Billyonaire:
Interesting, China and Russia just signed 2 multibillion Gas deals and you are talking Gold. China is stock piling gold, and with strategic arrangement, China can sell Russian Gold....

tpia6:
Always a very valuable commodity.

bookface:


Some will disagree - your biggest opponent will be Warren Buffet. As he puts it:


"It (gold) gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."


Buffet hammered on gold in his 2011 shareholder letter calling it an "unproductive asset." He said that assets like gold "will never produce anything, but are purchased in the buyer's hope that someone else will pay more for them in the future." He went on to say that the owners of assets like gold "are not inspired by what the asset itself can produce -- it will remain lifeless forever -- but by the belief that others will desire it even more avidly in the future."

tpia6:
Always a very valuable commodity.

ActivateKruger:


Gold is used to preserve wealth.... let's just say you're a Russian businessman and you have millions/billions of Rubles, the last thing you want to do is to have your wealth unpreserved because the value of the Ruble can depreciate at anytime taking down your wealth with it.


If a comet had to strike earth and stocks and currencies go crumbling, the last loaf of bread will be traded with gold and only those who have it will get to eat a slice.

bookface:


Gold is a pure speculative investment - much akin to gambling. The idea that it preserves wealth is nonsense. Last year alone, the value of gold fell by 28%.

The world has seen 2 world wars, a great depression, several recessions, earthquakes, tremors, and even moments when big towns were submerged under the sea (Alexandria of Egypt) or by molten magma (Pompei) yet, we are still here! I suppose your exaggeration of a comet hitting the earth is a tad bit too far, but even if that happens, the world will not trade goods and services in gold.

ActivateKruger:


Your figures are only short term, what was the price of gold 20 years ago in comparison to today?

In 1994 gold was slightly over $400 per ounce compared to $1400 today. If you had saved $400 in Naira value in a Nigerian bank, how much would it be today? Chances are it would have been eaten up by high inflation during Abacha's era and it wouldn't be much today. However if you had bought gold, not only would you have preserved your $400 but also shielded it from being depleted in value by inflation.


And yes during wars and depressions wealthy people buy gold in large numbers to store.. why do you think Hitler, Saddam, Gaddafi or any other war loving leadership had stacks of gold bricks? because they knew that paper currency is nothing but paper when bombs start hitting the ground, no one wants it.

and yes, the last loaf of bread will be traded in gold.

tpia6:
gold is used to value money i think.

buffet is right in the sense that its not a physical token such as paper money but i believe you may be quoting him out of context most likely.

bookface:


My figures were only short term? How about this - An ounce of gold in the year 1850 sold for $18.93. Twelve decades later, before America abandoned the gold standard in 1970s, an ounce of gold sold for $36.02. This is equivalent to an annual rate of return of 0.538% over 120 years!

bookface:


In the last 20 years, Gold has rallied - but so has every thing else. Global stocks, as measured by the MSCI world index returned 261% compounded over the last 20 years, versus gold return of 187%. If you have invested in a Nigerian deposit account that pays 15% per year, on a compounded basis over the last 20 years, you returns will be 1637% in NGN terms

bookface:


If you must talk about the impact of inflation - Inflation in Nigeria over the last 20 years has trended lower and stabilized at at average of 10% a year. Over 20 Years, it can probably be assumed that inflation (all items) have compounded at 673%. I am ignoring the currency effects given that the Naira has generally lost value relative to the USD over this period - but to safely compare, it can be assumed that a foreign investor in a Nigerian bank at 15% per year perfectly hedges his/her currency exposure and likewise a Nigerian investor in gold hedges his returns back to NGN. In all of these scenarios - such an investor will have fared much better in an account that pays 15% a year - followed closely by investment in global stocks. Additionally, gold would not have protected your wealth from inflation in this instances.

bookface:



People buy gold to store in times of fear only because they expect someone else who is more fearful than them to pay a higher price for it at some future date - pure speculation. Gold has very little utility - which is its use in manufacturing a jewelry (it probably has other uses). If i give you an ounce of gold today, you can not eat it, it will not pay you dividends, it will not grow in size - if you keep it under your mattress for another 120 years, it will still be an ounce of gold- Its value at that point in time is purely speculative. It could either increase, remain constant or decrease - like we have witnessed in the past two years.


Paper currency is nothing? - But even during wars - people don't go to supermarkets with cartons of gold! They pay cash!

ActivateKruger:


.... if you had saved that $36.02 in 1970 would it be equivalent to what gold is today?... the answer is no.

I never championed gold as an investment BUT as a wealth preserver. If you wanna bet all your wealth on never guaranteed stocks, go ask guys who lost it all in the 2007 financial collapse...after all when all stocks and currencies come crashing, gold is the real currency

You're shouting my point with a vuvuzela

Yes they do buy things in cash, but will be they buy the same in quantity as they did before the war? the answer is an obvious no. Inflation in war renders paper currency to almost worthlessness.

