Gold Standard Movement Growing

[Jacob]

What i don't get is that good prices keep going up but stock gold mining companies aren't matching the rise in prices of the product they produce.

There is an article in the Economist this week on that very subject. It mentions the following factors:

1: Increasing costs of production (easily accessed reserves are depleted, rising fuel costs), presumably meaning that profits doesn't keep up with price.

2: Big mining corps turning to acquisitions and mergers to build reserves, meaning less actual mining and exploration.

3: Investing in mining carries risk in addition to that of commodity prices (political instability, failed mergers, disappointing yields from expensive developments etc).

4: Gold bugs are betting on the price of gold going up, mining companies don't always do that often hedging for the sake of stability. In addition, mining companies pursue non-gold extraction as well (such as copper) making them less attractive for investors purely focused on gold.

... sounds reasonable enough to me

[grumbler]

By definition gold isn't fiat currency (obviously). What Ide was driving at was that neither gold nor USD have an intrinsic value that guarantees the item is going to hold its purchasing power.

No one was arguing that either gold or the USD had "an intrinsic value that guarantees the item is going to hold its purchasing power."  In fact, anyone who argued that anything had "an intrinsic value that guarantees the item is going to hold its purchasing power" would rightfully have been hooted off the thread, so I suspect that this is a red herring.

So, you agree with me now that Ide was wrong in his assertion that gold is "really just as much fiat currency as paper."  On that note, I think our discussion can end. 

[alfred russel]

Well I was a little confused regarding what we were discussing. I thought this was about more than just whether gold is a fiat currency like dollars, with you bringing up the Aztecs and Spanish.

[Malthus]

Interestingly, the Aztecs used chocolate as a currency (more accurately, cacao beans) - not gold. 

[garbon]

WTF is wrong with you?

TSS - tired schtick syndrome.  His schtick really belongs in the hospital bed next to Neil's.

I think we should make it a policy that posters must reinvent themselves every couple years.

Do we really need a Cher-Madonna rule?

[Iormlund]

Gold is useful for a unit of exchance precisely because it is useless and rare.  If we needed it for something else it would make a pretty shitty currency and likewise if it was common people would spend their time hoarding it instead of working.  So it was perfect back in more primitive times.

But it makes no sense in a modern economy.

Gold is not useless at all. It is widely used in electronics, for example.

[Malthus]

I say Mexico should go back to a chocolate currency.

Either that, or cocaine.

[Admiral Yi]

I say Mexico should go back to a chocolate currency.

Either that, or cocaine.

Too easy to debase cocaine.

[The Minsky Moment]

Gold is not useless at all. It is widely used in electronics, for example.

Industrial demand is much less than supply.  At current prices only heavy speculative interest can support gold prices.

[Iormlund]

Gold is not useless at all. It is widely used in electronics, for example.

Industrial demand is much less than supply.  At current prices only heavy speculative interest can support gold prices.

I don't see how that contradicts anything I said. The fact that gold is being used despite high prices driven by other factors only supports how useful it can be in many applications.