Why Gold Will Be Almost Worthless- [Archived]

Gold

Overview

Today a lot of people, us included are happy that their views are being borne out in the financial markets. On the lows, we sought points of view to challenge our opinion on Gold and Silver. That served us well. So we looked again. This time we wanted to stem our euphoria. And we found some things.

We also found yet another bearish gold article that was published and archived in a year. Worse, its premise is so bad we can't even debate it. In our attempt to control our own trending happiness, we ran into an article that's premise made us want to buy more at these prices.

BREAKING: FED DOES NOTHING

We have not given them much thought lately, as our opinion is that nothing can be done either way now. But here are the facts.

*FED LEAVES DISCOUNT RATE UNCHANGED AT 1%

*FED SAYS CASE FOR A RATE HIKE HAS CONTINUED TO STRENGTHEN- yet not strong enough

*FED: INFLATION HAS INCREASED SOMEWHAT SINCE EARLIER THIS YEAR-that is somewhat obvious

*FED DECIDED TO WAIT FOR TIME BEING FOR SOME FURTHER EVIDENCE against Hillary or Donald?

*FED REPEATS RISKS TO ECONOMIC OUTLOOK `APPEAR ROUGHLY BALANCED'- between heroin and cocaine, yes

moving on...

Introduction

Submitted for your approval, another article written by a man entrenched in the financialization of markets. An article that extols the virtue of man's intellect to make things better than they are. That there is nothing that cannot be improved upon given time and technological advancements. An article that has been prematurely archived in ... the Wayback Machine

Published Feb 13th, 2014 by Daily Finance
Archived: Feb, 7th, 2015
Excerpts from the article, [Soren K comments in brackets]
Pics added by Soren K.
Author Brian Lund

Why Gold Will Eventually Be Almost Worthless- [DELETED]

Alchemy aside, we're not going to figure out how to manufacture gold anytime soon, but I believe there's another reason that gold will eventually lose most of its value.

What Gold Did Once, Technology Now Does Better [ was not aware that there was a technological substitute for Gold]

Historically, gold has been used as a store of value, something you could carry across borders and cultures and understand that it could be exchanged for goods, services or even cash. It's rarity, malleability, and attractiveness made gold the preferred metal when making jewelry -- something you could give someone, or yourself, that expressed value.

The demand and trade in gold created markets in the yellow metal, and naturally, derivative products such as gold futures and ETF's were developed on the underlying commodity -- securities which became staples of the financial services industry.

Stats for 2012 -- the most current year available -- show that 90 percent of the gold produced each year is used for jewelry or investments, with only 10 percent going to industrial use. That means that almost all the demand is based on the archaic idea of gold as a universal store of value. But every day, the Internet and the free flow of data undermine that concept.

It's no longer necessary to store value in an inefficient and -- for practical purposes -- non-portable [sacrifice freedom for convenience is the message] format like gold. Information flow is no longer restricted by borders, and a small, lightweight piece of plastic can reveal [and be hacked] the value you own in the form of currency anywhere there's an Internet (or even a good phone) connection, eliminating gold's usefulness.

Who Wants Gold Most?

More than half of the world's jewelry demand for gold comes from India and China, countries that have 13 percent and 1.1 percent broadband penetration, respectively. Almost 30 percent more of the demand for jewelry gold comes from underdeveloped countries with similarly low broadband penetration rates. [ignorant people want gold] But as the populations of those countries continue to gain access to cheap data transfer services, they'll increasingly move to rely on electronic or, if you will, virtual stores of money. [and it is being done with gold too]

As this trend increases, it will become less and less profitable for the financial industry [because they can’t brand it] to deal in gold-based products, which will accelerate the drop in [less supply means less demand?] demand. Eventually, gold will only have a worth based on industrial demand, and little, if any, intrinsic value.

This won't happen overnight, of course. Habit and tradition take time to die out.[ as do the effects of drinking the financialization kool-aid too] Gold's value is based on faith –- like the faith you have in the U.S. dollar -- and there are many vested interests who want gold to retain its value the way it has for thousands of years. [and many more who do not]

The Internet in its current form, however, is barely 10 years old, and has yet to truly reach the masses. When it does, we've seen the speed at which technology changes habits and allows people to let go of closely held beliefs. It'll be no different with gold. Someday you'll see those gold coins, jewelry and bars in the same way you now look at a set of bound encyclopedias, a Beanie Baby, or a BlackBerry: something you once would have paid a lot to own, but that's now an obsolete anachronism, valuable only for its attractiveness and nostalgia value. In other words, not very valuable at all. [logical fallacy says what?]

Full article here

Tx- SK

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