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croninsiglos t1_j1g7ydo wrote

Quote from David Dodge, former Governor of the Bank of Canada and Senior Advisor at Bennett Jones LLC.

> "[The] issue is quite clear, that it costs to hold gold, whereas holding U.S. or Chinese or Euro bonds yields you a return," said Dodge. "…That was a strong view. And a view that our international monetary system was in a place that was sufficiently robust, that holding this antique instrument of stability called 'gold' really didn't make any sense."

So you can hold on to gold, but it costs money to house it, secure it, etc and it may or may not increase in value, whereas you can get something on paper/digitally that will gain value and not cost as much to maintain.

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XSauravX OP t1_j1g9x2w wrote

But the paper is not gold right? Wouldn't it be better to hold like the real thing cuz it's more real..?

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nim_opet t1_j1gahks wrote

Why? If you go to buy a car and offer them a gold bar, would they take it? How is it more real than offering dollars?

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Ahnikuh t1_j1gay8y wrote

Because you can travel through time to almost any nation that has ever existed and exchange the gold for the current local currency. If you time travel with US dollars, you'll find the buying value fluctuates quite a bit. And since we have only figured out how to time travel into the future, investing in their currency now would result in a loss down the line.

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codalafin t1_j1gdtpz wrote

So it's cool if I'm a time traveler, got it. Unfortunately I am not.

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skaz915 t1_j1gne6n wrote

No, you are!

Strictly forward and at regular speed

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m477m t1_j1gtj2s wrote

I have traveled here from the year 19XX at the speed of 60 minutes per hour

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Ahnikuh t1_j1h4ybz wrote

You travel forward in time and even great empires fall. Someone will be a bag holder for all those investments. It won't be the guy with a pile of gold.

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nim_opet t1_j1hdk5x wrote

Let me know how the time travel works out for you. I’m going to buy coffee with dollars, will be back before you leave.

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XSauravX OP t1_j1gb5fy wrote

Cuz gold is finite and dollar ain't I mean the dollar is gonna be totally useless when you are trying to trade with someone who doesn't accept the dollar and gold is accepted by everyone u can easily exchange gold for the currency of that nation but there are country which will not accept the dollar

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croninsiglos t1_j1gd33a wrote

A bond has a guaranteed income vs gold which doesn't for any given currently conversion.

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XSauravX OP t1_j1gdpi2 wrote

What's the point in having 4% guaranteed income while inflation is 7% while gold stays neutral an ounce of gold is still an ounce of gold and usually if gold loses it value it recovers and everyone is fine but if the dollar starts gaining it's old value(deflation) everyone loses their shit

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croninsiglos t1_j1gdw4l wrote

How much did it cost you to house that gold, pay salaries for security, etc?

Due to inflation, the cost in gold is more and more for the same goods, because you still need to convert to the dollar.

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XSauravX OP t1_j1ge23i wrote

Pretty reasonable while looking at the ups

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MercSLSAMG t1_j1gmkg0 wrote

Gold value is related to the US dollar. An ounce of gold = a set amount of USD based upon commodity trading. So if the USD loses value so does gold.

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XSauravX OP t1_j1gmzap wrote

Actually it's just opposite the value of gold has risen and is at ATH rn while the USD is at ATL

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MercSLSAMG t1_j1gnqt2 wrote

If you want to buy 99.9% of stuff with gold you would first have to sell your gold to get a currency. And the exchange rate of gold is based upon USD per ounce.

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XSauravX OP t1_j1gny5m wrote

Yes and an ounce of gold has kept on rising Against the dollar it was around $21 or $34 in 1971 and it's over $1000 now

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MercSLSAMG t1_j1gqc65 wrote

https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart

More like ~$300 USD/ounce. So you take into the inflation of the USD which is 1 dollar in 1970 is roughly 7.50 today - that makes gold not have any increase whatsoever vs. the USD. In fact it's almost identical to a 4% cash bond.

