I see that the price of gold has risen substantially, and I watch the news from Iraq and Sudan, where society has broken down and the national currency may not be functioning, or from places like Zimbabwe where inflation is thousands of percent a year. It occurs to me that these conditions are why the “gold bugs” tell us we need to have a stash of gold coins. So, does anyone know if this is how people actually are behaving in these God-forsaken countries? What are the Iraqi middle classes using to finance their departures from Iraq, or their lives as refugees? I have done a Google search on this question, and gotten no useful information, so you Teeming Millions are my last hope.
I don’t have a factual answer, but I would guess they would just use US Dollars, Euros, or Pounds Sterling instead. I don’t know that the Iraqi Dinar is unstable, although it very well could be.
People in the US who think holding on to gold in preperation for unstability is a good idea probably believe that if the greenback fails, there won’t really be a backup currency.
My Vietnamese roommate told me once that people in his area tended to store wealth in gold instead of other currency, and he’s not the type to bullshit. But that’s a stable regime (repressive, but stable.)
As T_SQUARE wrote, several countries use US dollars as their de facto currency. I believe some countries have officially acknowledged this and stopped producing their own national currency.
I read somewhere that gold is sometimes used for housing or real-estate purchases in some countries and held in some kind of escrow account. The reason is because the currency in question has become so unstable and the time-frame from start to closing can be several months, so it becomes a form of insurance against devaluation.
strife torn countries tend to revert to barter. Gold is quite good, silver works. Problem with gold is when things get really bad, even a little gold is waaaay too much for mundane every day purchases like groceries.
WW2 pilots in Asia were issued with gold coins as part of their survival kit. CIA types during Nam had bracelets and necklaces of gold links. Idea was to barter it away one link at a time.
Yep, during the VN war gold was very popular w/ the population. I’m pretty sure that many of the Vietnamese people who managed to immigrate to the west funded their new start w/ the gold that they had managed to accumulate.
A quote I remember from way back (roughly): “If society’s reached the point where you’re going to a farmer and trying to buy a chicken with a $300 gold piece, he’s going to say ‘Fine, here’s your $300 chicken’”.
But did any of these people actually use the gold links and coins? The more I think about it, the difficulties of agreeing on a value for the gold, in a country where the native currency is worthless, would be almost insurmountable. The $300 chicken may be a bargain if you are starving, but the chicken seller may not be able to use the gold coin in his turn to buy $300 worth of anything else.
The more I look at it, the whole gold thing looks like a mass delusion.
And not just with US$, either - the official currency of Kosovo is the Euro, despite not being part of the EU.
US or other stable currency is common. In Africa, the old Thaler (about a oz of silver) is still bandied about. Some dudes *hoard *gold, few use it for a medium of exchange.
Really? I would have figured that since Thalers are at least over 100 years old that they would be worth more as collectables than bullion.
The ones used as currency are either copies or very worn. I can get well-worn (real) Thalers for not more than the spot price of silver. Note that they re-issued hundreds of thousands of them just for the African market.
It is the 1780 Maria Teresa Thaler which has so many copies and “restrikes”. Found some on ebay for farily low prices.
One short-lived family business was a laundromat, which we ended up selling after about 1.5–2 years to a Vietnamese family who wanted a side business from their jewelry store. The owner and his wife were a teacher and a nurse, respectively, before everything went down. They obviously needed to get out since they were, no joking, going to be among the first against the wall when the revolution came. Problem was that by the time things got far enough that it was obvious how everything would turn out, the banks had partially collapsed and the money they had was worth basically nothing. They got out with a few hundred dollars in jewelry, which was about the only possessions they had that were portable enough and valuable enough to be worth taking.
Problems like that seem to change people’s attitudes toward all kinds of things. They said that the reason Vietnamese and Cambodians (which two groups made up close to half of their customers at the jewelry store) bought real gold, 24 k if they could get it, and jewels of intrinsic worth was because of their very recent memories of the war. Most people who got out of that mess never trusted banks much, even in the US.
Their experiences seemed to spur self-reliance and strong a strong attitude of self-defence. They carried large amounts of cash and precious metals due to the nature of the business, and for that reason they and pretty much everyone who worked there was armed. I come from a gun-owning family, but I do remember that the submachine gun they had hanging on the wall in the strong room, visible through the armored glass partition, made even my eyes get big. It was meant to, as a silent warning not to try robbing them. They took security seriously, in their home and at their place of business. They also didn’t trust police or the government. Again, that’s because of the failures they saw personally.
