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Comment by IshKebab | Hacker News Reader

Gold is not "real money", come on.

That chart is also really weird. With log scale turned off and expanded to all time...

https://www.macrotrends.net/1437/sp500-to-gold-ratio-chart

Makes it look like the US peaked at Sep 2000 and has been downhill ever since. Doesn't track at all with GDP which has almost doubled since 2000. I.e. it doesn't track with growth, but does track with dollar index somewhat, which makes sense because it's tracking a dollar value intermediate when considering "how much gold it takes to buy S&P 500", which means it really ends up tracking something else entirely.

> Compared to real money (Gold) the S&P500 is down over the past 10 years. [4]

Isn't this the real chart to look at for that? Completely different story when you select max on the timeline.

https://www.perplexity.ai/finance/%5EGSPC?comparing=GCUSD

Personally I am about $10M USD poorer for listening to people on the internet. I wish people would not spread falsities about finance that can actually ruin lives. (Albeit to be fair, the trend is towards conservative advice...my life was uniquely affected in terms of limiting upside, so I am at least grateful that most online posts work very hard to limit downside.)

> Isn't this the real chart to look at for that?

No, the perplexity chart is actually a really bad one to look at. It tracks a derivative of gold from 1975 onwards from which the S&P already accrued over 350% in returns. They also started the gold derivative off at a price of $178 while using the initial price of $17.57 to calculate S&P returns.

> Personally I am about $10M USD poorer for listening to people on the internet. I wish people would not spread falsities about finance that can actually ruin lives.

Ideally no one would blindly follow advice they don't understand or can't accept into their own mental model.

Any advice that you both understand and fits perfectly into your mental model is probably coming from whatever dogma you already follow and is therefore useless.

Any advice you don't understand is, of course, useless.

Any advice you do understand but doesn't fit into your mental model will just get rejected.

“I always pass on good advice. It is the only thing to do with it. It is never of any use to oneself.” ― Oscar Wilde

Although certain "advice" is actually SOP, in that case it is good to know (like stop, drop, and roll).

> Any advice that you both understand and fits perfectly into your mental model is probably coming from whatever dogma you already follow

I don't know what you mean by "fits perfectly" into one's mental model, but one can certainly accept new information validated against their own understanding of the world. People don't put an equal amount of weight in each of their beliefs and there are axiomatic ones that can be used in logical arguments to disprove the inconsistencies of others.

S&P gets you dividends though, so the interpretation of that chart is tricky. Holding the S&P, you can still do better than holding gold, even when the GOLD/S&P ratio is positive.

It's a lot less Fiat than USD.

How so?

I guess because gold isn't created by decree?

Supply is only one half of value. The demand for gold is almost entirely speculative, whereas dollars can be directly used for almost anything.

The issue isn't it's usefulness in small transactions. The issue is who decides. In the case of gold a huge distributed system decides the valuation of Gold. Yes we usually use USD as the comparator. But there is a Gold:RealEstate ratio, Gold:Oil Ratio, Gold:Bread ratio. No single or small number of actors can change that in a meaningful/reliable way.[1] Whereas USD can, and has been, printed at an exponential rate.

[1] -(Let's exclude intentional market manipulations like if a world leader were to buy a bunch of gold and then saber rattle to drive up fear).

The analytical philosopher in me says:

"Define real money"

I think everyone can agree if you specify your definition.

A goat or a sheep cost roughly the same in gold today as it cost 2000 years ago during the Roman Empire. Gold is the only “real money” in the sense that it is the only stable measure of the value of basic needs over centuries.

https://chatgpt.com/share/696fb3e8-91d4-800a-9b2b-32eacdadeb...

First link to ChatGPT as a "source" that I've seen in the wild.

Times they are a-changing.

I can't say that anyone is going to find that very convincing, even if it's a compelling idea to consider gold inflation over the centuries.

Unless there's something I'm missing, there isn't even a response at the link - just a question.

(And if that was how the user posed the question, I'd be concerned that priming the chat with "is it true that..." biased the response towards "yes, it's true".)

Yeah, I saw that link and had a few thoughts immediately collide in my head:

    - Wait, WTF? Really??
    - But but but it's a *chatbot*, not an authority 
    - We're doomed

A goat costs exactly (not roughly) the same in goats today as it cost 2000 years ago. So by that measure a goat is the only stable measure of the value of basic needs over centuries.

That's why new stablecoin is backed by goats: Capracoin

Goat production is overall much cheaper now so wouldn't we expect the "real" price to be less? That it tracks the price of goats and sheep makes me think it's not a particularly stable unit of value since I don't expect goat or sheep to be valued in a stable way, especially across millenia.

Ahh, yes, gold and the speed of light in a vacuum - the only real constants in the real universe.

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