# The Gold Standard - Actually prefferable to fiat? **URL:** \ **Category:** Great Debates\ **Created:** [March 20, 2016, 1:03pm UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639 "2016-03-20T13:03:41Z")\ **Posts on this page:** 20\ **Page:** 13
**Author:** ![silenus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/silenus/32/166_2.png) [@silenus](https://boards.straightdope.com/u/silenus)\ **Post date:** [April 19, 2016, 7:18pm UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/241 "2016-04-19T19:18:52Z")
> [@Common\_Tater](#): > > That’s not to say it can’t become worth less, **but it can’t be made worthless** , as is the case with pieces of paper or the like. My bolding. Bull crap. Gold can be just as worthless as any other rock. As mentioned above, having a ton of gold on a desert island won’t do you a lick of good if you have no food. $20 gold coins are nothing but paperweights if nobody in your society will accept them as payment for goods and services. There is _absolutely nothing_ that says that gold will be valued in the future as much as gold bugs value it now. Any claim that “History shows…” is guessing. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [April 19, 2016, 9:17pm UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/242 "2016-04-19T21:17:59Z")
IMO, in these threads there are some issues where the pro-gold posters are right and their detractors are wrong. One question is _Does gold have intrinsic worth?_ Recall that I used mayonnaise as my sarcastic example of “real money.” Let me state firmly that I believe gold has “intrinsic worth” in ways that mayonnaise does not. For example, its unique properties mean _gold is still used in high-performance electronic connections_. Amounts needed decline as technology advances but there are still several milligrams of gold in a typical smart-phone, no? (And much more I’d guess if that metal weren’t so pricey!) ---
**Author:** ![Miller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/miller/32/481_2.png) [@Miller](https://boards.straightdope.com/u/Miller)\ **Post date:** [April 19, 2016, 9:29pm UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/243 "2016-04-19T21:29:27Z")
> [@septimus](#): > > IMO, in these threads there are some issues where the pro-gold posters are right and their detractors are wrong. One question is _Does gold have intrinsic worth?_ Recall that I used mayonnaise as my sarcastic example of “real money.” Let me state firmly that I believe gold has “intrinsic worth” in ways that mayonnaise does not. > > For example, its unique properties mean _gold is still used in high-performance electronic connections_. Amounts needed decline as technology advances but there are still several milligrams of gold in a typical smart-phone, no? (And much more I’d guess if that metal weren’t so pricey!) Yeah, sure, but try putting it in your sandwich! All the gold in the world won’t make that chicken sandwich any moister! Unless you use it to buy better quality chicken sandwiches! Or some mayonnaise! ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [April 19, 2016, 9:59pm UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/244 "2016-04-19T21:59:04Z")
Of course mayonnaise jars could be used as money. But they’d be much more inconvenient than, say, gold or silver coins. Mayonnaise is bulky. It’s perishable. It’s divisible, but jeez. It requires special handling in fragile jars. You can’t bury jars of mayonnaise in the back yard and dig them up 100 years later. Mayo varies in quality in a non-straightforward way. You could carry enough gold to purchase a new car in your pocket. Try bringing that much mayonnaise to the car dealership and see what happens. So yeah, rather than mayo I might suggest cowrie shells or cacao beans or even cigarettes. Or gold. Gold could very easily be used as money, and in the future it will probably be still pretty valuable, even if we discover a solid gold asteroid and mine the hell out of it. And by all means, if the US fiat dollar starts to collapse in value buy gold with it. Real gold, though, not a piece of paper that says you own gold. Until that day, go ahead and use dollars in your daily transactions, and don’t have large savings denominated in dollars. If you’ve got $100,000 in a savings account, by all means invest that money in some productive assets. ---
**Author:** ![truthSeeker2](https://avatars.discourse-cdn.com/v4/letter/t/7cd45c/32.png) [@truthSeeker2](https://boards.straightdope.com/u/truthSeeker2)\ **Post date:** [April 20, 2016, 1:27am UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/245 "2016-04-20T01:27:27Z")
> [@septimus](#): > > The main cause of inflation is too-much-money chasing too-few-goods. That problem could exist (ignoring psychological effects) whether the U.S. keeps its printing-press activities secret or not. We’ve had threads discussing why that new money isn’t causing inflation; a main reason is that much of the new money is still just sitting in F.R.B. computers as “excess reserves.” > > But inflation policies and government fraud may be beyond the scope of this thread. A gold standard is no panacea — aren’t there some who think the U.S. government has replaced the gold in its vaults with gold-plated tungsten? > > [trivia note] The Federal Reserve still has about 11,000 tons of gold bullion backing part of their dollar issue (though redemptions aren’t allowed 🙂 ) . The gold is shown on their books at the old $35 price. A quick $380 billion profit is available by “marking to market” that gold, but so what? I am not for gold standard, just discussing potential loopholes in present system. So inflation will not build up regardless of how much ever debt they create. I see 3 reasons - 1. The demographics. Not enough babies born. Population getting old. Putting pressure on demand. 