Gold As A Medium Of Exchange After Fiat Money Destruction

Naam · May 12, 2012

http://money.cnn.com...rency/index.htm

Read this. I know it's only CNN but I figured a second rate source like them would be good enough for TV.

nobody doubts that this Utah law exists, in fact is was mentioned months ago in this thread. doubtful, respectively impossible is that one can actually pay in a supermarket with gold or silver.

Naam · May 12, 2012

As many an action movie shows, in times of complete breakdown of society as we know it, guns and bullets are more effective for getting hold of the goods you need, than a few gold coins would be...

or carrying a few gold coins safely to a store and then the goods bought safely home

farang000999 · May 12, 2012

I think some of you guys living in fear of international collapse need to grow a pair of testicles.

Yes, some national economies will need to readjust, to recalibrate, but that's been going on ever since the Romans and Greeks minted coins. , The gold notion is predicated on there being a systemic worldwide financial collapse. That;'s about as likely as me waking up naked with a katoey. Aint gonna happen. In my case, I have a sharp eyed broomstick flyer keeping an eye on me. In the case of the world economy, there are too many central banks working together. Despite all the negativity we can read about in the media, when push comes to shove, the central banks of China, Russia, the EU, and the USA all come together because they know that if one goes down, they will all suffer.

Do you remember what happened at the peak of the financial crisis, when there was a real fear that the USD would collapse? The Australia Canada, Sweden, the UK and the EU central banks went to work. Even the Chinese were obliged to prop up the USD. The world is too integrated and too dependent on each other to allow such a thing to happen.

Geriatrickid I am not expecting hyperinflation or anarchy, what I am expecting is to see substantial inflation, +5% annually. This is a substantial decrease in the purchasing power of your money. My expectation is that gold will meet or beat inflation.

Look at what you are saying, "they are propping up the dollar"... and how do they do that?... By printing their own currency and buying dollars. It is a race to the bottom. Everyone wants a weak currency. There is no magical cure all. Pain is coming.

Edited May 12, 2012 by farang000999

gregb · May 12, 2012

In case of hyperinflation, you could make use of gold by paying for larger amounts of other commodities, and exchange those for food or other goods.

I had thought of this too, and it is possible, though it can be an inconvenience if you don't really need the commodity that you exchange your gold for. You could buy a lot of food at once with a single bar of gold, but you'd need space to store it, and you'd want to consume it all before they expire to prevent wastage.

I'm thinking that very small coins would be the most practical form of gold as a medium of exchange as opposed to bars. So what are the smallest coins around in Thailand? I've read that 1/20th of an ounce is available in other countries.

There was a discussion on Kitco around last year about the smallest practical gold denomination. The consensus was gold dust was probably the most practical, small form of gold. I remember one guy stated that is was possible using a low surface tension solvent such as an oil or alcohol to measure volumetric displacements of around 10 microliters on extremely fine graduated cylinders. Combined with a good digital scale, that is sufficient resolution to allow you to verify with low tech methods that the substance you were given was in fact gold down to about a gram. Of course, if the dust is very fine you may have to use a good filter to recover it from the solvent.

Low tech is important, because if you wanted to use an idea like this in a market place setting, it would require everyone to be able to determine with confidence that the gold was real gold. Using dust and paying for an item would go something like this: 1g of gold dust verified to be real gold. From that, the vendor extracts the mg or even ug of gold necessary to complete the purchase, and returns the remainder of the gold gram to the customer. This system would require everyone to have at least 1g of gold at all times to facilitate the transaction, and that may turn out to be impractical.

Personally, if it is going to happen at all, the more likely scenario in my opinion is that something will develop similar to the food court system here in Thailand. You go to a booth with proper and expensive equipment and exchange your gold for vouchers. You spend vouchers in the market, and then you go back to the exchange booth to retrieve the remainder of your gold you didn't spend. The exchange booth could be compensated by rent from the vendors, so no need to resort to a transaction fee. Do keep in mind that as industrialization winds down and the overproduction of "stuff" is resolved, prices of everything will start to rise and the number of people on the planet will be reduced. Eventually, it would be possible to get back to using coins and realistically sized gold pieces as they did for thousands of years.

