Why Gold?(kevinlawler.com)
kevinlawler.com
Why Gold?
http://kevinlawler.com/gold
135 comments
> Neither of these have any bearing on the topic of the article itself.
I disagree there. I think diligent fact-checking encourages readers' trust. While I don't expect the author to have consulted a geologist, when I read "It's geologically distributed like this because it leaves the center of the Earth through volcanoes and other cracks", I wonder if any of our lava/magma comes from the core, because most of our core is just iron and nickel. We can imagine what a volcano that spews iron and nickle would look like. A quick check on Wikipedia indicates that our magma is formed in the crust and mantle.
I disagree there. I think diligent fact-checking encourages readers' trust. While I don't expect the author to have consulted a geologist, when I read "It's geologically distributed like this because it leaves the center of the Earth through volcanoes and other cracks", I wonder if any of our lava/magma comes from the core, because most of our core is just iron and nickel. We can imagine what a volcano that spews iron and nickle would look like. A quick check on Wikipedia indicates that our magma is formed in the crust and mantle.
I tend to agree that the technical inaccuracies are glaring enough to detract from the article. And I'm not even a geologist - just an amateur rockhound who tends to pick up bits of gold along with the other (more interesting) things I find in the mountains and deserts of Utah.
I feel as though Dave Barry would jump in and point out that you've just shared an awesome band name:
Felsic Magmas
Felsic Magmas
Cummingtonite.
(There is a long tradition, among earth scientists, of geological dirty puns.)
(There is a long tradition, among earth scientists, of geological dirty puns.)
We do know how to make the bedrock.
My thing was crystallography. We do have the odd characteristic habit.
If you can show that ancient placer deposits were the result of meteor strikes and not volcanic activity I'll change the article. Everything I read pointed to volcanic activity.
If you mean modern mining activity, not germane.
If you mean modern mining activity, not germane.
Placer deposits are secondary in nature. I was referring to the original source of the gold, not later erosion and deposition.
Most major gold deposits are related to orogenic events (mountain building). A significant subset of these are related to fluids associated with felsic magmatism. However, the majority of orogenic gold deposits are linked to fluids that escaped during wide-spread regional metamorhpism, as opposed to volcanic activity. In other words, they're not related to igneous activity, but rather with burial and heating of large regions of rocks. (Note - Metamorphism is not melting.)
That aside, my main gripe is with using "center of the earth".
Yes, many gold deposits are linked to igneous activity. However, even if it is volcanic, what does that have to do with "the center of the earth"? Volcanoes don't source anything from that deep. Nothing comes from the core.
The metorite bombardment I was referring to is an early phase in Earth's history. After the core and mantle segregated, most of the heavy elements should have wound up in the core and been unable to escape. However, we see relatively high concentrations of many heavy elements in the crust and mantle. The leading hypothesis is that the heavy elements were added during the meteorite bombardment phase of the planet's formation. Because the core had already segregated, the heavy elements added this way were able to remain in the mantle and crust.
At any rate, sorry to go on a rather technical rant. It distracts from the main point of the article.
Most major gold deposits are related to orogenic events (mountain building). A significant subset of these are related to fluids associated with felsic magmatism. However, the majority of orogenic gold deposits are linked to fluids that escaped during wide-spread regional metamorhpism, as opposed to volcanic activity. In other words, they're not related to igneous activity, but rather with burial and heating of large regions of rocks. (Note - Metamorphism is not melting.)
That aside, my main gripe is with using "center of the earth".
Yes, many gold deposits are linked to igneous activity. However, even if it is volcanic, what does that have to do with "the center of the earth"? Volcanoes don't source anything from that deep. Nothing comes from the core.
The metorite bombardment I was referring to is an early phase in Earth's history. After the core and mantle segregated, most of the heavy elements should have wound up in the core and been unable to escape. However, we see relatively high concentrations of many heavy elements in the crust and mantle. The leading hypothesis is that the heavy elements were added during the meteorite bombardment phase of the planet's formation. Because the core had already segregated, the heavy elements added this way were able to remain in the mantle and crust.
At any rate, sorry to go on a rather technical rant. It distracts from the main point of the article.
I've changed "center" to read "interior". I meant "center" as the complement of the surface.
Sorry but this theory is completely wrong.
Gold has value because it is a currency (medium of exchange) and money (store of value) due to the following properties:
a) Indestructible - bury it in your garden for fifty years, still the same.
b) Infinitely divisible - use it to buy a goat or the neighbouring kingdom.
c) Easy to detect adulteration
d) Stable supply (around 2% growth in supply annually since time immemorial)
e) No other use - Gold is terrible for most other things (swords, stirrups, axes....) so demand for it is purely for its value as a currency.
This is why rich people had a lot of gold - rich people have money and gold is money
There is one other very precious thing and that is diamond, basically the same except not divisible. Silver also caught on but not as much as gold. Pretty much every other metal lacked on one or more of the above properties.
Bitcoin is exactly the same, except you can send it over the wire.
Over the millenia, the properties people have looked for in currency have not changed.
Gold has value because it is a currency (medium of exchange) and money (store of value) due to the following properties:
a) Indestructible - bury it in your garden for fifty years, still the same.
b) Infinitely divisible - use it to buy a goat or the neighbouring kingdom.
c) Easy to detect adulteration
d) Stable supply (around 2% growth in supply annually since time immemorial)
e) No other use - Gold is terrible for most other things (swords, stirrups, axes....) so demand for it is purely for its value as a currency.
This is why rich people had a lot of gold - rich people have money and gold is money
There is one other very precious thing and that is diamond, basically the same except not divisible. Silver also caught on but not as much as gold. Pretty much every other metal lacked on one or more of the above properties.
Bitcoin is exactly the same, except you can send it over the wire.
Over the millenia, the properties people have looked for in currency have not changed.
> There is one other very precious thing and that is diamond, basically the same except not divisible
Diamons are a bit more complicated than that, owing to the monopolies on mining/cutting/selling (which likely artificially inflates prices) and general inability to re-sell diamonds near the cost at which they were purchased (which also keeps prices high).
https://en.wikipedia.org/wiki/Diamonds_as_an_investment
Diamons are a bit more complicated than that, owing to the monopolies on mining/cutting/selling (which likely artificially inflates prices) and general inability to re-sell diamonds near the cost at which they were purchased (which also keeps prices high).
https://en.wikipedia.org/wiki/Diamonds_as_an_investment
The monopoly aspect of the diamond market is a pretty outdated claim. It is not currently possible to synthesize large, flawless clear diamonds. The supply side (mining/cutting/selling) is largely constrained by the ability to unearth the rarest high-quality gemstones.
http://www.resourceinvestor.com/2013/04/09/diamonds-driven-m...
http://www.resourceinvestor.com/2013/04/09/diamonds-driven-m...
