Gold - Commodity or currency?

[Martinghoul]

I came back to post some interesting articles about the gold standard not to engage in any discussion with you.

Really? So your post #223, where you directly responded to something I said, was "not to engage" in a discussion with me? In post #228 you further suggested that I changed my mind. Was that also a novel way of "not engaging" in a discussion with me?

 

[new_trader]

Really? So your post #223, where you directly responded to something I said, was "not to engage" in a discussion with me? In post #228 you further suggested that I changed my mind. Was that also a novel way of "not engaging" in a discussion with me?

Ok, what I meant, was not to fully engage in another discussion with you. I suppose you want me to ignore you if you respond to an article I post? When I meant 'ignore' you, I don't mean literally, I have nothing against you personally. You have been mostly polite in your discussions and I respect that. But we will never agree on this issue. We belong to two entirely different almost incompatible schools of economics.

 

[Atilla]

Well, n_t, I can imagine two possibilities:
a) My argument is nonsense and is simply devoid of logic; or
b) My argument is sufficiently logical and clear, but you're unable to comprehend it, because you're just too blinkered and indoctrinated

I am not sure how we can establish which one of the possibilities is the more likely one, other than by asking the audience (not that it would be in any way conclusive, either way, but still it's better than nothing). I can't be bovvered to create a poll, so, informally, if anyone reads this, could you pls go for a) or b)?

c) I see how you Martin are looking at this and the short term v long term consequences re: cons and pros - put it in perspective for me.

However, having considered long term issues re: BoP imbalances and exchange rate mechanism unable to resolve them I favour the commodity (gold) backed old reserve system.


I still hold the view reason why US came away from it is purely political to do with financing Vietnam war. It could not finance its military ambitions and thus did away with it and started printing money.

This current $3.7 trillion cost of wars in the last 10 years is the same old problem. Some estimates likely to be 4.7trillion. US debt approx 15 trillion. Cutting back on space and military expenditure would go a long way to reducing debt.

I digress... The world and international trade needs financial discipline and certainty. Gold provides this level of stability. There is ample evidence in the last 40 years - when this gold standard is not adhered to.

 

[Martinghoul]

Yes, Atilla, this is precisely the crux of the matter. We all make a judgement about whether the longer term repercussions of various policies we have been taking for granted are toxic. We can certainly discuss that and what you say makes a lot of sense. This is a sensible discussion that's worth having because we would be starting with the same basic premise.

However, all of the above notwithstanding, my point remains. We in the West may do whatever the hell we want, but we have to take into account the fact that we're competing with China and the rest of the EM world. They will do whatever is necessary to achieve their goals. How do you force them to "play by the rules"?

 

[new_trader]

c) I see how you Martin are looking at this and the short term v long term consequences re: cons and pros - put it in perspective for me.

However, having considered long term issues re: BoP imbalances and exchange rate mechanism unable to resolve them I favour the commodity (gold) backed old reserve system.


I still hold the view reason why US came away from it is purely political to do with financing Vietnam war. It could not finance its military ambitions and thus did away with it and started printing money.

This current $3.7 trillion cost of wars in the last 10 years is the same old problem. Some estimates likely to be 4.7trillion. US debt approx 15 trillion. Cutting back on space and military expenditure would go a long way to reducing debt.

I digress... The world and international trade needs financial discipline and certainty. Gold provides this level of stability. There is ample evidence in the last 40 years - when this gold standard is not adhered to.

Atilla,

Watch this video, it might help you understand why The West is in the position it is in.

 

[YouAreNotFree]

Austrian economics has all the answers.

 

[Atilla]

Austrian economics has all the answers.

From planet Pluto you can see the stars too.

 

[Atilla]

Gold $1570 - ooh la la

 

[new_trader]

Of course Ben Bernanke is clueless, he is a modern economist who studied all the textbooks!

http://blogs.forbes.com/afontevecch...e-admits-hes-clueless-on-economys-soft-patch/


Try expanding the money supply, that's all you know...moron!

 

[Martinghoul]

n_t, do you want me to respond or is this not addressed to me again?

 

[YouAreNotFree]

New highs in Gold today Silver has shot up.

Thanks Ben. That's more currency in my pocket.

 

[Martinghoul]

You guys like Martin Armstrong?

 

[Atilla]

You guys like Martin Armstrong?

Martin,

Check out my predictions for 2011 made on 24th December...


Gold > to kiss 1600
USD > to tank further no end in sight
UK Inflation > 7%
Interest Rates to remain well below inflation < 5%
China > to continue growing at 7%+
Oil > $150
GBP to test $1.40
EUR to test $1.20

Anything that takes your fancy?


Enjoy

 

[Martinghoul]

Nice... Looks like 4 out of 8, innit?