But in the hypothetical scenario where we need to use gold directly with the 7 billion people, the amount of gold for ordinary transactions would be vanishingly small and require some creativity on how to make it work.

g00dgirl · May 12, 2012

As many an action movie shows, in times of complete breakdown of society as we know it, guns and bullets are more effective for getting hold of the goods you need, than a few gold coins would be...

Not just action movies, I suppose recent riots in the world showed it, too.

Land to live on, ideally with a clean water source, agricultural land, animals, a fortified building on a hill, weapons, a big family / clan, trusted people, gold, silver, even iron, other metals, tools for construction, agriculture, machines, skills, knowledge, ideally one has all that.

If you are weak, alone and can't defend yourself, others might take your gold off you easily.

farang000999 · May 12, 2012

If countries and their central banks feel the need to hold some gold, why shouldn't we?

Kind of funny when people say gold is a barbaric relic yet the ECB still feels the need to list it as the first item on it's balance sheet.

hyperdimension · May 12, 2012

As many an action movie shows, in times of complete breakdown of society as we know it, guns and bullets are more effective for getting hold of the goods you need, than a few gold coins would be...

If countries and their central banks feel the need to hold some gold, why shouldn't we?

Kind of funny when people say gold is a barbaric relic yet the ECB still feels the need to list it as the first item on it's balance sheet.

If central banks had 100% confidence in the power and longevity of the fiat money that they magically create out of thin air, then they wouldn't need to be holding any amount of such a barbaric relic as it would be such a waste of space and manpower.

So the fact that central banks are hoarding vast amounts of gold tells us that they are fully aware that their own fiat money is crap and will only be able to store value up until the day that most of the population loses confidence in it. They see gold as the "real" money, whilst the electronic money that that they conjure up by typing numbers into a computer or the paper / plastic money that they print and put into circulation is just play money for the little people (the majority of the population).

Edited May 12, 2012 by hyperdimension

hyperdimension · May 12, 2012

There was a discussion on Kitco around last year about the smallest practical gold denomination. The consensus was gold dust was probably the most practical, small form of gold.

It's strange that they found gold dust as the most practical form, as by your detailed description, it sounds quite impractical. It appears that you also agree:

that may turn out to be impractical.

Though we could see in the video earlier in the thread that the poor Zimbabweans used small granules to purchase their basic needs. I couldn't see how they actually measured amounts as small as 0.1g though, nor how the vendor verified that what was being paid was real gold.

Personally, if it is going to happen at all, the more likely scenario in my opinion is that something will develop similar to the food court system here in Thailand.

That sounds just like gold certificates. So there would need to be standards set, for example so that people can't make fake certificates. It could be implemented, but more likely during peacetime and good governance than in crises.

Edited May 12, 2012 by hyperdimension

hyperdimension · May 12, 2012

As many an action movie shows, in times of complete breakdown of society as we know it, guns and bullets are more effective for getting hold of the goods you need, than a few gold coins would be...

or carrying a few gold coins safely to a store and then the goods bought safely home

That could be a realistic scenario one day. Not everyone is expecting continuous total anarchy and lawlessness.

Using violence to take whatever you need or want from others can one day backfire.

Edited May 12, 2012 by hyperdimension

hyperdimension · May 12, 2012

http://money.cnn.com...rency/index.htm

Read this. I know it's only CNN but I figured a second rate source like them would be good enough for TV.

nobody doubts that this Utah law exists, in fact is was mentioned months ago in this thread. doubtful, respectively impossible is that one can actually pay in a supermarket with gold or silver.

The passing of this law is definitely a step in that direction.

letitbe · May 12, 2012

I can't imagine there are many TV members who own 'bars' of gold.

I recall being in a heated discussion with a silver obsessive on another 'financial' forum recently in which he poured scorn on anyone else who didnt share his vision that his was the only way forward, all other investments were stupid, the world was going to end and his huge stash of silver coins would save him from armageddon.