2. Technology. Producing more with less. 3. Cheap developing countries labour and competitive devaluation by developing countries. I am against this debt based system for the future. I worked brilliantly when world population was increasing (world population was just 1.2 billion in 1920 for ex.). In future it won’t work when working age population will peak and will start to decrease. I am in favour of something being done on global scale. All countries coming together, creating a common currency, the poor people in all countries being eligible for something like food stamps in the US. Right now, many countries can’t afford this because they have inflation problem. Young people there look to relocate to the US, EU etc. This is not sustainable in long term. ---
**Author:** ![dropzone](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dropzone/32/7515_2.png) [@dropzone](https://boards.straightdope.com/u/dropzone)\ **Post date:** [April 20, 2016, 2:30am UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/246 "2016-04-20T02:30:58Z")
> [@UltraVires](#): > > I know a guy who is convinced that U.S. currency will soon hyperinflate so he put his extra money into gold. I just assumed he had gold coins or gold bars in a safe or a bank vault somewhere, but a few years ago I was talking to him and he showed me “certificates” that there was a certain amount of gold on deposit in his name in some bank in the Cayman Islands. > > This type of thinking astounds me. He does not trust U.S. currency, backed by the full faith and credit of the strongest nation in the history of human civilization, but he trusts the contractual agreement of a private entity under the laws of a foreign island nation. Not only that, but he believes he is investing in “hard” money. Wait! I…um…some guy who will remain nameless could create a shell corporation in the Caymans, build a website showing stock photos of the corporation’s “gold,” advertise on political radio programs (gold bugs come in all political flavors), and watch the money flow in? What sort of extradition treaty is there between the US and the Caymans? I’m asking for a friend. In other words, just how dumb is your friend? :smack: ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [April 20, 2016, 3:54am UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/247 "2016-04-20T03:54:47Z")
> [@dropzone](#): > > What sort of extradition treaty is there between the US and the Caymans? Go over here, click the .pdf, and unless I’m missing something there appears to be no extradition treaty between the US and the Cayman Islands. This isn’t surprising as the Cayman Islands are a notorious haven for shell companies. [Extradition Treaties](http://www.state.gov/s/l/treaty/faqs/70138.htm) I’d honestly like to know more about this friend of UltraVires’. I’m guessing that he is more interested in protecting a world view than in protecting his savings. To be fair, I see that Scotiabank has a Cayman Island gold certificate program, if I am reading their website correctly. Their bonds are rated A (actually they range from A- to A+ depending on the agency. AA bonds and AAA bonds are rated higher. BAA bonds are rated lower. Below BAA- is junk.) I think it’s safe to say that the buying power of an ounce of gold will fluctuate a lot more than the buying power of dollar. As for declines in the buying power of the dollar is concerned (currently about 2% per year) that’s what diversified investments are for. I’d love to earn easy money by betting against hyperinflation with these folks, but I’m guessing they maintain that government statistics are wildly off base, as are other independent sources that agree with them. The only reliable sources of inflation information come from those who won’t release their methodology, according to this view. ---
**Author:** ![Lord\_Feldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lord_feldon/32/341_2.png) [@Lord\_Feldon](https://boards.straightdope.com/u/Lord_Feldon)\ **Post date:** [April 20, 2016, 4:40am UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/248 "2016-04-20T04:40:54Z")
> [@Measure\_for\_Measure](#): > > Go over here, click the .pdf, and unless I’m missing something there appears to be no extradition treaty between the US and the Cayman Islands. I think it would fall under the treaty with the UK. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [April 20, 2016, 5:04am UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/249 "2016-04-20T05:04:59Z")
> [@Lord\_Feldon](#): > > I think it would fall under the treaty with the UK. I see that you are correct: nice catch. (Cite:The Cayman Islands link will present a .pdf of the US/GB extradition treaty. The Cayman Islands appear explicitly in the annex. ) > **[A Guardian guide to extradition](https://www.theguardian.com/world/interactive/2013/jul/02/guardian-guide-extradition-interactive)** > > The official surrender of an alleged criminal by one state or nation to another ---
