FOFOA On Gold's "Focal Point", Or Is Silver Money Too?

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Sat, 12/18/2010 - 14:44 | 815617 The Answer Is 42
The Answer Is 42's picture

Silver is not gold. The underlying drivers are very different. Gold is ultimately about hedging against the collapse of fiat currency. Siler has been mistaken by some to be an alternative but it's not. It has too much intrinsic value to be that.

Sat, 12/18/2010 - 15:15 | 815667 flacon
flacon's picture

Viva La FOFOA!

Sat, 12/18/2010 - 19:20 | 816043 Malcolm Tucker
Malcolm Tucker's picture

Here is Nigel Farage telling the EU the Euro crisis "is like watching a slow motion car crash"

http://fedupmontrealer.blogspot.com/2010/12/nigel-farage-euro-crisis-is-like.html

If things devolve in Europe then long gold and silver in euro terms would be a great trade before the next mega ultra galactic bailout ...

Sat, 12/18/2010 - 21:09 | 816208 velobabe
velobabe's picture

cotton_pulp, bitchez

Sun, 12/19/2010 - 15:59 | 817182 RockyRacoon
RockyRacoon's picture

More cotton... less pulp, Honey.

Sat, 12/18/2010 - 16:13 | 815756 Quixotic_Not
Quixotic_Not's picture

You're right, with the Chinese burning through Ag like water in their electronica kamps, you'll find out just how different they are post haste!  ;-)

Sat, 12/18/2010 - 20:24 | 816106 dlmaniac
dlmaniac's picture

Silver satisfies all the necessary elements for a commodity to be money. Its rampant industrial usage (thus shortage) IS A PLUS INSTEAD OF NEGATIVE to its value b/c it means you have to revalue it REALLY HIGH to use it as money.

FOFOA's using China's past decade selling silver as proof of China not believing in silver is as questionable as someone citing China's mass acquiring of TBonds as proof of China's faith in US$. Don't get me wrong. I have tons of respect for FOFOA but I have doubts on this particular point of his. China was simply fooled into a long term silver supply contract the same way they were fooled into holding TBonds.

Not any more. Look at the KWN and Jim Willie insider info out of LME: Deep-pocket Asian buyers are draining LME of BOTH gold and silver, and they are particularly intensive in silver. Who are they? It's China busy dumping Dollars for silver. Wouldn't you say it has more to do with them being "silver bugs"?

And were there no such goofy European VAT on silver we'd be talking about 40$ silver easily right now.

Be nimble PM investors. Don't get religious. If gold overshoots its ratio against silver (which is what happens now) then trade some of your gold for cheap silver. If silver does gold then vice versa. I know it's hard to operate but I think it'll be an effective strategy to maximize your wealth.

Sun, 12/19/2010 - 00:09 | 816469 Oh regional Indian
Oh regional Indian's picture

Good points dl. But also to be noted is that sometimes a frimly held conviction can come across as being religious.

Also, I think it's safe enough to say that the earth would be a mightily different place if we did not have the moon. And of course a MIGHTILY different place if we did not have the sun.

There is a magic ratio in there that reflects(!) where gold and silver may find themselves.

Last but not least, Freegold or freesilver will only create another group of oligarchs.

Is that such a good thing?

ORI

http://aadivaahan.wordpress.com

Sun, 12/19/2010 - 00:27 | 816494 nuinut
nuinut's picture

Freegold or freesilver will only create another group of oligarchs.

Indeed it will.

A group that will include every holder of gold.

A group that anyone will be free to join by purchasing gold themselves.

A group which anyone who produces value in the world will be able to join. 

You seriously don't see where this goes?

Does no one consider that we may be able to enjoy a better system after the demise of this one?

All things being equal, we'd have at least a 50% chance of better rather than worse, no?

I guess this is why ZH is considered a "doomer" site. It's almost all it attracts.

 

Has no one made the connection that the monetary system is the DNA of the society that forms around it? Change the system and you change the nature of the society. The participants now have different motivations. To look at their behaviour now, and extrapolate it into a future using a different system is absurd. 

