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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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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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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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Ahnikuh t1_j1gay8y wrote

Replying to nim_opet (#1,033,050)

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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XSauravX OP t1_j1gb5fy wrote

Replying to nim_opet (#1,033,050)

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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XSauravX OP t1_j1gdpi2 wrote

Replying to croninsiglos (#1,033,300)

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

Replying to XSauravX (#1,033,379)

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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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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Leftstone2 t1_j1gld3b wrote

Replying to [deleted] (#1,034,255)

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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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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brianbezn t1_j1gp7er wrote

Replying to XSauravX (#1,034,616)

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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MercSLSAMG t1_j1gqc65 wrote

Replying to XSauravX (#1,034,569)

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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MoogTheDuck t1_j1gvb2g wrote

Replying to XSauravX (#1,033,105)

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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explainlikeimfive-ModTeam t1_j1gvkbm wrote

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