>e) No other use - Gold is terrible for most other things
Not true, Gold is one of the best conductors of electricity and is used in electronics and wiring.
Not true, Gold is one of the best conductors of electricity and is used in electronics and wiring.
Right. Gold has lots of practical uses and if it was valued according to them it would be worth at least as much as Bismuth at $25 per kg. But of course gold is $40,000 per kg.
Yes, but not at the time gold rose to prominence as a currency. In those days people needed mostly swords and axes.
Gold's not a great conductor. It's used because unlike copper or silver it doesn't tarnish.
And because it's shiny so it looks good in adverts.
And because it's shiny so it looks good in adverts.
This. Also, you can durably plate other metals with gold only tens-to-hundreds of atoms thick, so actual mass usage is kept very very small for these applications.
> e) No other use - Gold is terrible for most other things (swords, stirrups, axes....) so demand for it is purely for its value as a currency.
I don't think that's fair, unless ornamentation isn't considered a "use". Gold is pretty close to ideal for a primitive (and contemporary) jeweler/artisan because it's atypically easy to work with: it can take intricate detailing, it takes a high polish, it doesn't tarnish, it has a pleasing unusual color and unusual density, and it's forgiving (can be melted down). If gold were as common as dirt, it'd still be a preferred medium for ornamental purposes.
I don't think that's fair, unless ornamentation isn't considered a "use". Gold is pretty close to ideal for a primitive (and contemporary) jeweler/artisan because it's atypically easy to work with: it can take intricate detailing, it takes a high polish, it doesn't tarnish, it has a pleasing unusual color and unusual density, and it's forgiving (can be melted down). If gold were as common as dirt, it'd still be a preferred medium for ornamental purposes.
granted, but gold can be used as an ornament and money at the same time. use as an ornament does not detract from its use as money.
This.
Coming from a line of ancestors in India who basically lived a primitive lifestyle until 1950s, I have the knowledge passed down.
Gold is durable. It will last for generations. In a world without digital currency and modern safeguards, real wealth used to be: - Land - House - Cattle - Slaves - Stuff
None of the above (besides land) was durable for multiple decades (or even generations)
So, they created whole social systems around gold, preservation and transfer.
Coming from a line of ancestors in India who basically lived a primitive lifestyle until 1950s, I have the knowledge passed down.
Gold is durable. It will last for generations. In a world without digital currency and modern safeguards, real wealth used to be: - Land - House - Cattle - Slaves - Stuff
None of the above (besides land) was durable for multiple decades (or even generations)
So, they created whole social systems around gold, preservation and transfer.
>This is why rich people had a lot of gold - rich people have money and gold is money
It's my understanding that the richest people in America think gold a barberous relic.
I agree that gold has some interesting properties, but so much of the value-of-gold argument seems to stem from its historical uses. But we've used all kinds of things as currency. Using a metal we have to dig out of the ground seems so backwards to me.
It's my understanding that the richest people in America think gold a barberous relic.
I agree that gold has some interesting properties, but so much of the value-of-gold argument seems to stem from its historical uses. But we've used all kinds of things as currency. Using a metal we have to dig out of the ground seems so backwards to me.
Because they belong to the class of people who have been able to create an alternative, the dollar, which has no intrinsic rarity value and can be printed at will, and these seignorage rights have made them wealthy. Clearly they have every incentive to dismiss their primary foe, gold.
Yes, all of these are reasons why gold got started. A gold backed system is perhaps not even possible anymore let alone desirable.
Please see http://svs.io/post/69301254342/bitcoin-fud There are only two things we've used as money (metals and state power)
Please see http://svs.io/post/69301254342/bitcoin-fud There are only two things we've used as money (metals and state power)
One of the Rothschild's investment vehicles (RIT) listed on the FTSE still holds some gold - thats why I brought some shares for my ISA last Year
Neither of these things is money. Money is by definition a purely financial asset, a liability on somebody's balance sheet.
Gold (and bitcoin for that matter) is a real asset, it is nobody's liability.
Gold (and bitcoin for that matter) is a real asset, it is nobody's liability.
> Money is by definition a purely financial asset, a liability on somebody's balance sheet.
Maybe Econ 101 has changed, but I remember learning that "money" was:
- A medium of exchange
- A store of value
- A unit of account
When we were on the gold standard these were all true. Now that we're off the gold standard gold is no longer a medium of exchange or a unit of account, but one could argue pretty effectively that it's a better store of value than dollars have been, and it's done so for throughout history. (I'm talking time periods of decades, not the post 2008 crisis volatility here.)
The fact that the system we're using now is debt-based rather than based on precious metals should't change the definition of money, however.
Maybe Econ 101 has changed, but I remember learning that "money" was:
- A medium of exchange
- A store of value
- A unit of account
When we were on the gold standard these were all true. Now that we're off the gold standard gold is no longer a medium of exchange or a unit of account, but one could argue pretty effectively that it's a better store of value than dollars have been, and it's done so for throughout history. (I'm talking time periods of decades, not the post 2008 crisis volatility here.)
The fact that the system we're using now is debt-based rather than based on precious metals should't change the definition of money, however.
> - A medium of exchange
> - A store of value
> - A unit of account
Note that these are all social attributes. They are true because and only because society treats them so. A medium of exchange works because counterparties to the exchange accept the medium. A store of value works because counterparties in the near future will accept the currency at something similar to its current value - its value isn't heavily fluctuating. And a unit of account works because people physically write up accounts using the currency as a unit, issue invoices and demand payment using the unit, issue debt and demand interest, borrow and pay interest, all using the unit.
It's all a social construct.
(Gold's value is a social construct too, of course.)
> - A store of value
> - A unit of account
Note that these are all social attributes. They are true because and only because society treats them so. A medium of exchange works because counterparties to the exchange accept the medium. A store of value works because counterparties in the near future will accept the currency at something similar to its current value - its value isn't heavily fluctuating. And a unit of account works because people physically write up accounts using the currency as a unit, issue invoices and demand payment using the unit, issue debt and demand interest, borrow and pay interest, all using the unit.
It's all a social construct.
(Gold's value is a social construct too, of course.)
During the gold standard the government promised a fixed quantity of gold in exchange for the money that they created.
Money was a liability like now. It's just that the associated promise was different. Gold was not money then more than it is now.
Money was a liability like now. It's just that the associated promise was different. Gold was not money then more than it is now.
> Money was a liability like now. It's just that the associated promise was different.
Is there any promise associated with money now (except "you don't go to jail if you pay enough taxes in government's money")? If not, then I can't see money as a liability, only as an investment (i.e. the government prints money, sells it for other assets (FX, bonds, stocks, etc.).