So investing in gold is like investing in cash bonds - which is to say it's a shitty investment to make money, but has near guaranteed value.

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XSauravX OP t1_j1gn204 wrote

Actually it's just opposite the value of gold has risen and is at ATH rn while the USD is at ATL

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MoogTheDuck t1_j1gvb2g wrote

You aren't really asking about gold, you're asking about fiat currency. Some people say that the US dollar (or any fiat currency) isn't real, has no intrinsic value, only exists because we say it does... this is not true. Fiat currency is backed by law and the state's monopoly on legal violence. To say that the dollar is useless is basically saying the US economy doesn't exist.

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nim_opet t1_j1hdie5 wrote

Please find me a bakery that will accept your gold. I’ll wait

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croninsiglos t1_j1gcwfy wrote

Not if holding it costs you money.

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XSauravX OP t1_j1gdwt4 wrote

Yes holding usually costs the printable made-up currency

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tenebras_lux t1_j1gvh1x wrote

If the US, China and Euro bonds Canada has plummet, having gold is probably not going to help us.

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Leftstone2 t1_j1g8xio wrote

Back when countries all existed on the gold standard, governments needed to be able to back their currency with huge volumes of gold in reserves. In order to trust that a government's money was worth anything they needed to have sufficient gold in reserves they could potentially pay it out if money holders wanted gold instead. However, most governments began transitioning off the gold standard around the 1970s meaning that they had no need to hold enormous gold in reserves.

So why is the United States still holding so much gold when Canada is not? It costs a ridiculous amount of money to hold onto gold. You need a facility to keep it in, you need to guard it and the gold doesn't really do anything for you while you're holding it. Canada has realized that instead of paying all this money to hold, they can sell it and buy bonds, assets that don't cost any money to keep and actually make you money. The United States on the other hand keeps most of its reserves in Fort Knox, a military facility that they would still be paying for with or without gold because it guards numerous other secrets.

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[deleted] t1_j1gkzmi wrote

[deleted]

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Leftstone2 t1_j1gld3b wrote

Not to be pedantic but money is not "based primarily on new mortgages". I agree with you that we have a serious problem but incorrect assignations of blame paralyse our actual ability to solve the issue.

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jasandliz t1_j1g64mu wrote

Canada’s is sitting on lots of gold. It’s just in the ground. If people are buying what you can dig up, then print that money.

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XSauravX OP t1_j1g9ssc wrote

But it takes a lot of time to mine cuz it involves a lot of things and will that not create a problem when there is need of gold

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MercSLSAMG t1_j1gmr40 wrote

There will never be a need of gold as a currency, only as a commodity. Gold is the same as lumber and oil - they are commodities that are traded for a set value.

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brianbezn t1_j1glc5g wrote

Canada is trustworthy enought that people value their currency even if they don't have gold. Most countries, specially ones with good monetary policies have even close to enough bonds, international currencies or metals to back their whole currency. But it doesn't matter, as long as everyone knows it's much better for Canada that their currency continues to operate, nobody will believe they will rug pull all the people holding Canadian dollars.

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XSauravX OP t1_j1gobn5 wrote

So the Canadian gov sold all the gold cuz people believed in the government and expect them to make good economic decisions which will never hard the $CAD?

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brianbezn t1_j1gp7er wrote

The very simplified logic is this:

As long as Canada allows taxes to be paid with canadian dollars, the currency will hold value. As long as the government is making so much money out of taxes, they have no incentive to fuck up their own currency for short term gains.

Not having to have reserves to cover your currency is cheaper and allows you more freedom to do stuff to save the country from recessions or to drive growth among other stuff.

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Echo71Niner t1_j1gov1e wrote

Canada has $0 dollars in gold reserves today.

There is a saying owning it is not the same as storing it.

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explainlikeimfive-ModTeam t1_j1gvkbm wrote

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