Gold Hoarding – How It Harms Us And How To Stop It

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When most people think of investing, they think of buying shares in a company or buying government bonds. These activities help to grow the economy by providing businesses and governments with capital that they can then invest and use to create jobs. But alongside these legitimate investments, a selfish form of economic abstinence is taking millions of dollars out of the economy every year, contributing to job losses, higher prices, lower quality goods, and loss of business opportunities. The activity I’m referring to is gold hoarding, which instead of providing capital to those who need it, locks this capital away where it serves no utility to anyone.

Gold hoarding locks economic value away in vaults, where it is unable to circulate and generate economic growth. This literally sucks the lifeblood out of the economy, leaving millions of people homeless and out of work, while millions of dollars sit idly by, serving no purpose other than to support the selfish needs of gold enthusiasts.

So why do people choose to hoard this shiny metal instead of investing in the economy? The answer can be found in the extreme political ideologies that these people tend to subscribe to. Gold hoarders tend to be conspiracy theorists and right-wing extremists, who believe that the Federal Reserve bank of the United States is secretly conspiring to strip them of their wealth. Many of them are also anti-Semites, and choose to boycott the entire banking system, which they see as disproportionately Jewish. Some hoarders believe that we are heading for economic Armageddon, and that gold is a means of ‘protecting their savings’ in this apocalyptic scenario. Safe to say, these beliefs are all unfounded, and incredibly bigoted.

One of the problems with our modern liberal democracy is that we are too tolerant of extreme and dangerous beliefs and subversive anti-government activities. We need to start setting boundaries determining what is and what isn’t acceptable behaviour in the 21st century. The economic effects of gold hoarding are dire, and we cannot simply stand by while millions of people are forced to endure the hardships induced by this selfishness. Gold hoarding needs to be outlawed, pure and simple. In order to buy significant quantities of gold, one should have to demonstrate a legitimate business need for this raw material, such as jewellery manufacturing or watch making. Simply owning gold for the sake of a perverted and flawed political ideology cannot be allowed in a 21st century liberal democracy.

1 COMMENT

  1. “…the Federal Reserve bank of the United States is secretly conspiring to strip them of their wealth…” Not so secretly any more. The cat is out of the bag and people are figuring it out. For over 400 years the value of the Spanish Dollar held steady at $20/oz of gold. Since the FRB got their mitts on it the Dollar is now 1300/oz of gold. This is called “depreciation.” It amounts to theft of people’s savings. Of course people don’t want to put their money at risk for a paltry reward paid in depreciated dollars. If you don’t like gold, just build a big giant warehouse and store all the food, clothing, and toilet paper you’re gonna need for the rest of your life because if you try to buy it later it will cost more than your fiat money will be worth.

    • It is no secret that our Federal Reserve employs monetary stimulus measures in order to support economic growth and job creation. Yes, over time this reduces the value of the dollar, but wage increases and economic growth more than compensate for this loss in value.

      • False, people have never been more poor and it is due to your loved Feds intentional inflation. I am talking about the vast majority not the one percenters.

      • And then when they begin to less than compensate? What then? What happens when devaluing the currency no longer is able to steal consumption from the future? What happens when the monetary time-machine process fizzles out? What happens when the chickens come home to roost? A tiny minority of people believe there is no such thing as a free lunch. The vast majority of people are like you and believe wholeheartedly that there is a free lunch if we only have the courage to vote for it. Time will tell, but my bet is on gold, silver, and toilet paper. And, I’m like Big Giuli in the movie Guys & Dolls, I love to bet but I do not like to gamble.

      • Is that why we now have to have 2 bread winners in the family, whereas in the 50’s, only one? Or that the median house has gone from 7,500 to over 180,000 in the last 50 years, yet the median income has only gone up to 50,000 (and that’s taking into account the extra bread winner).

        Tell me how that has “more than” compensated for the destruction of the dollars value?

        • Are you seriously questioning the brave feminist achievements and sexual liberation of the last decades? A woman belongs in the kitchen and the man at work? Seriously? Isn’t women having the equal right as men worth changing some economical mumbo-jumbo only some (white) people at wall street can make sense of anyway?

          I can’t remember people in the 70s having flat screen TVs and electronic Google and what not. So tell me exactly what your “median income” (or whatever you might call it) has to do with standard of living?

          Don’t be so shortsighted. Maybe the dollar will deprecate in value. Maybe not. I’m certain the assurance of living in a country where Our Elite is taking care of us makes more than up for it.

  2. Lmao, take an inflation target of 2% and compound it. So it isn’t ok for someone to preserve there wealth and boycott a corrupt system but it’s ok to silently steal wealth from the masses by watering down the money supply. You forget there is always 2 extremes, right and left. Try and stay balanced my friend. Selling gold to buy real estate just make real estate unaffordable for the masses, so why not write an article about the hording of real estate?

      • If it becomes unaffordable (like it already has in most places) then it only provides utility to the one percenters

      • No, gold is money, a very stable (the most stable) form of money and thus provides tremendous utility. It allows individuals and corporations to plan ahead, workers to save for retirement and bad times. That is the entire point of gold. Plus, with companies like goldmoney, everybody can save a few dollars in gold every week vs who the f.. can afford to buy real estate at this point. And the latter is exactly the result of central bank policy which allows the rich to borrow money at almost no costs and buy the same assets over and over (real estate). The US has been living on a gold standard for nearly 180 years. About 40 of these years during the most prosperous time in history during the industrial revolution.