Is there any promise associated with money now (except "you don't go to jail if you pay enough taxes in government's money")? If not, then I can't see money as a liability, only as an investment (i.e. the government prints money, sells it for other assets (FX, bonds, stocks, etc.).
You can only pay yours debts with the government with money created by the government. And this is not something new.
Government money is, also, a liability in a very real accounting sense too.
When the government creates money (by crediting the accounts of their providers, for instance) it is also registered as a liability for itself.
This same money always will be accepted back as a payment. That's the promise.
Government money is, also, a liability in a very real accounting sense too.
When the government creates money (by crediting the accounts of their providers, for instance) it is also registered as a liability for itself.
This same money always will be accepted back as a payment. That's the promise.
The promise is to accept for settlement of tax obligations.
No, they actually issued gold and silver currency, which was called "money" and was used directly as a medium of exchange. Money wasn't just exchangeable for gold, it was gold (and silver).
The widespread use of paper money is actually quite a recent innovation, compared to the millennia of history for gold and silver coinage. People didn't trust paper for a long time (and still don't, when times get troubled).
The Constitution of the United States (quite a recent document, historically speaking) invariably refers to "coining" money, not printing it.
The widespread use of paper money is actually quite a recent innovation, compared to the millennia of history for gold and silver coinage. People didn't trust paper for a long time (and still don't, when times get troubled).
The Constitution of the United States (quite a recent document, historically speaking) invariably refers to "coining" money, not printing it.
'issued gold and silver currency, which was called "money"'
If the value of the coin comes from the material, why issue coins in the first place?
If the value of the coin comes from the material, why issue coins in the first place?
Because it's harder to make a counterfeit coin than an counterfeit irregular lump of metal.
> Gold was not money then more than it is now.
Actually, once the state stopped recognizing gold as the standard economic unit of account, it ceases to be money. It becomes just another commodity, like corn or platinum.
Another natural consequence of gold having become a commodity is that monetary policies cease to cover the value of gold, thus it fluctuates naturally in the market just like any product, and is also subjected to economic bubbles.
The price fluctuation alone makes gold unsuited to be used as money, as it is no longer suited to store value.
Actually, once the state stopped recognizing gold as the standard economic unit of account, it ceases to be money. It becomes just another commodity, like corn or platinum.
Another natural consequence of gold having become a commodity is that monetary policies cease to cover the value of gold, thus it fluctuates naturally in the market just like any product, and is also subjected to economic bubbles.
The price fluctuation alone makes gold unsuited to be used as money, as it is no longer suited to store value.
If I hold a $100 bill in my hand, who is the someone else with the liability on it's balance sheet? The government?
Yes, money is a government liability (the USA government in your example).
If you don't believe that, try to pay your taxes with gold and see what happens.
If you don't believe that, try to pay your taxes with gold and see what happens.
Not quite. A Federal Reserve Note is a debt instrument issued by the Federal Reserve Bank, which is as much "government" as the Post Office, Fannie Mae, or Amtrak--a tiny bit government, but mostly independent.
In theory, a Federal Reserve Note should be redeemable in United States Notes or in coins stamped by the U.S. Mint, but thanks to legal tender laws, the note is a debt instrument, which means it may be discharged by tendering Federal Reserve Notes in place of whatever the debt actually calls for.
So you go to the Fed and ask to redeem a $100 bill, and they will hand it right back to you. Technically speaking, they should give you a different $100 bill, other than the one you are trying to redeem, but really, if you get that far, you're already lucky they aren't physically throwing you out of the building.
This is one of those "laws and sausages" things. You're far better off not looking at it too closely if you want to continue to enjoy the benefits unburdened by unnecessary knowledge.
In theory, a Federal Reserve Note should be redeemable in United States Notes or in coins stamped by the U.S. Mint, but thanks to legal tender laws, the note is a debt instrument, which means it may be discharged by tendering Federal Reserve Notes in place of whatever the debt actually calls for.
So you go to the Fed and ask to redeem a $100 bill, and they will hand it right back to you. Technically speaking, they should give you a different $100 bill, other than the one you are trying to redeem, but really, if you get that far, you're already lucky they aren't physically throwing you out of the building.
This is one of those "laws and sausages" things. You're far better off not looking at it too closely if you want to continue to enjoy the benefits unburdened by unnecessary knowledge.
Well, you have a point about the nature of the Fed, but it's not the normal case. Most governments own their National Banks.
In any case, I don't think that changes the essence of what we were discussing.
In any case, I don't think that changes the essence of what we were discussing.
In practice I don't think it's useful to think about it in terms of liability. That $100 bill is a share in the net wealth of the nation. This is why when a country prints a lot if its currency to fund government spending, the relative value of that currency goes down. There are more 'shares' in the economy now, so each one represents a smaller slice of the pie than it did before. So if there is any liability, it's distributed across everyone else holding that currency.
Of course the value of anything is only relative to what anyone is prepared to pay for it, it's a matter of sentiment, so the value of an economy can go up or down depending on perceived risks, liabilities or opportunities and thus is reflected in the value of the currency compared to other assets or currencies.
Of course the value of anything is only relative to what anyone is prepared to pay for it, it's a matter of sentiment, so the value of an economy can go up or down depending on perceived risks, liabilities or opportunities and thus is reflected in the value of the currency compared to other assets or currencies.
I think so.
(c) easy to detect adulteration
http://www.popsci.com/diy/article/2008-03/how-make-convincin...
(tungsten. Same density as gold. Wrap a tungsten bar in gold, and you pass weight, density, and surface chemical tests. W is much, much cheaper than gold most of the time.)
http://www.popsci.com/diy/article/2008-03/how-make-convincin...
(tungsten. Same density as gold. Wrap a tungsten bar in gold, and you pass weight, density, and surface chemical tests. W is much, much cheaper than gold most of the time.)
Tungsten was first isolated in 18th century. Gold was already established by then.
Testing a gold bar's electrical conductivity will easily tell the difference between a real and tungsten filled gold bar. So will it's capacitance. Given the simplicity of this test (touch one or two wires to the bar and measure) this doesn't seem a very good technique.
And it's much, much harder to process (harder than most metals, highest melt point). The effort alone would make it at least as valuable as gold in the 19th century.
Gold has been a currency. It isn't really any longer. Now it's almost an anti-currency.
If the dollar is a good medium of exchange and store of value, I have no need of gold. Dollars are considerably more convenient. But if the dollar isn't a good store of value (or I suspect it won't be in the future), then I can use gold as a store of value, for the reasons you stated. Gold therefore becomes my alternative to currency. Functionally, it's almost a short on currency.
But the currency has to be fairly bad for this to work. Example: Gold was $1700 maybe five years ago. (Can't get exact dates from Yahoo Finance's current site, so I'm working from memory.) It fell to $1050 maybe a year ago. Now it's $1200. That makes the dollar look like a pillar of stability.