I asked him how deep his commitment to silver was. It seems he was buying one ounce a month - a heady 20 quid or so - and that he was proudly the owner of no fewer than 80 coins.

Absolute chump change.

Ive noticed this a lot with single asset class obsessives. When you drill down to their exposure, it's usually next to nothing.

i agree its peanuts but IMO if thats all you can afford better to have a little rather than none. We have 6 1000 onz silver bars and around 300 baht of gold in various forms being coins, swiss gold, thai 5 10 and 20 baht bars and lots of other bits. Of course its unlikely that fiat money will go completely but it will probably be deflated (or do i mean inflated) as one of only ways the west can clear its massive debt. If/when and I think it will the day comes when many fiat currencies crash almost totally their will be a new money either backed by gold or something else and then anyone with gold can simply sell 1 onz or so or 5 baht and exchange it for a bit of new fiat money or of course with silver its easier to pa with a single silver coin. You can get gold coins here of 1/4 baht which although far to much to buy a single plate of food is enough at moment for around 600 kg of rice. It is just an insurance policy. We went from no gold or silver to now holding around 30% of our assets in gold and silver rest being in property and shares. I would not keep more than 3 months spending in any fiat money at any time. My wife occasionally suggests we might sell some of gold and silver to which I reply and put it into what worthless fiat money, property that can easily crash 50% or more, shares that can easily crash 80%. All those falls have happened in past and can happen again.

letitbe · May 12, 2012

no small gold coins available in Thailand. ½ Baht weight 965 gold with difficulties and premium available. in Europe 1 gram gold bars (~1/32nd ounce) are available but you pay a fancy premium above spot.

nonsense 1/4 baht coins are available and every time i buy 10 or 20 baht bars i also get 4 or so of 1/4 baht and 1/2 baht coins theirs also 1/8th onz chinese hats and premium is only 100 baht a piece so not worth worrying about.

farang000999 · May 12, 2012

where do you buy letitbe?

hyperdimension · May 12, 2012

1/4 baht coins are available

1/4 baht gets the coin value down to almost 6k baht, which would be much more convenient for buying small items or paying bribes than larger sizes.

How much more than the spot price did you pay for these 1/4 baht coins?

How small are they?

Could there be a market for gold coins as small as 1 baht coins or even those annoying 50 or 25 satang coins?

Edited May 12, 2012 by hyperdimension

letitbe · May 12, 2012

where do you buy letitbe?

company called Ausiris they have branches in several places I use BKK branch. Its not a gold shop does not sell jewelry only gold bars coins etc and also sells swiss gold but you need to become a member at most branches. They are gold dealers. Ive also seen 1/4 baht coins in a gold shop in Chinatown BKK but cant remember name. you can google to get their web site.

letitbe · May 12, 2012

1/4 baht coins are available

1/4 baht gets the coin value down to almost 6k baht, which would be much more convenient for buying small items or paying bribes than larger sizes.
How much more than the spot price did you pay for these 1/4 baht coins?

How small are they?

Could there be a market for gold coins as small as 1 baht coins or even those annoying 50 or 25 satang coins?

premium is 100 baht a coin also have 1/2 baht and 1 baht bars and coins at several places

Naam · May 12, 2012

no small gold coins available in Thailand. ½ Baht weight 965 gold with difficulties and premium available. in Europe 1 gram gold bars (~1/32nd ounce) are available but you pay a fancy premium above spot.

no small gold coins available in Thailand. ½ Baht weight 965 gold with difficulties and premium available. in Europe 1 gram gold bars (~1/32nd ounce) are available but you pay a fancy premium above spot.

nonsense 1/4 baht coins are available and every time i buy 10 or 20 baht bars i also get 4 or so of 1/4 baht and 1/2 baht coins theirs also 1/8th onz chinese hats and premium is only 100 baht a piece so not worth worrying about.

