Text 12065, 121 rader
Skriven 2008-03-08 12:47:09 av Michiel van der Vlist (2:280/5555)
  Kommentar till text 12002 av Robert Bashe (2:2448/44)
Ärende: Stability is security
=============================
Hello Bob,

On Friday March 07 2008 08:06, you wrote to me:

 MV>> Many "mystiques" have been abandonned or watered down over the
 MV>> ages. Few peole would hoard Kauri shells these days....

 RB> Who ever used cowrie shells as money except for a few islanders?

I think it is a good example of a commodity that was valuable because
"everyone" perceived it valuable. "Everyone" being all memmbers of the economy
concerned.

That system worked as long as it was a closed economy. Of course it collapsed
when it got exposed to another economy where the shells were almost worthless.
Then the bubble burst.

 MV>> So how come the bubble doesn't burst?

 RB> Because the total amount of gold ever mined doesn't increase markedly
 RB> over the years and the metal remains rare and attractive (color,
 RB> weight). It just _feels_ solid. Don't discount the emotional part of
 RB> it.

Cowrie shells also feel solid, They are rare and attractive too. For the people
that lived far away from the sea in New Guinnee.

 MV>> Well, RSA is not what it was 30 years ago and the "diamond bubble"
 MV>> at least /did/ burst...

 RB> Diamonds remain rare and particularly the larger ones (1+ carat) are
 RB> quite stable in value. You may be talking about the drop in value of
 RB> the smaller ones, less than a carat, since the market is meanwhile
 RB> flooded with them and they can even be made synthetically.

Synthesysing is only commercially attractive for industrial diamonds. The very
small ones found on diamond saw blades and the like.

And ironically the fact that "diamonds are forever" is partly responsible for
their drop in value. Diamond are virtually indestructible. Well, diamonds will
burn and turn into CO2 when exposed to a plasma torch, and each year a few of
them get lost by disasters like a sinking ship, but other than that, diamonds
are indeed forever. What is here, is here to stay. So as long as we keep
digging them up, the total amount of diamonds will keep increasing. It is not
hard to predict that eventually that will result in a drop in price. Which is
what happened, except for the very big ones.

 RB> Oh, and just try making gold to flood the market - alchemy is out of
 RB> style nowadays.

True. So unless the aliens land and give us cheap tranformation, there is
little risk of the market collapsing by a drastic increase in supply.

OTOH there is the demand. As someone remarked.  "women want pretty things made
of it".  Well, women are fickle. What if the demand collapses because women
decide that from now on they no longer want a ring of gold, but that they want
a ring of Tungsten instead?

Tungsten seems to be on the rise for jewellry.

 RB> RSA isn't what it used to be, as it's now part of black Africa with
 RB> all the term implies,

Gold is gold and diamonds are diamonds. It should not matter in who's hands the
mines are.

 RB> and the gold and diamond mines are starting to approach exhaustion.

That may be a better explanation.

Anyway, so much for this fellow's theory that "South africa would never go
broke becuase they have gold and diamonds".

 MV>> He took a pragmatic approach then. Of course he knew very well
 MV>> those toilets would be vandalised within two microseconds of
 MV>> delivery if not before.

 RB> Stolen, you mean. Not vandalized.

Ok.

 RB> And in spite of the ideology, he wasn't stupid. Gold is valuable and
 RB> is accepted the world over.

As I said, he took a pragmatic approach.

 MV>> Again a good observation, but not so good an explanation.

 RB> Then let me just remark that you may give me all the old, ugly,
 RB> valueless gold you possess and I will dispose of it for you. Not an
 RB> attractive suggestion? Why not, unless you too think gold is valuable.

I, like Lenin take a pragmatic approach. Of course gold is valuable, I never
claimed otherwise. It is valuable if only for the fact that so many people
believe it to be valuable and are willing to trade it for things that I find
valuable.

So, apart from the fact that I do not poses much gold, I have an old wedding
ring somewhere and there may be a few milligram to be scraped off from old
printed circuit boards in the junk box, no, I will not give you my gold.

I never claimed gold had no value. I just asked *why* so many people find it
valuable. And the answer seems to be "because many people find it valuable".
And that, while true as an observation, of course is not much of an
explanation.

 RB> And if so, why don't you explain that to me instead of asking for
 RB> explanations yourself?

I think the above explains my position well enough.

 RB> That's what's known as turning the tables" on someone ;-)

I still do not have a satisfactory answer to my question. Seems there isn't
one.


Cheers, Michiel

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