 

[Atilla]

Nice... Looks like 4 out of 8, innit?

Cheers old boy...

Steady as she goes...

I should clarify though I do my own calculations and TA for all my forecasts. I read a lot but all views and calculations are purely mine.

Just blowing my trumpet.

At the beginning of the year Fib extension to 1.61% pointed to $1650 so around this point I'm looking for major resistance and subsequently for a big sell off.

 

[jthetrader]

Martin,

Check out my predictions for 2011 made on 24th December...


Gold > to kiss 1600
USD > to tank further no end in sight
UK Inflation > 7%
Interest Rates to remain well below inflation < 5%
China > to continue growing at 7%+
Oil > $150
GBP to test $1.40
EUR to test $1.20

Anything that takes your fancy?


Enjoy

I would probably have agreed with you about oil, how grossly wrong I would have been since it (Brent} seems to be in the $115-120 range and where is WTI (hovering around $100?).

If oil sees $150 before the end of the year it will have to have an organic cause, rather than just market sentiment; something like a real threat to supply, trouble in the ME, downward revision of reserve estimates (not that any of the OPEC member states would admit to having less than they claim since their output is based on their reserves) or a currency crash.

Do you still see $150 before the end of the year? The only way I could imagine it going that far is if the dollar really does crash and ends up at $2 to GBP. Does anybody know what the situation was like regarding the dollar's strength last time oil peaked, 3 years ago to this month if memory serves.

 

[Atilla]

I would probably have agreed with you about oil, how grossly wrong I would have been since it (Brent} seems to be in the $115-120 range and where is WTI (hovering around $100?).

If oil sees $150 before the end of the year it will have to have an organic cause, rather than just market sentiment; something like a real threat to supply, trouble in the ME, downward revision of reserve estimates (not that any of the OPEC member states would admit to having less than they claim since their output is based on their reserves) or a currency crash.

Do you still see $150 before the end of the year? The only way I could imagine it going that far is if the dollar really does crash and ends up at $2 to GBP. Does anybody know what the situation was like regarding the dollar's strength last time oil peaked, 3 years ago to this month if memory serves.

Yes I see oil going higher. It is also based on a dollar crash.

If the Fed continues printing dollars - you will see oil rising.

The prospect of ME disruption is ever present imo.

You need to ask the question if oil is $100 in a recession what will it be in recovery.

If gas prices are rising - complementary energy source to oil - oil prices will rise if produces switch.

Nope predictions remain put especially gold and oil and the dollar. Twin defecits are here to stay. Nothing has changed. Simply that markets have deteriated imho.

 

[new_trader]

New highs in Gold today Silver has shot up.

Thanks Ben. That's more currency in my pocket.

Ron Paul (the gold standard in politics) makes Ben Bernanke look like the clueless shill that he is.

 

[Atilla]

Ron Paul (the gold standard in politics) makes Ben Bernanke look like the clueless shill that he is.

Technically speaking with my expert hat on... :smart:

Everything is a commodity including money.

What exchange rate one uses in exchanging commodities is the price of exchange

Money is also a commodity.

Currency is a name - a label - for a country's money.


The commodity called money is used to price all other commodities. However, people can print this as much as they like and so with Supply and Demand it loses value.

The commodity called gold can also be used to price all other commodities (because of all its intrinsic features which make it ideal).

Objections people have who work in markets - like financial bods - is that one can't electronically shift gold. This is why they take a negative view.

However, like clearing houses there is nothing to stop shipment of gold to settle balances in fixed periods. These would then become just cost of transaction just liek paying bank charges.


Simple really.

 

[new_trader]

Technically speaking with my expert hat on... :smart:

Everything is a commodity including money.

What exchange rate one uses in exchanging commodities is the price of exchange

Money is also a commodity.

Currency is a name - a label - for a country's money.


The commodity called money is used to price all other commodities. However, people can print this as much as they like and so with Supply and Demand it loses value.

The commodity called gold can also be used to price all other commodities (because of all its intrinsic features which make it ideal).

Objections people have who work in markets - like financial bods - is that one can't electronically shift gold. This is why they take a negative view.

However, like clearing houses there is nothing to stop shipment of gold to settle balances in fixed periods. These would then become just cost of transaction just liek paying bank charges.


Simple really.

LOL Atilla, I'm starting to think you haven't paid attention to anything that has been said in this thread. If money is a commodity simply because a country has declared it legal tender then you have to ask yourself why there are poor countries. An ounce of gold that Zimbabwe digs out of the ground has the same purchasing power as an ounce of gold that the USA digs out of the ground but you can't say the same for the 'money' they each print. What is the difference between the intrinsic value of a $1 note and a $10 note?