Gold – A Commodity, Currency, or Pet Rock? by Roy Sebag

2년 전

It is common for financial pundits to categorize gold as just a commodity. It is not. Commodities generally have value only to the extent that they are effectively consumed either directly, or indirectly via various industrial processes. This is largely the case even with gold's sister silver, which does tarnish and, in modern times, has found numerous major industrial applications that place it beyond practical recycling. Industrial metal stockpiles generally can be expensive to maintain and the costs of recycling metal scrap can be prohibitive. Agricultural and other 'soft' commodities are consumed essentially entirely as food.

By contrast, gold is gold. It stands alone as the only non-reactive element excepting a few noble gases and poisonous substances. Yes, gold can be fashioned into jewellery, or into myriad other objects of beauty. But the marginal cost of melting it right back into generic bars or coins is small, hence the ubiquitous market for even tiny amounts of scrap jewellery.

Gold production is highly energy-intensive and also requires labor and capital input. But gold, once produced, is eternal. Hence gold is the only substance known to man that functions as stored energy, labor and capital, and hence of stored value. This is the best explanation for why gold has been used as money across all major civilisations over time and is still used as a de facto money in India and much of Asia.

That gold does not circulate as a legal-tender currency does not make gold a commodity either. Fiat currencies require third parties to enforce their acceptance and regulate their supply. Here, too, gold is gold. No government is required to enforce its acceptance. Nor is any government able to print it excessively or otherwise devalue it. This is also what makes gold a truly international and multicultural money, unlike fiat currencies with fundamentally political characteristics, their values thus subject to political expedience.

As Lord Acton once observed, power tends to corrupt and absolute power corrupts absolutely. By corollary, monetary power tends to corrupt and absolute monetary power corrupts absolutely. This has become highly evident through the quantitative easing and zero or negative interest rate policies of many central banks since 2008.

Money itself is a technology. As contemporary information theorist George Gilder explains, prices are information and money is the conduit. Economist Ludwig von Mises made the point already in the 1920s that communism would fail because without market-determined price information, economic resources could not be efficiently allocated. Actively managing fiat currencies distorts vital information such as interest rates and risk premia and so undermines economic health. There is also mounting evidence that it exacerbates inequality by elevating the prices of those assets held by the wealthiest households. Gold cannot be manipulated by a single issuer as there is no issuer. It cannot be printed so as to inflate asset prices and exacerbate inequality.

Advocates of bitcoin frequently cite these above points when arguing that it, too, is superior to government-issued fiat currency. However, they also sometimes claim that by contrast to bitcoin, gold is a 'barbarous relic' from a time long ago, before computers and the internet ruled global commerce. As with the claim that gold is a commodity, this is also incorrect. There is no practical reason why blockchain technology--the engine behind bitcoin or other competing digital currencies--cannot be applied to gold itself. The only difference is that unlike blockchains, which can be replicated into a potentially infinite number of competing currencies with similar characteristics, there is no replicating gold. Alchemists have tried to be sure but have always failed and the laws of physics and chemistry explain why.

Hence the efficiencies of blockchain can be combined with the unique, eternal store of value benefits of gold, demonstrating that gold is not only not just a commodity but also the ultimate store of value, entirely as suitable for the future as it was for the ancient world and all of those in between. Applying blockchain technology to enable the frictionless exchange of title to gold is thus the single most significant innovation in monetary technology since the advent of standardized coinage in the 1st millennium BC. That is the real scoop here which the mainstream financial media have completely missed so far.

Reintroducing gold as a commodity money using innovation and technology has been my personal mission since 2008. My two primary businesses: Goldmoney and Mene 24K Investment Jewelry illustrate gold's versatility as both a currency and exemplary natural element.

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
STEEMKR.COM IS SPONSORED BY
ADVERTISEMENT
Sort Order:  trending

Great post @roseybag! In my opinion, gold is more of a commodity than anything else, but it could also be viewed as some form of non-government backed currency.

