Guest Post: Gold, The Improbable Answer To Life, The Universe, And Everything

Tyler Durden's picture

Submitted by Bo Peng

Gold, The Improbable Answer To Life, The Universe, And Everything

"Alright," said the computer and settled into silence again. The two men fidgeted. The tension was unbearable.
"You're really not going to like it," observed Deep Thought.
"Tell us!"
"Alright," said Deep Thought. "The Answer to the Great Question..."
"Of Life, the Universe and Everything..." said Deep Thought.
"Is..." said Deep Thought, and paused.
"Forty-two," said Deep Thought, with infinite majesty and calm.

-- Hitchhiker's Guide To The Galaxy, Douglas Adams.

(With apologies to Mr. Adams, may he rest in peace, I never get tired of quoting H2G2.)

There's no rational basis for valuing gold in terms of anything else.
Unlike all other widely traded metals, gold has relatively little
inherent value and its above-ground quantity never decreases because,
well, gold is forever (while diamonds burn up).
These (little inherent value, inert) plus the relative rarity make
gold a very good medium for trade, i.e., money. The ideal medium for
trade is something that

A. has 0 inherent value and
B. can never be created and
C. can never be destroyed.

Since human stupidity is hard to measure or divide into smaller chunks, gold will have to do.

It's worth noting that digitized fiat currencies of today meet two of
the three requirements 100%. If we find a way to make it hard to create,
it would be a better choice than gold. Independent central banks were
created specifically to make it harder to create fiat currency. But the
game nature of human society dictates that every system will be
corrupted, and every good idea turned bad, over time. As such, the
central-bank experiment, while brilliant and noble, has come to an
abrupt end in failure since the 08 crisis. Global fiat currency system
was an ingenious and bold experiment except for its reliance on an
optimistic view of human's ability to overcome greed and fear. Soft
inhibition/prohibition against the creation of money, be it moral,
legal, or political, is not enough to prevent us from caving in to greed
and fear when the time is right (or wrong). We need something stronger
to save us from ourselves. Back to gold.

It is no accident
that the dollar started its slide and gold its rise both around early
2002. The terrorist attacks of 9/11 alerted the world to the
unthinkable, the possibility that all the powers of US could not
provide protection against the new type of threats. The ensuing domestic
and international policies of the Bush administration tirelessly
proved this right. Perhaps more importantly, the Bush administration
showed the world that, lacking the ability to generate organic growth
and wealth, the US is perfectly willing to abuse the trust the world
had bestowed upon it, by making the dollar the global reserve currency,
in order to fund a war without fronts, borders, goals, endings, or
clearly definable enemies. Obama strangled any budding audacity of hope
by resolutely wasting the best historical opportunity for
financial/economic/regulatory/legal reform in generations, allowing
himself to be bullied around and weakened in the process.

Somewhere along the process, however, the Perverse Gold has become more
than the dollar hedge. It gradually dawned upon the world that we're
faced with a paradox:

A. The dollar cannot serve as the global reserve currency, and
B. There's no alternative to the dollar as the global reserve currency.

How to get out of this Catch 42, nobody knows, although creative/crazy
ideas abound. Gold is most definitely not the answer, at least not in
the old style of gold-backed currencies. But when everything else proves
even uglier, the original ugly begins to look better and better. I
still don't believe we'll go back to the old gold standard but it's the least improbable among the improbables. And, with the Infinite Improbability Drive technology owned by the Fed, it's becoming less and less improbable.

Since 2002, gold has used every pathetic excuse to go up. When the
dollar is weak, it's a dollar hedge; when the dollar is strong, it's the
euro hedge; when crisis hits, it's the safe harbor; when the economy
is good, it's the inflation hedge. Now central banks are no longer
ashamed of hoarding gold. Various countries and localities are talking
about using gold to settle trades, e.g., India, Commonwealth of Virginia (yes, gold, Virginia).

A notable exception is 2008. But it was not because people liked cash
more than gold, it was because people needed cash to unwind their
positions just to get through the day. And in various scenarios some
fiat currencies may be considered temporary safe heaven. But the
candidate pool is shrinking and the safety duration is shortening.

I profess zero love for gold; it doesn't hug me back. But as far as
sustaining the things that do, gold is a necessary evil, the most benign
evil at this point in time. I always liked Virginia; if they actually
pass the alternate-currency law, I would be very tempted to move there,
if only for the cool factor and the clean conscience knowing my
children's future wouldn't be volunteered to keep some irresponsible
bums on their spending high. My children hug me back and I'd like to
keep it that way.

When you're on the right side of a macro
trend, supposedly random events inexplicably go right with improbably
high probability. I can live with such blatant disregard of nice
mathematical properties. What I cannot live with is the lack of
understanding when the trade may end. There're many ways the gold trade
may end, but valuation is not one of them (though valuation may cause
temporary pull-backs once in awhile). As I said in the beginning,
there's simply no rational basis for gold valuation in anything else.
It is, quite simply, whatever value the market is willing to pay for.

So, until the world figures out what the next common medium for trade
is, gold is the temporary universal answer to Life, the Universe, and
Everything. It is the question that you need to figure out for yourself.

