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Originally posted by Arbiter I doubt that. We can already synthesize gold, albeit at ridiculous expense considering the amount created. Considering the exponential rate of technological advancement, I expect that we will be able to synthesize gold efficiently within my lifetime. I think it's much less probable that the dollar and euro will "go the way of the dodo" within my lifetime. Incidentally, I wouldn't want to be invested in gold when we make that particular technological breakthrough...

I really doubt the amount of energy required to synthesize gold would ever be cheaper than the gold itself. And even if that were so, gold isn't the most expensive material there is so that energy would probably be used for synthesizing more important and more expensive materials. Whichever the case, I'm pretty sure we'll be dead and buried long before that happens.

On a side note, you can print as much dollars as you like for a fraction of their value, and they're still holding their price pretty good. Even if that scenario does happen, I'm sure there would be strong enough restrictions to limit the economic impact of such production. Unless we evolve into a borg-like society by then and gold stops to matter...

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1+1=10

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Originally posted by Krypton I've already got gold/silver locked up and hidden for times like these.

Why am I not suprised...

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Originally posted by Renegade Well, exactly: the point is that gold (especially if it were to replace money as a form of currency) is subject to exactly the same fluctuations in value at the hand of supply / demand factors as money currently is.

Not exactly, you're ignoring one really important fact about fiat currency v.s. gold (or any other precious metal) here. There's no limit to how much money can be printed unless we have a serious shortage of tree to cut down and make paper from. Gold, Silver, Platinum, and other precious metals etc. have a limited supply and cannot be arbitrarily be injected in to the amount of money that's in circulation in the economy. Unless I missed something...

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"The Greatest enemy of knowledge is not ignorance, it is the illusion of knowledge." -Stephen Hawking
"First they came for the communists, and I did not speak out— because I was not a communist;
Then they came for the socialists, and I did not speak out— because I was not a socialist;
Then they came for the trade unionists, and I did not speak out— because I was not a trade unionist;
Then they came for the Jews, and I did not speak out— because I was not a Jew;
Then they came for me— and there was no one left to speak out for me." -Martin Niemöller

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Originally posted by shaolin_Z Not exactly, you're ignoring one really important fact about fiat currency v.s. gold (or any other precious metal) here. There's no limit to how much money can be printed unless we have a serious shortage of tree to cut down and make paper from. Gold, Silver, Platinum, and other precious metals etc. have a limited supply and cannot be arbitrarily be injected in to the amount of money that's in circulation in the economy. Unless I missed something...

but that's meaningless in the context we are talking. who cares about the scarcity of gold in an economic collapse when nobody wants gold anymore?

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Originally posted by DrUg_Tit0 I really doubt the amount of energy required to synthesize gold would ever be cheaper than the gold itself. And even if that were so, gold isn't the most expensive material there is so that energy would probably be used for synthesizing more important and more expensive materials. Whichever the case, I'm pretty sure we'll be dead and buried long before that happens. On a side note, you can print as much dollars as you like for a fraction of their value, and they're still holding their price pretty good. Even if that scenario does happen, I'm sure there would be strong enough restrictions to limit the economic impact of such production. Unless we evolve into a borg-like society by then and gold stops to matter...

This Jim fellow at the Financial Times feels that the dollar has been proped up by short sellers who bet wrong and now need to cover thier position. He's got a strong point but I'm not completely convinced he's right.

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FT: It's a year since we last interviewed you. You were aggressively bearish about the dollar, but you thought there would probably be a rebound and you would take that as an opportunity to get further out of the dollar. Have you made a further exit from the dollar? JR: Not yet, no. And the reason I haven't is because we're in a period of forced liquidation of everything. We've had only eight or nine periods like this in the past 150 years, where everybody has to reverse their positions on everything. There is a gigantic short position in the dollar and they're all having to cover as they reverse their positions, so this rout is going to go on much further than I would have expected - to my delight, because then I'll get to sell at higher prices. I don't know whether I'll get out this month or this year even - maybe next year, but I do plan to get out of the rest of my US dollars, because this is an artificial rally caused purely by short covering. http://www.ft.com/cms/s/0/fb9a69aa-...00779fd18c.html

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Originally posted by shaolin_Z Not exactly, you're ignoring one really important fact about fiat currency v.s. gold (or any other precious metal) here. There's no limit to how much money can be printed unless we have a serious shortage of tree to cut down and make paper from. Gold, Silver, Platinum, and other precious metals etc. have a limited supply and cannot be arbitrarily be injected in to the amount of money that's in circulation in the economy. Unless I missed something...

Well let's assume that the US adopts the gold standard, that we can be fairly sure about how much gold is in circulation (a big assumption) and that this amount of gold is fixed. If we ignore trade, then - in a domestic context - there is something that can be said for pegging a currency to something tangible like gold. If supply is fixed, then the value of gold becomes solely a function of demand: it appreciates (in nominal terms) during economic expansion and deprciates (in nominal terms) during economic recession. In real terms (depending on how that is measured) it should remain relatively stable. It might be a bit unnecessary (a fiat currency would nominally rise and fall in much the same way, presuming fixed supply) but at least it works.

Given that the US economy is an open one, however, where economic growth is necessarily related to foreign demand then the pegging of the US dollar to domestic supplies of gold makes no sense. Assuming a fixed supply of gold (and, therefore, a fixed supply of currency) the valuation of the US currency becomes entirely dependent on aggregate demand and - ironically - will be prone to much more volitility than under the current system where the supply of currency is much more flexible. Under the gold-standard, the valuation of the US dollar (and therefore, gold) will be extremely responsive to changes in demand, and so you're left with the same problem of having no real "absolute" valuation of currency that you presently do, but you've got the added problem of not being able to use any sort of monetary policy to at least be able to stabalise it. Inflation (and deflation) and exchange rate volitility would still exist, only they would be much more pronounced and the Chinese - or any other importing / exporting parter - would probably have more control over the valuation of the US dollar than the federal reserve would.

I'm not intimately familiar with the proposed gold-standard so I've probably missed some of the nuances here and there, but if I've got vaguely the right idea then I think these conlcusions are largely inevitable.

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Originally posted by Renegade I'm not intimately familiar with the proposed gold-standard so I've probably missed some of the nuances here and there, but if I've got vaguely the right idea then I think these conlcusions are largely inevitable.

if you care, here's a wonderfully brief resource that explains why we don't use the gold standard anymore.

http://www.j-bradford-delong.net/Po...ldstandard.html

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