This is simply not true. Gold is useful for things, from industry to jewelry. Because it is useful as an object, it is possible to find someone who wants to buy your gold.
I specifically called out the industrial and decorative uses of gold in my comment to make the point that it's simply not true that just because something is desirable independent of its utility as a currency that it is ideal for storing value or being used to facilitate exchange of goods and services. Gold's shininess, ductility, conductivity, and malleability can be found in many other substances. If you need all of those properties in one substance, you might have a stronger need for gold, but how many people need all of those properties?
People really don't understand these ideas at all. It's not necessary that *everyone* has a use for the substance, it's only necessary that there is enough demand for the intrinsic commodity to provide a market.
You keep using the word intrinsic in a way that suggests that gold is imbued by the creator with some magical power. Gold does have some desirability for jewelry and a few other applications, but there's more than enough gold in the world to take care of whatever demand there is for it in those capacities. The rest is sitting in vaults somewhere as a store of value because of its relative scarcity compared to other commodities. Of course, the scarcity itself is created by people who bought it to store value, and this is the same cat-chasing-its-tail shared illusion that underlies fiat currency, with the only difference being that you can't create or easily acquire more gold. (You and other Austrian types consider that a feature, many others including myself consider it a bug.)
I mean, you do realize that bank notes have some intrinsic value, right? You can burn them to keep warm in the cold, or hang them on your wall and admire their artwork. Of course there are plenty of other things that could be burned to keep warm, and anyone can photocopy the art work, so it's really just the artificial scarcity that comes with anti-counterfeiting laws that makes paper hold its value.
So, check and mate? Not quite. Keep in mind that much of gold's desirability as jewelry is *because* it's valuable. Indian weddings rely so much on gifts of gold jewelry not primarily for its beauty, but for its use as value in a dowry. It's not the demand for shiny accessories, it's demand for something valuable.
There's lots of things that are scarce but don't have significant value. Scarcity is only one dimension. To be valuable, something needs to be scarce and desirable. A "hard" money is desirable (by some) for its *intrinsic* properties.
We agree that scarcity is important, but what's desirable is a function of a lot of ephemeral factors that gold is no more immune to than any number of other scarce commodities. On the issue of scarcity, one has to consider the unanticipated lack of scarcity that would come from a disruptive change in mining technology. Think that's not possible? Look at what hydraulic fracturing has done to global natural gas prices, and keep in mind that, while gold has been used as currency for a couple thousand years, two thirds of all gold in the world has been mined since around 1960. If that's not an exponential trend, it sure looks like one, and the population isn't going to grow fast enough to soak up all that excess supply.
Of course, predictability of mining efficiency isn't the only risk. There are countless variables that go into the price of gold that have nothing to do with how pretty people think it looks on their wrists or how much it adds to the sticker price of Monster cables. Going back to the example of India, suppose the recent controversy over last year's Delhi gang rape case bloomed into a full-on womens' liberation movement in India, including a push toward abandonment of the anachronistic practice of dowry. You'd see significant downward pressure on the demand for gold in a country that accounts for 30% of the global demand for gold jewelry, which represents about half of the world's gold holdings. Now, this example is far-fetched if we're looking at a year from now or three years from now, but the goldbug conceit is that gold is far more isolated from these shocks than fiat currency, and even if that were true, you'd need to offset the loss of the ability to use monetary policy to adapt to global economic changes.
One more thing on this. An ounce of gold doesn't change value. An ounce of gold is a physical thing you can hold in your hand. It is what it is. What changes value is paper money. The more money in circulation, the more it takes to buy that same ounce of gold. The gold itself hasn't changed at all.
This is clearly an article of faith for you, so I won't delude myself into thinking I can raeson yourself out of something you haven't reasoned yourself into. But what you're doing here is asserting something as fact that goes against the basic human understanding of the word "value", throughout all of recorded history. Before fiat currency, the value of gold changed versus the value of silver, and it changed against the value of copper, and it changed against the value of whisky, salt, beads, and everything else that's ever been used as currency, and all of those other things changed in value versus each other. You can hold all of those other things in your hand the same way you can with gold (okay, you need a bottle for the whisky), and, of course, the tautological "it is what it is" also holds for them.