The real value of gold is yet to be fully explored. For instance, the precious metal can be applied in healthcare as a mono-atomic gold Ormus to deal with several health issues. It also has applications in technology since it is a powerful superconductor.

More and more use cases of gold are being discovered, and I think that it may increase the demand for the precious metal in the future.

Roy, this is an amazing piece! I can’t tell you how thrilled I am to see you on Steemit. Steemians should consider themselves lucky to have you involved here! I have resteemed this and written a piece in your honor!! https://steemit.com/steemit/@goldmatters/goldmatters-asks-steemians-for-a-favor

·

@goldmatters - You have been an incredible friend and supporter. I am thankful to have you in my corner. Thank You for all you do for Goldmoney and our mission of broadening access to physical precious metals.

Welcome to Steemit @roysebag! We are lucky to have someone of your knowledge, expertise, and business prowess here on the platform! This article was a great read, and I can’t wait to see more of your content!

I have to tell you, @goldmatters is probably the best evangelist of Goldmoney and Mene you could ask for! He is constantly sharing knowledge and giving back to the community.

·

Thank You. I am excited to learn more about this innovative new platform!

Welcome aboard Roy!

Goldmatters has been instrumental in educating me about Menē and Goldmoney, and others too! All across the Steemit platform — and especially in #steemsilvergold. Moreover, he has been a delightful and witty friend to interact with: he won a very special 2017 Steem round from my stash, and paid it forward by sending me a goldmoney t-shirt. He is a super generous guy and has supported this community big time — all the while getting more and more people on this decentralized band-wagon and interested in the Au projects he supports.

I have opened a Menē account (got some others to join too) and already have the brushed Verona Cuff in ny cart — just figuring out the exact payment date and method (that your company accepts cryptos is a major boon).

So, thank you! All too often genius is overlooked!

Welcome aboard Matey — gold times await!

Cheers! from @thedamus

"There is no practical reason why blockchain technology--the engine behind bitcoin or other competing digital currencies--cannot be applied to gold itself."

What do you mean? Like somebody stores the gold, and you transact in blockchain tokens?

You don't need a blockchain for this. It would actually be less efficient, as far as I can tell. You'd needlessly be adding a layer of mining and decentralized confirmation, when we're still trusting the centralized gold source. It's better to just have a centralized ledger.

There might be a role for these, but you could never have one that's ubiquitous. You can trust centralized storage of gold when it's small, but you wouldn't want to trust a big piece of the world's wealth in one party's hands.

"The only difference is that unlike blockchains, which can be replicated into a potentially infinite number of competing currencies with similar characteristics, there is no replicating gold. "

You can ask yourself why Bitcoin Cash (the exact same thing!) only has 12% the marketcap of Bitcoin and Bitcoin Gold about 1% and all others even less.

I've heard there's even a website or some sort of tool out there that streamlines the process of cloning Bitcoin and allows anyone without coding skills to do it with a few clicks.

The network effect is a real thing.

Bitcoin is not a physical object, so it's not meaningful at all that physically it can be cloned. (This is basically just an assertion that being a physical object would be better.)

Bitcoin is a network of people more than it's the protocol itself. The protocol enables this network to be a thing, but what has value is the network.

Hi @roysebag , and welcome to steemit! My most favorite talented and all-around awesome guy @goldmatters sent me over to check out your blog, it is great to have someone with your knowledge and expertise join this platform. I'm already a huge fan of Gold money and I'm ready to sign up with Mene. Cheers and you have a new follower!

Welcome to SteemIt @roysebag we are all looking forward to reading your thoughts and learning more about Mene and Goldmoney. I've had a Goldmoney account for years, back when it went by the name of BitGold. @goldmatters has done a great job here on Steemit and even got me into Mene24K recently. My 2nd order should be arriving tomorrow for my wife's birthday celebration this weekend...its an amazing business concept...well done.