If the dollar is a good medium of exchange and store of value, I have no need of gold. Dollars are considerably more convenient. But if the dollar isn't a good store of value (or I suspect it won't be in the future), then I can use gold as a store of value, for the reasons you stated. Gold therefore becomes my alternative to currency. Functionally, it's almost a short on currency.
But the currency has to be fairly bad for this to work. Example: Gold was $1700 maybe five years ago. (Can't get exact dates from Yahoo Finance's current site, so I'm working from memory.) It fell to $1050 maybe a year ago. Now it's $1200. That makes the dollar look like a pillar of stability.
You are taking this from the wrong angle: the fact that gold price changed from $1700 to $1050 to $1200 says nothing about value of gold - instead it says everything about the value of dollar. Simple example:
in 1915, or so, Henry Ford released Model T, first mass produced car. The price of Model T at that time was about $300 dollars, which was equal to 20 ounces of gold. Now, 100 years later, 20 ounces of gold still can buy you a brand new car, while 300$ only buys you set of tires and some gas.
in 1915, or so, Henry Ford released Model T, first mass produced car. The price of Model T at that time was about $300 dollars, which was equal to 20 ounces of gold. Now, 100 years later, 20 ounces of gold still can buy you a brand new car, while 300$ only buys you set of tires and some gas.
> You are taking this from the wrong angle: the fact that gold price changed from $1700 to $1050 to $1200 says nothing about value of gold - instead it says everything about the value of dollar.
If what you say was true, how would you explain the fact that gold prices also fluctuated wildly with regards to all currencies used in the world?
> in 1915, or so, Henry Ford released Model T, first mass produced car. The price of Model T at that time was about $300 dollars, which was equal to 20 ounces of gold. Now, 100 years later, 20 ounces of gold still can buy you a brand new car, while 300$ only buys you set of tires and some gas.
You need to discover what inflation is. Adjusted to inflation, $300 in 1915 are equivalent to around $7k in 2016.
Furthermore, prices are dictated by the purchasing power of the target market which also varied significantly since 1915.
If what you say was true, how would you explain the fact that gold prices also fluctuated wildly with regards to all currencies used in the world?
> in 1915, or so, Henry Ford released Model T, first mass produced car. The price of Model T at that time was about $300 dollars, which was equal to 20 ounces of gold. Now, 100 years later, 20 ounces of gold still can buy you a brand new car, while 300$ only buys you set of tires and some gas.
You need to discover what inflation is. Adjusted to inflation, $300 in 1915 are equivalent to around $7k in 2016.
Furthermore, prices are dictated by the purchasing power of the target market which also varied significantly since 1915.
> the fact that gold price changed from $1700 to $1050 to $1200 says nothing about value of gold - instead it says everything about the value of dollar.
No. The value of the dollar did not change to that degree in the past five years. The only way you can define that as being changes in the value of the dollar is to define the value of the dollar in terms of gold. Then you're correct, by definition, but your argument is circular.
Your example over the last 100 years may be valid. For the last five years (or even 40), though, the change in the value of gold has been a reflection of peoples' fears about paper currency, rather than an actual measure of the value of that currency.
No. The value of the dollar did not change to that degree in the past five years. The only way you can define that as being changes in the value of the dollar is to define the value of the dollar in terms of gold. Then you're correct, by definition, but your argument is circular.
Your example over the last 100 years may be valid. For the last five years (or even 40), though, the change in the value of gold has been a reflection of peoples' fears about paper currency, rather than an actual measure of the value of that currency.
The point is that, unlike gold, dollar (or any fiat currency for that matter) has no intrinsic value, only the value we give it in our minds as average of our greed and fear.
Exercise for the reader: take a look at this plot [1] and this plot [2] and guess which year US government stopped using gold standard for dollar.
[1] http://stooq.pl/q/?s=xauusd&c=100y&t=l&a=lg&b=0
[2] http://static4.businessinsider.com/image/50e77df8ecad049b560...
Exercise for the reader: take a look at this plot [1] and this plot [2] and guess which year US government stopped using gold standard for dollar.
[1] http://stooq.pl/q/?s=xauusd&c=100y&t=l&a=lg&b=0
[2] http://static4.businessinsider.com/image/50e77df8ecad049b560...
Define "intrinsic".
Gold doesn't have intrinsic value either, except for it's industrial value. Gold's value as a currency is also "only the value we give it in our minds as average of our greed and fear."
Gold doesn't have intrinsic value either, except for it's industrial value. Gold's value as a currency is also "only the value we give it in our minds as average of our greed and fear."
Be fair; that Consumer Price Index rise also corresponds to the beginning of consumerism. Lots more changed than just a currency basis. That was probably the least important?
> Functionally, it's almost a short on currency.
Every currency (except the one you have to pay taxes/debts in) is a "short on currency" - all FX crosses are long one currency and short the other.
Every currency (except the one you have to pay taxes/debts in) is a "short on currency" - all FX crosses are long one currency and short the other.
I think there's a problem with this ((d) in particular) because you don't need a stable supply of gold per se, but a stable supply of all things fulfilling the other four properties, plus (d) independently.
So if you start finding smold or plold or frold (or creating bitcoin or smitcoin or whatever) that each has those five properties, currency-wise they're in essence all the same thing.
If they're all the same thing, just call them all "gold", (d) for this aggregate no longer holds. However there's no property that distinguishes one from the other as a currency, so you can't just "pick one" and move on. So essentially currency no longer exists.
So if you start finding smold or plold or frold (or creating bitcoin or smitcoin or whatever) that each has those five properties, currency-wise they're in essence all the same thing.
If they're all the same thing, just call them all "gold", (d) for this aggregate no longer holds. However there's no property that distinguishes one from the other as a currency, so you can't just "pick one" and move on. So essentially currency no longer exists.
The value of gold depends on the supply of it. The value of silver depends on the supply of it. The value of gold does not depend on the supply of silver. The two are separate currencies.
So for a currency to be stable, its supply has to be stable. The supply of other things need not be.
So for a currency to be stable, its supply has to be stable. The supply of other things need not be.
The article covers how it started. If you are in currency-less barter only hunter gatherer society, it is not yet a medium of exchange. You would have better luck trading with food than anything else in those societies, as covered in the article.
Also diamond wasn't and still isn't used as a currency. Only in the last 10 years, it became a somewhat semi-serious investment grade material.
Also diamond wasn't and still isn't used as a currency. Only in the last 10 years, it became a somewhat semi-serious investment grade material.
Yes and at some point you need a token of value. Imagine the plight of the itinerant tradesman as he herds his chickens through the forest from village to village simply so he can trade.
