Dollar Value Predictions 2021/2022

[Dougie]

Store of value vs. medium of exchange

 

[Dougie]

Gold is ridiculous to carry, store, is not negotiable at any food or clothing store I have ever been to, and always has pretty significant transaction fees to either buy or sell.

100%. That's why Bitcoin is will fast take over gold as the global store of value and eventually take over the dollar as the international measurement of value. Although that may be 10 - 15 years out.

 

[on the brink]

People have been predicting the dollar's collapse for ages. Hasn't happened yet.

As Mark Twain said: "Reports of my demise are greatly exaggerated"

 

[Ries]

Oh- I didnt realize I was talking to "the wealthy".
I was talking about the blue rate, and Argentina.
In Argentina, there are perhaps a 100 families with "a store of wealth".
The rest of the people actually do have to buy food, pay rent, and take the subte.

In the USA, a relatively wealthy country, the median net worth of a family (not an individual) is around $120k USD. That would include home equity.
So, like most americans, I dont stay up at night worrying about where to store my enormous trove of wealth, and weather gold or bitcoins is better.

Argentina, of course, is much worse off- generally figures show median net worth to be around 1/20th of the US averages.
So the idea that gold has any relevance to the average citizen of either country is kind of far from my realm of understanding.

But you guys must not only be genius economists, but also extremely wealthy, to be so concerned with storing your immense wealth in gold.
I have a nice gold stud in my left earlobe. That counts, doesnt it?

For 99% of the people on earth, gold is not "money" and "storing wealth" is a pipedream.

 

[talbur]

OMG. This thread totally reminds of the South Park episode where Timmy and Jimmy fight.

So good.

 

[on the brink]

Gold is a dead end, sterile thing - it benefits only those hoarding it. Maybe.

But money invested anywhere else cycles through the economy, creating work and opportunities for everyone.

 

[Dougie]

Oh- I didnt realize I was talking to "the wealthy".
I was talking about the blue rate, and Argentina.
In Argentina, there are perhaps a 100 families with "a store of wealth".
The rest of the people actually do have to buy food, pay rent, and take the subte.

In the USA, a relatively wealthy country, the median net worth of a family (not an individual) is around $120k USD. That would include home equity.
So, like most americans, I dont stay up at night worrying about where to store my enormous trove of wealth, and weather gold or bitcoins is better.

Argentina, of course, is much worse off- generally figures show median net worth to be around 1/20th of the US averages.
So the idea that gold has any relevance to the average citizen of either country is kind of far from my realm of understanding.

But you guys must not only be genius economists, but also extremely wealthy, to be so concerned with storing your immense wealth in gold.
I have a nice gold stud in my left earlobe. That counts, doesnt it?

For 99% of the people on earth, gold is not "money" and "storing wealth" is a pipedream.

You seem to be wealthier than most here. Large farms in Washington and homes in Buenos Aires. When you talk, I listen, even if I don't always agree with your points of view. The EF Hutton of BA Expats.

I don't think that the discussion around store of values pertains to 100 families. In Argentina the main store of value is dollars and real estate priced in dollars.

Gold there are many problems with that have already been discussed.

The problem is that real estate is illiquid and you need to have a large amount of dollars to purchase even a small amount of real estate.

The issue with dollars is that you either need to hide the physical dollars in your home, which presents a security risk and the dollars devalue at around 5% a year. Or you stick them in a bank and you need to trust both the bank and the government.

Bitcoin can function as a store of value without the same security risk as having dollars under you mattress. All you need is a seed phrase. It can't be confiscated from you like a bank or government. You have as little as $1, you don't need large amounts like real estate. It can also be transferred at a low cost.

It present some advantages to real estate and dollars in the bank or under the mattress. The negative is it's volatile and still a fairly new technology.

Beyond some younger people who are into tech and finance...the 18 to 45 crowd, I wouldn't say it has made many in roads yet. I did have an Uber driver ask my opinion of it the other day though.

To add I've seen Marcos Galperin speak about his interest in both Bitcoin and Ethereum. Considering his position of influence over payments I could see Mercado Pagos creating some infrastructure around it to push mass adoption.

