Submitted by XSauravX t3_ztz1y9 in explainlikeimfive
nim_opet t1_j1gahks wrote
Reply to comment by XSauravX in Eli5 Why did Canada get rid of it's all gold? by XSauravX
Why? If you go to buy a car and offer them a gold bar, would they take it? How is it more real than offering dollars?
Ahnikuh t1_j1gay8y wrote
Because you can travel through time to almost any nation that has ever existed and exchange the gold for the current local currency. If you time travel with US dollars, you'll find the buying value fluctuates quite a bit. And since we have only figured out how to time travel into the future, investing in their currency now would result in a loss down the line.
codalafin t1_j1gdtpz wrote
So it's cool if I'm a time traveler, got it. Unfortunately I am not.
skaz915 t1_j1gne6n wrote
No, you are!
Strictly forward and at regular speed
m477m t1_j1gtj2s wrote
I have traveled here from the year 19XX at the speed of 60 minutes per hour
Ahnikuh t1_j1h4ybz wrote
You travel forward in time and even great empires fall. Someone will be a bag holder for all those investments. It won't be the guy with a pile of gold.
nim_opet t1_j1hdk5x wrote
Let me know how the time travel works out for you. I’m going to buy coffee with dollars, will be back before you leave.
XSauravX OP t1_j1gb5fy wrote
Cuz gold is finite and dollar ain't I mean the dollar is gonna be totally useless when you are trying to trade with someone who doesn't accept the dollar and gold is accepted by everyone u can easily exchange gold for the currency of that nation but there are country which will not accept the dollar
croninsiglos t1_j1gd33a wrote
A bond has a guaranteed income vs gold which doesn't for any given currently conversion.
XSauravX OP t1_j1gdpi2 wrote
What's the point in having 4% guaranteed income while inflation is 7% while gold stays neutral an ounce of gold is still an ounce of gold and usually if gold loses it value it recovers and everyone is fine but if the dollar starts gaining it's old value(deflation) everyone loses their shit
croninsiglos t1_j1gdw4l wrote
How much did it cost you to house that gold, pay salaries for security, etc?
Due to inflation, the cost in gold is more and more for the same goods, because you still need to convert to the dollar.
XSauravX OP t1_j1ge23i wrote
Pretty reasonable while looking at the ups
MercSLSAMG t1_j1gmkg0 wrote
Gold value is related to the US dollar. An ounce of gold = a set amount of USD based upon commodity trading. So if the USD loses value so does gold.
XSauravX OP t1_j1gmzap wrote
Actually it's just opposite the value of gold has risen and is at ATH rn while the USD is at ATL
MercSLSAMG t1_j1gnqt2 wrote
If you want to buy 99.9% of stuff with gold you would first have to sell your gold to get a currency. And the exchange rate of gold is based upon USD per ounce.
XSauravX OP t1_j1gny5m wrote
Yes and an ounce of gold has kept on rising Against the dollar it was around $21 or $34 in 1971 and it's over $1000 now
MercSLSAMG t1_j1gqc65 wrote
https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart
More like ~$300 USD/ounce. So you take into the inflation of the USD which is 1 dollar in 1970 is roughly 7.50 today - that makes gold not have any increase whatsoever vs. the USD. In fact it's almost identical to a 4% cash bond.
So investing in gold is like investing in cash bonds - which is to say it's a shitty investment to make money, but has near guaranteed value.
XSauravX OP t1_j1gn204 wrote
Actually it's just opposite the value of gold has risen and is at ATH rn while the USD is at ATL
MoogTheDuck t1_j1gvb2g wrote
You aren't really asking about gold, you're asking about fiat currency. Some people say that the US dollar (or any fiat currency) isn't real, has no intrinsic value, only exists because we say it does... this is not true. Fiat currency is backed by law and the state's monopoly on legal violence. To say that the dollar is useless is basically saying the US economy doesn't exist.
nim_opet t1_j1hdie5 wrote
Please find me a bakery that will accept your gold. I’ll wait
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