No no, food is far too cumbersome to be a token of value. Much better to slip a tiny token into ones waistband and exchange it in the markets. Gold was an exceedingly good token of value.
Diamonds are not currency because they are not easily divisible. But they have been a store of value for centuries now, and that makes them money.
No no, food is far too cumbersome to be a token of value. Much better to slip a tiny token into ones waistband and exchange it in the markets. Gold was an exceedingly good token of value.
Diamonds are not currency because they are not easily divisible. But they have been a store of value for centuries now, and that makes them money.
> food is far too cumbersome to be a token of value. Much better to slip a tiny token into ones waistband and exchange it in the markets.
Or massive stones? https://en.wikipedia.org/wiki/Rai_stones
http://www.npr.org/sections/money/2011/02/15/131934618/the-i...
Or massive stones? https://en.wikipedia.org/wiki/Rai_stones
http://www.npr.org/sections/money/2011/02/15/131934618/the-i...
You missed the point completely. Indeed you need to reverse the order of your underlying axiom, completely. That gold has value because it serves as money is obvious. The real question, which the author does a very good job at least at beginning to broach, is why did it, and not some other material or scarce human creation, become money in the first place.
Gold is also superior to silver for jewellery. It is more malleable, more tarnish resistant, and less reactive for those with sensitive skin. (People had allergic reactions back in the stone age too.)
Is d) actually desirable? I think what we really want is a stable representation of value. These days that means actively managing the money supply in response to movements in the economy.
a) necessary but not sufficient
b) necessary but not sufficient
c) not when trading coins
d) no, see spanish price revolution
e) no, see jewelry and ornaments
b) necessary but not sufficient
c) not when trading coins
d) no, see spanish price revolution
e) no, see jewelry and ornaments
[deleted]
Kinda off topic, but here's on Einstein's relativistic effects in gold atom, that give gold its glow: "Why is Gold yellow? Special relativity causes length contractions and time dilations in objects that travel at speeds approaching the speed of light. The valence electrons of large atoms such as gold have such high energies that their speeds actually approach the speed of light—and the relativistic effects on those electrons can become quite large.
Special relativity changes the energy levels of the 5d orbital in a gold atom so that the energy difference between 5d and 6s orbitals equals the energy of a ‘blue’ photon. Gold thus absorbs blue light when electrons are elevated from the 5d to the 6s orbitals, while other metals do not. These special relativistic changes to the energy levels of atomic orbitals are slightly different for each element.
Relativistic contractions on gold’s valence electrons (the 6s subshell) pull the 6s electron very close to the nucleus. Being closer to the nucleus makes the 6s electron less accessible to any potential reactants. Special relativity is not only the reason for gold’s yellow colour but also for its very low reactivity!"
https://jameskennedymonash.wordpress.com/2014/07/13/why-is-g...
https://www.fourmilab.ch/documents/golden_glow/
Special relativity changes the energy levels of the 5d orbital in a gold atom so that the energy difference between 5d and 6s orbitals equals the energy of a ‘blue’ photon. Gold thus absorbs blue light when electrons are elevated from the 5d to the 6s orbitals, while other metals do not. These special relativistic changes to the energy levels of atomic orbitals are slightly different for each element.
Relativistic contractions on gold’s valence electrons (the 6s subshell) pull the 6s electron very close to the nucleus. Being closer to the nucleus makes the 6s electron less accessible to any potential reactants. Special relativity is not only the reason for gold’s yellow colour but also for its very low reactivity!"
https://jameskennedymonash.wordpress.com/2014/07/13/why-is-g...
https://www.fourmilab.ch/documents/golden_glow/
This is too cool not to try and incorporate.
Not to sound harsh, but are there any historical sources or references for this essay?
It's likely another just-so story about gold and the emergence of money from the barter economy.
https://en.wikipedia.org/wiki/Just-so_story
It's likely another just-so story about gold and the emergence of money from the barter economy.
https://en.wikipedia.org/wiki/Just-so_story
It's ridiculous and completely made up. He's treating prehistory like history -- we have absolutely no clue how this stuff evolved. Based on the role of art in history, it's highly likely that people did what they did with gold because religion / witch doctory, not economics.
"Rich people" with lots of stuff in the history we know about were rich because of force and threat, not trade.
Edited to add: that doesn't mean trade didn't happen, just that people mostly weren't "rich" off of it.
"Rich people" with lots of stuff in the history we know about were rich because of force and threat, not trade.
Edited to add: that doesn't mean trade didn't happen, just that people mostly weren't "rich" off of it.
It's probably the case that barter economies only emerge in cultures that have a concept of money, so even this is a just-so story.
You might enjoy Nick Szabo's work on the subject: http://szabo.best.vwh.net/shell.html
Here is my serious question for Hacker News community: who the upvote this piece of ? I mean, seriously, guys, why, in the name of all that is (even if marginally) correct, did you up vote this piece of fantasy?
I frankly don't think this piece of deserve any more attention than the few minutes I spent insulting it, but I think my insults require defense. After all, they are probably less trashy than their target (in this case; note: I am generally against insult; but guys, I can't help myself). Here goes the defense (feel free to ignore it; again, just ignore this whole things to save yourself a few precious minutes): 1. Gold is among the most useful material on earth. It is impervious to any kind of oxidization, as well as soft and easy to work with, plus conducts heat and electricity superbly. This means that even the least developed societies can fashion high quality tools out of it (from bowls to utensils to weapon). The idea that somehow gold is useless (beside decoration) is beyond laughable. 2. Secondly, the idea of rich and poor within a lowly bartering-only society is also laughable (well, this one is slightly less obvious than the uselessness of gold). Wealth implies accumulation, which implies settlement, which implies (relatively) high food production capacity. By then, oops, you are talking about relatively advanced societies. There is one thing I have yet to find: a society with wealth that looks at gold with no more than amusement.
So, 1+2 means that a place where rich people only employ gold for decoration is a fantasy by idiots. Again, I am against name-calling, but this is just so.... Sorry, my bad. Anyhow, please save yourself and STOP UPVOTING IDIOCY.
I frankly don't think this piece of deserve any more attention than the few minutes I spent insulting it, but I think my insults require defense. After all, they are probably less trashy than their target (in this case; note: I am generally against insult; but guys, I can't help myself). Here goes the defense (feel free to ignore it; again, just ignore this whole things to save yourself a few precious minutes): 1. Gold is among the most useful material on earth. It is impervious to any kind of oxidization, as well as soft and easy to work with, plus conducts heat and electricity superbly. This means that even the least developed societies can fashion high quality tools out of it (from bowls to utensils to weapon). The idea that somehow gold is useless (beside decoration) is beyond laughable. 2. Secondly, the idea of rich and poor within a lowly bartering-only society is also laughable (well, this one is slightly less obvious than the uselessness of gold). Wealth implies accumulation, which implies settlement, which implies (relatively) high food production capacity. By then, oops, you are talking about relatively advanced societies. There is one thing I have yet to find: a society with wealth that looks at gold with no more than amusement.
