[quote=Arraya]Allan is correct, in principle. Though, I think, technically off a bit. Gold is like fiat, in a sense, a perception game. Though, it is subject to the rules of physics, which I like, unlike fiat. Still, It takes a bunch of people to agree that it is worth something beyond it’s utility. Gold has utility, unlike fiat, but not much by commodity standards.

Fiat is backed by debt and the ability to pay it back. As the ability to pay it back goes down so does it’s value.

Fiat is GUARANTEED to go down in value. At this juncture, I think, a sudden dramatic drop is in the cards.

A sudden drop in fiat could cause a perception/psychological shift.

People have a long history of using gold as money

We have not seen gold fever yet

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Arraya: Thanks. You did a better job of making my point than I did, but you hit it on the head.

Part of the problem with arguments like Peter’s and Scaredy’s is that they also ignore the social constructs necessary to impart value to gold or fiat currency or Dutch tulips, for that matter.

Gold is not possessed of an intrinsic value, that value is imparted or, more correctly, set. It is set by a wide variety of factors, but I doubt you will see a wholesale collapse of the dollar, immediately followed by gold becoming the de facto REAL MONEY.

Using “history” and “facts” without fully understanding either also destroys the ability to effectively argue a point, too.