Why is gold important compared to cash?

Answer 1

Re-edit -- sorry!

Unfortunately, all of these answers come up short. First of all, both gold and money are in limited supply. We use money to purchase goods (eg. cars) and services (eg. haircuts). If money was available in unlimited quantities, then the price of these goods would be very high, since there would lots of cash chasing those goods!

Second, there is no longer any connection between gold and money. Both of them are stores of value. Money has some value one year from now, just as gold will also have some value next year. Money is a very poor store of value, since its vaule is generally eroded away by inflation. While gold is somewhat better, it also has not kept up with the overall cost of living.

The true value of gold is that it is used for many purposes that are valued, especially jewelry. Money has value because we need it to buy things.

Answer 2

Becaus the value of the gold in time dont change a lot. About cash, an economic crisis could undervalue money making it have less power of buying something.
Imagine you have $10 dolars, with that you can buy 2 ipod´s (imagine!!! haha), $5 each one. You bought $5 of gold. After a while an economic crisis makes that now the dollar undervalue, so now to buy the ipod you need more cash; now the ipod cost $10. So with the $5 you have on cash you cant buy it. Its like the REAL value of the cash now is $2.5. Now you sell your gold at the real price you bought it, so you would get $10 in cash.
The power of buying the ipod with the gold dont change, but in cash yes, cuz its more sensible to crisis and a big etc.
Thats why on times of coming crisis people change cash to gold.
And is not iron or copper cuz this metal have many properties, one is the few gold is on the world compare to other metals.

Answer 3

To add to the economists above. Cash is FAR more important to nearly everybody than mere gold. Would you rather have $100 of cash or of gold? You can spend the cash immediately, not the gold. If you chose the gold, you'd soon realize it's not terribly liquid. You might finally go to the nearest pawn shop to try to sell it, and that's when you learn that you'll only get 50 cents to the dollar on it.

Despite what many people think, gold is absolutely NOT some perfect inflation-proof store of value. It is a commodity metal whose price goes up and down depending on supply and demand and occasional market hysteria. In terms of real prices, gold has lost perhaps 75% of its value since 1980.

Answer 4

I agree with the Economist who has answered just before me. However, I do not agree that the the GOLD is more imporatant to Cash.

Just tell me what is more important as compare to GOLD or IRON. Now you answer depends on many factor. Just for an economist the IRON is more imporatant than the gold. SO, the price of IRON should be more than GOLD based on its usefulness.

Second, money is not a matter of importance and not importance. It is a instrument to measure the value of product. So, comparing cash with gold has very little relevancy.

Third, keeping the stock of gold is just like keeping the stock of any currency. Because price of both item can be apprecite and depreicate.

Forth, as mentioned by many people before me here in connection with answering your question, it is wrong that now a days the country are printing cash based on their stock of gold. Nowdays the coutnry are printing money based on its impact on overall trade, price level, and employment.

Fifth, as argued by few above, it is not necessary that the price of cash depreciated as compare to that of GOLD. If your currency appreciated.. the price of gold might go down. Second, even if the currency depreciate, the interest earned or the oppertunity cost of the cash compensate the decrease value of cash.

So...in conclusion..you are putting people to compare uncomparable thing...especially in econmics.

However...holding cash, or buying gold out from it can be one options available to cash out in many

Answer 5

Gold is considered a hedge against inflation. Gold no longer backs our currency. The dollar was taken off the gold standard a while back, and Nixon officially made the dollar an unbacked currency. Gold is important because it is universally recognized as something of value. As such, it does not lose value. Yes, its price in currency might fluctuate, but this is due to the currency losing or gaining value, not the gold itself. Whereas a dollar might buy one thing today, but require two to buy the same thing tomorrow, the ounce of gold will remain the same.

Gold is a hard money, meaning that it does not lose its value like soft money, such as currency, does.

Answer 6

In terms of cash I am going to assume you are talking about a countries currency. Gold is the standard medium of trade for all international countries. Therefore a countries currency must be 'backed up' by the amount of gold in their national treasury. What this means is that for each dollar of US currency that is printed there is one dollars worth of gold stored at Fort Knox (national treasurery).

If there was not a standard medium of trade (gold) to back up a countries currency then a country could just print up as much currency as they wanted. This helps keeps the 'trade' standards working. This is only a short explaination but hopefully answers the question.

Answer 7

lol universe has plentiful of golds and iron after the bigbang, should we all go and mine it in space?

Gold can't cheat because it's there is there.
Money or currency can cheat because noone able to know how many extra copies u printed for the country..like photocopy machine. Press nos of copy to be printed and press Start button. lol...

GOld is the value of the your currency.

A talking cork answer! hehe yet with factual reality evidence.

WWII German printed extra bank note to UK bank & after Naxis surrendered, the german commander dumps all the left over copied bank note or money into one of the lake.

Japanese printed a lot of Bananas note during their occupation.

Hey, dumber, check with Discover and National Geography channels documentary shows, will u? LOL! Thumb down so fast?

Answer 8

Its a tangible asset that has held value for thousands of years.

Answer 9

bbecause there is a lesser quantity of it and money is printed everyday.
but also it can be less reliable because the price of gold is also going up and down all of the time

Answer 10

gold is what makes cash have value you dope!