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Gold/Mining/Energy : Barrick Gold (ABX)
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To: nickel61 who wrote (2136)9/27/2000 7:47:27 PM
From: russet  Read Replies (2) of 3558
 
<<<I think you should understand that the only thing aside from gold used to back the validity of any countries currencies is debt. That is all other foreign reserves are the debt instruments of another country or their currency in the form of their treasury notes or bonds.
When these are suddenly called into question AND THERE IS NO GOLD IN YOUR FOREIGN RESERVES there is no backing behind your currency at all. NOthing.>>>

Gold has only the value we humans give it. It is valueless in nature. Your above argument makes no sense to me. The economic output of goods and services from a country is what backs that country's debt, and it's currency. That is a direct measure of the ability of it's citizens to repay it's debts.

The amount of gold and other currencies a country keeps in reserve is a miniscule amount in comparison to it's economic output, and it's debts, at least in most countries today. That reserve is only kept for a rainy day. I doubt its presence gives any country confidence that another country can repay it's debt. When you or I go for a loan, the lending institution looks at our ability to repay that loan more than our asset position. If they only looked at our reserves, few people could get a loan.

There is no need for gold to be a reserve currency. Most countries have seen that, and acted to reduce their reserves of the stuff because it costs a lot of money to keep it around (storage, insurance, security). A country's best "reserve", is the ability of that country's people to produce goods and services the rest of the world wants.
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