 

[Ceviche]

For 99% of the people on earth, "storing wealth" is a pipedream.

Indeed. As tragic it sounds, its the harsh reality.

 

[camel]

When you talk, I listen, even if I don't always agree with your points of view. The EF Hutton of BA Expats.

EF who?

 

[Ries]

You seem to be wealthier than most here. Large farms in Washington and homes in Buenos Aires. When you talk, I listen, even if I don't always agree with your points of view. The EF Hutton of BA Expats.

I don't think that the discussion around store of values pertains to 100 families. In Argentina the main store of value is dollars and real estate priced in dollars.

Gold there are many problems with that have already been discussed.

The problem is that real estate is illiquid and you need to have a large amount of dollars to purchase even a small amount of real estate.

The issue with dollars is that you either need to hide the physical dollars in your home, which presents a security risk and the dollars devalue at around 5% a year. Or you stick them in a bank and you need to trust both the bank and the government.

Bitcoin can function as a store of value without the same security risk as having dollars under you mattress. All you need is a seed phrase. It can't be confiscated from you like a bank or government. You have as little as $1, you don't need large amounts like real estate. It can also be transferred at a low cost.

It present some advantages to real estate and dollars in the bank or under the mattress. The negative is it's volatile and still a fairly new technology.

Beyond some younger people who are into tech and finance...the 18 to 45 crowd, I wouldn't say it has made many in roads yet. I did have an Uber driver ask my opinion of it the other day though.

To add I've seen Marcos Galperin speak about his interest in both Bitcoin and Ethereum. Considering his position of influence over payments I could see Mercado Pagos creating some infrastructure around it to push mass adoption.

I am far from wealthy. I have been lucky, and born white and middle class, but I bought both my place in rural washington and my apartment in Buenos Aires many years ago, when prices were much cheaper. I did a lot of work on both myself. Currently my main income is Social Security. I have driven delivery trucks, fixed tractors, done my own wiring, and done a lot of metal work with my own two hands, mostly in construction and for architects and contractors, for 40 years. No Rolls Royces or Rolexs here.

But my point of view in this discussion is based on having spent time in Argentina every year since 2007, and having a lot of Argentine friends.
None, to my knowledge, own either gold or cryptocurrencies.
Most do convert extra pesos into US dollars, even if that means the Mucama buying a couple of 20 dollar bills, because they are safer than hanging on to pesos.
Its common to see, in Cuevas, ordinary people exchanging a single 20 dollar bill, or a single hundred, for pesos.

It is my understanding that the blue rate does not apply to bank to bank transfers, but only to actual exchanges of physical dollars.
So when we talk about the blue, we are talking about how Argentines are buying and selling dollars in Argentina, or how foreigners are exchanging dollars they physically brought into the country for pesos.
I dont understand how crypto currencies affect the blue- maybe someone can explain that to me?

I am also extremely interested to hear from anyone who has actually bought either gold or crypto currencies in Argentina, using pesos.My guess would be that it would require first exchanging for dollars, then doing a dollar denominated deal- but I dont know.
In the USA, the people I know who buy and sell physical gold pay a premium for buying the gold, over the quoted market rate, and the gold needs to be tested for purity. And they get paid under the quoted market rate, with transaction costs again including testing, unless its something like a gold coin.

I still maintain that in Argentina, its not very practical to keep your "store of wealth" in either gold or crypto, and that few people do.
Instead, I know a lot of people who have physical US dollars, often in safety deposit boxes in banks. Argentines have held physical US dollars for many many years, its really common.
And Argentines BELIEVE in real estate, even though it is, indeed, illiquid. But most Argentines I know dont sell. Pretty much ever. I know a fair amount of people who live in the apartment their grandparents bought, or who share ownership of that apartment with siblings, and rent it out. To sell is a real sign of desperation, and seldom happens. Maybe to move to a better place, I know a couple people who have done that in the last couple of years. But Argentines tend to believe that real estate is a long term place to park money, and that its safer than anything else available to them.