ – is the official currency of the People’s Republic of China and the eighth most traded globally, accounting for a daily average volume of US$101 million. Despite being an emerging market currency it is also the seventh most held reserve currency – estimated to account for 1.23% of global reserves. It is issued by the People’s Bank of China (PBoC).
The chart shows that 22 countries have more than doubled their gold reserves this decade. Among gold sellers, Germany, with its tiny 1% sale, is in 2nd place with 37 tonnes. Contrast this with Russia's purchase of 1464 tonnes.

The answer to my question: "Are central banks still increasing their gold reserves?" was a simple 'Yes (on average).' HTH.
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Old 03-23-2020, 07:08 AM
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gold is more than worth it! gold has its own value and is much higher than any currency in the world.
One can also claim the value of cereal box tops is higher than any currency in the world by this "logic".

How do you compare the value of one thing to currency except by that same currency? And if you do, just look at the massive instability in gold prices over the decades. And how much money you'd lose on average when inflation is taken into account. And that doesn't take into account if you had bought govt. bonds instead and gotten an actual ROI.

Sure, if there are low points and high points and say "Say you bought at X and sold at Y, you made money!" But that's 20/20 hindsight and doesn't apply to the average over time. Pick two random times to buy and sell and odds are you lose. But if you bought a stable currency and sold it at a random time, you'd do better on average.

How on Earth does anyone think that gold is some sort of magic wealth generator?
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Old 03-23-2020, 07:44 AM
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I’d suggest platinum as a comparison point ... AFAIK has never been used as currency.
Wiki has this:
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The first and only case when platinum coins were used as a regular national currency was in Russia, where coins were circulated between 1828 and 1845. These coins proved to be impractical: platinum resembles many less expensive metals, and, unlike the more malleable and ductile silver and gold, it is very difficult to work. However, merchants valued platinum coins because it did not melt in fires like gold or silver.
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Old 03-23-2020, 08:00 AM
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Nope. The charts that have been posted show that most first world countries' gold reserves are steady or dropping. Those that are steady are not exchanging it with anybody. Those that are selling it off aren't selling it to other Western first world nations since they aren't buying it.

The odd-men out are Russia and China. Since their reserves increases are a lot more than anybody is selling, they are getting it from other sources. Russia from its own local mining companies, China from overseas. Some of the latter is from places like Germany that are selling off, but that's not enough. So they get it from private buyers.

Country to country sales are rare. As noted, some countries that are in trouble are selling gold. But that goes on the open market which is private buyer dominated. The sellers don't care who buys it as long as they get their cash.

Those videos showing pallets of gold being moved around in the NY Federal Reserve vaults are private transactions for the most part.
Your facts are off. China is the largest producer of gold by a significant margin. Like 30% clear of Australia.

Second is Australia, third is Russia, then the US and Canada. Aussie and Russia are comparable, US/Canada a way behind.
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Old 03-23-2020, 08:14 AM
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How do you compare the value of one thing to currency except by that same currency? And if you do, just look at the massive instability in gold prices over the decades. And how much money you'd lose on average when inflation is taken into account. And that doesn't take into account if you had bought govt. bonds instead and gotten an actual ROI.
No matter how much you despise gold — or despise the people who don't despise gold — you do your fellow gold haters a disservice by spreading disinformation and thereby lowering their credibility.

In 1970 you could purchase 1 troy ounce of gold in New York City for $36.41. That gold could now be sold for $1500.30. (This ignores costs to store or safeguard your gold.)

Had that same $36.41 been invested in U.S. Treasury bonds (with interest recalculated at the beginning of every September using the 10-Year Treasury Constant Maturity Rate) you would now have $730 (ignoring transaction costs).

$1500.30 > $730. Hope this helps.
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Old 03-23-2020, 08:52 AM
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Derleth: I am not saying you are wrong. But after thousands of years, a great number of people still think of gold as money. And I believe that it is that kind of thinking that gives gold an artificially high price.
I disagree. No one thinks of gold as "money". Many people, possibly everyone, thinks of gold as valuable, but that's an entirely different thing.
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