@roysebag Wow! This has made my day :) Thrilled to see you on Steemit! I'm proud to say that I have a Goldmoney account and have since it was BitGold and thought then what a brilliant concept that was, although there is nothing like holding Gold in your hand, I do like the security of having some tucked away in various faults throughout the world...

Then enter #Mene24K another brilliant concept which has been fantastically publicized by @goldmatters and I'm delighted to say that I received my first pierce of #Mene24K last week and I'm in love thanks to my wonderful hubby @matthewwarn - who's post you actually tweeted :)

So, a big, heartfelt welcome and I look forward to reading more of your posts very soon :)

·

Fellow Goldmoney Network member! So happy we have our own community here @redwellies

·
·

@par-ee Yes, isn't it wonderful :) Love being around like-minded individuals :)

Welcome Roy! I have been learning so much about gold the last couple of weeks thanks to @goldmatters. I didn't realize how important it really was, and I am as excited about it now as I am about Steemit! There are a lot of precious metals enthusiasts on here, so you will definitely find a welcoming home on Steemit! :)

Welcome to steemit. Our Goldmoney expert @goldmatters directed me here, and I'm glad he did. Its nice to have someone like yourself here and you'll find most of the precious metal stacker community here on Steemit already appreciate and understand the value of gold. A few of us are even members of goldmoney.

Hi @roysebag, welcome to this incredible platform and community that is Steemit. @goldmatters speaks very highly of you, which is great to hear. I have a lot of respect for @goldmatters and what a solid member of the Steemit community he has become.

Everything I have learnt about Goldmoney and Mene has been a result of @goldmatters and his dedicated promotion of the brands. I love what you guys are doing with Mene, your products are beautiful and the quality finish looks amazing.

I am a dedicated gold and silver stacker, so being able to communicate and engage with such a well respected member of the precious metals community as yourself is very exciting.

Once again, welcome on board, I look forward to reading more of your content in the coming days.

Welcome to steemit Roy. I am here to learn from you and maybe even share some things as well. One of the smartest steemians I know when it comes to matters of gold (see what I did there) and precious metals investing recommended you to the community. I'll say this @goldmatters was spot on with you. If that's your first post I can't wait to see what comes next! Followed, upvoted and resteemed!

Great post. I love gold, addicted. Following now because @goldmatters shouted u out 👍😎

welcome to steemit roy your friend @goldmatters led me to your post. you have a great friend. glad to meet you.

Welcome to steemit Roy I'm a big fan of Goldmoney! I actually just wrote and performed a Goldmoney poem for @goldmatters unfortunately I couldn't find my t-shirt. I'll get the poem up later. Wait... Here...sorry bout the wind noise I was on top of a cliff!

·

Classic @owenwat, you are a true wordsmith. That being said, I probably would not give up your silver stacking just yet!

lol.png

Happy to see the most important dude behind gold of this century up on Steemit. Welcome to Steemit Roy!

@roysebag awesome to have your insights shared with the Steemit community! It's precisely the type of out-of-the-box thinking and content that pushes the boundaries of what information is distributed in media and by institutions. @goldmoney-inc following is growing here on Steemit!

Gold is money. Bitcoin is technology.
Blockchain is a technology that could help to track ownership of gold but alone it cannot be truly commoditised as technology suffers from rapid obsolescence.

Very nice a post you are very riches informayions and exper man 10000 thanks roysbag

Welcome to steemit @roysebag. I love your service at Goldmoney and have been using it to teach my children. I'm looking forward to reading your posts.

Rally enjoyed this article and welcome to the fold! Thanks for sharing!!

Welcome to the community man, enjoy this wonderful place .

Hi Roy! Welcome to steemit!

Congratulations @roysebag! You have completed some achievement on Steemit and have been rewarded with new badge(s) :

Award for the number of upvotes received

Click on any badge to view your own Board of Honor on SteemitBoard.

