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| Updated: June 5, 2005 |
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June 5, 2005 According to Webster, money is "something used in buying". If gold were money, I could take a 1 ounce ingot to the grocery store and pay for my groceries. If I gave the grocer a one ounce gold ingot for, lets say a $100 worth of groceries, the grocer would return the ingot to me and ask for Money. How do I know this? I tried it at my local Ralph's grocery store, where they knew me and would not call the men in white jackets. Even after I explained that the ingot was worth $420 and I was only purchasing about $100 worth of groceries, they still insisted on payment with money. Why? Because gold is not money, or legal tender, as a lawyer would describe money. Legal tender is something that everyone has to accept for payment. The grocer could accept my one ounce gold ingot for payment, but does not have to. And since most people have no way of knowing if the ingot is really gold and really worth $420, they would not opt to accept the ingot for payment for goods or services. Therefore, gold is not money, and all those that rant and rave otherwise are simply alerting the world to their ignorance, or perhaps hoping if they repeat their mantra many times, it will become true. So, get it right, only Money is Money. Now, that that is cleared up, this notion that gold price always follows currency because it is money is likewise BS (as Penn & Teller would say). Currency fluctuations are a factor in the price of gold, but only one of perhaps 3 or 4 factors determining the value of an ounce of that precious yellow metal. Let's assume that gold were as plentiful as sand, and that the dollar rapidly devalues from 1 USD to 1 Euro to 100 USD to 1 Euro in a week (after Howard Dean was elected President in the year 2008, with Hillary Clinton as VP, that would probably do it). Would the price of gold go from a dollar per pound to $100 per pound? Absolutely not, because there would be more gold than anyone would have a use for. The currency fluctuation would have absolutely no bearing. Being a precious metal, though, gold is found in very limited quantities, and is relatively rare. Therefore, it has much more value than sand. Platinum is even more scarce than gold, and it trades at a multiple of gold, generally between 1.5 and 2. But scarcity alone does not determine value, there are many elements more rare than gold, such as Actinium (Ac). Gold is present in the earth's crust on average of 0.004 ppm. Actinium, however is so rare it is only present on average 0.00000000055 ppm in the earth's crust. So why is Actinium not selling for $1,000,000 per ounce? There is no demand for it. No one wants it, except a few research labs that might want to experiment with it. Therefore, demand or uses for the product must be the most important factor in determining the value of almost anything? Generally speaking, yes, it is. Now while currency fluctuations have had a major impact on the price of gold in the last couple of years, it does not currently have this impact, and demand will play the major force in the price of gold for the near future. On May 1, 2004 gold was selling for about $429/ounce and 0.77 Euro would purchase one Dollar. On June 2, 2005, gold was selling for $423 and 0.81 Euro would purchase one Dollar. Gold is only 1.1% lower in value, but the dollar is 5.1% stronger. Why? Supply and demand. The first quarter of 2005 had the demand for gold (with jewellery being a big chunk of this increase) up 26% (in tons of gold), while mine production was only 1.7% higher, and it is estimated that for the year, demand will outstrip supply by 15% to perhaps as much as 20%, which can only mean relatively strong pricing for this yellow, noble metal. But I'm ignoring facts and economics, to start my market cornering of Actinium, and the movement to make Actinium Money. Get in on the ground floor, "Actinium Is Money". |
| But that's just my opinion. Charles Kubach Mine-Engineer.Com |