Then I ask, why in war do governments pay contractors or hired external security personnel with gold instead of local currency as they would before a war? why did Qaddafi pay mercenaries in gold instead of his own currency? As I said before.... gold is the real currency, paper money is just printed currency.

bookface:


First you cite the case of Qaddaffi - without much information that can be freely validated

Second, there are not many antecedents that supports your theory. The US has the largest reserve of gold in the world - yet it does not fund its wars by selling gold. It pays the good ol' dollars.

Third, gold is not a currency - how many cars/shoes is an ounce of gold worth? No one knows. Because the value of gold cannot truly be objectively determined. It's value is perceived based on demand and supply.

Missy89:

Yes Gold is not a currency but it is MONEY. currencies come and go but money is always money. Currencies are fiat and their value is dependent on the credit of any government.
Gold can be divisible to match prices of any goods like it was done war before the first world war. most currencies were backed by gold then and u can take it to the bank and get a gold in return which means, gold can purchase goods too.

The example that America didn't use gold to fight wars and dollar instead its just wrong. since we have are global economy now and the most important commodity (oil) is purchased with the dollar, It keeps the value of the currency and makes it acceptable. compare that to say ww2 when most economies are not interconnected. most US shipments to Europe and the USSR then was exchanged with gold and not with pounds or rouble.
The dollar only keeps its vale because there is high demand for it (oil purchase) and the biggest US export is inflation (lost of dollars). Should all the dollars return home, a toilet paper will be more valuable as compared to gold

"Gold is not a currency, but it is money".

"Currencies come and go, but money is always money"

"Gold can be divisible to match prices"

"The example that America didn't use gold to fight wars and dollar instead its just wrong."

The dollar only keeps its vale because there is high demand for it (oil purchase) and the biggest US export is inflation (lost of dollars). Should all the dollars return home, a toilet paper will be more valuable as compared to gold

bookface:




..so also is silver, copper, salt, cannabis, barley or any other item that can be battered for their perceived value. I really don't see how this adds to the debate.



...again, this doesn't make much sense. Money, either fiat money or commodity money will always be traded for their perceived value. While fiat money is backed by the credibility of a government and its central bank, commodities money are backed by everyday forces of demand and supply which makes them speculative in nature. The former is arguably more reliable than the latter. The argument that gold - as money, will always be money - assumes that you take less risk by holding gold as opposed to fiat currency, this is total nonsense.



So also can cannabis, wine or artwork. But yet still, you wouldn't take a gold bar to the hospital for medical check up, neither will you take it your mechanic workshop. You need an acceptable medium of exchange in which services or goods are valued - you need your fiat money.




So can you give an example of a period in time, when America paid in gold for merchandise during a war as opposed to the dollar?




This is rubbish. Forget about the dollar for a moment and move on to any other currency with a global reserve status - the Yen, sterling, Swiss Francs and the Euro, none of which are directly linked to the price of oil - why are these currencies holding their values? The Japanese government has the highest debt to gdp ratio in the world (above 200% of gdp), yet, the Yen is still held by several central banks, surely, by your theory, this shouldn't make any sense?

Here's a quick lesson - The USD is not holding its value because oil is priced in USD. It is the other way round - oil is priced in USD because people trust in the stability of the US government. It is the same reason why several countries peg their currencies to the value of the dollar - as opposed to the value of gold which is very speculative.

Missy89:


When you say u cant take gold bars to hospital etc.. It seems are not getting the message. There is nothing wrong with paper money as long as it is backed by something of value and not pure faith in a government. Gold unlike " faith of government" are a thing of value over the centuries. fiat money on the other hand are only as good as their demand

When you say people use Dollars to buy Oil because of the trust in the government, this is not true. The dollar became the dominant currency for oil in the 70s because of a deal not trust. The Fed print dollars almost everyday to satisfy demand so it is not rare (valuable) but in demand. The minute the commodity lose it's relevance , the dollar will go belly up even if there is faith in the US government and the reason is the exported inflation will have to go back home. since there is little use for it in the international market anymore.

When u say stability of the US government, you make it sound like it is the only stable government around the world

Most international post world war conflicts are fought with gold (or gold backed paper). I gave u an example of how the British and the french bought almost everything the needed with Gold from the US during the 2 wars and not with the Pounds or Francs. and if you are talking about Post WWs, since the dollar is in high demand, why would the US use gold when u can just use their paper?

bookface:


Your argument misses the point. The value of gold is highly relative, and there's no real reason why they must be of higher value than faith in government. Gold is not food that can be eaten, neither can it keep you warm at night. It is simply a rock with limited utility to humans (mostly in jewelry production). The value of gold can collapse by more than half as it did between 1980 and 1985. Last year alone, the value of gold collapsed by close to 30%. There's no good argument to back each dollar of money by such a speculative measure of value. Faith in government alone is valuable enough.

bookface:

There are many flaws in your argument:

First of all, the dollar became dominant, for the Brenton Woods agreement in which the US dollar was deliberately placed as an anchor of the international financial system. The US government guaranteed other central banks that any point in time, they can exchange their dollar reserves for a fixed amount of gold. Many countries agree to this, and some like Japan and Europe, even devalued their own currencies relative to the dollar so that they can boost exports. When the US abandoned the Brenton woods agreement, the only thing remaining that backed the US dollar was the faith United States government. That was the only reason why other OPEC states went along with Saudi Arabia to back Nixton's arrangement in 1971, even though the Saudi's had other goals.

bookface:

Second, it doesn't make much sense to me to say that what is in high demand is not valuable - at least literally. Additionally, it doesn't make much sense, that what is rare is always considered valuable - as in this case gold. Value is driven by human want/needs. The end utility of gold to humans is very limited even though it is a rare commodity.

