The Mystery of Gold Explained : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Economics Explained, by Robert Heilbroner & Lester Thurow, ISBN 0-671-88422-0 (Page 137)

"How then, do we explain the worldwide rush to buy gold-a rush that raised the dollar price of gold from thirty-five dollars and ounce-its official price as late as 1971-to over eight hundred dollars an ounce in 1979, before it fell back again?

Once again, the economist offers no rational explanation for such a phenomenon. There is nothing in gold itself that possesses more value than silver, uranium, land or labor. Indeed, judged strictly as a source of usable values, gold is rather low on the spectrum of human requirements. The sole reason people want gold-rich people and poor people, sophisticated people and ignorant ones-is that gold has been for centuries a metal capable of catching and holding our fancy, and in troubled times it is natural enough that we turn to this enduring symbol of wealth as the best bet for perserving our purchasing power in the future."

(Page 138)

"In fact, anything is usable as money, provided that there is a natural or enforceable scarcity of it so that men can usually come into its possession only through carefully designated ways. Behind all the symbols, however, rests the central requirement of faith. Money serves its indispensable purposes as long as we believe in it. It ceases to function the moment we do not."

-- Paula (, October 18, 1999


in essence, then, gold has REAL or maybe just real Perceived (?) value at all times. History shows it's purchase power has been roughly the same for centuries. A suit of clothes today, 1860, 16xx, or 33AD all for an ounce. A months worth of groceries in all those times for an ounce. It does not necessarily have the highest growth potential but keeps you from losing too much purchase power in times of currency deflation or goods inflation. A gold bug is one who has lost faith in local currency or equities and believes the rest will also lose faith.

So it's good to own gold when local ( a relative term) economies are shakey but not always the best bet for accumulating material goods when costs are coming down or stock markets are booming.

Sound right?

-- toptxs (, October 18, 1999.


You may be interested in Mr. Greenspans view on gold.

-- (, October 18, 1999.

Even though Greenspan's article has a 1996 date on it, I'm sure that it is really what he wrote back in the '60s that has been quoted a lot. Before he went over to the dark side of the force.

The April 1996 date may be when it was posted there or something.

-- King of Spain (madrid@aol.cum), October 18, 1999.

Also the new Nobel Prize for Economics went to the gold advocate guy that basically planned the Euro/gold/oil currency...

Coincidence? I think not...


A fine suit these days like an Armani is $1,000 +...

My contention is that the status symbol nowadays is an SUV rather than a suit...

The cost?

$30,000 :)

-- Andy (, October 18, 1999.

Have you seen "Three Kings" where they give the Gold back and all go back to nowheresville...

Do you know who just got the Nobel Prize for Economics?

The guy that is behind the Euro/Gold/Oil new currency - a gold advocate...

No coincidences...

-- Andy (, October 17, 1999.

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"In the Robert Mundell speech for which Steve H provided a link, the laureate said as early as 1997 there would be a new gold market and that central banks would look to settling with gold at free market prices. He suggested that this would occur in the 21st century. Was it last year, the gave Prize was awarded to Black and Scholes -- and then LTCM -- where Scholes was employed -- promptly went under water? Now Mundell wins the Nobel Prize while the gold carry trade implodes. The former honed tools for statist economics; the latter honed tools for free currency and gold markets and a much-needed competitor for the dollar. One became the tools of the status quo; the other the tools for a new economy."

-- Andy (, October 18, 1999.


For serious economics, try some of the major works of Ludwig Mises and F. A. Hayek. Relatively speaking, Heilbroner and Thurow are court jesters, to put it politely.


-- Jerry B (, October 18, 1999.


court jesters - you forgot the prince of clowns himself, double ddecker...

-- Andy (, October 18, 1999.

"anything is usable as money, provided that there is a natural or enforceable scarcity of it so that men can usually come into its possession only through carefully designated ways"

sounds good. so you have faith in whom? Governments, or your fellow humans?

A dicey call, but I think you know which way it tilts:

Basically, you're going to be buying your goods & services from *people*, not from govs, so you better be sure they'll accept the "money" from you. You *trust* in their long-practiced acceptance of one or more "moneys", and you estimate that the current trading value of that money will not change radically, or at least is changing on a continuum that you may estimate and live with.

Now, to govs, your "trust" in them is that they won't slip in -- or deluge the marketplace -- with quantities of easily created "money" to cheat you of the labor or other value you've stored in the money you hold.

-- jor-el (jor-el@krypton.uni), October 18, 1999.

For wealth creation, let's not forget the importance of skills. A doctor, hunter, chimmney sweep, etc... have the basic skills needed in a post y2k world. My cash, gold and food would be better invested helping my friends whom are a doctor/nurse couple rather than my daytrader/insurance agent friends. Both couples are DWGI, but I have only told the doctor/nurse couple that we will help them out. They have skills I can broker out, and I have told them that is what I would do. They both laugh it off as being absurd, but when the hospital they both work at shuts down and they have no place to go for food, heat, water... then what? He may be called to an emergency MASH type of shelter or the hospital may be run with generators. If not, I will help them line up people in need of medical help. I have joked with him that he can let his $40K per year malpractice policy lapse after 1/1/2000, because people won't be looking to sue, they will only be looking for a chance to keep living.

In the end, I would like to have needed skills rather than cash and gold for the long haul.

-- Bill (, October 18, 1999.

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