Sun, 12/19/2010 - 09:21 | 816783 Oh regional Indian
Oh regional Indian's picture

Nuinut,

My personal take is that this is a dualistic world. Expressedly dualistic. To imagine that one metal will on the sole role of Monetary arbiter, beyond all cultural/historical and other factors shrieks of closed minded-ness.

If you say that the sea of fiat (however it might be envisioned, even as in the article above) is somehow a counterbalance, to my mind that is dis-ingenuous.

Maybe that is is my biggest problem with the A/FOA thesis.

It has the feeling of another uni-polar solution, something that cannot and does nto exist in real life.

We are bi-polar. We are probably bi-metallic too! ;-)

 

ORI

http://aadivaahan.wordpress.com

Sun, 12/19/2010 - 14:20 | 816933 FreeMartinArmstrong
FreeMartinArmstrong's picture

Bi polar we are !

but so is money ! that is why the two main functions(store off value and medium of exchange) can NOT be in the same entity !

The two poles are hard and easy, the hardest being gold, everbody(focal point) seems to agree, but the easiest in todays economies is the cotton or the digital cards we use today. NOT silver ! not anymore. society changed ! it wll be a good investment as a commodity but can not be money anymore. something easier came around, infintely available even. can't get any aesier. ask the bernank about it.

the ONLY solution will be freegold, because it will give us a bi polar moneysystem back again, today the dollar tries to be both poles ! it will lead to system failure, because at the end one can not divide by zero. as money today is debt. debt denominated in debt will destroy the debt.

simple as that ...

Mon, 12/20/2010 - 01:13 | 818090 dlmaniac
dlmaniac's picture

Gold is no harder than silver if you think about it from monetary point of view. FOFOA mentions that France could not go to silver standard b/c of all the silver out there so he concluded gold is better as it does not have that problem. Wrong. First of all China and Mexico were both on silver standard during that time. They weren't panic b/c of US quiting silver standard or someone else' silver output. It's silver being under-valued that broke their silver standard.  Secondly gold is not immune to outside interruption. Gold ran into several cases throughout the history that its value took a hit when a mass new gold mine was found.  Gold's relative hardness over silver as monetary metal is a myth.

Just remember this it's the market force chooses silver to be money for thousands years. It's not by a bunch kings, central bankers or central government. I would not count on IMF$ coming out to arrange it.

Sun, 12/19/2010 - 16:03 | 817194 RockyRacoon
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Has no one made the connection that the monetary system is the DNA of the society that forms around it? Change the system and you change the nature of the society. The participants now have different motivations.

A damned fine and important point!  The folks who junked you are ignorant of the weight of your statement.  The "system" is a reflection of its money.  Change the money and you change the nature and intent of the system.  Greed will prevail in all cultures or systems of exchange, but the effects can be more easily negated with an honest and unitary system of exchange.   Thanks for your insights!

Sun, 12/19/2010 - 13:08 | 816944 Sean7k
Sean7k's picture

I think we can resolve this issue in a very simple manner: eliminate legal tender laws. I guarantee we will find out what is useful as money and what is not. We will find out the value of every monetary substitute. 

We will see how people store their wealth and what they use for everyday transactions. Why this preoccupation with rules? Let the markets decide...

Sun, 12/19/2010 - 16:07 | 817199 RockyRacoon
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A beautiful sentiment, but impractical in the sense that there are too many involved with (embroiled in) the current system of fiat currencies.   They ain't gonna let go without a revolution -- but that could be arranged.

Sun, 12/19/2010 - 23:02 | 817933 Unbeliever
Unbeliever's picture

The Gov't wants a standard unit of accounts so they can effect taxes.

Sat, 12/18/2010 - 16:22 | 815771 Gloomy
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Taleb makes the point, and I think it is a good one, that you should diversify into several metals and agricultural land, because it is easier for central banks to manipulate gold alone than multiple markets. Hedge your bets-and silver is an important component of that.

