I know people out there who have invested a lot in gold under the belief that in the event of like complete societal collapse or hyperinflation, they could use it for purchasing.

I have the hunch it’s a scam, but I haven’t learned enough monetary theory, business, or economics to understand why.

  • rc__buggy@sh.itjust.works
    473·
    2 days ago

    If you don’t hold it, you don’t own it.

    Investing in gold someone else holds is silly. Having a few ounces stashed away is just illiquid asset that should be a hedge against inflation.

    • tired_n_bored@lemmy.world
      313·
      2 days ago

      You can have liquid, premium-free gold by buying an ETF/ETC. Whether you hold it or not is irrelevant in case of hyperinflation. Stashing it away may be useful only if you like to touch it I guess

      • diablexical@sh.itjust.works
        171·
        2 days ago

        Executive Order 6102

        If it can be taken from you with the stroke of a pen, then it isn’t yours. Gold financial products are useful speculative assets but not for calamity insurance.

        • tired_n_bored@lemmy.world
          31·
          2 days ago

          ETFs may be useless in case of a calamity (in that case I’d stash bullets and canned food, not gold) but they’re useful for hyperinflation scenarios because the financial system keeps working. See Turkey and Argentina

          • chicken@lemmy.dbzer0.com
            5·
            2 days ago

            I think what they’re saying is that in a hyperinflation scenario, it is an option for the government to seize the physical gold backing the financial products people hold in order to continue paying to run the government now that fiat is worthless and they are having trouble with that.

            Gold you have buried in your basement, they will have to work a little harder to get.

            • tired_n_bored@lemmy.world
              1·
              1 day ago

              I understand but inflation is actually good for the debt of governments since there’s a surplus of money (they pay on the nominal value) so it’s unlikely they’d have to scrap personal gold in order to function.

              Anyway that’s just my two cents and I may be totally wrong. I’m not an economist

              • chicken@lemmy.dbzer0.com
                1·
                22 hours ago

                I looked up some stuff about Argentina’s financial crisis since you mentioned it before, and it looks like they actually did something a bit like what I’m talking about, directly appropriating the valuable assets they could in an effort to keep being able to function:

                In addition to the corralito, the Ministry of Economy dictated the pesificación; all bank accounts denominated in dollars would be converted to pesos at an official rate. Deposits would be converted at 1.40 ARS per dollar and debt was converted on 1 to 1 basis.[69]

                There’s some indication that this also applied to financial products:

                As noted above, a number of U.S. investors have filed ICSID arbitration claims against the government of Argentina. Most of these investors consider the January 2002 pesification of dollar-denominated contracts, and/or the ex post facto prohibition on contracts linked to foreign inflation indices, to be an effective expropriation of their investments

                I can’t specifically confirm this included gold held on paper, but I think it probably would have.

                As for the plausibility of this sort of thing happening in the US, in addition to the actions of Roosevelt mentioned by @[email protected], the main trigger for Nixon abandoning the gold convertibility of US dollars was France attempting to physically withdraw the gold they had stored in US banks, which they didn’t want to allow.