I have never understood why anybody would not want to hold physical gold and have a mere piece of paper. Sure, that paper is supposed to be backed by gold but why trust a bank so much? They could be selling it without your knowledge and you would not know it. I would pull it out immediately if I had any gold there.
Will it result in a run? Will other banks do the same?
I have never understood why anybody would not want to hold physical gold and have a mere piece of paper. Sure, that paper is supposed to be backed by gold but why trust a bank so much? They could be selling it without your knowledge and you wou ...[text shortened]... immediately if I had any gold there.
Will it result in a run? Will other banks do the same?
Not everyone wants to physically hold all of their wealth. Even if I did not get interest (and you virtually don't in a bank), I would not want all of my money in my house. I do not think it is illogical to have an institution that you trust hold gold or money for you. But, as you point out, there are risks in trusting others.
I have never understood why anybody would not want to hold physical gold and have a mere piece of paper. Sure, that paper is supposed to be backed by gold but why trust a bank so much? They could be selling it without your knowledge and you wou ...[text shortened]... immediately if I had any gold there.
Will it result in a run? Will other banks do the same?
"You can no longer request physical delivery of your precious metals from us ".
Sounds like you have to go pick up your gold yourself. I don't see how that is a big deal.
Originally posted by no1marauder "You can no longer request physical delivery of your precious metals from us ".
Sounds like you have to go pick up your gold yourself. I don't see how that is a big deal.
If you are right it is no big deal and no bank run would take place. Seems like that would be a big goof for implying there would be a bank run as the link does though.
I have never understood why anybody would not want to hold physical gold and have a mere piece of paper. Sure, that paper is supposed to be backed by gold but why trust a bank so much? They could be selling it without your knowledge and you wou ...[text shortened]... immediately if I had any gold there.
Will it result in a run? Will other banks do the same?
"I have never understood why anybody would not want to hold physical gold and have a mere piece of paper."
Ease of exchange, transport, and purchase, doing business. Same reason people get cashier's checks instead of paying with cash (paper money). Secondarily, for security, not having all your wealth at home subject to burglary.
Few banks anywhere today offer unlimited exchange for gold. In some cases, private ownership of gold is illegal.
Originally posted by normbenign "I have never understood why anybody would not want to hold physical gold and have a mere piece of paper."
Ease of exchange, transport, and purchase, doing business. Same reason people get cashier's checks instead of paying with cash (paper money). Secondarily, for security, not having all your wealth at home subject to burglary.
Few banks anywher ...[text shortened]... oday offer unlimited exchange for gold. In some cases, private ownership of gold is illegal.
Originally posted by normbenign "I have never understood why anybody would not want to hold physical gold and have a mere piece of paper."
Ease of exchange, transport, and purchase, doing business. Same reason people get cashier's checks instead of paying with cash (paper money). Secondarily, for security, not having all your wealth at home subject to burglary.
Few banks anywher ...[text shortened]... oday offer unlimited exchange for gold. In some cases, private ownership of gold is illegal.
Still, only the banks know if the gold reserves are still there. They could be doing what the goldsmiths have been doing for ages. The only way to know your gold is there is for everyone to demand the bank gives them their physical gold.
I would hate to be the last person to ask for the gold only to find out it is not there.
Originally posted by Metal Brain I would hate to be the last person to ask for the gold only to find out it is not there.
If you were the last person to demand your gold from the banks, then the monetary system would have collapsed, everyone would have lots of gold, and it would be worthless.
Originally posted by Metal Brain Still, only the banks know if the gold reserves are still there. They could be doing what the goldsmiths have been doing for ages. The only way to know your gold is there is for everyone to demand the bank gives them their physical gold.
I would hate to be the last person to ask for the gold only to find out it is not there.
Agreed, and the only reason people don't demand their gold, is legal tender laws, which in the US allow banks to pay you with Federal Reserve notes in lieu of gold.
Originally posted by twhitehead If you were the last person to demand your gold from the banks, then the monetary system would have collapsed, everyone would have lots of gold, and it would be worthless.
Sorry but there just isn't anywhere near enough gold to pay off all the paper money, anywhere.
Originally posted by normbenign Agreed, and the only reason people don't demand their gold, is legal tender laws, which in the US allow banks to pay you with Federal Reserve notes in lieu of gold.
The thing that bothers me is that banks that hold gold can engage in massive short selling unless there is some sort of accounting that takes place. This could allow manipulation of gold prices if banks act in unison. That is why mere paper bothers me and I think people should hold physical gold.
What is to keep banks from selling 90% of the gold they hold? All I can think of is the risk gold prices might increase, but if it is done by banks acting in concert with each other the people holding paper could get screwed while unwittingly helping the banks do it. The people holding physical gold might get screwed too, but they would not be helping the banks screw all gold investors.
Dutch bank halts gold delivery
25 Mar '13 13:05
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