How do we know that gold is not another fiat currency?

Discussion in 'Economics' started by RCG Trader, Jun 13, 2010.

  1. Seriously, who has the hard numbers on how much gold is out there? What if all the option holders insisted on physical delivery of their gold?

    I have never purchased, or even entertained the purchase of gold simply because if the gold bugs are right, then how much gold one has will be the very least of our worries.

    In fact, gold will matter no more than the dollar.

    So, how do we know that gold is not just another fiat?
  2. zdreg


  3. "If you has to ask, you ain't never gonna know"
  4. There is a difference between a 1 oz gold coin and a piece of paper that says its worth 1 gold coin.

    The smart people take delievery of the coins. The not so smart buy paper ETFs or invest in these companys that "hold" your gold for you.
  5. Because... hmm... err.. Well.. Gold is BACKED by Gold... :eek:
  6. The FED can "crush" the market and make losers out of all of the longs. :eek: :D :(
  7. gold is worth a rock

    dollars are worth some paper

    then there is this whole mental construct surrounding the worth of rock and paper. I would say that paper beats rock, but rock beats scissors, but scissors beats paper, but, but paper beats.... AARG BRAIN ANEURISM!!!
  8. Gold is fiat. As are all "perception and trade value" based currencies that requires human perception, valuation and exchange for commerce.

    Clean vs. dirty energy and carbon measure are also fiat except they are measured in valuated potential with [likely]expiration.

    <a href="" target="_blank"><img src="" border="0" alt="Image and video hosting by TinyPic"></a>

    Primer from those in charge:

  9. Gold is most certainly not fiat. Fiat means to be created by decree. Gold cannot be created or conjured out of thin air, like paper currencies can. A government can cut down a tree that might be worth a few hundred dollars in the marketplace, and by virtue of what numbers they happen to print on the pieces of paper created from it, magically create $10 million worth of "money".

    Gold is created by nature and cannot be created or destroyed by man. Therefore it is not fiat.

    That said, gold, like paper currency, only has whatever value two or more parties mutually agree it has at that moment. But the reasons it has survived for millennia as an agreed form of money or wealth, while every other currency has failed, is precisely because it is not fiat, it cannot be conjured out of thin air by decree.

    Now, what IS in all likelihood fiat with respect to gold (and silver) are the GLD and SLV ETF's. There have never been any audits to my knowledge of those funds to verify that they hold the bullion they're supposed to to back the number of shares created.

    However, if you are holding physical bullion in your possession, you don't need to worry, it is not fiat. It has survived as money for thousands of years, and despite whatever intellectual masturbatory exercises one wishes to engage in, that is not going to change. This time is never different.
  10. paper has money because the govt says so.

    gold has money because people intrinsically like shiny objects.
    #10     Jun 13, 2010