what kind of "coins" are these? please more details. i have enquired, but no goldshop in Pattaya and Chonbury knows about any small available coins which should be more sturdy than the half-baht "bars".

endure · May 12, 2012

As far as finance goes I'm a complete simpleton but one thing has always puzzled me. People talk about gold as though it has some intrinsic value whilst paper has none. They're both just physical things. It seems to me that the only reason gold is more valuable than paper is because people believe so. If Apocalypse arrives which is more likely to fill your belly - paper or gold? Or neither?

flying · May 12, 2012

As far as finance goes I'm a complete simpleton but one thing has always puzzled me. People talk about gold as though it has some intrinsic value whilst paper has none. They're both just physical things. It seems to me that the only reason gold is more valuable than paper is because people believe so. If Apocalypse arrives which is more likely to fill your belly - paper or gold? Or neither?

I think those that hold gold as more than a hedge....meaning the types you are speaking of....see Fiat as an IOU where as gold

is nobody's marker.

As to which will fill your belly.....yes neither is edible but one can be traded for food after monetary collapse & one cannot.

disclaimer: I am not predicting monetary collapse but am pointing out what has worked in countries that did suffer collapse or hyperinflation. But it is not limited to metals. Trade-able items work just as well.

Edited May 13, 2012 by flying

flying · May 13, 2012

I can't imagine there are many TV members who own 'bars' of gold.

Naam · May 13, 2012

If central banks had 100% confidence in the power and longevity of the fiat money that they magically create out of thin air, then they wouldn't need to be holding any amount of such a barbaric relic as it would be such a waste of space and manpower.

If central banks had 100% confidence in the power and longevity of gold, then they wouldn't need to be holding any amount of "worthless fiat money".

an interesting fact is that a bankrupt country like Greece holds 81%, the semi-bankrupt country Portugal holds 89% and shaky Italy holds 73% of its reserves in gold. that indicates that those central bankers know their jobs.

seemingly stupid are the policy makers of the Chinese central bank which only holds ~2% of its reserves in gold and 98% in "worthless fiat money". but then those of us who live in Asia, especially in Thailand, are well aware that the Chinese have no idea how to do business. in our host country ethnic Chinese are mostly doing low paid menial jobs, such as gardeners, cleaners, helpers on construction sites, dishwashers in restaurants and soi dog chasers. the economies of mainland China, Taiwan and Singapore have been, are and will always be in shambles because Chinese lack any business acumen. is this perhaps caused by is a genetic defect?

starrdog · May 13, 2012

I see gold as intergenerational/portable wealth rather than a barter item. Still, if you're concerned about bartering with gold, maybe look into buying a chain where you can remove individual links.

Posted with Thaivisa App http://apps.thaivisa.com

flying · May 13, 2012

I see gold as intergenerational/portable wealth rather than a barter item. Still, if you're concerned about bartering with gold, maybe look into buying a chain where you can remove individual links.

Posted with Thaivisa App http://apps.thaivisa.com

Not far from the truth

I remember reading about Argentina during their collapse.

There was an interesting account from someone living through it. What you mentioned

is very close to what he said. He said that they dealt with junk gold not gold coins.

smaller items like rings, thin chains etc.

It was an interesting read

seminomadic · May 13, 2012

To answer the OP's questions and not get bogged down in prognostication, I'd recommend www.kitco.com where you can buy bullion coins. The lowest denomination I see right now in gold is 1/20th an oz- the coins are currently around $106 for Canadian Gold Maple 1/20th ounce coins. Still not the most practical unless you're buying groceries in bulk but I'll attest to Kitco's professionalism in delivering its product.

Hope this helps.

Naam · May 13, 2012

To answer the OP's questions and not get bogged down in prognostication, I'd recommend www.kitco.com where you can buy bullion coins. The lowest denomination I see right now in gold is 1/20th an oz- the coins are currently around $106 for Canadian Gold Maple 1/20th ounce coins. Still not the most practical unless you're buying groceries in bulk but I'll attest to Kitco's professionalism in delivering its product.