Personal experience with both Cambodian and Vietnamese people showed me that they weren’t atypical in their thinking, and that they were definitely right about the jewelry thing. My mother had several Cambodian employees she worked with at her shop, she taught Sunday school at a Cambodian Christian church, and we met a few other Vietnamese through the people we sold the laundromat to. I never saw any Cambodian or Vietnamese without jewelry of some kind; the metal was always gold, and most of it had the particular sheen that only 24 k shows. Even the kids in families who could afford it would have some portable hard wealth on them.
The line between “paranoid survivalist” behavior and “normal” gets moved pretty far when you’ve actually been through unrest, war, and later a catastrophic societal collapse.
Steel, that’s a cool story. You are talking about the US right? (As opposed to your location; Japan) Gold does serve its purpose well, high value density, divisible, inert, and historically a good store of value. Plus, it looks a lot better displayed around one’s neck than municipal bonds or baseball cards.
Certainly not 24kt. Certainly more than the usual American 14kt, maybe 18kt. 24kt is very soft and no one wears it as jewelry. My Mom had a 20+kt bracelet (from the “old country”) and it was scratched and bent and warped. As a young child I could bend the gold in it with my bare hands. :eek:
But yes, Vietnamese and other nationalities wear a bit of their wealth in high carat gold.
I have lived in these conflict/post-conflict societies
Kosovo
Afghanistan
Iraq
Philippines, Sulu Archipelago
And have also lived in Russia, Ukraine and Moldova when inflation was out of control in the 90s as well as travele throughout the developing world.
As other people mentioned people often use a foreign currency, often the dollar, but increasingly the Euro. A lot of times, people get paid in a local currency and immediately convert it to a hard currency before it devalues further. Sometimes there is a hard currency shortage and you walk around with huge wads of cash in your pocket. Here in Indonesia, I have around a million in 50,000 notes in a sweaty lump in my pocket as I type this. The bigger the purchase, the more likely it will be in a foreign hard currency.
In answer to the question of what the middle class use in Iraq: most of them use what ever the currency is in the country they fled to, or they are dead. Iraqis on the street use Iraqi notes which is somewhat stable right now, or dollars.
No, I do mean 24k. I’ve got a necklace that was bought from their jewelry store at my apartment right now, stamped 24k on the fitting at both ends, as is the clasp. Looks similar to this necklace, but with big square links. Even the clasp is a substantial piece of gold, about the size of my pinky nail or a bit larger. Look at the clasp detail lower on the page. That’s exactly like mine. You bend one of the prongs to slip the loop at the end of the chain off the prong. My necklace is probably worth a bit less than what those necklaces are going for, as it’s only about half a troy ounce in weight.
Rings will get bent out of shape sometimes, and you can get them repaired or touched up for a small fee at the jewelers, or for free in many cases if the repair is simple, but chains are preferred to avoid the durability problems you mentioned. Normally for small solid pieces like rings, or thin bracelets, 18k is the highest you can get without having problems with keeping the shape. Even with that problem, just about everything at their shop was full-weight gold. They were disdainful of anything lower than 20k for the body of the piece, saying that anything less was practically costume jewelry and basically worthless. My sisters both got 20k rings, and they did have problems with the rings bending sometimes. The prongs for stones usually have to be 18k or so or you’ll have problems with losing stones, but that’s a small part of the whole piece.
T_SQUARE, I grew up in California, but I’ve been living in Japan for several years.
Dr Deth
You’re off on this one. A lot of the jewelry in SE Asia is 24K. Go to Thailand sometime and check. Gold is sold by the “baht” which is 15.x grams of 24K gold. It is bought in the form of chains, bracelets, rings or whatever that doesn’t require holding a stone in place. The Thais don’t really care for low-percentage gold and consider US 12 and 14K gold to be more-or-less, just some kind of funny metal. I like the buttery color of pure gold myself. Low-percentage gold alloys look too much like brass.
An interesting personal experience on this. When we had the first Gulf War back in the '90s, I was in Saudi. The day after Saddam invaded Kuwait, you couldn’t find a US dollar, British pound or any other hard currency in Saudi. Everyone swapped their Saudi Riyals for dollars. I had some money in a local bank that I wasn’t convinced was going to be around when the Iraqis showed up so I withdrew my money (in Saudi Royals) and took it to a jewelry shop where I bought gold coins and what is called a “ten-tollah” bars which are a small slug of pure gold the size of your thumb. I carried a pocketful of the coins and bars around for the rest of the war. I never used them but still have them around, “just in case.”
Regards
testy
Steel
I bet your necklace comes from Thailand. They all seem to use those serpentine catches on necklaces and bracelets. I’ve got a few of those that I’ve had for years and the gold never gets metal-fatigue.
Testy