Wednesday, October 1, 2008

Gold: Worth it?

So, I had a long discussion last night with friends about the whole economy thing. We started talking about how the price of gold vs. the dollar has gone up. Someone made the point that paper money is meaningless without gold to back it up.

This got me to thinking: Does gold REALLY have any intrinsic value over paper? I know it's a precious mineral. But I would suggest that it's only precious because we attribute value to it, just like we do with paper money. The mineral itself, while shiny, is basically useless unless you like gold jewelry or teeth. Sure, there's not a lot of gold out there, making it more valuable to people who already like gold, but shear scarceness does not making something valuable. There's not a lot of copies of The Outfield's "Play Deep" album out there anymore, but that doesn't mean it's instantly worth anything at all to human beings who come in contact with it.

The way I see it, if you're stranded in the desert with no food or water for days and find a piece of gold, I don't think you're going to be that thrilled. You might say to yourself, "I wish this was a gold cup of water or a golden plate of pancakes", but otherwise it's not much use to you. In fact, it's so heavy it might actually be a detriment, since you have a lot of trekking across the desert to do.

I guess all I'm saying is, in and of itself, gold isn't all that great. If everything were to collapse economically and we entered some Mad Max state of being (as CNN would seem to prefer), I really don't think Ft. Knox is going to be the first place that gets broken into. It would be pretty safe. Maybe keep an eye on your Targets or your Home Depots. But the gold will probably be fine. In fact, the following things would be of more value than gold in a post-apocalyptic, back-to-the-basics world; solely because they are useful. Here, ladies and gentlemen, are your future (more reliable) forms of currency:

Duct tape
Rubber Bands
Bungee Cords
Solar Powered Cars
Solar Powered Scooters
Solar Powered Calculators
Books from the humor section (especially if it's a bleak future)
Hand Crank LL Bean Flashlights
Leathermen tools and/or forks
Dustpans (could also double as shield)
Can openers
Roman Candles

I think this is a pretty complete list. All items represented here are actually more valuable than gold, if we're really talking long term. I suggest we switch to one of those now, maybe Duct Tape, just to ensure the ACTUAL value of the dollar. But I'm no economist.


Davis said...

I'm pretty sure that the American dollar is no longer backed by gold at all, but that at some point in the past century (1971, just looked it up) it was backed by "the full faith and credit of the United States government." In other words, "market forces" determine the value of the dollar, rather than it being linked to the price of one commodity (gold) world-wide. All that to say, the idea that "paper money is meaningless without gold to back it up" is no longer the case, and hasn't been in quite some time.

Still, I could see a duct-tape backed dollar as a solid standard, and the phrase "duct-tape standard" rolling easily into common parlance, as in "Chrysler is the duct-tape standard in automotive excellence," or whatever. Sorry. Can't help myself sometimes.

Wes W. said...

Ah, good point. I think what my friend meant is price of gold itself is rising, which is a bad indicator of how much the dollar is worth. Or something like that.

Amy said...

The soundtrack to much of my high school experience was The Outfield Play Deep cassette in my oh-so-awesome VW Bug. I LOVE that album. Didn't know it was "disappearing." I think my cassette melted long ago. So sad. Wait, what was my point?

Oh yeah...I am pro duct-tape.

holly said...

this is some pretty brilliant stuff here..
i think the dollar should be backed by kitkat bars, or my sister's version, the nochalotte??? which is really a big kit kat that italian food eating people seem to enjoy finishing their meal off with, and which, the other day i remarked looked an awful lot like the gold bars i remember seeing in cartoons, or like what you've featured here, or what they actually look like...