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  1. #1
    Junior Member hunty's Avatar
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    How is gold any different than fiat currency? Gold is just a shiny rock that's...

    ...severely inflated in price? we assign worth to gold just like we assign worth to paper money so how is it any different?

  2. #2
    Senior Member Meg's Avatar
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    The amount of gold is nearly constant so central banks can not increase the money supply as the economy grows if the are on the gold standard. This means the over decades prices and wages will fall, and investors do not have to take risk to see a positive return so investment also declines.

  3. #3
    Junior Member livestium's Avatar
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    They are not the same. A FIAT currencies value is determined by government law and neither is Gold a "shiny rock", its a metal. Golds value is determined by the market.

  4. #4
    Junior Member justlife's Avatar
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    there was a time when they assigned more gold than paper money available.. led to hyperinflation in 30's.

  5. #5
    Senior Member Victor's Avatar
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    You're absolutely right.
    Gold has value only so long as people accept it as valuable.
    It has nothing about it that isn't also true of any rare object or substance.
    Remember that oceanic civilisations in pre-1600 times used conch-shells as money; they had no concept that a metal could be valuable until Europeans forced the idea on them.

    Gold does have the advantages of all the attributes of a money:

    - it is rare, cannot be picked up off the ground just like that
    - it is quite difficult to find, gain, refine and form into useful shapes
    - it is resistant to corrosion in any natural environment
    - it looks nice and people like to own it !!!

    Otherwise, it is as artificial a measure of value as any other object or substance - or any fiat currency.

    By the way, as a matter of interest, based on its atomic weight and known gravitational proportionality, it can be estimated that only about 6% of the gold in the planet has been found so far. Therefore, it is not really fixed in supply as the "metalists" would have us believe.

    Keep looking, eh?


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