Gold Is Real Money: Making of Case For Gold (Part 3)
The last two articles on gold education, lots of rumors were debunked, I focused on how some anti-gold statements are actually made in support of gold, technically and ignorantly. Many people have been brainwashed including baby boomers.
If you have missed the last two parts, here are links, so read critically and catch up;
Part One
Part Two
I am glad that business discussion has generated lots of reactions from the online community, it is a good thing for gold. Do you know that American President Donald Trump give a hint about the US returning to the gold standard? Here is the youtube video that supports this.
Where do we go from here?
The Said Gold Does Not Have Any Yield.
Well, it is another powerful statement in support of gold. It does not give yield because gold is money. Your dollars produce no yield because no risk is involved in having it. Real money is not a risk asset, it can store value, you can use it as a medium of exchange as well as a unit of account. Until you put money in the bank it gives no yield, right? Yes once you give it to the bank, it becomes bank deposit, at this point it is not money but an unsecured liability. Let me take you down the memory lane. In 2008, the largest bank in the US would have crumbled if the government had not bailed them out through various monetary tools at her disposal. A typical example is Cyprus, it is a recent bitter experience that should send a strong message to everyone in the world. Bank depositors learned a very hard lesson, banks were shut down, there was a shortage of paper money and ATM stopped dispensing fiat. People had their money forcibly changed to bank stocks, does this make any sense to you? In Greece for instance, local credit cards became useless as deposited could not withdraw their money, trade by barter resumed. The economic collapse took them back to the 16th century. Well, nothing is bad in diversification, a little bit of real estate, stocks and bonds are beneficial. But investors should be aware that these are not money. They are in similar class with bank deposits, we call them to risk assets.
Whether bitcoin, fiat or gold coin, they are all money. One is cryptocurrency, one is printed on paper and the other one is metal. They are money, none should have yield among them.
They Are Going To Tell You That Gold Have No Intrinsic Value
The idea behind intrinsic value began when Karl Marx in his books The Communist Manifesto said that value of goods should be derived from the addition of capital and labor that has gone into its production.
When more labor goes into it, the higher it value. This is fantastic in theory but the practice has long been eliminated by capitalism. A capitalist put in his capital and extort the laborers to obtain maximum gain through proletarian revolt. It is safe to say that their idea has been replaced by Carl Menger's school of thought, he opined that value of goods should be subjective, that is, the value is determined by individual's wants and needs. Globally, intrinsic valuation does not apply to any good, why should gold have intrinsic value? It is either the gold haters don't have deep knowledge of what intrinsic value is or they are talking out of fact.
The value of growth depends on the subjective value that is placed on it by people, you and me. There are times that fiat may prove very useful based on economic performance and gold is not. Gold price may go up due to subjective evaluation and it may be due to lack of confidence in fiat if this happens the value of gold skyrocket.
To Wrap It Up
I am not saying that gold is Superman, every form of money have its own problems. Adoption of the new gold standard is going to be as a result of intensive technical research and logical conclusion, more work will be done on parity with other currencies, and this could take a decade is to achieve.
Be guided, it took countries in the Eurozone eight (8) years to make Euros work. So why should gold standard take eight months?
Posted from my blog with SteemPress : https://kowaste.com/GOLD%20IS%20REAL%20MONEY%20–%20MAKING%20A%20CASE%20FOR%20GOLD%20(Part%20Two)