**Author:** ![Spectre\_of\_Pithecanthropus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spectre_of_pithecanthropus/32/12343_2.png) [@Spectre\_of\_Pithecanthropus](https://boards.straightdope.com/u/Spectre_of_Pithecanthropus)\ **Post date:** [April 20, 2016, 5:24am UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/250 "2016-04-20T05:24:43Z")
> [@Lemur866](#): > > How has the government hampered it’s use as money? > > Seriously. Yes, in the past–when we were on the “sound money” “gold standard” there were all sorts of restrictions on gold, because the government needed to control the gold market to control the money supply. Now that we’re on a fiat money system we have a free market in gold. One prerequisite of anything that is supposed to function as money is that it provide reasonably stable price levels, so one could argue that the government hampers the use of gold by the fact that it no longer maintains a set price for the metal. Any merchant could simply decide to price all their stock in gold and silver bullion coins, after all, the mints produce them in a variety of different weights. But as the prices of those metals fluctuate–especially silver, the business owner would have to constantly reset prices. However, as nice as it might be to think that the gold standard was a guarantee of stable prices, [history](http://inflationdata.com/Inflation/Inflation_Rate/HistoricalInflation.aspx) shows this is quite far from the truth. During and especially after major wars, there were periods of double-digit inflation, even going as far back as the first World War. And in the 16th century, when gold and silver were essentially synonymous with the word “money”, the flow of [New World gold](https://en.wikipedia.org/wiki/Price_revolution)into Europe led to huge price increases over a century or so. ---
**Author:** ![dropzone](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dropzone/32/7515_2.png) [@dropzone](https://boards.straightdope.com/u/dropzone)\ **Post date:** [April 21, 2016, 2:24am UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/251 "2016-04-21T02:24:00Z")
> [@Lord\_Feldon](#): > > I think it would fall under the treaty with the UK. Darn! I wonder what Li’l Kim would want for his cut. This could be great way to get hard currency into NorKor. ---
**Author:** ![truthSeeker2](https://avatars.discourse-cdn.com/v4/letter/t/7cd45c/32.png) [@truthSeeker2](https://boards.straightdope.com/u/truthSeeker2)\ **Post date:** [April 21, 2016, 7:22am UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/252 "2016-04-21T07:22:04Z")
the end game of fiat currency could be near. deutsche bank says it rigged silver and gold prices. China opens new gold exchange where you will be 100% guaranteed of physical delivery of gold u purchase. So this should end the rigging. It is a huge news imo. ---
**Author:** ![UDS](https://avatars.discourse-cdn.com/v4/letter/u/ecae2f/32.png) [@UDS](https://boards.straightdope.com/u/UDS)\ **Post date:** [April 21, 2016, 7:36am UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/253 "2016-04-21T07:36:24Z")
> [@truthSeeker2](#): > > the end game of fiat currency could be near. > > deutsche bank says it rigged silver and gold prices. > > China opens new gold exchange where you will be 100% guaranteed of physical delivery of gold u purchase. 100% guaranteed by whom? (PS: I don’t see how this will “end the rigging”. Whatever it is that enables people to manipulate the price of commodities, it certainly isn’t the lack of a 100% guarantee of delivery to those who trade in the commodities. Even if delivering of a commodity is not only guaranteed but actually happens, the price of that commodity is still going to be determined by market forces, and is still open to “rigging” through those forces. ---
**Author:** ![truthSeeker2](https://avatars.discourse-cdn.com/v4/letter/t/7cd45c/32.png) [@truthSeeker2](https://boards.straightdope.com/u/truthSeeker2)\ **Post date:** [April 21, 2016, 7:49am UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/254 "2016-04-21T07:49:52Z")
> [@UDS](#): > > 100% guaranteed by whom? > > (PS: I don’t see how this will “end the rigging”. Whatever it is that enables people to manipulate the price of commodities, it certainly isn’t the lack of a 100% guarantee of delivery to those who trade in the commodities. Even if delivering of a commodity is not only guaranteed but actually happens, the price of that commodity is still going to be determined by market forces, and is still open to “rigging” through those forces. If you don’t have do deliver physical gold - You can create as many shorts as you want to suppress the price, it just increases the open interest. Ultimately the buyers will lose patience and begin selling, at that time you can cover your shorts. That’s what the banks have been doing for decades in US/UK stock exchange. Not possible anymore, because true price of gold will reflect on China stock exchange. Check out this very useful video [![]( " - YouTube") ](https://www.youtube.com/watch?v=cG5-HtalWCk) ---
**Author:** ![truthSeeker2](https://avatars.discourse-cdn.com/v4/letter/t/7cd45c/32.png) [@truthSeeker2](https://boards.straightdope.com/u/truthSeeker2)\ **Post date:** [April 21, 2016, 7:52am UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/255 "2016-04-21T07:52:10Z")
I am planning to buy some (physical) gold after knowing about this development. ---
