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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (35950)	6/26/1999 4:28:00 PM
From: Jim S	Read Replies (2) \| Respond to of 116786

I'm going to recklessly stick my toe back into these turgid waters. <g> Ron, I disagree with a lot of what you say, but I have to admit that I'm impressed with your ability to support your contentions. You've clearly thought through your ideas. I'm having trouble with the concept of all currencies being relative. Some things, like a bushel of corn, will have a solid, static intrinsic value, and an emotional value that varies with how hungry the buyer or seller might be. Other things, say, plutonium, have very little intrinsic value, but enormous political and emotional value, but that can vary with how angry different nations might be. Either corn or plutonium could be used as a guage of a fiat currency's value, but would be very misleading in comparison to what a different currency value might be for the same thing. Thus, Iraq may be willing to spend lots of their dinars for a pound of plutonium but comparitively few for a bushel of corn; the opposite might be true for Ethiopia. Hence, a need for a universally accepted medium of exchange. The medium itself is of little importance so long as it is not so plentiful as to be made worthless. Thus, sand probably wouldn't make a very good exchange medium. Or, for that matter, American dollars. OTOH, gold has historically filled this role, pretty much without question. Now, it is being questioned, and is actually under attack, seems to me. If fiat currencies can be substituted as international exchange media, the term "value" ceases to have meaning. If a currency is only worth what it can be exchanged for with a basket of other variable curriencies, those in control of the exchange rates can determine the wealth of nations, and the nations themselves would have limited influence over their own fortunes. Good for the big guys, bad for Bangladesh. But, if something, gold or anything else, sets the universal standard, it severely limits the ability of the big guys to arbitrarily overwhelm the little guys; at least, it means they have to make an expendature of wealth, they can't just reset the exchange rates. Furthermore, since fiat currencies can be rendered worthless (rubles after the Soviet collapse, baht in the Asian crisis), SOMETHING should be available that has some universally accepted value. Today, American dollars work pretty well anywhere in the world, but like grains of sand, there are lots of them, and their value is mostly political, like plutonium. What's wrong with using gold for this function, since we don't know what tomorrow's fiat currency of choice will be? I'm in over my head, and interested in whatever responses may result from this. jim