Inspired by a commercial.

[FromTheSouth]

An ad for Monex asks if you had the choice between $50,000 in gold or cash, and you couldn't cash it in for five years, which would you choose?

Now, as a finance guy, I can assure you that when something reaches an all time high, it's a good time to sell. But, with the current state of the economy, commodities are going to be rated a good buy for a while. Gold is worth $1224.41 an ounce right now. It has been rising for years now.

American currency is backed by the government. The government can guarantee proper value for the note. Currency used to be backed by gold, in that there was an amount of gold held for each bill printed. That arcane practice has been abandoned. The problem is that when the American economy is shaky, the value of the dollar drops. While the economy is improving, we are not out of the woods yet. The future of our currency is shaky, in that nations continually threaten to unpeg themselves from our currency, meaning, there is less backing of the American government.

Dollars are the preferred payment for international purchases of large commodity orders. The bill is paid in dollars and then exchanged for national currency.

The question posed by the ad is interesting. How much faith do you have in the government. The higher the price of gold, the less the value of the dollar. Which one do you take?

 

[BladeRunner]

Gold is both stable and "real". That means it's based on something that actually exists in reality. Money as it is currently is ephemeral based on the overall value of the economy it's pinned to. When the economy goes shaky the dollar will go down. You should go with stability.

So definitely gold imo.

In fact, I believe that the dollar should be pinned to real gold value. This means that the dollar would represent a real piece of gold somewhere. As of right now, the fed can mess with the dollar's value and this leads to such things as inflation, which is exactly what's happening right now. The fed is printing money that doesn't exist, that is, it's not based on anything real. And this make the value of dollar go down. And you get stuck with the fallout.

They're doing this to prevent a depression, but this only temporarily stops the inevitable.

When people ignore the real value of things and trade in stuff that's not really there it's exactly like gambling.

The stock market did a bunch of gambling with YOUR money. Lost it. And then got a bailout from you!

What a racket!

 

[FromTheSouth]

But, the question asks you if the economy, in five years, will be more stable than it is now. One thing you learn in a finance program is that high and lows are temporary, and barring extreme external factors, everything settles in the middle.

If gold is worth 1224 now, for it to be worth more in five years, the economy would have to be worse than it is now. We appear to be moving in the right direction. What do you see that will send us into depression.

As much as I hate to say it, I see the nation getting stronger, and the purchasing power of the dollar going up in the next five years. I may be wrong, but my faith in the system leads me to take the cash.

 

[BladeRunner]

Ah ok. Well I'm not necessarily saying gold will be worth more in 5 years. Gold has a set real world worth. It would only appear to have more or less value if you were to compare it to say a 5 dollar bill. But I suppose other people will have different ideas on how you assign worth to things.

I can't say where the dollar bill is going because it's being arbitrarily messed with by people who think they know what they're doing and trying to prevent catastrophy. Whether they will help or hinder or not is anybody's guess. So far, they've only been doing more damage by things I mentioned like inflation.

 

[lordslix0129]

American currency is backed by the government. The government can guarantee proper value for the note.

Paper money has no value at all. Though it is tangible for the exchange of goods and services, but how long that lasts is up for debate.

How much faith do you have in the government. The higher the price of gold, the less the value of the dollar. Which one do you take?

I'm a libertarian, and I have no faith or trust in the government at all. I'll take the higher price of gold over the valueless paper dollar any day of the week.