O/T With the risk of sounding stupid

[chip]

The promise to pay on banknotes is symbolic and has been since 1933 when Britain left the Gold Standard.

On Swiss currency it is valid but I believe you need to bring the entire price of a gold bar with you to get one from the central bank

true, we abandoned the gold standard, but it is still a promise to pay - in gold or otherwise. The currency would be worth nothing without such a gaurantee.

The US get round this very well with the Federal Reserve underwriting the Feberal Bank who in turn are underwritten by the Federal Reserve. However, as Suadi owes them upto 20 years of full oil production their reserve is very strong. Much money is also raised through bond issues and selling on other countries loan/bond agreements and this contributes to the currencies strength.

BTW MYOB, the UK selling gold didn't lower the price significantly as it was already low and falling.

 

[Pevenseagull]

If for some reason the UK Government needed to raise cash from the treasury, they'd probably sell their large amounts of dollars, Euro, and Swiss Francs first, before touching the gold. They sold a lot of gold recently to buy said £/€/SFR and it reduced the gold price a fair bit.

The price of gold's gone up to silly levels recently, the gold sell off could be justified as profit taking but the global weakening of the dollar suggests an insular approach to global economics in the US - perhaps.

Gold is an artificial (but honoured) safe haven for global banks in times of market instability. Now that the markets appear steady and SHOULD carry less speculative valuations, trade and liquidity should have returned and the noses should be back in the trough.

However, the implications of the banks, in particular the US's banks, approach to macro-economics is worrying. Unless they have a 'cunning plan' it doesn't make sense when considered in relation to traditional models.

The glorious opportunites of the 'new economy' of the late 90s (pre tech crash, pre Enron) have been replaced with a 'scary' new world.

Finance is paranoid

 

[Pevenseagull]

BTW MYOB, the UK selling gold didn't lower the price significantly as it was already low and falling.

I don't think the price of gold has been 'low' for a few years, it's been at a paranoia fuelled high against other assets, surely?

 

[Cian]

The glorious opportunites of the 'new economy' of the late 90s (pre tech crash, pre Enron) have been replaced with a 'scary' new world.

Don't remind me, please

I had paper worth of about IR£4,000 in telecoms shares (bought for a few hundred). They're now worth.... a few hundred

My brothers company now has a sell on value of around €11,000,000. Cisco bid over 3 times that once - they're still making money, more than they did then even.... but the entire tech economy is buggered.

 

[Lord Bracknell]

If you print off loads of pounds for a 3rd world country, you would need to go through someone who would exchange it for the local currency - so those pounds stay in the UK economy as pounds can't be used anywhere else

The curious thing about GOLD, though, is that it is nothing but a lump of rock dug out of a hole in the ground in a third world country.

We then get all excited about it and contrive a currency system that says the third world country can't have any.

Funny old world.


















Actually, not funny at all.

 

[Easy 10]

Safeway and MYOB have made me laugh out loud on this thread.
God I've missed this place.

 

[Safeway]

L

I switched off about there.