Sun, 12/19/2010 - 13:51 | 817001 DoChenRollingBearing
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Gloomy, Mr. Taleb is a man I respect a lot.

Diversity in precious metals holdings is indeed a good thing.  I practice it every day!

I am not in a position to manage agricultural land however.  A possible way to play food shortages are the ETFs like DBA and CORN, which of course are paper assets.

Sat, 12/18/2010 - 16:25 | 815778 tmosley
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Gold has intrinsic value as well.  It is used in industry.  It's just that the price of gold is high enough to make recycling efforts economical.  Practically all of it is recovered.  This is also the case with expensive catalysts like platinum and palladium.  The same will eventually happen with silver.  Once it becomes more expensive to pull out of the ground than it is to recycle.  This is likely to happen temporarily when the gargantuan supply shortage caused by decades of undervaluation hits as new silver production will take years or decades to come on line.

Silver is likely to be priced a lot more like platinum during an industrial panic, and more like palladium until  new mines come on line.

Sat, 12/18/2010 - 21:15 | 816161 dehdhed
dehdhed's picture

yup, even wealth isn't accumulating gold nearly as much as they should but imagine when the wealthiest of them all, i.e mega-technology corporations, decide they need to secure silver supply for the future.

silver isn't a poor man's gold, it's more like a rich man's black gold.  it's a scarcity issue.

i like gold for all the reasons stated in this article, but if one were to give me palladium or platinum or rhodium, i wouldn't degrade it like this article tries to do with silver.  even the poor man's gold analogy is designed to instill feelings of inferiority.  friend of friend of another has an agenda and at times he tries to levitate gold to the status of deity.  another's agenda was simply to bring about a greater awareness of gold's value to the 'giants', and fofoa seems to try to capitalize on another's teaching.  in this article, he degrades one asset to prop his own.

for instance, i could make up stories how a billionaire might pay $1,000,000 a day to sustain life a little longer,  or perhaps that same man might pay $1000 for every sip he took, if forced to die of thirst instead.   one might even argue how air would be more valuable than anything.  although i try to wake up each day with an appreciation as though i just the lottery,  i wouldn't try to argue that silver is not even worth the air you breath freely everyday.  even though i believe air is more important than silver, tomorrow i'm not going to rush out and invest in balloons full of air.

i am in no way trying to degrade gold. i own both gold and silver, but not because i think they are equals.  if anything, i think oil is more an equal to gold.   but at the same time, i think silver is the next oil. 

the 'value' of gold is completely different than it's price.  and even though i don't think silver's 'value' could ever be greater than gold's, i don't dismiss the possibility that one day it's price might.

Sat, 12/18/2010 - 17:02 | 815833 akak
akak's picture

OK, I may earn a few junks here for this, but the more I read of this "FOFOA", the more I find his convoluted, excessively long-winded expositions to be irrelevant, historically ignorant and flat-out incorrect, if not in fact disingenuously misleading.

For one thing, there is this idea of the separation of the value storage and medium of exchange functions of money, in which he proposes gold as the storage of value, and a (presumably government-issued, inflationary) fiat currency as the means of exchange as the best of all worlds.  But why would anyone want a dishonest, government-issued, fiat currency in ANY aspect of a reformed monetary world?  The flaw in his analysis is that there can NOT be, in practice, such an artificial separation ---- all money is in some sense "storing value", while SIMULTANEOUSLY being used as a means of exchange.  Is the money in my wallet purely a means of exchange?  Isn't it storing value, even if only for a few days?  And what of my checking account?  A 3-month CD?  A one year CD?  Just where is the line between these two functions of money?  I would aver that there is in fact no such line.

Another problem I have with his "Freegold" scenario is the fact that if one wants to store their value in gold, and use fiat as the day-to-day means of exchange, is this not in fact the system we ALREADY have today?  What is to stop anyone from storing all their long-term savings in gold right now?

