Is gold really still the benchmark for all currencies?

MystagogosMystagogos Posts: 5 Tin ✭

I hope everyone reading this is doing well. Lots of questions to follow, hopefully the sorts of questions other relative newcomers may find useful.

Last year I purchased some gold from this site because it seems a sensible thing to do. However, like many out there, I do not really know what I am doing. Lately, time has been available and I aimed to get a handle on the basics and begin my self-education in finance, lensing the basics through focusing on gold. Specifically, I went through the gold and silver price charts here, stretching back 1 and 10 years: US$, Euro, GBP, JP¥ and HK$. I was working under a couple of assumptions: i) gold maintains its value over time and therefore remains (informally, if not necessarily formally) a true judge of what a nation's money is to be valued at, and ii) the numbers of any currency per se are not so important (like most people I can 'feel' my home currency, but not any other), what is important is the ratios between them.

Therefore, and in no particular order, here are some questions raised by my recent analysis. Here goes:

i) Am I right assuming that gold is a snapshot diagnostic tool with which to judge a nation's economy? This, because gold seems to have something to say about all currencies. T
ii) Gold has little practical use outside of jewellery. This is often said as something against it; but this maybe its USP, in that practical demands might skew its 'pure' price, unlike silver which along with being a precious metal also has industrial applications. Can this be said also of platinum and palladium? (And what is palladium? And why is referencing its price?)
iii) Looking at the 10-year charts, the US$ is now 71% of its value against gold, the Euro 58%, the GBP 50%, the JP¥ 70%, and the HK$ 71%. What does this suggest about the individual national economies? What does it also suggest when the ratios over the same period show that the GBP is only 70% and 86% against the US$ and Euro respectively, when everything is referenced against gold?
iv) That Japan and Hong Kong have maintained decent values against gold, whereas the Western world has not so much - what does this suggest?
v) The above ratios sometimes, and sometimes not, say the same thing when lensing the ratios through silver instead of gold. Again, is it wise to take into account silver's industrial applications? How is the silver market different from gold? And how to take this into account when judging a national currency vis-a-vis each the general economies.
vi) Are these types of questions the right way of approaching a foundation for a financial education? How to use this kind of knowledge as a platform when drilling down into various sectors worldwide? (For instance, I wouldn't mind looking into, say, the biotec industries.)
vii) Reading websites like King World News there always seems to be much talk about government interference in the price of gold. While all this apparently makes sense, I could be sceptical and say this is mere 'conspiracy theory' talk. Can anyone elaborate and give a fuller picture on this?
viii) It would be interesting to see charts of gold vs. Bitcoin, oil, and the Saudi and Israeli currencies. Can anyone supply?

A lot here. Thank you for your patience reading through. I look forward to your answers.



  • GoldNRollGoldNRoll Posts: 89 Copper ✭✭
    @ Mystagogos To start with, gold has important industrial uses in medicine, space and aviation industries: - Other uses

    Comparing gold with silver, compare a 100 years old pure silver spoon of our grand-grand parents with a 3000 years old pure gold spoon made by Egyptians: golds is better preserved :smile:

    On the fact that governments influence the price of gold: yes they do. It's not a conspiracy, it's just a matter of offer and demand and it's all transparent. When several governments sell over a period of several months hundreds if not thousands of tons of gold, the price will go down. That happened in 2009-2014. Even the IMF sold hundreds of tons...
  • MystagogosMystagogos Posts: 5 Tin ✭
    Thank you for coming back. I am particularly interested in the questions relating to gold being a reasonably good diagnostic of antion's currency. As said, GBP has dropped against almost all currencies these last ten years, evident when everything is translated through the price of gold (which officially no one does, instead just straig?ht-comparing one currency against another). Is lensing macro-economics through gold a decent platform upon which to build a financial education?
  • PowerlunchmoneyPowerlunchmoney Posts: 250 Bronze ✭✭✭
    Gold is a known value in terms of its energy/extraction/scarcity/timelessness. Currencies are a smokescreen. It's no wonder we need a diagnostic.

  • MystagogosMystagogos Posts: 5 Tin ✭
    So, in short, you're saying yes - that lensing macro-economics through gold, which officially is not how such things are presented to us, is the right way to go? Cool.

    Also, any similar charts referencing gold to oil, the Saudi and Israeli currencies, and in particular Bitcoin (and maybe other digital currencies) ?

    Thank you.
  • CryptoladyCryptolady Posts: 1 Tin ✭
    I'm wondering how we can use our gold/silver purchased to pay bills or make purchases. Admit I am new to this and I have purchased gold and silver. But if/when the USdollar goes away, we will need to use our metal to pay bills, etc. Any thoughts are appreciated.
  • SpontaneousOrderSpontaneousOrder Posts: 267 Bronze ✭✭✭
    @Cryptolady, you can get the Mastercard through your holding.
  • GoldNRollGoldNRoll Posts: 89 Copper ✭✭
    We can already use gold in closed circuit: Goldmoney clients can exchange products and services and pay with precious metals transfers between accounts.

    I develop a marketplace explicitly for this: Gold'N'Roll

    To have a mature global marketplace with payments in gold, I consider 7 axis of development:

    1) Gold cash - gold refiners should develop processes to cast gold bars and coins in very small quantities (milligrams), identifiable by security scan (search PAMP veriscan) so people can make small cash purchases. That would also allow for people to deposit gold cash without being charged for re-assay.

    2) Gold depositories like Goldmoney should work closely with local dealers to create a network of local shops globally, to deposit and withdraw gold cash.

    3) Gold depositories should work with large card issuers like VISA and MasterCard to include gold in the international standard for financial transactions; to create debit cards denominated in fine gold grams. In the 1st stage, those could be use only for online shopping with gold.

    4) Online payment tools with gold make online commerce with payment in gold possible so large marketplaces like eBay and Amazon should integrate payment in gold. Otherwise, Gold'N'Roll already does this :smiley:

    5) Gold depositories, card issuers and large merchants willing to accept payments in gold should work together with technology developers to create means for physical use of gold debit cards: compatible POS terminals and ATMs.

    6) A banking system based on gold may arise. That means the existence of accounts that are not 100% backed by gold and credit cards. Don't be scared by that, such a system has an intrinsic element that keeps it balanced: gold is a finite, physical commodity.

    An excellent book on this subject published by the American Institute for Economic Research:

    7) The last thing I would want to do with my gold is to pay taxes. But this may be the final step of gold acceptance as money.

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