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thefatasswilly's picture

So . . . silver and platinum (all high quality women LOVE platinum. It's "very pretty" apparently) are not answers? I'm beginning to feel nervous about gold because of posts like this.

DoChenRollingBearing's picture

@ fatass,

MY wife does not care much for platinum, so I will hold it for her and my kid (in Pt Eagle form).  It is my favorite PM.

Don't worry about gold.  It is going to do great, even if your fantasies about killing off half the population come true...

JonNadler's picture

BUT YOU CANT EAT GOLD!!!! or platinum

Sam Clemons's picture

or stocks, or bonds

honestly, i find it very very interesting that ancient cultures were obsessed with gold.  considering some people think that aliens visited this planet and taught pretty much  all the ancient cultures everything they knew, it is interesting.  i have to assume the aliens are who taught the people then that gold is special.  the bigger question is if alien bloodlines still exist today, who are they, are they hoarding gold for some reason?  Maybe it is fuel for some technology we don't have... never know.  we do know it is the best metal for space travel due b/c of its heat capacity (friction/near stars).



thefatasswilly's picture

If you want to dive into that quagmire (giggity), I suggest you consider the fact that all ancient cultures worshiped some sort of flying serpent / dragon: indoamericans worshiped Quetzalcoatl, we Chinese are descended from dragons (and we worship / pray to our ancestors), whites believe in Satan, the great red dragon, Hindus / Cambodians worshiped Nagas, etc. etc. etc.

omfg serpent gods from outer space? I actually find it quite likely. Doubt it's a coincidence that dragons supposedly hoard gold.

Red Neck Repugnicant's picture

worshipping snakes in space does not add any credibility to the 'Chinese are superior' argument

I would have kept that one to yourself.


Sudden Debt's picture

1. Any race that thinks is superior is more related to rats then anything else :)

2. I do believe Chinese come from space. They look pretty alien to me. Also when a Chinese get on a plane and want to go to America, we call them "ILLLEGAL ALIENS". Coincidence? I THINK NOT!

jeff montanye's picture

could anyone dispute such airtight logic?

Sam Clemons's picture

is that better than his videos "beyond the cutting edge?"  he just droned on in those videos.


New World Chaos's picture

Well, the book is a massive brain dump.  That's to be expected when someone is trying to pull together a Grand Unified Conspiracy Theory.  The nice thing about the book is there is something for everyone, and you can pick and choose.  If you don't think the moon is a giant mind control Death Star, then you can just skip that chapter.

Oquities's picture

Zachariah Sitchin, bitchez!

Sam Clemons's picture

I do as well.  I think the bible even frequently references loud machines or fire or wheels when referencing god or angels arriving.  Sounds like a space ship made out of gold because it is the best material for it.

guestpost's picture


DoChenRollingBearing's picture

Ah, JonNadler has joined us again.  So what are the instructions from TPTIB (The Power That Is Blythe) tonight?  Oh, wait, I know!!!

Pt to $0.03

Au to $0.02

Ag to $0.01

StychoKiller's picture

...and we'll be saying a big hello to all intelligent life forms everywhere...and to everyone else out there, the secret is to bang the rocks together guys..."  sub-etha radio broadcast in HHGTG

Chappaquiddick's picture

Oh yes you can and silver and a range of other very odd materials, but's far better to horde it and and polish it and love it and yak yak yak yak yak.

thefatasswilly's picture

Hm, why does she dislike platinum? Does she prefer gold instead?

What generation are you guys from?

DoChenRollingBearing's picture

@ fatass,

She does not dislike platinum, she just does not have precious metal fever like some of us here at ZH do.  Platinum is my sentimental favorite, it is heavy...

So it's up to me, at 54, to hold the PMs as insurance against .gov stupidity or an ugly Black Swan event.  I hold some food and guns & ammo as well.

Red Neck Repugnicant's picture

oh god. The most loathsome, wretched pig at ZH is offering insight about high quality women.  



all high quality women LOVE platinum. It's "very pretty" apparently...

Your post should read:  all high quality warthogs have a penchant for cornmeal.  It's "so tasty" apparently. 

Dr. Sandi's picture

all high quality women LOVE platinum. It's "very pretty" apparently...

If quality=price and Platinum=blonde, this equation makes perfect sense.

thefatasswilly's picture

What equation?

I might have exaggerated a bit with "all," but I've asked quite a number (I'd estimate 20-25) of non slutty, attractive women about their feelings on gold, silver, and platinum. I understand that there is a high demand for jewelry amongst women.

Most either didn't care much for silver, or expressed mild disdain for it. All talked about how good platinum looked when I asked if price was a factor in the unanimous #1 choice. Some stated that gold is too flashy.

Maybe it's just my generation that's in love with platinum.

Red Neck Repugnicant's picture


What equation?

This one:

XengXang + horniness = trip to the warthog farm


thefatasswilly's picture

This is my last reply to you. I've already pummeled you twice; you have had to resort to school yard namecalling and making up random ass shit like your "equation" above, because you have been unable to counter me logically. At all. You even tried using one of my arguments as your own argument. I don't know why you're even responding to me; are you a masochist? Do you have no sense of self respect?