To support your work, I also upvoted your post!
For more information about SteemitBoard, click here

If you no longer want to receive notifications, reply to this comment with the word STOP

Upvote this notification to help all Steemit users. Learn why here!

Very good information @roysebag! I enjoy reading all of your articles, informing everyone of gold's true value as money.

Found this post thrilling. Didn't know much about gold as beyond a commodity.
Thank you for this piece

Welcome to the community @roysebag! You have a new follower here! Lots of love all the way from the Philippines. Keep on steemin'

Roy, this awesome I can’t tell you how thrilled I am to see you on Steemit. Steemians should consider themselves lucky to have you involved here,am talking to some couple of friends right now about it, and am so sure they are eager to know more, we are blessed by you
I sincerely appreciate this so much
here's my little link
https://steemit.com/introduceyourself/@jambo247/my-introductory-post-eager-to-explore-steemit-and-make-it-last
Am a big fan now

Welcome to Steemit \o/

I love Gold but I’m on a Silver Budget. I did have some money I put into BitGold so I guess that’s in GoldMiney now. But haven’t been able to log in.

Welcome to the blockchain!

I own some gold (and silver) like I own insurance. If I had a Katrina event, I think I’d be able to use them as money when systems that rely on electricity are unavailable.

That said, as practical daily money, gold isn’t as useful to me. I do most of my shopping online. The paper gold problem of having to trust a third part custodian is huge. Putting it on the blockchain may help some, but I think it’s an unsolvable problem to take a physical thing and exactly and uniquely represent it in code. As you mentioned, it’s easy to reshape gold and thus easy to replicate any stamp (such as a blockchain private key). There’s also the tungsten gold bar concern where as a bitcoin private key is unique and can be used to cryptographically sign messages and prove ownership.

Gold, I think, will always have an important place in the world, but the world also needs a form of money that is secure, programmable, and without third-party risk. Gold can’t do those things so I prefer cryptocurrency over gold.

The argument that cryptocurrencies can just be copied is concerning at first, but I see it as a feature. Having worked in software since 1996, I recognize how valuable open source is and the competition to serve the needs of real users. Competing currencies keep everyone honest. The network effect is a big part of what gives money value and various cryptocurrency projects will work hard to maintain it to avoid a fork. Forks that do happen often don’t amount to much of anything beyond speculations. Where they may provide value is to indicate stored user demand for a feature which the main chain can readily adopt (hurray open source!) making the fork irrelevant.

Again, I wouldn’t call gold archaic, I just think it’s role in daily society will be much smaller than the role cryptocurrency will play.

Thanks for coming to Steemit. I look forward to reading more of your content.

·

Wow! Thanks for weighing in @lukestokes! You are a huge influence on Steemit and I appreciate you commenting here. Are you familiar with Goldmoney? Goldmoney allows payments, savings, transaction, earnings with gold. Thank you for your thoughts here

·
·

Does goldmoney eliminate third party custodial risk? If so, how? If not, I still personnaly prefer the cryptographically secure, trustless systems of cryptocurrency.

·
·
·

I am a proponent of owning both gold and cryptocurrency! The gold you own through goldmoney is redeemable if you prefer to take physical possesion. Some people don’t want to own all of their physical gold at home. In addition, being able to transact with gold is a huge advantage, especially within the goldmoney rail. We can send each other gold as payment, similar to sending STEEM back and forth without fees. I think its prudent to have a diversified portfolio, which include some amount of transactable gold. The gold in the Goldmoney vaults is all insured and third party audited as well.

·
·
·
·

Thanks for the reply, but you didn't really answer my question. Insured and audited means there's a need to trust a third party. It's like rule number one in cryptocurrency: if you don't own the private key, you don't own the cryptocurrency. If you have to trust someone else with your gold, well... do you really own it?