In fact, when you look at the "prices" of things, priced in ounces of silver or ounces of gold, they are incredibly constant over time. Gasoline, for example, has traded for about 1/4 ounce of silver per gallon, which was about 25 cents from the early 1900's to about 1965. That same pre-1965 quarter, which contains 90% silver, is worth about $4.85 in today's money. In other words, gas is cheap today when priced in silver, which is consistent with lower energy costs during recessions/depressions.
Even if your numbers are accurate, this does not prove what you think it does. Just as the value of gold (and silver) depend on how much is mined and how much people want, so to does the value on the other side of the equation, i.e. the value of the gasoline. Saying the price of something with price instability measured in something else with price instability is "incredibly constant" over time means nothing.
We are all trained since we were kids to think of dollars as an immutable thing and the value of other things changing. But that's not at all what's happening. You need to see the physical thing, the ounce of gold or ounce of silver or gallon of diesel fuel, or whatever as the constant. It's the dollars that change.
Again, the value of the physical things also change. Sometimes we measure value in dollars, sometimes we measure it in gold coins, and sometimes we measure it in hours of work we have to do to earn the dollars or gold coins. These are all ways of measuring value. None of them are static. They all change based on how society, culture, and technology change.
So, that means that gold is not really an "investment" like a business is. The gold will always be exactly what it is. It will always be an ounce of gold. It's not going to multiply. It becomes "worth" more only in the sense that the dollars are becoming worth less, and it takes more of them to buy the gold. Gold is a very convenient *store* of value, but not exactly an investment.
This is splitting hairs -- any store of value is an investment in a world where other stores of value are depreciating faster. And no, gold doesn't multiply, but neither does whiskey.
In times of dramatic money printing (such as today, although the money is created electronically rather than "printed"), we should seek to protect our savings from eventual loss by inflation.
Is that the eventual loss by inflation that your Rothbards and Schiffs have been saying for six years is just around the corner? Is there an expiration date on these claims, or is it just a reaaaally big corner? Why does the wisdom of the world market disagree with you, as evidenced by
the paltry TIPS spread showing a 10-year inflation expectation in the 2% range?
One way to do this is to buy STUFF instead of holding currency. It doesn't matter what that STUFF is, but some things are better than others. Convenient STUFF that holds its value over time has certain properties:
1. It doesn't spoil, or decompose over time.
2. It will be valuable to people in the future.
3. It doesn't take a huge amount of space to store.
4. It is easily verifiable as genuine.
5. It is easily divisible into smaller quantities.
Precious metals have all of these properties, which is why free markets have gravitated to them as "money" over the millennia. Other STUFF has been used as money. In America today, people are already using ammunition as a barter currency because it is so scarce at the moment.
Your points 1 and 2 are tautological. You want some "STUFF" that holds its vaue over time to "be valuable to people in the future." I think we'd all agree with that!
People who held Cypriot currency in banks in any quantities are fucked. People who spent all that money on STUFF are just fine (assuming they still have that STUFF). And they can sell or trade that STUFF for other STUFF that they need. Gold and silver have been shown over tens of thousands of years to be STUFF that people want, and that remains true today.
The "people" who held Cypriot currency in banks in any quantities are not "people", but large Russian oligarchs and criminals who were trying to avoid taxes. They all probably saved more money in the tax evasion than they'll lose with the large depositor haircut, and if not, it was just the cost of doing business and avoiding the instability of their own country's financial sector and political system.
The point being, nobody ever saw the Cyprus banking sector as a safe store of value compared to, say, T-bills. The big money is always going to try to find the least-regulated and lowest-cost financial sectors and tax shelters whenever possible, whether it's Cyprus, the Cayman Islands, or Luxembourg, which sounds like it'll be the next domino to fall. So, to cherry-pick Cyprus as an example of the evils of fiat money is silly. I'm sure you'll throw out Weimar and Zimbabwe next, as if the presence of a half dozen or so prominent cock-ups in countries with fiat currencies is somehow worse than the many panics and depressions that occurred in the Western world while it was on the gold standard. But somehow those get airbrushed out of the goldbug history books.
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