So, 1+2 means that a place where rich people only employ gold for decoration is a fantasy by idiots. Again, I am against name-calling, but this is just so.... Sorry, my bad. Anyhow, please save yourself and STOP UPVOTING IDIOCY.
Yes, thank you, this article is trash, to the point where I have to wonder if it isn't some attempt at trolling akin to "the purpose of a ninja is to flip out and kill people".
http://www.neatorama.com/2010/11/30/why-gold-is-the-ideal-me...
http://www.neatorama.com/2010/11/30/why-gold-is-the-ideal-me...
> I have yet to find a society with wealth that looks at gold with no more than amusement.
The Aztec Empire (and most other New World cultures) knew and used gold, and fits your definition perfectly. They used cacao beans as storage of value. The Spaniards — who threw cacao beans in the water but were ready to kill for the gold — were quite a surprise for them.
The Aztec Empire (and most other New World cultures) knew and used gold, and fits your definition perfectly. They used cacao beans as storage of value. The Spaniards — who threw cacao beans in the water but were ready to kill for the gold — were quite a surprise for them.
Gold isn't useless, it's great for decoration, jewelry and small sculptures. For instance, because it's so malleable, you can easily turn it into a sheet and apply it to a sculpture, as the Greeks did.
We don't usually think of decoration as something that's worth a lot of money, but that's partly because we have access to so many cheap organic pigments. Before the 19th century, natural pigments could be very expensive and societies spent a lot of money on them (like the Greeks who painted and gold-plated their statues).
We don't usually think of decoration as something that's worth a lot of money, but that's partly because we have access to so many cheap organic pigments. Before the 19th century, natural pigments could be very expensive and societies spent a lot of money on them (like the Greeks who painted and gold-plated their statues).
That's not really true. Gold is used in decoration because it's expensive. i.e., it's use as a status symbol derives from its costliness primarily, not the other way around.
Aluminium had a similar status, at one point it was used for decorating the most fancy things, it was a show of wealth and power and more expensive than gold or silver. If you had aluminium cutlery, you were the bomb. Then they were able to produce aluminium cheaply, instead of mine the small amounts that naturally exist. It became dirt cheap, and thereby lost its status.
Was it any less decorative? No. The cutlery still looked the same. It became uninteresting to use aluminium not because it became ugly, but because it became cheap.
Same with gold. Yes we sorta-kinda like shiny things, but we don't like the gold apple watch the best because we like the tacky golden color so much, we like it because we all know it's expensive. There are lots of pretty metals, pretty colours etc, it's not what gives gold its value.
Of course gold isn't useless, it has industrial applications and indeed artistic applications as you mention. But what is clear as day, is that it trades at a value that far exceeds this use, at a value that can't be explained by its functional utility alone.
Aluminium had a similar status, at one point it was used for decorating the most fancy things, it was a show of wealth and power and more expensive than gold or silver. If you had aluminium cutlery, you were the bomb. Then they were able to produce aluminium cheaply, instead of mine the small amounts that naturally exist. It became dirt cheap, and thereby lost its status.
Was it any less decorative? No. The cutlery still looked the same. It became uninteresting to use aluminium not because it became ugly, but because it became cheap.
Same with gold. Yes we sorta-kinda like shiny things, but we don't like the gold apple watch the best because we like the tacky golden color so much, we like it because we all know it's expensive. There are lots of pretty metals, pretty colours etc, it's not what gives gold its value.
Of course gold isn't useless, it has industrial applications and indeed artistic applications as you mention. But what is clear as day, is that it trades at a value that far exceeds this use, at a value that can't be explained by its functional utility alone.
A minor nitpick: aluminum was mined before and after it became cheap, what made it cheap was improvement in the process of refining the mined ore into pure aluminum, not that it was suddenly "produced cheaply" instead of "mining the limited amounts that naturally exist".
thanks
Ancient Greece is still an age or two away. I am interested in your pigment argument, however. If I get into specifics about what makes gold good art I'll check into that. It would be interesting to look into, say, the price of gold versus purple dye in Ancient Rome.
The classic example of this is ultramarine blue in the Renaissance. Typically cost three times its weight in gold. Painters often had to have their patrons supply the ultramarine if they wanted blue in their painting. Having a very blue painting was naturally a status symbol.
"The things which have the greatest value in use have frequently little or no value in exchange; on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarcely anything; scarcely anything can be had in exchange for it. A diamond, on the contrary, has scarcely any use-value; but a very great quantity of other goods may frequently be had in exchange for it."
-Adam Smith , from An Inquiry into the Nature and Causes of the Wealth of Nations
-Adam Smith , from An Inquiry into the Nature and Causes of the Wealth of Nations
But gold isn't just great, it made massive amount of people crazy. Is it the color that tickles our brain much more than red green or blue ? ...
> We don't usually think of decoration as something that's worth a lot of money
The fashion and jewelry industries might disagree.
The fashion and jewelry industries might disagree.
"Gold is not useful"
Gold is useful. Good thermal conductivity and low chemical reactivity with many corrosive compounds.
Using it for money and decoration is perhaps the least sensible thing.
Gold is useful. Good thermal conductivity and low chemical reactivity with many corrosive compounds.
Using it for money and decoration is perhaps the least sensible thing.
We all know that gold has industrial uses. But those won't appear for thousands of years. Mentioning that you can use gold in integrated circuits does nothing to explain gold in the Stone Age.
The fact that gold doesn't corrode explains why it is used for money and decoration. You don't want your decorations to tarnish, and you don't want your currency to degrade over time. When it comes to resisting time, you just can't beat gold.
Hmm... I think if gold had been cheap enough, the ancients would have used it for some practical purposes. Cooking and drinking vessels that didn't corrode, for instance. Also plating on iron and steel items to keep them from corroding (non-electro gold plating has been known since ancient times).
Several others come to mind.
Several others come to mind.
Fair point. So, I look forward to the follow ups :)
If it's just the pretty, shiny stuff that makes it valuable, then gold will always have some value (bar nuclear synthesis and Star Trek replicators).
If it's scarcity, then there's market manipulation and alternative artificial currency a la Bitcoin.
If it's just the pretty, shiny stuff that makes it valuable, then gold will always have some value (bar nuclear synthesis and Star Trek replicators).
If it's scarcity, then there's market manipulation and alternative artificial currency a la Bitcoin.
While it is useful, I think that wasn't what the author meant. There is actually very tiny amounts of gold used in manufacturing etc. Compared to iron and other metals gold isn't used much is probably more what was meant.
