Comment by nerdsniper

I believe that is a widely misunderstood conception of the origin of money. Gold has generally not been used as currency. The sovereign right to dictate the value of a coin struck in a metal is called "seigniorage", and exists for all of those 3000 years. The value of the currency comes from the demand for it by the government to pay taxes, not the value of the metal in the coin. The metal in the coin makes it expensive to counterfeit said coin, with punishment by death doing the rest of the disincentive.

There is a reason the coins have the emperor's face on them. They are what he will accept as payment for the taxes he requests, and in assessing taxes according to his power, he dictates their value by fiat.

Much of the 3,000 years of history you're referring to saw precious metals used as wealth storage primarily in the form of objects like jewelry, silverware, and candlesticks. All of which have sales taxes.

The question I'm asking is why it's unreasonable that bullion that we've agreed isn't currency isn't being treated differently than these other things?

> Whereas to me, it's wild that thousands of years of gold bullion trade as a form of currency exchange is supplanted basically overnight and now only "gold but only on paper" would be considered the only form of real gold currency.

I mean, it's not a coincidence. For example, the US government has laws against using gold as currency, and they take those laws seriously and enforce them with vigor. They don't want dollars to suffer the competition.

Given the laws, it is necessarily the case, by definition, that gold is not currency.

> But it isn't true; if you resell your jewelry you're going to get basically nothing compared to what you paid, unless you like to wear gold chains. The resale value of new jewelry is more like the resale value of a new car.

This entirely depends on the type of jewellery and the premium you pay for it over the price of raw materials.

I know for a fact that there's quite a lot of jewelry that trades at a fairly tight spread around the price of weight in gold (10-20% between bid and ask). Losing 20% isn't getting "basically nothing"

Of course, if there's a brand name involved you're not really paying for just the gold content anymore so there the resale value sucks.

You can sell jewelry for the same price as the equivalent weight in whatever purity of precious metals it is and I specified same weight in the parent comment. They won't be the same price originally, but that's not particularly germane to this discussion of whether there should be a sales tax on one vs the other.

And for what it's worth, people buy things for different reasons. It's very common for Indians to explicitly value jewelry as a wealth store (among other reasons), to give one example.

Some cultures hold a lot of household wealth in that format (predominantly-gold jewellery). South East Asia, North Africa, Middle East...

> It's fair to say that many people have this idea in mind when they buy jewelry, and that it pushes up the price.

Jewelry is the single biggest usage of gold, worldwide. It makes for nearly half of all the gold's reserve and usage. Jewelry alone represent as much gold as all the gold held by central banks and hoarded by individuals (be it bars or coins). There's also some gold use by various industries but that gold is often lost.

So it's fair to say that jewelry does, indeed, push gold's price up.

But maybe I misunderstood your comment.

Which is why Value added tax is superior system. Though gold is in some jurisdictions treated different when it is considered investment. But for rest it is like any other metal.

Gold doesn't corrode away. If gold was cheap, my roof shingles would be made of gold. You'd also have gold wires instead of copper wires.

Even in ancient times it was consumed to make jewelry and decorations. People used to go to the goldsmiths to sell their gold.

Wouldn’t that be for the same kinds of reasons things like purple dyes were valuable: rare to find, hard to harvest, hard to transmogrify (insect/sea life guts into clothing dye, gold into chains or other wearables), hard to break, which all culminates into a quick visual indication of wealth.

Now? Gold is a great conductor of electricity (of course silver is better) and some people still like wearing lots of flashy jewelry.

I have no earthly clue why people find it valuable to invest in other than it’s like bitcoin: it’s valuable because everyone else also thinks it’s valuable.

Never once have I read a quarterly progress report from the CEO of the element “gold” outlining profit strategies for the next year.