I'm tired of repeating my superiority over you, boy. It's not fun anymore. Can you tell by the way my language has changed? Of course not. You are white. Inferior brain (did you know that the white unemployment rate in America is higher than that of the Asian American unemployment rate? We do better than you even in your own country). Incapable of deep, critical thinking.

I know you will respond, boy. Hoping for another lashing from the whip. Sorry, bored.

Rylie's picture

what did you Asians do copy western ideas and gadgets and make cheap replicas of them


thefatasswilly's picture

I apparently also possess a superior command of your own language. English was my third; based on your inability to recognize correct punctuation and capitalization, I'm fairly certain it was your first.

Lord Koos's picture

Those with deep-seated insecurities often feel a desperate need to blow their own horn, small though that horn may be.

AnAnonymous's picture

what did you Asians do copy western ideas and gadgets and make cheap replicas of them


It is rather simple to understand why. Because it is one of the only sectors left in the west for "productive" work.

When you start a business, you perfectly know that you will meet duress from other competitors. The goal of competition is to eliminate concurrence, so new concurrence is not welcomed.

If Asians or more exactly Chinese,Indians, Russians or Eastern Europreans (Japan is beyond copying western ideas and gadgets) start their own IP businesses stuff and like, any corporation in the West will face the question of where to locate the production of their goods. With an expected outcome that it is required to move either entirely or partly the activity in the quoted areas of the world for various causes, as profits but also reduce concurrence by poaching their talents.

Which will result in an earthquake in the West.

People should not forget that outsourcing is the result of internal pressure to the West, that politicians have presented education as a solution to cope with the outsourcing phenonemum and expelling educated jobs to places where they will belong will not go that easy.

The reaction to outsourcing jobs for the educated is strongly adverse, especially when it is justified as it means no returns of the activity.


trav7777's picture

inferior brain?  WTF?

Let's see your slope record of inventions...I'm waiting

our dicks are bigger too

thefatasswilly's picture

Are you really that insecure about your own dick?

Red Neck Repugnicant's picture

Hey XengXang

Speaking of Chinese dicks, did you ever see this movie?

No more yankee my wankee, the Donger need FOOD!


Hephasteus's picture

Sorry trav he got ya there. 1 billion plus countries know how to fuck. I wouldn't try to make people from india feel sexually inadequate either. It's not going to fly.

Lord Koos's picture

Among other things Chinese invented eyeglasses and gunpowder back when anglosaxons were still living in caves. 

Tom G's picture

"We do better than you in your own country".


So much hilarious stuff there. A true collectivist mindset, hidden in that false bravado. What do I care if the "average" asian american is more employed than the "average" white american? It seriously could not mean less to me. I concern myself with myself, not my white brothers.

And these averages have absolutely nothing to do with the quality of the brain of any individual white person you meet. Of course, the superior asian brain in your head should be able to figure that out for yourself, I imagine.

thefatasswilly's picture

You concern yourself with yourself? So . . . you are not at all worried about your family, your own flesh and blood?

You do not give a shit about your cousins? You couldn't give a shit less about your race, the ones closest to you genetically?

Do humanity a favor and do not reproduce. Imagine the sort of father you would be; imagine how your kids would turn out.

Tom G's picture

You could just change the argument and focus on one throw-away hyperbolic comment. Oh, that's what you did.

Of course I care about my family. I care less than that about my cousins. And I care as much for asian american strangers as I do my white american 'brothers' who I do not know -- ie., not much.

I certainly don't care if unemployment among whites is higher than unemployment among asians in America. Is my family taken care of? Yep. You're the one bragging about racial differences in unemployment as if that makes your brain superior to every white person's brain you encounter.

Would you prefer we talk about poverty rates among asians worldwide compared to poverty rates of whites? Does that mean I'm going to assume that I'm smarter and wealthier than every asian I meet? Absolutely not, but the comparison between the above assumption and your specious argument is pretty solid.

Dr. Sandi's picture

Apologies, Fats. Your experience is your experience. Personally, I just don't 'get' platinum.

Now silver is both a fine metal and a great horse.

living on the edge's picture

I agree, platinum doesn't excite me. When the masses wake up, it will not be platinum that they buy. 

StychoKiller's picture

Once Au and Ag become unavailable at any price, it'll be any port in the "perfect" storm...

thefatasswilly's picture

Hm. Just exercising contrarian thought. I'm loading up on silver and thinking about picking up a little bit of platinum just for shits; thus, asked females because of jewelery etc.

What do you mean when you say don't "get" platinum?

Dr. Sandi's picture

Well, platinum is obviously a high grade investment metal. But I watched the market for awhile and it seems more like it's controlled by two guys named Vinnie than actual market forces.

Now that I type it out, I guess the platinum marekt seems too much like the stock market, and I've already received burns over 90% of my body in that place, so I'm a little shy of anything even a little exotic.

Silver, they made coins out of when I was little. Gold, they made teeth out of when I was bigger. Those, I feel safe with.

Platinum just feels too trendy for comfort.

thefatasswilly's picture

Thank you for the insight. I forget that young women tend to be quite trendy.