Paper currency is the oldest Ponzi scheme that exists out there. I can wipe my nether regions with it. If there is a collective delusion that it has value, I can exchange goods for it.
My point being, Gold is a delusion, just like paper.
My point being, Gold is a delusion, just like paper.
Notice how this entire system depends on the government's monopoly on violence. The real modern delusion is the many layers of indirection that insulate us from the real source of power in the natural world. Whether the thing that has value is gold, silver, paper, or bottlecaps doesn't matter. What matters is that the one holding the guns says it has value.
A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.
Gold as a commodity is almost exclusively priced in dollars globally. If the dollar plunges, gold will spike higher accordingly.
US spending being out of control right now (pointing to aggressive dollar debasement as the Fed 'prints' - runs QE infinite to monetize the ever expanding debt) and concerns about the condition of the US economy near-term with the virus, have pummeled the dollar lately.
So the price of gold is up due to the drop in the dollar, and there is a considerable fear premium on gold right now as well (likely to the tune of several hundred dollars). As that fear fades you'll see a drop in gold, from whatever new high it puts in, as in 2011-2016. It'll set a new higher low due to the dollar losing real value it will never recover from the spending spree going on (there is probably going to be $5+ trillion in unexpected spending that will occur over several years due to the virus, which was not baked into the dollar or price of gold previously).
so, in "lures investors and pays profits to earlier investors with funds from more recent investors", the mechanism of "luring" is fear.
> 2) the USD is falling rapidly
seems to be a part of 1)
> Gold as a commodity is almost exclusively priced in dollars globally. If the dollar plunges, gold will spike higher accordingly
Isn't gold priced by a market? if the market has to move, the people must be willing to pay more dollars (or to say it another way: they have access to cheap dollars). It seems like people are exchanging their cheap dollars for gold, this is the part that doesn't make sense to me.
A bit pedantic but even if the value of gold rises from increased demand the fact one can mine it and get in on it means they would have gained from it while being newer. Furthermore it technically takes from the older holders by reducing the demand slightly.
> Indeed, money is probably the most successful fiction ever invented by humans. Not all people believe in God, or in human rights, or in the United States of America. But everybody believes in money, and everybody believes in the dollar bill. Even Osama bin Laden. He hated American religion, American politics and American culture — but he was quite fond of American dollars. He had no objection to that story.
https://bitflate.org/post/2019/11/29/how-gold-became-money.h...