        • Does it blow your mind the way it blows mine that the Spanish Dollar was pegged at 20/oz of gold for over 400 years, until Federal Roosevelt and then Milhous Nixon devalued it until now its 1300/oz of gold? Isn’t it the same thing that happened in the Roman Empire where their coins went from 90% silver to no silver at all?

      • The utility of gold as monetary savings lies in its stability of value compared to other things. Also, gold doesn’t rust but real estate can erode. Gold is fully fungible but every piece of real estate in the universe is unique. Gold is divisible into tiny bits but real estate is lumpy and chunky. But, hey, MDB, do spin again, it’s fun to watch you work. And I’ll see you over at zerohedge later, eh?

    • Million Dollar Baby-Bonus comments wryly on Zerohedge.com, and most of us suspect he is a sarcastic troll, a satirist in the tradition of Swift and Juvenal.

    • It’s a stupid analogy to say you can’t live in gold. You can’t build a house with penicillin either. Sheesh.

  3. What you completely ignore is that gold doesn’t sit idle in a vault, the same way your dollar savings don’t sit idle in a vault. Gold can be used to borrow/lend just they way dollars are and it is being done as I write this and has been done for a very long time (longer than fiat borrowing), there is zero difference. By not knowing that you already disqualified yourself from writing about it and your article is based on wrong information (no information). you can have gold backed bonds the same way as dollar backed bonds. So your article is complete nonsense. I recommend taking this article down, reading up on the gold market, monetary history and economic history a bit and then try writing it again if you still feel a need for it.

  4. Balls! you forgot to mention that the large financials have a built in competitive advantage over the retail investor and can use the leverage you reference to drive the trader and retail investor out of his position at any time and from time to time. also, ther eis a vested interest in keeping the appearance of price stability and low prices for a variety of societal rationals. Large institutions also have preferred access to the rumour mill and are constantly “selling their books” to infuence prices. You raise a couple of points regarding efficiency but I would much prefer a system where an instituion or large bank that provides a secure storage service is prohibited in trading in the stored metal.

    Only then could realistic supply demand price recovery occur. the real traders would then be primarily those entitiies that have a vested interest in operating in the physical supply chain. International anti trust laws could be applied to any entity that got too big for its britches in the international market place. A limit on hedging should be applied to physical – period.

  5. Million dollar baby is a world class sarcastic troll from zero hedge. He’s so good that many think he’s being serious. So for the confused I’ll offer a response. Currency flows through stuff not into it. That is to say there isn’t any cash literally stuck inside a gold bar hiding in a vault. When someone buys or “invests” in gold the seller of the gold gets all the cash. That same cash is still available to then be invested in so called productive investments like shares and bonds. I repeat, the currency doesn’t catch fire and burn like a vampire in the sun because it was used to buy evil yellow rocks. The same amount of currency, just like it could before it selfishly flowed through gold, can still flow through the PC investments deemed acceptable in totalitarian gold investment free utopias

  6. MDB: Small typo at “Some hoarders believe that heading for economic Armageddon”…missing “we” are heading for economic Armageddon?

  7. So why do people choose to hoard this shiny metal instead of investing in the economy?

    The answer is simple: Not “extreme political ideologies that these people tend to subscribe to” are responsible. No. Instead they choose the shiny because it is frozen wealth, which can easily be divided, internationally transferred, stored with almost no costs—and it can not burn (like houses), it cannot become bad (like wine) and it does not need to be polished (like oldtimer).
    The best thing yet is: It can stay in your own hands. And YOU decide over its destiny.
    Compare to stocks and shares…

  8. David
    September 5, 2016
    4:03 pm

    Sorry I couldn’t post a direct reply, because (a result of of some WordPress peculiarity) my browser narrows the thread at that particular point into insensible one word/billion line senseless and unreadable posts.

    David, your post above (hopefully with your tacit permission) is hereby re-posted by me in its entirety:

    “Are you seriously questioning the brave feminist achievements and sexual liberation of the last decades? A woman belongs in the kitchen and the man at work? Seriously? Isn’t women having the equal right as men worth changing some economical mumbo-jumbo only some (white) people at wall street can make sense of anyway?

    I can’t remember people in the 70s having flat screen TVs and electronic Google and what not. So tell me exactly what your “median income” (or whatever you might call it) has to do with standard of living?

    Don’t be so shortsighted. Maybe the dollar will deprecate in value. Maybe not. I’m certain the assurance of living in a country where Our Elite is taking care of us makes more than up for it.”

    My man (or woman, or gender confused/exploratory, transgender or other focussed non-cisgender human being)! You have hit the nail on the head!

    Like you, I decry the patently misogynistic approach of the conservatives and cuckservitives directly comparing today’s gender-equal society where all seventeen genders and gender-types work their arses off for the communal benefit of their personal societal aggregation choice mates.

    Do we WANT to go back to women in chains in the kitchen, with rotating duty on the birthing stool? Hell no!

    Like you, I cannot remember people even WANTING flat screens in the 1970’s.

    The standard of living today is so incredibly enhanced simply because those chains of patriarchal oppression have been torn asunder, Inshillah!

  9. The more something is produced, the less valuable it becomes.
    Open more gold mines and the price of gold will go down. Do you think that more paper dollars or gold will be produced in the next few years ?