Every time I read this FOFOA, I get the sinking feeling that I am being sold a bill of (questionable) goods by a fast-talking, long-winded salesman in a purposely complex and dishonest-feeling manner.

Sat, 12/18/2010 - 17:48 | 815918 kiwidor
kiwidor's picture

Yup.  And the practical reality?  How many of us can afford to have gold sitting around?  2/5ths of 3/8ths of fuck all. So for all those intergenerationally wealthy with nice quiet money lubricating their passage through life, his argument is unnecessary.  And for those without that luxury, his argument is irrelevant. 

 

Sat, 12/18/2010 - 19:44 | 816073 DebtBasedCurrency
DebtBasedCurrency's picture

Are you saying you have no abilty to save? How about cancelling your internet than and save the money in PM's you spend on that? You do not have the abilty to set aside 10% of your income and invest how you see fit?

Sun, 12/19/2010 - 12:00 | 816876 Max Hunter
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You may want to take a more sobering view of our population. Upwards of 70% live from check to check. That means they have NO money for gold. If you cancelled your internet, it would take 2 years to save enough for a gold eagle, minimum. I think the person is better off with the internet for that time.

It's nice to hammer out on paper a mathematical solution to everyone's problem but it's not realistic.

Sun, 12/19/2010 - 19:48 | 817496 kiwidor
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I was pointing out that few people have enough spare fake-money to buy real money.  As for my ability to save, it's none of your business.  I can, but choose not to.    If that means I perish when i run out of food, so be it.  But at least I'm off the hamster wheel.

 

Sun, 12/19/2010 - 02:34 | 816637 Spitzer
Spitzer's picture

At $1380 gold, his arguments are relevant.

I personally find FOFOA makes more sense then any other gold commentators. Look at his inflation/deflation explanation. Second to none.

Sat, 12/18/2010 - 17:55 | 815927 AUD
AUD's picture

No junks from me.

FOFOA is definitely convoluted, excessively long-winded, irrelevant, historically ignorant and flat-out incorrect, & in fact disingenuously misleading.

There's no way I'm going to attempt to read that gibberish but in scrolling through I noticed this:

Money is debt, by its very nature, whether it is gold, paper, sea shells, tally sticks or lines drawn in the sand. (Another shocking statement?) Yes, even gold used as money represents debt.

What a load of garbage, money is what extinguishes debt, it is not debt. Debt is debt, the opposite of money, which is why the dollar is not money but debt. Like the value of a bounced cheque, dollar is moving slowly toward zero. In the meantime its value is uncertain, leading to the 'price' volatility we see in commodity & financial markets.

There, how long did that take to read, like 1 minute?

Sat, 12/18/2010 - 18:27 | 815984 SRV - ES339
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There's no way I'm going to attempt to read that gibberish

And yet you comment and trash, without understanding the argument?

What a load of garbage, money is what extinguishes debt, it is not debt 

In the fractional reserve fiat system you live in, every dollar in your pocket was borrowed into existence by the Fed, so it is, by definition, debt. This link explains it in detail... a lot of "gibberish" in there though... and it's "over a minute" long!

http://video.google.com/videoplay?docid=-515319560256183936#

 

Sat, 12/18/2010 - 18:30 | 815987 Quixotic_Not
Quixotic_Not's picture

"In the fractional reserve fiat system you live in, every dollar in your pocket was borrowed into existence by the Fed, so it is, by definition, debt."

The first rule of Fight Club is...

Sun, 12/19/2010 - 02:51 | 816654 AUD
AUD's picture

Didn't I write; the dollar is not money but debt, the very next sentence after What a load of garbage, money is what extinguishes debt, it is not debt?

Yet you accuse me of commenting & trashing without reading the article?

Next you'll be posting some bullshit from Lyndon LaRouche & telling me to read it! You're an idiot.

 

Sat, 12/18/2010 - 18:55 | 816022 tmosley
tmosley's picture

Money, free money like gold, is debt owed by society to a producer who has loaned the fruits of his labor to that society.