I'm not trying to bash on what you've built as it seems like a way better system than fiat and many other gold schemes, but I still don't see it as a practical electronic money due to the third-party risk. From my perspective, might as well use cryptocurrency. For those who already own gold and want to transact with it, this may be a good option. Or, they can convert into cryptocurrency for the amounts they wish to treat as money instead of just a store of value.

·
·
·
·
·

Fair :)....... How about a scenario in where you want to own some gold, as insurance as you do, but it is too large of an amount to store at home? Let’s say you wanted to keep some of it at home as a store of value and as savings, but you didnt want to store all of it in one place. What is the most secure way available to accomplish this? I believe a private secured vault with armed guards and audits, where the gold is redemable is a good solution for this situation. In the meantime, you can transact with it as an added benefit. I really think we are on the same page here. I am not proposing to replace an entire payment system with gold... it is not an either or equation to me. Own crypto, own some gold at home, own some gold in a vault that has full transparency. Thank you for the engagement Luke!

·
·
·
·
·
·

Yeah, that sounds like the best model we have today and one that goldmoney would work well for. Personally, I'd prefer to keep more value in cryptocurrency as I think it has a much higher upside growth potential, but that's just me. :)

·
·
·
·
·
·
·

I understand! Gold and cryptocurrency are completely different classes in my view. Gold is not an investment or a speculation, but should be used as a store of savings imo. Gold should not be compared to crypto as they do completely different things . Crypto has tons of potential upside and also significant risk thus is a seperate profile. I would never buy gold speculating on its price, but to maintain my savings over long periods of time. I speculate on crypto all the time though! ..... I’ll hop off this post as this is Roy’s article but feel free to continue the discussion with me anytime . Thanks Luke

Welcome @roysebag, Glad to have you here for more ideas and outlooks. The precious metal community is growing day by day.

Great to see more gold phds on steemit. Been a gold money customer for a decade & have always appreciated the company. History doesn’t necessarily repeat itself, but math is always math & the future of gold is very bright & shiny by my maths 😆

i think your thinking is very right,,thank you for your valuable post and great analysis,,i am impressed

Welcome to Steemit. I love, love, LOVE gold. I started investing in dental scrap back in the 70's. It has saved me a couple of times over the years. I don't have much right now. But I prefer to physically own it. Kitco has a pool that you can buy into. You don't receive the gold. It is held at Kitco for you. I've never owned so much that I couldn't find room for it. I do own a little crypto. To me crypto is a lot riskier than gold, silver platinum and palladium. Of course to an investor, crypto is where it's at. I'm not an investor. I look forward to seeing how Goldmoney plays out.
image0022.gif
38.gif
@Lahvista

Welcome to Steemit. Thank you both as a customer and shareholder.

So A gold backed block chain that cannot be forked? The only issue I have with gold as the currency is the transportation of said goal of massive wealth this is the whole reason we started moving towards notes during the times of the Chinese empire .

Welcome to steemit from @mantuametals. Gold,Silver, Platinum and Palladium. Those ARE the Mantua Metals.

You are highly welcome Sir! @Roysebag its really a pleasure to have someone like you here on steemit, and i believe your presence will make a difference here.

Congratulations @roysebag! You have completed some achievement on Steemit and have been rewarded with new badge(s) :

You got your First payout
Award for the total payout received

Click on any badge to view your own Board of Honor on SteemitBoard.
For more information about SteemitBoard, click here

If you no longer want to receive notifications, reply to this comment with the word STOP

Upvote this notification to help all Steemit users. Learn why here!

Congratulations @roysebag! You received a personal award!

Happy Birthday! - You are on the Steem blockchain for 1 year!

Click here to view your Board

Support SteemitBoard's project! Vote for its witness and get one more award!

Congratulations @roysebag! You received a personal award!

Happy Birthday! - You are on the Steem blockchain for 2 years!

You can view your badges on your Steem Board and compare to others on the Steem Ranking

Vote for @Steemitboard as a witness to get one more award and increased upvotes!