Gold Standard

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How is a piece of gold, or piece of diamond, or piece of rock, different?

At the end it is just your faith that people with give you certain amount of really useful things for your piece of gold.

I dont know why its different, i agree that it is just faith that something holds value in this way. The value probably comes from knowing that they know someone else also has value in it. Also knowing that it cant die, rust away, rot, corrode or diminish any way.

red ochre ,
salt
barley,
copper,
peppercorns,
large stones ,
decorated belts,
shells,
alcohol,
cigarettes,
cannabis,
candy,
wampum,
maize,
iron nails,
beaver pelts,
tobacco

have all been used as money.
I think money is always an abstraction.

-Jake

Money is an abstraction. It's an abstract means of carrying value. The problem is that when people fail to grasp that abstraction, they cling to the shiny goodies and rather than lofty concepts such as fiat money, they abandon it, devalue it, and cling to objects like a surrogate teat.

That is its trade value. What people are willing to give you in exchange.

ruveyn

Gold tumbles as global markets sink

Spooked investors dump the metal to raise cash.



Gold prices were tanking Tuesday, falling below $1,400 as a nuclear disaster in Japan continued to unfold.

Gold prices have shed as much as 2.5%. Investors buy gold as risk protection to sell during times of disaster, and that's exactly what global markets, most heavily Japan's, are doing.

Gold for April delivery was sinking $26.70 to $1,398.20 an ounce at the Comex division of the New York Mercantile Exchange. Gold has traded as low as $1,380.70, while the spot gold price was plummeting almost $30, according to Kitco's gold index.

The list of bad headlines mounted Tuesday with investors trying to figure out what the worst-case scenario for Japan could be. Prime Minister Kan announced that radiation levels near four exploding nuclear reactors are very high. Bank of Japan pumped an additional 8 trillion yen, or $98 billion, into the market. The Nikkei was down 14% during trading.

On the surface, gold should be rising because of its role as a haven investment. However, it seems investors are using gold as currency, selling it to raise cash during this crisis.

China and India are by far the largest gold consumers in the world, and Japan saw fourth-quarter investment fall 11 tons in 2010 as jewelry demand plummeted 31% in the same time frame, according to the World Gold Council.

But Japan still has gold to sell. Its central bank holds 765.2 tons. That is not to say the bank is selling, but Japan still represents a big player in the market.

"I think (Japan is) unwinding a lot of carry trades," says Phil Streible, senior market strategist at Lind-Waldock. "They're selling a lot of their gold assets, their silver assets, and any other non-liquid asset, getting out of it, trying to repatriate back to Japanese yen ... cash is king right now to them."

Streible thinks that after a week, investors will have a better assessment of the damage in Japan, which might help buoy gold prices.

Gold prices broke below $1,400 an ounce Tuesday, a key psychological support level for most investors. The downward move triggered sell stops, where positions are sold automatically to protect gains.

Typically this kind of selloff in gold would trigger bargain hunting, which is still a possibility, but investors worldwide are contending with massive losses in equities. The Dow Jones Industrial Average ($INDU) was tanking triple digits, forcing traders to cash in their gold positions to cover losses.

Analysts are citing $1,380-$1,385 as the next critical support level for gold. Gold could still get a boost later today when the Federal Reserve releases its interest rate decision at 2:15 p.m. EST.

Rates are expected to remain unchanged at historically low levels, but gold will take its cue from any hints that the Fed might curb its $600 billion bond buying program, which would send prices even lower, or leave the door open for QE3, which would support higher gold prices.

Headlines out of Bahrain could also trigger safe haven buying and bargain hunting as Saudi police are now clashing with protesters as the Bahrain ruling Sunni minority tries to control civil unrest.

Also, although gold prices are down almost $40, the percentage move is less than 3% compared with the Nikkei's 10.5% loss.

Silver prices were also in free-fall, losing $1.41, or 4%, to $34.44 an ounce. Anthony Neglia of Tower Trading says the "silver is not going away anytime soon" and is standing by his upside target of $50 mid-year. But Neglia does warn that investors need to get used to volatile $1-$2 price swings.

Gold mining stocks, a risky but potentially profitable way to buy gold, were tumbling along with the metal and broader equities. Barrick Gold (ABX) was falling 3.4% to $49.28 and Newmont Mining (NEM) was down 1.9% to $51.35. Randgold Resources (GOLD) was losing 3.2% at $71.14 and AngloGold Ashanti (AU) was tumbling 3.7% to $45.28.

http://money.msn.com/market-news/defaul ... 1be21c1a59

Some people sold something to raise capital to pay off creditors. What else i only scanned the copy/paste.

Not so. In a collapse of society (presuming, of course, that the currency becomes worthless), nobody would trade for the old currency because it's lack of value is known....more so, at the rate that notes have been produced, it's worth less than the paper it's made from. Gold and silver (especially if minted to a given purity) is known to be a limited quantity and not easy to find/produce.

If the USD collapses, any medium of exchange that replaces it would need to have limitations in quantity or it would hold no value in trade without having to have mass quantities of it.

You best have limitations in population if you're going to limit the quantity.

The USD collapses if and only if nobody believes she can exchange anything with USD. You are just presupposing a case when USD and all currencies fail (as a matter of fact gold did not replace the Zimbabwean currency) but not gold. Whether gold is rare or not is irrelevant.

Again will you give me 1 kg of flour for 1 kg of gold if you know that everyone except you will be gone tomorrow?

I guess it wasnt available. So they just began to barter goats and bananas instead.

Either you believe in the trade value of some item or you go back to the most primitive barter trade.

You work with what you have. Nothing is as polar as you describe it.