FOFOA is very smart, but he operates on a flawed premise, as is pointed out above by akak.  You simply can not separate the store of value function from the medium of exchange.  If you do, you will have instant hyperinflation.  The only thing that holds hyperinflation at bay is the propensity of people to hold  their extra dollars, whether in a mattress or in the bank. If EVERYONE saved in terms of gold, then you wouldn't be able to get any in exchange for dollars, and everyone would quickly stop using dollars, but would just use gold (or some other substitute).

Sat, 12/18/2010 - 20:23 | 816114 BrosMacManus
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I had my first engaging conversation with someone that actually wanted to discuss our debt-based monetary system's flaws and what would evolve in the event of our reserve currency status and/or fiat system's collapse. Not being well versed in financial matters, this person's preconceived notions were a considerable impediment to forwarding the discussion to the "what happens when" phase of the discussion, with lots of starts and stops to back fill and clarify what money is. As I reflected on my conversation, it struck me how FOFOA must feel at times in in explaining his freegold concept. I've been reading FOFOA and Another's archives, but admit my understanding is far from complete. That said....

It strikes me that freegold is the next branch of our monetary system's evolutionary tree, but instead of it being driven by environmental factors as most evolutionary changes are, freegold is the genetically modified equivalent conjured up in the labs of the central banks (and the Bilderberg-esque elitist individuals/organizations that control them). Freegold is elegant, but not particularly beneficial for us lowly plebes, once instituted. Freegold, as I understand it, is the anchor and ballast for all currencies, but most importantly is the basis in which sovereign nations settle their current accounts; it is not primarily intended as a medium of exchange, but rather as a store in which to value the currency, at the sovereign level. I may be off here, but intuitively I seem unable to make the connection that FOFOA does re: gold being the only suitable store of value when I bring this down to the individual's perspective. Yes, gold is singularly qualified to serve as the sovereign's store of value, and as a result all individuals should aspire to acquire it while they can. However, being priced as it is, I can't see his perspective that the poor man's gold is still nothing more than an overvalued commodity when applied to the individual. Nevertheless, being of the belief that TPTB are driving us inexorably to freegold, gold seems to be the better medium in which to store value, even if bought in fractional and or gram increments. However, silver still seems to me to serve some role in the monetary system at the individual level, whether as an alternate Salinas-Price style non-denominated free floating currency or as store of value once the POG becomes unattainable. I don't understand the mutual exclusivity, but at the same time don't ascribe to there being a natural mathematical linkage of the two via the GSR.

Sun, 12/19/2010 - 03:41 | 816675 nuinut
nuinut's picture

BrosMacManus: When you say "at the sovereign level", are you applying this to individuals as well as nations? Freegold is the tool that supplies the sovereignty, placing the sovereign individual on equal footing with the sovereign nation.

 ...gold is singularly qualified to serve as the sovereign's store of value, and as a result all individuals should aspire to acquire it while they can.

Freegold is the permanent availability of physical gold, with the rate of exchange for currencies not being distorted with the inclusion of paper gold. Perhaps you mean "while they can get it at such an advantageous exchange rate for fiat"?

I can't see his perspective that the poor man's gold is still nothing more than an overvalued commodity when applied to the individual.

The move to freegold, which will spontaneously occur when physical gold and paper gold cease to trade at par, will propel the relative value of physical gold into a permanent orbit, which will not be mirrored by silver. Silver may well be valued relatively higher than currently too, but FOFOA's point is that gold will make this particular phase transition alone. If silver goes up too, it will not be to the same extent nor for the same reasons as gold.


Sat, 12/18/2010 - 21:19 | 816228 SDRII
SDRII's picture

not if there was a one time revaluation - think ecb m2m

Sat, 12/18/2010 - 21:33 | 816247 tmosley
tmosley's picture

Right, just like a junkie will get clean and never use again.  I sure as hell ain't gonna bet my life savings on THAT one.