Hope this helps.

and Kitco delivers the coins without any problems to Thailand? assuming that the OP lives in Thailand.

flying · May 13, 2012

To answer the OP's questions and not get bogged down in prognostication, I'd recommend www.kitco.com where you can buy bullion coins. The lowest denomination I see right now in gold is 1/20th an oz- the coins are currently around $106 for Canadian Gold Maple 1/20th ounce coins. Still not the most practical unless you're buying groceries in bulk but I'll attest to Kitco's professionalism in delivering its product.

Hope this helps.

and Kitco delivers the coins without any problems to Thailand? assuming that the OP lives in Thailand.

I do not get the impression the OP is interested in buying gold.

seemed more like a curious post dealing with a mad max type scenario.

Posters like this should save their money & buy bullets instead

PS: for those looking seriously at fractional coins APMEX is a good site & does deal internationally.

But Thailand is not on their drop down list

Edited May 13, 2012 by flying

hyperdimension · May 13, 2012

I do not get the impression the OP is interested in buying gold.

seemed more like a curious post dealing with a mad max type scenario.

I am interested in buying gold, but I haven't been in a gold shop yet. My reason for starting this thread was to learn more about it from those with more experience and knowledge, particularly the practicalities.

I have plenty of US dollars unproductively lying around in bank accounts, most of it made from foreign currency exchange trading profits over a few years, and are deteriorating in value due to debasement of the US dollar. In order to counter the debasement, I need to put the cash to work, i.e. invest it in assets that appreciate in value. The problem is in deciding on what to invest in. Gold seems to be a common response. So I currently hold some "paper gold" via a foreign currency exchange broker, which are basically just some electronic leveraged positions. I don't think the positions give me any right to physical gold. If the broker goes out of business those positions would probably be worth nothing. So holding some physical gold seems to make sense.

Posters like this should save their money & buy bullets instead

I don't own a gun though.

PS: for those looking seriously at fractional coins APMEX is a good site & does deal internationally.

But Thailand is not on their drop down list

I had a look at the APMEX web site and it seems it caters primarily to collectors. I'm not interested in paying premiums for fancy stuff like nice artwork or rare old coins. Do they sell just small basic gold coins? Do gold coins without any artwork exist? I just want the chemical element (Au) in small "standard-sized" pieces.

I think this is the smallest gold coin I've found so far, just 0.016 ounces (almost 1/60 ounces): 2012 Mini Roo 0.5g Gold Coin. Though the cost (54.36 USD) is more than twice what you'd pay based on the gold content and spot rate. 0.016 * 1600 = 25.6 USD

Edited May 13, 2012 by hyperdimension

flying · May 13, 2012

I am interested in buying gold, but I haven't been in a gold shop yet.

I had a look at the APMEX web site and it seems it caters primarily to collectors. I'm not interested in paying premiums for fancy stuff like nice artwork or rare old coins. Do they sell just small basic gold coins? Do gold coins without any artwork exist?

Sorry if I misunderstood.

If your interested in gold & live in Thailand you should buy in Thailand IMO

APMEX sells all types even scrap. Plain coins/ Fortuna bars etc & many things stamped plain Apmex with lowest prems of course.

But again if your in Thailand buy there is my advice.

What you buy & why ...should be thought out before buying...also just my opinion.

Good Luck

hyperdimension · May 13, 2012

The lowest denomination I see right now in gold is 1/20th an oz- the coins are currently around $106 for Canadian Gold Maple 1/20th ounce coins.

The premium seems to be around 33% above spot, which is much less than that of the 2012 Mini Roo 0.5g Gold Coin.

hyperdimension · May 13, 2012

an interesting fact is that a bankrupt country like Greece holds 81%, the semi-bankrupt country Portugal holds 89% and shaky Italy holds 73% of its reserves in gold. that indicates that those central bankers know their jobs.

So are their gold holdings the only thing they have left that is of real value?

seemingly stupid are the policy makers of the Chinese central bank which only holds ~2% of its reserves in gold

Why do they feel the need to hold any gold at all?

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