Try taking a gold bar down to the gas station and buying a tank of gas and a hot dog. Do you have change for this? A couple of doubloons and a nugget?
It's battering. Gold is a commodity. So if things really did get that bad, gasoline, food, water or anything else (batteries), would be a much better bargaining medium.
That's what people don't understand when they make this argument. If you hold the physical gold, the value is up to debate and barter, your $1000 worth of gold just became $50? If you hold certificates, then it's just worthless paper.
So the scenario where gold works best is short of total collapse and in which you can get it converted to some foreign currency that is still accepted in you home country.
Again, in New Orleans, people didn't suddenly break out doubloons and start normal operations, so the short term is out.
Where is gold a reasonable investment for the "doomsday" scenario? I'd really like to know, because logically I can't think of a good reason to hold gold.
You entirely missed the point. Notice the little qualifying phrase, "given time"? Yes, in a crisis, gold is not worth much to you. But if you want a method of retaining wealth that is guaranteed to be convertable in almost any country in the world, you need gold.
I question. You clearly take that as virtually axiomatic, but I question. Gold's ultimate value is that it is pretty and shiny, and industry has produce metric shitloads of prettyshiny since the last time gold had any real independent value as uniquely prettyshiny.
Your gold is only worth what people will give you in return for it. If society collapses, who is going to trade you gold for food? You'd better hope enough people buy your propaganda about gold's value because it's going to be your only hope; the market for gold jewelry is going to be pretty small and effectively saturated.
Gold has no value anymore. Yes, historically it was valuable, but times have changed. A lot.
God help those who are long on gold once we start asteroid mining. Be sure to dump your gold holdings before then, ideally several years before; once the market figures out what that means gold will plunge even before the asteroid gold hits the market. (By "plunge", I mean that I could see it losing 99% of its value in less than a year. No joke.)
No. Gold's value is in its intrinsic suitability as an instrument of exchange, far more than any other substance on earth. Can you point to any time in the history of civilization where gold has been worthless? I mean, really, any period of time from, say, the days of the Babylonian empire until today? Just what about today's times have changed the intrinsic value of gold? See my other post in this thread for just what that value is. It is by no means arbitrary.
This isn't like fiat currency where it's based on "our faith" like they taught us in school. It's expensive as it is because of a) some decadent people's actual demand for it b) other people's expectation for said decadent people's demand for it. Usefulness as a currency I suppose can raise the price, but only because there is an expectation of actual utility in the hands of a final consumer, somehow or other.
Really, I think gold is interesting because it's rare and thus coveted.
edit - no offense if you enjoy gold, I was just making sweeping generalizations for expediency
"Your gold is only worth what people will give you in return for it. If society collapses, who is going to trade you gold for food? You'd better hope enough people buy your propaganda about gold's value because it's going to be your only hope; the market for gold jewelry is going to be pretty small and effectively saturated."
Well, there's also expectation of future gold jewelry markets. Assuming we live like Mad Max until the end of time, sure, who needs gold. But if we expect things to improve later, with luxuries becoming a reality again, people holding lots of gold have it made.
No, it's not imaginary. Far from it. Gold is not like tulips in Holland. Not even remotely. It's value is in its scarcity, divisibility, and durability. Nothing else compares. Never has (unless you want to say Silver). That is why gold has been money for thousands of years, and that shows no signs whatsoever of changing. It is one thing that no matter what the markets do will still have value.
Is it an investment? No, and anyone treating gold as an investment is acting very foolishly. Gold is money, plain and simple. It has retained its essential value for centuries.
Scarcity does not equal value, if value is defined as "something that is useful." Perhaps the language is deficient in not making a distinction between inherent and assigned value.
Gold has real value as, for example, a material used in electronics. That is about it aside from aesthetics.
Additionally, humans ascribe (nonexistent) value to gold for the reasons you mentioned. You can certainly argue, as some others seem to, that being suitable for use as currency is value inherent but that assumes the necessity for currency. In the past, perhaps.
Correct. Scarcity does not equal value, and scarcity alone does not make a good currency. However, gold is not only scarce, but also durable, divisible, and portable. The unique thing about gold is that its value is actually in its intrinsic suitability as a currency, more so than any other substance on earth.
I can accept that with the stipulations that it is a very suitable material for currency, not necessarily the most suitable one; and that this is only true at certain early or unsophisticated stages of civilisation.
However, even then the unspoken and often ignored requirement is that there is something of real value that the currency can represent. This also ignores fluctuations in the perceived value of gold, which belies its valuation not being tied to its function as currency. Arguing that e.g. mining for gold is a service whose end product is currency, "consumed" by others is circular (but in reality that does not matter.)
I suppose it can simply be said that gold is considered to have value by common agreement; but that agreement is not irrevocable unlike some believe.
What's really amusing to me is when gold-nuts rail against modern currencies as fiat currencies. It seems to me gold is just as arbitrarily denoted a currency as any other, it just has no explicit guarantor.
EDIT: Also, why is it so hard to imagine taking care of the debt? Or is it because he has little faith in taxpayers' willingness to pay into it?
The difference between gold and fiat currencies is that gold cannot be devalued through inflation. We don't have a machine that can manufacture gold, but central banks can 'manufacture' as much new fiat currency as they like.
I imagine that's why Scott's friends are buying gold. Not because they think the end of the world is nigh, but because they think the dollar is going to have to be devalued to sidestep the crushing debts that have been run up.