Sat, 12/18/2010 - 21:41 | 816246 dehdhed
dehdhed's picture

What a load of garbage, money is what extinguishes debt, it is not debt.

do you not see you argued perfectly fofoa's point.  when two things can be exchanged equally, are they not the same?  currency has no intrinsic value but to represent a debt owed.  that's how it facilitates trade.   if you give someone currency for a good, it represents your debt owed to them.  they in turn pass that debt owed to them to someone else.  if i give someone currency for apples, it represents a debt of apples owed.  the apple vendor might exchange his claim to my apples owed for something else, but in each case it continues to represent debt.

if someone forgoes fruit of their labors and accumulates currency, their wealth represents debts owed to them.  even a closet full of currency doesn't represent wealth except in the sense that the closet full debt owed to that person can be exchange for things with intrinsic value.   and then the debt would get passed along. 

it's like when i write a check, i didn't create wealth, i exchanged the accumulation of debts owed to me for something else.

Sun, 12/19/2010 - 00:31 | 816499 dkny
dkny's picture

And the most interesting question is how does this currency come into existance.

Mon, 12/20/2010 - 15:58 | 819272 Dr. Sandi
Dr. Sandi's picture

Evelyn Wood. Her techniques can increase reading speed so much that you can read as fast as you talk, thereby qualifying for a high-paying job in media, or as President of the United Snakes. Then fully reading these long articles isn't nearly such a chore.

Sat, 12/18/2010 - 18:09 | 815950 Lionhead
Lionhead's picture

I'm glad this FOFOA chap has posted this rubbish. He has revealed himself to be a poor thinker & has wrongly interpreted the facts; at the minimum, his writings require a good editor to scrub his poorly composed words into something that's understandable & concise. Sorry, FOFOA chap, you get an F on this work. Come back to ZH when you improve your skillset as a thinker & writer.

Sat, 12/18/2010 - 18:13 | 815956 Quixotic_Not
Quixotic_Not's picture

"Come back to ZH when you improve your skillset as a thinker & writer."

Candy stripe a cancer ward?

Sat, 12/18/2010 - 22:30 | 816298 DavidPierre
DavidPierre's picture

Mr. Lionhead:

Yes... and quite right!

"Less is More!"

Way to many words thrown out with no connection or meaning... confusion shines...wisdom darkened!

Why... he just makes Old Fart's eyes water and my brain go to head aching when trying to make any sense, rhyme or reason, or what-so-ever out of his jumble.

{Editing is the process of selecting and preparing language through processes of correction, condensation, organization, and other modifications to make your point in a blog format.}

Now... TheDP ... EDITS... and be most helping to reduce his heavy backpack by throwing out most of FOFOA's uselessness and usual verbal baggage before he sets out into the wild unknowns.

Have himself contact I... here @ ZH ...having much experiences and many years of taking greenhorn wrighters into the  Rocky Mountains and Grizzled Bear's WilderNests of CyborgSpace. 

Sun, 12/19/2010 - 01:01 | 816544 Lionhead
Lionhead's picture

I heartily recommend your services sir to the FOFOA chap. ;)

Sun, 12/19/2010 - 07:59 | 816743 Al Gorerhythm
Al Gorerhythm's picture

As in ship-wrighters? Contact I? Wildernests? WHAT THE?! You couldn't edit an high school newspaper.

I highly recommend that you to attend the scool for righters that dont spel good..

Sun, 12/19/2010 - 17:52 | 817328 RockyRacoon
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Even more scary:  He is old enough to vote.  

(The Coon runs screaming off into the dark woods...)

Sun, 12/19/2010 - 21:10 | 817460 DavidPierre
DavidPierre's picture

 ....................DUH!...................

"Zero Hedge has been known to utilize such stylistic tropes as hyperbole, sarcasm, and irony ... with the end goal of making the reader aware..."*

{*TD}

Sat, 12/18/2010 - 18:27 | 815985 Blah Blah Blah
Blah Blah Blah's picture

No junk, just a hearty "Amen".

