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Governments don't hoard gold; here's why

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  • Governments don't hoard gold; here's why

    Think about it.

    As a government there is no point to investing in a market that every "mere mortal" has access to. Why pay the premium for this crowdedness of the demand for it?

    It makes much more sense for them to invest in things that they can EXCLUSIVELY buy. Among all the assets that governments can secure for themselves, there's a whole range of things that share the wealth preserving properties of gold without being available to the public at large.

    Look at this picture; I can't guarantee that all the figures in it are accurate, but it's just there to illustrate a point:



    What makes gold so special? Why is it so much more suitable as a wealth preserving asset than any of the things on that list?

    Why would a government preserve its wealth in the form of gold when there are tons of things that are either illegal or impracticable for non-government parties to hold? Why would governments pay more for stores of wealth than they strictly need to by bidding on a public market rather than a tightly exclusive one?
    "It's not the end of the world, but you can see it from here." - Deus Ex HR

  • #2
    Re: Governments don't hoard gold; here's why

    Jim Willie thinks that Fort Knox has NERVE GAS in it rather than gold.

    This is the perfect example of something that is BOTH illegal and impracticable for parties other than governments to hold.
    "It's not the end of the world, but you can see it from here." - Deus Ex HR

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    • #3
      Re: Governments don't hoard gold; here's why

      Originally posted by NCR85 View Post
      Jim Willie thinks that Fort Knox has NERVE GAS in it rather than gold.

      This is the perfect example of something that is BOTH illegal and impracticable for parties other than governments to hold.
      they don't call him the 'golden jackass' for nothing

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      • #4
        Re: Governments don't hoard gold; here's why

        Originally posted by NCR85 View Post
        Think about it.

        As a government there is no point to investing in a market that every "mere mortal" has access to. Why pay the premium for this crowdedness of the demand for it?

        It makes much more sense for them to invest in things that they can EXCLUSIVELY buy. Among all the assets that governments can secure for themselves, there's a whole range of things that share the wealth preserving properties of gold without being available to the public at large.
        Cost of production does not equal exchange value.
        I think you would find very few buyers for a gram of Californium.
        raja
        Boycott Big Banks • Vote Out Incumbents

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        • #5
          Re: Governments don't hoard gold; here's why

          "Gold and silver are not by nature money,
          but money is by nature gold and silver."

          Karl Marx

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          • #6
            Re: Governments don't hoard gold; here's why

            Originally posted by metalman View Post
            they don't call him the 'golden jackass' for nothing
            Crucial correction: he calls himSELF that.
            "It's not the end of the world, but you can see it from here." - Deus Ex HR

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            • #7
              Re: Governments don't hoard gold; here's why

              I've often wondered the same about gold. I mean, it certainly made sense back when you could use it to impress visiting Kings with all its shiny splendor and how it made for nifty statues. But is it still as impressive in a day of smartphones, nukes, and electronic transfers? Not that I'm parting with mine, but just sayin.

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              • #8
                Re: Governments don't hoard gold; here's why

                Originally posted by Raz View Post
                "Gold and silver are not by nature money,
                but money is by nature gold and silver."

                Karl Marx
                I think you've nailed it on this one, Raz. Gold isn't valuable because of what it is, but because of what money is.

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