[roundman]

Not much long term effect on most nations. It might confuse/upset a few of the crazy people though.

JM

[KLhdfskja]

There would be a huge number of "dives" taken in various finals in the upcoming Olympics.

[Elitiachirl]

The price of jewelry not made with gold would go up.

[awagsFare]

South Africa uber ales!

[actrisski]

No worries there.

[ziIReIGS]

Why is that a real question and teh other one not?

[ViagraFeller]

What if it was vegetable oil?

[krasniyluch]

If you could turn paper towels into vegetable oil, the universe would explode.

[BliliBoopsy]

It would be a great metal to have in high abundance - very resistant to corrosion and a good conductor with interesting optical properties. Shame it is too soft for any structural uses.

Worthless gold I've never understood why people have always assigned so much value to the stuff...

[bromgeksan]

I was more referring to the demand side of the picture rather than the supply. It is so valuable because people covet it so highly. I've never really understood the fascination some people have with it, or "bling" in general...I find it a vulgar concept.

[lisualsethelp]

Re: OP

The world economy would collapse. There's a very significant about of money invested in gold and gold would become practically worthless.

[aquadayAquaks]

That's still trillions in gold out there, since it doesn't just evaporate. (I have no idea how much gold is held as investment rather than "in use". Anyone?) Also all the gold stocks and metal indices/funds would go into the shitter. It would do some serious damage. Much like the writedowns from CDO's. Only all at once since the stuff it would affect couldn't be hidden away in level 3 assets. Commodities and stock are mark to market. And in this case, the market would lose 99.9% virtually instantly.

You'd have investors and institutions getting margin calls... Fire sales on their holdings to pay for it, which can drive down the price of anything else they're holding. Sectors which go down or up strong tend to pull the rest of the market with them on sympathy anyways.

[ditpiler]

You do realize that commodities and futures markets are mostly zero-sum games, yes? One person loses money that another person gains in any given transaction.

The gold market is an indicator of sorts but is itself not a very big chunk of the whole. It would hurt, but the rest of the market would rebound.

[TolleyBoymn]

No, stocks represent fractional ownership of a company that has some kind of profit-making operation. The value of the stock is a bit of a game, but it isn't a zero-sum game.

Commodities markets rarely involve the actual goods changing hands or performing a profit-making function. They are mostly futures or day-trading contracts.

[Colorostikse]

Going back to the original question, I read once that this scenario actually happened when the Spanish were plundering gold from the Aztecs and bringing it back to Europe.

[sbrscnds]

It seems that there is a confusion about the expression “one person loses money” that I understood in Straybow’s sentence as “one person makes a loss” and Aeson translates by “one person loses bank-notes”, even using later the world currency. I think that we do not need referring to currency to explain the allocation of profits in the stock market game.

[YonkFiorc]

Most of the transactions on commodities (including "money" as a commodity in Forex) are little more than bets on which way and how far the market moves. Each transaction has a counterpart who essentially bets against you. Either you win money, which comes from the counterpart's portfolio, or you lose money which goes to the counterpart (less the "spread" which goes to the brokerage). Of course, sometimes the brokerage itself acts as counter.

[SasortFkire]

He's also ignoring that that is how the stock market works too. You don't take physical possession of the portion of the company you "own" either.

[Scfdglkn]

Originally posted by Straybow
Most of the transactions on commodities (including "money" as a commodity in Forex) are little more than bets on which way and how far the market moves. Each transaction has a counterpart who essentially bets against you. Either you win money, which comes from the counterpart's portfolio, or you lose money which goes to the counterpart (less the "spread" which goes to the brokerage). Of course, sometimes the brokerage itself acts as counter. Sure, but someone still owns all the gold in the world. And who's betting that gold will be $5 and ounce?

[HunterM]

Originally posted by Straybow
A substantial part of the stock market (including the mechanisms that drive stock values) are futures and similar derivatives, but the greater part of stock transactions are purchases rather than derivatives. Not so for the gold market. It's an irrelevant distinction to what you were arguing.

"One person loses money that another person gains in any given transaction." - Stray

When you buy a stock, you give money to someone else, who is selling the stock. If the stock price crashes, the person you bought the stock from "makes" the money you "lost". Selling an appreciating asset is a loss, selling a depreciating asset is a gain. This becomes very apparent when you look at short sales of stock.

Also, you don't "make" money on stocks until someone buys them from you. Just sitting on an appreciating asset affects your wealth, but to lock that in, you have to close out your position.

There is no actual money created or destroyed in the process, only transferred. But the underlying value changes all the time.

This is no different in that regard than commodity markets. The underlying value changes all the time, affecting wealth distribution. If you take that underlying value away, it's a real loss in wealth, regardless of what types of contracts are used to describe or facilitate ownership of the underlying.