Sat, 12/18/2010 - 18:47 | 816005 Withdrawn Sanction
Withdrawn Sanction's picture

"Every time I read this FOFOA, I get the sinking feeling that I am being sold a bill of (questionable) goods by a fast-talking, long-winded salesman in a purposely complex and dishonest-feeling manner."

Hear, hear, akak.

 

So many errors so little time.  But to indicate just a couple:  First, the idea that we need ever-expanding amounts of money to function as a “lubricant” seems genuinely absurd.  Why expanding?  Who knows.  Does a car engine need ever-expanding amounts of lubricating oil?  No, really all it needs is a pump/pipes (the saving/lending channel), a reservoir (savings/unspent income), and a filter (a risk pricing and bankruptcy mechanism).  (Yeah, I know, the metaphor is not perfect, but you get the idea.)  In short, why put the adjustment burden on the quantity of money alone?  Why not allow prices and velocity to adjust too? 

Second, as for the monetary commodity is concerned, the important question is who controls the standard, while the question of its physical composition is a secondary consideration (important, but not primary).  If the standard is to be controlled by the government, no standard is safe from abuse.  If it’s to be the market, no standard need be specified in advance. That is, the market itself (i.e., through the self-interested choices of millions of men and women) will decide what they want to use and accept in exchanges and for wealth storage. 

What I THINK they/we will choose is a bimetallic standard.  Having silver coins circulate alongside gold coins enhances the divisibility of gold coin.  It allows us to conduct exchanges on a far smaller scale.  Consider that today, even a 1/10th oz. gold coin would be good for exchanges of $130 or more; whereas a 1/10th oz. silver coin (if such exists) would purchase as little as $3 worth of goods.

As a side note, the exchange rate between gold and silver (i.e., the mint ratio) would be market-determined as well.  This recognizes the fact that the relative values of gold and silver can change over time for a variety of reasons.   If silver were to become more valuable relative to gold, say, because of a new breakthrough medical procedure, the mint ratio would fall.  The same outcome occurs if a large deposit of gold or gold mining method were discovered that greatly added to gold supply.  On the other hand, if gold were to become relatively more valuable than silver (for monetary or non-monetary reasons), the mint ratio would rise (i.e., it would take more ounces of silver to exchange for an ounce of gold).   A fixed mint ratio, however, has the potential to drive one metal or the other from circulation, according to Gresham’s Law, depending on which one becomes relatively more valuable than the fixed ratio indicates.

 

Bottom line:  as far as possible, human beings should be able to determine for themselves what form and standard of money they should use and accept.  Telling them that only gold can function as money seems as narrow-minded as foisting irredeemable fiat currency on them does.

 

Sat, 12/18/2010 - 19:52 | 816083 Jendrzejczyk
Jendrzejczyk's picture

Bottom line: Fofofoafoafo is putting up a video of a crack head to support his theories.

Sun, 12/19/2010 - 04:10 | 816685 sterling effort
sterling effort's picture

Junked you for low content. The guy in the video is so not a crack head. He may have some sort of autism such as Aspergers that causes him to appear 'different'. People with this type of syndrome have the need to grasp a topic and use their considerable intelligence to 'worry' the hell out of it. Some obsess on obvious things such as trains; others......cows or whatever. This guy has chosen silver as his 'thing'. He is more informed on his topic of choice (silver) than you can imagine. He is smarter than you, and when it comes to his topic (silver) he has the added advantage of being impervious to boredom. A powerful combination. He is completely unaware that dickheads like you view his difference as a disability.

Sun, 12/19/2010 - 08:06 | 816747 assetcoin
assetcoin's picture

Sterling, I applaud your defense of the Silverfuturist.  I have been a subscriber to his YouTube channel for almost a year.  He is very intelligent and passionate about silver and all precious metals.  I have learned a lot from him, and he's pointed me toward good books and articles to learn more.  His name is Joe, and though we've never met, I consider him a mentor and friend.

Do NOT follow this link or you will be banned from the site!