This Warren Buffett quote on gold could very easily be changed to apply to diamonds:
"Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."
Except that diamonds are just a form of carbon, whereas gold is divisible and un-manufacturable. Say what you want about diamonds, they way will pass as technology makes more and more strides, but gold does have industrial use as well as financial use. Gold is money when the future is completely uncertain. Heck, the Dow hasn't moved since the thirties when priced in gold.
If our society collapses, rebuilding parts of it will give great economies of scale to those with the requisite knowledge. Gold might not be the most worthful metal, though; that might go to copper, until the infrastructure gets built back up to the point where we're concerned with gold's particular conductivity.
People have agreed on gold's value for thousands of years. I don't think anything worse than the fall of Rome is likely to happen, and gold retained its value even then.
> Real-estate on the Moon is also divisible and un-manufacturable, but no-one seems to be arguing that we should base a monetary system on _that_.
From the perspective of a fiat currency serving as a store of value, Moon real estate is a great idea. The exact amount and location of it is available to anyone in the world; it's tamper-proof; and unlike regular paper money, it's difficult for it to be inflated.
A currency with zero nominal inflation translates to effective deflation in a growing economy. If you own x% of the moon, and no more moon can be printed, you'll hold your lunar notes under a mattress waiting for their value to rise and nothing productive will ever get financing.
I think you're the first person to think of it. Good idea. I will be arguing for it from now on, because not only is it divisible and un-manufacturable, it wouldn't inhibit industrial uses of gold or anything else.
I'll take 2,000+ years of recorded human history, across multiple cultures and ethnicities/races, over Buffett's views, thanks.
How about I counter with Bernard Baruch:
"Gold has worked down from Alexander's time ... When something holds good for two thousand years I do not believe it can be so because of prejudice or mistaken theory."
If you apply the same argument to astrology, would you accept that we should hold it as a valuable part of human civilization as well?
Astrology is older than 2000+ years and it is used by multiple cultures and races. Only recently that scientific advances have convinced a substantial percentage of population to think otherwise.
If the exact same kind of astrology (not different variants) were used, and it was shown to have predictive power, perhaps I could see the equivalence between gold and astrology.
Example: I time travel back to 500AD, do some kind of service, get paid in gold and bury it in a specific place so I can retrieve it. Then in 2010 I get the gold - it has retained its value over that broad span of time.
Astrology - I use it in early September 2001 to predict a massive upheaval in US economy - I buy a bunch of short positions on September 9th, 2001 and make a boatload of money.
The difference here is that, with currency, if everybody agrees that something is currency, it IS currency, whereas astrology makes false claims about the physical world.
Gold doesn't buy derivatives it doesn't understand. Gold doesn't depend upon AAA ratings from government-sponsored cartels; gold can't be destroyed by gamblers or liars or cheats. 2000 years from now, it is highly unlikely that Buffet's empire will still exist in any form. Gold, however, will exist 2 billion years from now, just as it is today.
I have no positions one way or the other. Mainly because I don't plan on living 2 billion years. If I did though...
You could say that about any form of currency. For example, cash is trees that we cut down, cover with ink, and put in a vault and pay somebody to guard them. Maybe Mars has a barter economy.
As long as artificial diamonds are cheaper. Last I heard, natural industrial-quality diamonds were cheaper than artificial ones, which were cheaper than natural gem-quality.
"Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."