Third, I am not sure which commodity you refer to, but the US government has tools in its reserve to manage inflation, one of them is interest rates. The US dollar will remain appealing as long as the US treasury is seen as a safe haven for assets, and the US federal reserve retains its capability to manage inflation.

bookface:

It is not the only stable government in the world, but it is the most trusted to remain stable. The federal reserve is arguably the most independent central bank in the world. Independence in this case, refers to independence from local politics. Obama cannot simply dictate to Yellen. Unlike what you could find in several other countries. Also, the activities of the federal reserve is open, transparent. All of this is why more than 17 countries feel comfortable to peg their currencies to the dollar.

Kingsnairaland:
Gold they bought before 2014

Too much fake news.

Adjovi:
Lol gold is the new currency. If it's not why did USA invade Libya and stole All of the gold's Gaddafi kept?

Russia is following that Gaddafis ideology of a currency backed by gold. If it's not important tell USA and France and the UK to return all the gold's they stole and are still stealing from africa if it's truly worthless

As for OP you say sanctions is biting hard on Russia and they still have money to buy Gold just dey play your hear dey play

BidenDConqueror:



Also bro..look at the date ..if the sanctions were effective, Russia wouldn't have had the capability to defend and protect the rights of the people of the Donbass republics today.
That was my coded message

Intense Prospetiy Decline: US To Bring Back Child Labor And Formalize Slavery
https://www.nairaland.com/7584067/intense-prospetiy-decline-us-bring#121198226

bookface:


Putting money in a mattress is never a wise strategy - everyone knows that. The question is what else do you do with it? On the other hand if you put your money in any US savings account that pays as much as 6% per year will have generated a capital gains that is at least 34% higher than what you could have got with gold




The idea that gold is a "wealth preserver" is a naive at best. If no one is willing to pay you as much as you bought your original bar of gold for, you would have lost money in real terms. Gold is pure speculative - in order words, similar to gambling. I just pointed out to you that someone who bought gold at the beginning of last year would have lost close to 30% of their wealth. Is that how you "preserve" wealth?




No, we are not talking about the same things. I mentioned the currency effects because both options are not strictly comparable.



Inflation affects the prices of everything. Gold will be worth much more during a war than before a war - but then so also is toothpaste or cattle or even condoms. If you live in the US and you buy gold for $36 before a war - if during a war, the prices rise to $200 your wealth has not really been protected since if you sell your gold, to buy toothpaste, the price of toothpaste that was $5 before the war is now $27




First you cite the case of Qaddaffi - without much information that can be freely validated

Second, there are not many antecedents that supports your theory. The US has the largest reserve of gold in the world - yet it does not fund its wars by selling gold. It pays the good ol' dollars.

Third, gold is not a currency - how many cars/shoes is an ounce of gold worth? No one knows. Because the value of gold cannot truly be objectively determined. It's value is perceived based on demand and supply.

pansophist:
Who is fighting a war it can never win? And no, Ukraine officially lost its sovereignty after the 2014 coup, sponsored and supported by the West. You think they will spend so much trillions and risk loosing their hegemony for nothing? If they care so much about democracy, why are they silent on the current Israeli genocide in Palestine?

FreddieGray:
More on the indigenous people of Canada. Canada is an occupied territory. The westerners invaded, subjugated the indigenous people, exposed them to genocide and continue to exploit thier natural resources. The Westerners are trying to do the same thing to Russia. The head of state of Canada is the British monarch. A sizable number of people are conditioned and configured to believe that the Westerners' illegal occupation of Canada and the US is ok. It's not. The US is an appendage of British Colonialism, the illegal Western immigrants rebelled against the British crown (that's why it has a president as the head of state). The indigenous people of North America should kick the invaders(westerners) out. Russia should arm these people. Israel illegally occupies Palestinian territory, where is the global outcry? The imperialists in the US illegally occupies Syria and steals it's resources..where's the global condemnation? It's either I'm Pro Russian (wrt the rus-ukr comflict) or neutral because I cannot in good faith support countries that actively engage in the same behaviour they falsely accuse Russia of indulging in. In addition, I'm an African, the hostility between the West and the East is beneficial to me...it serves as an expedited catalyst for a multipolar world. Most African countries gained their independence from the West after the USSR became a nuclear armed Country. The USSR never colonized Africa and they fought against western colonizers in Africa (the fight against apartheid which is a form of Nazism in South Africa is a reputable reference. The South Africans and the USSR (Moscow) emerged victorious).