Originally published at: https://boingboing.net/2020/08/28/the-case-for-banning-gold-mini.html
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In 1931 mankind was getting gold out of mines in South Africa and elsewhere in order to bury it again in treasuries—and to no other perceptible end. It seems a pity to spend all the labour of mining and transport on such an operation.
H.G Wells.
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As long as the price of gold is more than the work it takes to extract it, the demand will always be there. The solution is to artificially depress the value of gold, perhaps by flooding the market with all the gold that is held in various government depositories throughout the world.
I’m pretty sure the political will to make that happen is non-existent.
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Well, the people currently holding gold would see a huge benefit. Their stores would become much more valuable as the supply became constricted. And even if we have “enough” gold for industrial uses, that uses would become more expensive as investors drove up the cost.
Seems like this would benefit a certain class of wealthy people, and introduce a new illicit business (unauthorized gold mining) for organized crime to enjoy.
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This isn’t a great idea. Lots of gold mining already happens illegally, often using very polluting techniques. All that would result (assuming you could get consensus for such a thing) in an international ban on gold mining, is you would take out the corporate gold mines, who are least make some pretence of following environmental regulation, and make illegal mining much more profitable, and consequently more prevalent. Also, good luck persuading poor countries with gold mines that its in their interest to leave it in the ground.
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Classic tragedy of the (unmanaged) commons. If N countries ban it, the M remaining countries get to enjoy mining at higher sale prices.
If 100% of countries ban it, illegal mining gets more lucrative.
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I dunno - not an econmics expert, but this sounds like a bad idea. It makes me think this guy has a pile of gold he wants to dramatically increase the value of.
He is right, if you locked the supply at where it is, both the price and the demand will sky rocket. Scarcity or perceived scarcity makes people want things. Look at gun sales when certain leaders are elected. Look at runs on toilet paper for no apparent reason that got exacerbated when everyone saw that shelves were empty.
So let’s say you quadrupled the price. He’s right, the investors would buy what they could, they would just buy less of it.
But for items that USE gold, that price will quadruple too. So gold jewelry new would go up dramatically in price, probably making people switch to platinum or other metal. Electronics only use a small amount of gold - but it isn’t nothing. Costs will go up some.
One positive is people would probably recycle gold containing things more as the cost to do so is now worth it.
One negative is - and ironically this would be counter to the person’s whole reason for doing this - you incentivize gold mining. Only if it is illegal, instead of a poorly regulated industry (well, some nations regulate better than others) it would be small clandestine operations with no regulations. Operations that would probably devolve to mimic the current drug trade, as it is now a black market act and there is no legal recourse for people taking over or extorting your operation. Black market orgs who “launder” the new gold to sell it to investors and industry.
I appreciate wanting to clean up the negatives of mining, but making stuff illegal rarely works out the way it was planned.
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Yeah, I have witnessed first hand the ups and downs of the gold market and its effect on nanofabrication research. Gold is used for all sorts of things, and “normally” evaporating a thin layer of gold is no big deal and even electroplating doesn’t normally cost a tremendous amount. But when the price of gold spikes, academic cleanrooms start locking up those machines and controlling access not just because the price goes up, but the supply dries up as “investors” start hording it.
The article is correct: we have more than enough gold for industrial and decorative uses. However we should be concerned about keeping “investors” happy because they are the problem: the price is kept artificially high by speculators and doomsday preppers who want to store it in vaults. Get rid of the demand and the price will drop, mining will become unprofitable and stop or reduce to a level that supplies our actual needs.
A wealth tax would be one way to do that. The appeal of gold to many people is based on its supposed inflation proof nature while having low long term risk. However, a wealth tax would act like inflation for gold by devaluing it ~1-2% every year. This would encourage gold hoarders (at least the kind who keep it in bank vaults that can be easily tracked) to sell their gold and use it in a way that can create enough returns to pay the wealth tax. Of course people could still hoard gold in their homes and it would be hard to track or enforce taxation, but that is probably a relatively small proportion of overall gold stockpiling. There are other issues with enforcement of wealth taxes in general, but since that would be worth solving for overall social good, its nice that it would also help discourage gold stockpiling.
