As I've pointed out multiple times in the past, you can't eat gold. The same applies to silver too. Allowing scam artists to trick you into buying gold or silver (gold or silver that you don't actually possess) is just throwing your money down the drain unless you have plans to emigrate elsewhere and are looking for something that can be converted to your new nation's currency. Otherwise you're much better off purchasing real assets -- things that can be used to create stuff that can be traded for food and other goods if everything goes to hell in a handbasket. If you buy a potter's wheel and teach yourself how to throw pottery (and lids for the pottery that can keep out mice and rats!), for example, you have a skill that can be used to create stuff that can be traded for food and other goods in the event of a collapse. Gold and silver... bah. You can't eat it, and nobody will accept gold or silver in exchange for food, so what good is it?
-- Badtux the Economics Penguin
I've seen the ads hundreds of times and my scam detector always goes off and I never understood why. Thanks for giving some insight.
ReplyDeleteOn a side note, where does the religious fundamentalist part of your site description comes from? For some reason I keep thinking that it is from Discworld or Hitchhikers.
It is actually a slight variation of a statement by H.L. Mencken, who with Ambrose Bierce (see: Devil's Dictionary) was arguably the founder of the cult of snark. He used the then-current word "puritan", which has a different meaning today as "some early settlers who wore funny clothes". Back then it meant "religious fundamentalist". So I simply translated it into modern English.
ReplyDeleteThe scam behind the gold/silver ads is that you don't get the actual gold/silver. You are supposedly sold "shares" of gold/silver in a vault somewhere else. The problem with purchasing something that you have never seen and that might not actually exist is that, err, you do the math :-).
- Badtux the Monetary Penguin
I'm a little unclear as to your reasoning. Obviously you should avoid scams. At this point I'd avoid even the reputable "pools" like Kitco in favor of actual physical metals.
ReplyDeleteBut seriously, you can't eat a potter's wheel either. Of course you can trade pots for food, same as you can trade gold for food. Gold is just a lot smaller, that's all. I'd certainly agree there is value to having tools and skills useful in a low-tech society. Personally I'm a passable carpenter, and that will serve if need be. But, while buying a thousand hammers might be one way to prepare for the end of civilization, buying ten ounces of gold will serve the same purpose in a much more portable form.
A parting thought from a wise poster in the eBay groups: "The world is full of forgotten money systems. Samples of their paper money and coins are readily available on eBay. In the paper money category, you can buy obsolete notes by the handful, often for just a few dollars. Some of those notes once bought a week's groceries, but now they sell for pennies. In the coin category, it's not hard to find obsolete gold coins that once bought a week's groceries. And today, they still will."
Besides... Ain't she lovely? (US $5 gold, 1882, about 1/4 ounce)
Alan, walk into your grocer with one of your gold coins and attempt to trade it for food. Case closed. You will need to convert it into a real currency in order to purchase food.
ReplyDeleteGold, in and of itself, has intrinsic value only insofar as it is useful for things like electronic connectors and such. You may be getting confused by the difference between intrinsic value and extrinsic value. Things with intrinsic value are things like food, dishes, guns, housing etc. that can be used to sustain you or makes your life easier in some way. Things with extrinsic value are things like dollar bills, coins, etc. that you cannot eat, but which you can trade for other things that maybe after some set of trades you can eat. They have no value inherent to them, their only value is in what you can trade them for.
Gold coins are in that realm of things that primarily have extrinsic value. That is, you can't eat gold. The only reason gold has any value is that you can convert it into dollars currently, which can then be converted into food currently. But if the U.S. dollar goes the way of the Confederate dollar -- rendered valueless due to over-printing and eventual collapse of the issuing government -- then what do you do with your gold? Do you really suggest that you will be able to walk into a farmer's field and exchange your gold coin for food in that case? Utter nonsense. The farmer will say, "do you have parts for my tractor? Do you have fuel for my tractor? Do you have meat that I can eat while looking for fuel and parts for my tractor? Can you offer me assistance looking for fuel and parts for my tractor? Do you have seeds? Do you have something useful for me in sustaining my family today? If not, bugger off!"
This is not hypothetical, BTW. When the Soviet Union collapsed, the Soviet currency became worthless too. In large portions of the Soviet Union the currency then became... uhm, no, not gold. Turnips. Yes, turnips. If you wanted clothes, you went to the clothes factory and traded them turnips for some clothes. If you worked in the clothes factory and needed cotton to make fabric to make clothes, you then went to the cotton farmer and traded him turnips for some cotton. And so forth and so on. Eventually the former Soviet states established real currencies with real value and turnips returned to being a food item rather than a currency, but the point is that in an economy where government has collapsed and its currency is worthless, things with an intrinsic value, things you can eat or use to preserve things you can eat, things such as turnips, become the currency. Gold? Not so much.
- Badtux the Value Penguin
All I can say is I find it exceedingly unlikely that gold will ever become worthless. The world needs money. The world will always find something to use for money. And gold will always have value in whatever system of money is invented. When the Ruskies were using turnips, were they giving away gold wedding rings for free? No? You still had to pay for those, then? How many turnips? Well then, there's your exchange rate.
ReplyDeleteWhile a civilization collapse in modern times would be an event unlike any in history, I think gold is as good a bet as tools for preserving value.
...but you can eat pussy.
ReplyDeleteSo, I'm wondering...
Is this a plea for the return of the pussy standard?