Gold is actually mostly used for money, decoration, and collecting which is what drives the price to such high levels. I agree it isn't all that sensible when you try to make sense of it.
Gold is actually mostly used for money, decoration, and collecting which is what drives the price to such high levels. I agree it isn't all that sensible when you try to make sense of it.
Today that's true, but if we go back and look at the origins of gold in human society, the question is really, why did gold become so desirable vs. any other substance ancient humans observed.
1) The low chemical reactivity means it doesn't tarnish or break down. This is a BIG one for jewelry--a gold ring still looks bright and shiny 50 years later, unlike other metals, shells, bone, or pieces of wood, dyes, paint, etc.
2) It's continuously divisible into any amounts. You can easily chop a ring in half and sell half of it, if you only want to barter with a portion of your gold.
1) The low chemical reactivity means it doesn't tarnish or break down. This is a BIG one for jewelry--a gold ring still looks bright and shiny 50 years later, unlike other metals, shells, bone, or pieces of wood, dyes, paint, etc.
2) It's continuously divisible into any amounts. You can easily chop a ring in half and sell half of it, if you only want to barter with a portion of your gold.
I'm not sure I'd like a coin that has high chemical reactivity. They got that part right.
Meh - we get on fine with paper and plastic money in many places. Or digital. I'm glad I don't have to buy dinner with a big bag of platinum, gold, silver, copper coins etc.
Is this article well-researched, or is it mostly speculation? I'm fine with speculation, just I'm surprised it made the front page of HN.
Gold has some uses, but the utility value is far less than the monetary value.
The reason for this is a sort of religious idolization.
>When I was older, I learned what the fighting was about that winter and the next summer. Up on the Madison Fork the Wasichus had found much of the yellow metal that they worship and that makes them crazy, and they wanted to have a road up through our country to the place where the yellow metal was...Our people knew there was yellow metal in little chunks up there; but they did not bother with it, because it was not good for anything.
-Black Elk
The reason for this is a sort of religious idolization.
>When I was older, I learned what the fighting was about that winter and the next summer. Up on the Madison Fork the Wasichus had found much of the yellow metal that they worship and that makes them crazy, and they wanted to have a road up through our country to the place where the yellow metal was...Our people knew there was yellow metal in little chunks up there; but they did not bother with it, because it was not good for anything.
-Black Elk
The success of Bitcoin has led me to think that perhaps its concept of value is not wholly new, but rather illuminates how money has worked all along.
All my life, explanations of why gold is valuable have all boiled down to more intellectually nuanced versions of "Ooh, Shiny." But I suggest that gold is agreed to have value because of two traits it has which can be seen as analogous to traits of Bitcoin.
First, worked gold items like coins and jewelry represent a certain measurable and comprehensible amount of work. Not too much and not too little, in terms of available labor resources. Second (as I learned from the TV show Connections), the purity of a nugget of gold can be quickly estimated to a high confidence level by rubbing it on the smooth surface of a black basalt river rock. The deepness of the yellow of the streak on the rock immediately shows the quality of the sample.
So I believe gold is agreed to have value because to our ancestors gold artefacts demonstrated a certain amount of work invested, and the quality of those artefacts could be quickly evaluated with an efficient "proof of work" algorithm.
Why does "proof of work"=value in the Bitcoin ecosystem? In part because it guarantees a cap on inflation (thus preserving value while allowing appreciation), in part because dedicating valuable resources to mining represents a vote of confidence in the system.
I believe the simplest explanation for why gold has value is that there is nothing new under the sun, and analogous reasons applied when gold first came into use in human trading systems.
All my life, explanations of why gold is valuable have all boiled down to more intellectually nuanced versions of "Ooh, Shiny." But I suggest that gold is agreed to have value because of two traits it has which can be seen as analogous to traits of Bitcoin.
First, worked gold items like coins and jewelry represent a certain measurable and comprehensible amount of work. Not too much and not too little, in terms of available labor resources. Second (as I learned from the TV show Connections), the purity of a nugget of gold can be quickly estimated to a high confidence level by rubbing it on the smooth surface of a black basalt river rock. The deepness of the yellow of the streak on the rock immediately shows the quality of the sample.
So I believe gold is agreed to have value because to our ancestors gold artefacts demonstrated a certain amount of work invested, and the quality of those artefacts could be quickly evaluated with an efficient "proof of work" algorithm.
Why does "proof of work"=value in the Bitcoin ecosystem? In part because it guarantees a cap on inflation (thus preserving value while allowing appreciation), in part because dedicating valuable resources to mining represents a vote of confidence in the system.
I believe the simplest explanation for why gold has value is that there is nothing new under the sun, and analogous reasons applied when gold first came into use in human trading systems.
I liked this:
What really drives the demand for gold is the social aspect. The primary driver is that rich people accumulate gold and so are associated with it.
This is also why Chanel can charge $3,000 for a purse.
It's also why Apple can charge a premium. It's been a part of their marketing strategy from the beginning.
From pg 78 of Isaacson's biography of Steve Jobs:
The third and equally important principle, awkwardly named, was impute. It emphasized that people form an opinion about a company or product based on the signals it conveys. "People DO judge a book by its cover," he wrote. "We may have the best product, the highest quality, the most useful software, etc.; if we present them in a slipshod manner, they will be perceived as slipshod; if we present them in a creative, professional manner, we will impute the desired qualities."
There's a great deal of value in perception of value. If you have enough imagination to see value in pieces of paper with dead Presidents on them, then you've got enough imagination to see value in perception.
What really drives the demand for gold is the social aspect. The primary driver is that rich people accumulate gold and so are associated with it.
This is also why Chanel can charge $3,000 for a purse.
It's also why Apple can charge a premium. It's been a part of their marketing strategy from the beginning.
From pg 78 of Isaacson's biography of Steve Jobs:
The third and equally important principle, awkwardly named, was impute. It emphasized that people form an opinion about a company or product based on the signals it conveys. "People DO judge a book by its cover," he wrote. "We may have the best product, the highest quality, the most useful software, etc.; if we present them in a slipshod manner, they will be perceived as slipshod; if we present them in a creative, professional manner, we will impute the desired qualities."
There's a great deal of value in perception of value. If you have enough imagination to see value in pieces of paper with dead Presidents on them, then you've got enough imagination to see value in perception.
Paper money (fiat currency in particular) gets value because you can pay debts and taxes with it.
No, paper money gets value because your government forces you to use it - not accepting payment in local currency is punished by fine or jail time in the most parts of the world.
Correct. You can discharge any financial obligation with the legal tender and the recipient is obliged to accept it. We're saying the same thing.
You are correct. That's the foundation of Modern Monetary Theory.