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Before Bretton Woods, gold mining was necessary to the economy, because it determined the currency supply. A shortage of gold could trigger a deflationary spiral.
Arguably, at least. It’s also possible to advance the argument that the standard of living actually advanced during the Long Depression of the 1870s and 1880s even as the dollar value of labor declined due to metallic deflation. Macroeconomics always strikes me as voodoo.
In an age when currencies are arbitrary values not tied directly to metal, keeping gold in treasury vaults strikes me as an anachronism - it’s held against the possibility that the world decides to remonetize. Well, and to keep from crashing the holdings of those who have chosen to buy gold as an ‘inflation-proof’ investment. Making it an ordinary commodity would destroy a big part of some investors’ portfolios. It’s inflation-proof only because the treasuries support the price.
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Doesn’t the parable of the Capital Hill Baby Sitter’s Co-op apply?
It seems like Koning is basically asking for a liquidity trap.
An alternative would be to skip the whole “dig up and place in vaults” part. Let people trade in gold from known gold deposits while it is still in the ground. Instead of buying gold you buy parts of a gold rich mountain.
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This is easily the most laughable of all the laughable assertions in that paper.
Quoting Koning:
Translation:
“So, what about the goldbugs?”
“Oh, they won’t care at all.”
“Really? How so?”
“Well, I don’t really understand goldbugs at all, but, relying on my my own keen imagination of what >I< would do in their position, I don’t think I would care. So why would they?”
Gosh. I can’t imagine.
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While I strongly suspect we’re at least several decades away from unmanned asteroid mining, one of my (mild) concerns is that if and when it becomes a feasible industry, governments will artificially limit the supply of precious metals through laws and bureaucracy designed to protect their capitalist benefactors’ wealth.
Personally I want the value of precious and semi-precious metals to be obliterated, both to put gold bugs in the dustbin of history and make it a common commodity available to everyone. However, not by the environmentally destructive practice of extracting it from the Earth. And as I said, it’s unlikely to be obtainable any other way for at least a couple generations, if even then.
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I’d like to see this happen just for the entertainment value of the goldbugs trying to have it both ways with their stores of value.
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Apparently 0.2% of the world’s electricity is spent in Bitcoin mining. That is about 7.5 billion watts, around the clock according to…
Money returns to its foolishness as a dog returns to its vomit…
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What if I told you that Rubies and Emeralds can be manufactured in a lab for pennies a carrot, and diamond for not much more? There is some evidence that a large percentage of “Mined” diamonds are actually produced by a lab in Russia.
As long as the rubes believe Gold has value the knowledgeable will be able to recover their investments and leave others holding the bag, as they always do.
Of all the things to buy for a doomsday prep, gold has always made the least amount of sense to me. You can’t eat gold, you can’t drink it, you can’t smoke it, you can’t shoot it, you can’t even use it to clean your bottom with. And in a survival situation, I can’t imagine someone with useful supplies trading them to you for it- why would they?
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As an investment gold is at best an aggressively mediocre vehicle in a functional investment economy and something matchstick men use to swindle gullible “conservative” media addicts out of their life savings.
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So, the argument seems to be that gold mining is a large source of pollution, which I don’t doubt it is, and that is why we should shut down gold mining. Great! But…that pollution is an externality, which is a cost of business not absorbed onto the balance sheet of a business, but is forced out onto the general public to absorb said cost. This is literally how all modern businesses work to greater or lesser degrees.
I would prefer we agitate for legislation that forces all externalities back onto the balance sheets of business. Of course, that would mean IPhones and Kindles would cost a fortune, as well as underwear, tires, and lots of other “staples” of our current life, but it would be much more fair.
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Then there was Glenn Beck’s scam pitching numismatic gold to the prepper and militia crowd at a crazy premium. Because post-apocalyptic warlords are known to care about such things.
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