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Kiopa_Matt · 03-14-2011, 07:35 AM

I understand that, but nonetheless, you seem to be going under the assumption that all currencies will cease to exist, which just isn't going to happen. You're not about to buy a water filtration system with a few shavings off a gold bar, for example. At some point, you're still going to have to transfer that gold into currency. Whether that's USD, EUR, YEN, or some new world currency, it doesn't matter.

Let's use your island and coconut analogy. Joe is living on a nice island, and coconuts are cheap at $0.10. Yet, due to the threat of global warming, Joe and his friends decide to buy a bunch of gold. Joe gets himself $50 worth of gold, so he can now buy 500 coconuts.

Everyone else on the island catches on, starts buying gold too, but there's only so much gold so it raises the price, and Joe can now buy 800 coconuts with his gold. Great, right?

Earthquake hits, tsunami floods the island, and wipes out 80% of the coconuts. Now instead of $0.10, coconuts are $4. People begin realizing they can't afford $4 coconuts on their wage, and when they get hungry, decide they have no choice but to sell the gold that's under their mattress.

At first, everything is great, and people are getting lots of coconuts for their gold. After a month or two though, Joe ends up broke, and decides he has to trade his gold in for coconuts. He goes to the merchant, who says, "man, I already have about 6kgs of gold sitting in the back room. I'll give you 40% what you paid for it. Take it or leave it.". Since Joe is starving, he has no choice but to accept it.

You said yourself, gold relies on a supply and demand system too. What happens when people cash in their gold in mass, and the supply greatly increases? Your gold isn't going to get you as much as it once did. That, and if you want to use your gold, you're still going to have to exchange it into a currency of some kind.

03-14-2011, 07:35 AM
Kiopa_Matt Confirmed User Industry Role: Join Date: Oct 2007 Posts: 1,448	I understand that, but nonetheless, you seem to be going under the assumption that all currencies will cease to exist, which just isn't going to happen. You're not about to buy a water filtration system with a few shavings off a gold bar, for example. At some point, you're still going to have to transfer that gold into currency. Whether that's USD, EUR, YEN, or some new world currency, it doesn't matter. Let's use your island and coconut analogy. Joe is living on a nice island, and coconuts are cheap at $0.10. Yet, due to the threat of global warming, Joe and his friends decide to buy a bunch of gold. Joe gets himself $50 worth of gold, so he can now buy 500 coconuts. Everyone else on the island catches on, starts buying gold too, but there's only so much gold so it raises the price, and Joe can now buy 800 coconuts with his gold. Great, right? Earthquake hits, tsunami floods the island, and wipes out 80% of the coconuts. Now instead of $0.10, coconuts are $4. People begin realizing they can't afford $4 coconuts on their wage, and when they get hungry, decide they have no choice but to sell the gold that's under their mattress. At first, everything is great, and people are getting lots of coconuts for their gold. After a month or two though, Joe ends up broke, and decides he has to trade his gold in for coconuts. He goes to the merchant, who says, "man, I already have about 6kgs of gold sitting in the back room. I'll give you 40% what you paid for it. Take it or leave it.". Since Joe is starving, he has no choice but to accept it. You said yourself, gold relies on a supply and demand system too. What happens when people cash in their gold in mass, and the supply greatly increases? Your gold isn't going to get you as much as it once did. That, and if you want to use your gold, you're still going to have to exchange it into a currency of some kind. __________________ xMarkPro -- Ultimate Blog Network Management Streamline your marketing operations. Centralize management of domains, pages, Wordpress blogs, sponsors, link codes, media items, sales and traffic statistics, plus more!