Gold is an accident of history. It's valuable because it's shiny, it was one of the first workable metals (gold jewellery dates back at least to Sumerian times), and it required effort to produce (too Marxian?). Also, royalty and nobles had control of most gold because they controlled the means of production. With the connection to wealth and power, it was then used as a medium of exchange because let's face it, shekels of grain are somewhat inconvenient. Golds value persisted because of its durability, history, beauty, but mostly because it was always in demand.
[deleted]
Stop using gold as reserve currency and the price of gold plummets >99%
Canada has eliminated all but 77 ounces of their gold reserves.
http://www.mining.com/web/and-then-there-was-none-canada-sel...
http://www.mining.com/web/and-then-there-was-none-canada-sel...
...right before gold shot up ~15%. Bad timing.
This reminds me about signalling theories in animal mating (reminder: we are animals too).
For example, the idea about the peacock's tail being a good signal precisely because it serves no other purpose (and in fact can be a burden!). It signals that the individual is so well off, he can afford wasting resources on such a "useless" ornament.
According to this story, trading actual goods for a useless ornament would be a strong social signal that you are so rich, you can afford to lose actual resources in exchange for mere ornaments.
For example, the idea about the peacock's tail being a good signal precisely because it serves no other purpose (and in fact can be a burden!). It signals that the individual is so well off, he can afford wasting resources on such a "useless" ornament.
According to this story, trading actual goods for a useless ornament would be a strong social signal that you are so rich, you can afford to lose actual resources in exchange for mere ornaments.
This is written in extremely simplistic language, as if trying to explain to a small child - has it been through the Randall Munroe Thing Explainer filter?
No. Paste it into the Simple Writer, and there are many less simple words used.
https://www.xkcd.com/simplewriter/
And yes, I got that vibe, too. It's the same one I got when writing an article about encryption using it.
https://www.xkcd.com/simplewriter/
And yes, I got that vibe, too. It's the same one I got when writing an article about encryption using it.
Already the author is talking about barter and "protomoney" which sets off many alarm bells for me.
I encourage anyone interested in the topic of the origins of money to read "Debt the First 5,000 Years" by David Graeber.
AFAICT there is wide consensus among anthropologists that forms of "money" existed far in human prehistory, and barter was never common in early cultures.
I encourage anyone interested in the topic of the origins of money to read "Debt the First 5,000 Years" by David Graeber.
AFAICT there is wide consensus among anthropologists that forms of "money" existed far in human prehistory, and barter was never common in early cultures.
Why Gold? Why not Silver? Gold isn't useless, as others have said. Silver's a lot less useless; it's used in so many useful things, and both gold and silver are currently undervalued.
I liked the article, although I was hoping to read more about its value as an investment, and how it's survived and thrived through all of our past depressions.
I liked the article, although I was hoping to read more about its value as an investment, and how it's survived and thrived through all of our past depressions.
Silver tarnishes.
Good article. I'd like to nitpick, rich != power, just because you're rich does not mean you can hire people to steal gold violently for you. For that, you need followers. Without followers and having lots of gold just makes you a target.
A far better history of Gold and its relation to art:
https://www.youtube.com/watch?v=grULH297m48
https://www.youtube.com/watch?v=grULH297m48
As a side note, the author's bio is interesting. He went from assistant VP at Merrill Lynch to being a software engineer at Etsy.
Assistant VP in a big bank usually means underpaid third-class software dev. Working as a software engineer at Etsy is most likely a promotion.
Maybe job titles should somehow indicate the number of others in the company with the same job title. So VP/3500 would mean there are 3500 people with the title "VP" in the company. Not so impressive.
I remember once when my dad worked at IBM, he mentioned the president of IBM was only 5 "bosses" up from him. I was really impressed, until he told me that it's not that impressive, because 10,000 other people are also in the same position.
I remember once when my dad worked at IBM, he mentioned the president of IBM was only 5 "bosses" up from him. I was really impressed, until he told me that it's not that impressive, because 10,000 other people are also in the same position.
I think the point of calling people VP, executive etc is explicitly to not do that. It's meant to sound impressive. :)
Absolutely. A lot of sales-heavy companies have thousands of vice presidents, because if you're getting approached by a 'sales employee from XYZ investment bank' you hang up, if you get approached by 'the' (really 'a') vice president of sales from XYZ investment bank, you're more inclined to consider the sale.
There's entire industries where you start out of college around age 22, get an entry function for 3 years, a follow-up function for 3 years, and then become vice president by 30, and stay there for life, become a partner or change careers. The amount of VCs is ridiculous and totally lost its meaning.
There's entire industries where you start out of college around age 22, get an entry function for 3 years, a follow-up function for 3 years, and then become vice president by 30, and stay there for life, become a partner or change careers. The amount of VCs is ridiculous and totally lost its meaning.
Yeah, if he'd gone from Managing Director to writing code for Etsy that would be interesting. Bank titles make tech company inflated titles look sedate. "You're a senior engineer your second year out of school? I'm an EVP, dude, why you so bad?"
Merrill Lynch isn't a bank, it's more like a trading house. AVP is a somewhat inflated title, but that usage typically means something like "experienced employee" or "team lead". That's the highest a lot of people reach, in fact.
AVP is something like the equivalent of senior software engineer rather than team lead. There are even plenty of MDs that are just individual contributors.
Titles in finance usually reflect pay band rather than any sort of management role.
Titles in finance usually reflect pay band rather than any sort of management role.
Assistant TO the VP. :)
It's a viechle for value. If not gold, there will be other viechles.
>> "Gold is still rare, but it's also everywhere, roughly speaking. It's geologically distributed like this because it leaves the center of the Earth through volcanoes and other cracks. The Earth's surface has cracks all over it, so gold is all over it."
In context, it's innocent enough, but it's the sort of thing that makes me twitch grumble... (The phrase "fault line" provokes the same reaction... It's not a line! Just say "fault".)
The main part is that a) gold isn't everywhere. It's concentrated in specific areas. and b) Why add the "center of the earth" part in? That's just silly... Next, most(ish) gold deposits are probably sourced from metamorphic fluids rather than igneous activity. It's true that there is a major category of gold deposits associated with felsic magmas, and another associated with oceanic crust production, but way off base that "gold comes from volcanoes".
Next:
>> "Coming from the center of the Earth is going to ensure that gold has qualities not usually seen on the surface."
What?? Yes, gold is relatively nonreactive and relatively soft. That's because it's a noble metal. It doesn't come from "the center of the earth"... Yes, the core is probably enriched in gold compared to the crust, but the gold we mine at the surface doesn't rise up from the core. (In fact, it was probably added by meteorite bombardment after the planet was formed.)
At any rate, enough ranting. Neither of these have any bearing on the topic of the article itself.