**Author:** ![UDS](https://avatars.discourse-cdn.com/v4/letter/u/ecae2f/32.png) [@UDS](https://boards.straightdope.com/u/UDS)\ **Post date:** [April 21, 2016, 8:38am UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/256 "2016-04-21T08:38:14Z")
But you have always been free to buy physical gold; you can buy it at any jewellers. And if you want to buy bullion and have it physically delivered or go and pick it up yourself, you’re already free to do that too. [Perth Mint](http://www.perthmint.com.au/buy_precious_metals.aspx), for example, does a roaring trade. Any bullion you buy there you can collect yourself, have them deliver or have them store; it’s entirely up to you. And as long as others are free to deal in gold futures, options, etc, then they can still affect the price through their dealings in those instruments. And you may rest assured that the Chinese will not be selling gold at a different price to everyone else. ---
**Author:** ![samclem](https://avatars.discourse-cdn.com/v4/letter/s/a9a28c/32.png) [@samclem](https://boards.straightdope.com/u/samclem)\ **Post date:** [April 21, 2016, 11:24am UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/257 "2016-04-21T11:24:27Z")
> [@truthSeeker2](#): > > the end game of fiat currency could be near. > > deutsche bank says it rigged silver and gold prices. > > China opens new gold exchange where you will be 100% guaranteed of physical delivery of gold u purchase. So this should end the rigging. > > It is a huge news imo. You’re reacting to marketing by people who have been predicting a version of this scenario for over forty years. Some day one of their “predictions” may come true, just like the guy on the street corner holding the sign saying “The World Will End.” Just another day at the gold/silver/China/big banks/US dollar doomsters convention. ---
**Author:** ![truthSeeker2](https://avatars.discourse-cdn.com/v4/letter/t/7cd45c/32.png) [@truthSeeker2](https://boards.straightdope.com/u/truthSeeker2)\ **Post date:** [April 21, 2016, 12:41pm UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/258 "2016-04-21T12:41:04Z")
> [@samclem](#): > > You’re reacting to marketing by people who have been predicting a version of this scenario for over forty years. Some day one of their “predictions” may come true, just like the guy on the street corner holding the sign saying “The World Will End.” > > Just another day at the gold/silver/China/big banks/US dollar doomsters convention. I have noted the growth of Japanese public debt. From 60%of GDP in the 1990s, to 230% today. Japanese working age population peaked arnd 1995, and total population peaked 5-6yrs back iirc, has been decreasing since. Europe, China and US’s working age populations have also peaked. Basically the trajectory of debt growth in developed world put against the crash of fertility rates over last 20-30 years doesn’t inspire confidence in current monetary system. If you measure all the wealth in the world in terms of gold, the price of gold would probably come to 10-100 times the present value of $1250 per ounce. I don’t like gold but if people note the state of economy, the manipulation of gold price etc, their confidence in present system can shake and gold may rise substantially . ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [April 21, 2016, 2:02pm UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/259 "2016-04-21T14:02:41Z")
I’m not sure what the ratio of old people to young people has to do with fiat money, but this sentence caught my eye: > [@truthSeeker2](#): > > If you measure all the wealth in the world in terms of gold, the price of gold would probably come to 10-100 times the present value of $1250 per ounce. What does this even mean? That if the “value” of the “world’s wealth” (if that even means anything) _ **except** _ for gold was, say $71 trillion then the value of the gold already brought to the surface should also sum to $71 trillion? That is, that gold “should” comprise exactly 50.0% of the “world’s wealth”? This strikes me as an unlikely claim. What am I missing? ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [April 21, 2016, 2:16pm UTC](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639/260 "2016-04-21T14:16:53Z")
**truthSeeker2** , it sounds like you’re more interested in the short-term price direction of gold, rather than monetary policy. As you know, like the price of mayonnaise, sometimes the price of gold goes up, sometimes it doesn’t. If you had sold your gold to Roosevelt in April 1934 and kept the banknotes under your mattress you would still have $35 per ounce today. Big loss. If instead you invested the proceeds in something that paid 5% per annum, year after year, you’d have $1912 today. Better than gold. Much better when you factor in the price of shotguns etc. needed to protect your buried cache of gold. If you buy gold today, you may feel really happy about that decision five years now. Or maybe not. The same statements are true if you substitute Microsoft stock for gold. So what? (For the record, I do not recommend investing in mayonnaise.) [Previous page](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639.md?page=12) [Next page](https://boards.straightdope.com/t/the-gold-standard-actually-prefferable-to-fiat/749639.md?page=14)