Hutch you old anti-gold-freak you. I will only hint this once. Your analysis is one sided. If gold is a commodity is there any reason why its price should drop more than other commodity? It's uses and scarcity did not change overnite. Therefore its price must be a victim of manipulation. People are selling gold to achieve an objective, not to make money,
If you have the gold, you have the money. If I went out to your ranch and saw 1000 cattle I would say you had money too. There is no difference. Since the value is constant, why sell? We said the value is constant, not price. Surely you know the difference. Except in conditions of rapid change of technology or overwhelming change in supply a commodity's value remains relatively constant. Don't say monetary value when you mouth these words. Just say your need for this product due to its use. We will imagine here that we don't ever make too much or too little for this argument.
Fluctuations of price are minor during normal markets. What may change over time is the value of the dollar as its supply changes drastically by too much "printing".
Although temporary overproduction and undersupply of commodities changes the price commonly, if one takes a view that the commodity supply has a balance, then this will return its price to its normal valuation. We ignore replacement here too. Of course it happens. I would say that the replacement takes on the previous commdities value here.
Fair?
Value is a measure of normal need in a normal market. Price is a reflection of supply of that need.
So why is PD so high? Why is your gov't and money boy's darling? Because it is needed badly. But so is gold. But gold alone is feared by the ones with the green press.
The_banks_sold_to_drive_the_price_down.
You know this. You are either a witting cheerleader or one who naively believes that politicians or gov'ts and banks in cahoots with them, can be trusted to index the dollar and print it with impunity.
Anytime we have let gov'ts print money with no reference they screwed up. When has this not been so? Egypt 4000 BC? France in the 1700's? USA 1920?
You trust the dollar? Har ti har har har. I would say that you are being the hopeful one. One can see that your trust is blind and dogmatic. I cannot say when gold will return to normal prices. I fear that social upheaval will have to cause this. I know that both the market and the dollar will collapse. They cannot be said to be independent.
If you index the dollar with gold inflation is beat. Not all inflation but hyperinflation. I am sure you can see this. Go ahead and index la dollah with with salt and computer chips if you want to. But a word of caution. These commodities are not stable. While you are looking around for a stable commodity to use as an index, I may know of one. :)
The idea of using gold to reference the dollar is not stupid or arcane or old fashioned. Like I said you could use a massive commodity/consumer price index and control interest rates and the M1 and it might work. Fine. But the trouble is simply that it is too complex and subject to error, and worse, corruption. If you put the gold in a vault and pass a law saying money cannot exceed 10 times the gold on hand, then that could be easier to check. Even here we get lied to but it is a better myth. We need to put more checks and balances on that one too as Nixon lied about the gold on hand too. As soon as they canceled the treasury certificates you knew they were lying in their teeth. And why did they do it? To build minuteman missiles and B1 bombers without raising taxes. They raised inflation instead.
I think in order for you to overcome your prejudice you have to think of some other commodity instead of gold. Say, horse manure. Let's say that was in the vault at Knox. It has value, farmers love it. Don't turn up your nose at it. So why would you dump this HS on the market? Why tell farmers that it is useless, you believe in paper now? Why is it in stock in the first place? Don't be glib. Think deep. It represents something. What is that? Should the gov't have a mountain of paper in the vault instead? Or a secret press somewhere that has a stop on it when it gets to a certain number?
Ok, I will tell you. What is in the vault is what money will buy. What characteristic should that thing have? Go ahead and answer this. It could be anything that is easy to vault as the HS is in our story.
If you said you would use something of value that had use I could tell you I don't use that stuff! My prejudice or yours as to use. Which is better? If you use a product that is in demand and is widely used, what is the supply? What is its historic price? Will its demand be constant? Would you use water? Should a note say equal to 20 gallons pure? (Maybe in Texas, and the water should carry perhaps 40% fermented juices for preservation)
You could eliminate money and have a barter system. Eliminate all indexes and precious metals.
However when two people make a deal, they usually make some paper on it. Notes. They can't put all their cattle in the family sedan when they go to town.
When the gov't wants to make some paper that both can trust it has to be in units that both agree on. Three cows or two cars is hard to figure. So the gov't says one gold brick, of 1/35th ounce size.
That is how it works. See? The only way money has value is when it is guaranteed what it will buy now and ten years from now. That is why you cannot put it in a vault but you can put gold there. If cows never aged and were always the same price go ahead and put them there too.
I will make it simple for you from now on. I will not say I like gold. I will say I like horse shit. You can understand that I will warrant.
And let's say your opinion is not really stupid or slavish. It is really quite astute and insightful. Wrong, I think though, for this world at this time.
EC<:-} |
