Why do people assume gold has intrinsic value?
I just saw today they were freaking out about how much gold is fluctuating, it is just as imaginary as the dollar.
Technically the Big Mac does provide some form of intrinsic value in the form of food for the homless. but for the average person it would actually give them more value to take the big mac away so it has sorta a negative value, negative intrinsic value, I think I just invented that.
Gold is nothing but an uncertainty indicator proxy, if gold price goes up, people are unsure in the market and future returns and thus buy gold, if the price is low the market and economy feels stable and people don’t buy gold
This comment actually made me think and look it up. I never thought about this. Why is gold valuable?
Yeah you were basically right. Because societies decided it would be. I mean gold has some practical applications but nothing that would justify it’s price.
Gold’s value is ultimately a social c- onstruction; its worth is sustained by ourcollective agreement about its importance and our belief in its future value.
Gold’s physical properties—its lustrous quality, relative scarcity, durability, and difficulty of extraction—reinforce and justify its perceived value.
Unlike other precious metals, gold strikes a balance of being rare enough to be precious but abundant enough to serve as a practical medium of exchange.
So I guess rare enough yet abundand enough and durable enough.
That’s a bit light on the “balance” many metals are precious and fairly rare, their physical characteristics like being poisonous, being visually indistinguishable from various cheap metals or malleable to the degree they will wear out as a coin are some issues.
Yeah but was the process cheaper than buying it? Converting a million dollars of lanthenides and energy into a few thousand dollars of gold isn’t a great trade off
Even so, in a scenario where all the currencies fall apart, Gold and Silver are very probable to become the basis of wealth.
Nowadays, stuff like SiIicon and Copper are pretty high value (and similarly, Germanium), but they really depend a lot upon hard to measure purity which goes with high-technology.
So Gold and Silver, which are easier to determine with lower technology (unless someone uses high-technology to spoof them) and also easier to make into useful products, will tend to hold intrinsic value.
Value of iron and others, break down due to abundance, while steel depends upon technology and expertise.
Also because gold and silver are what people will mentally default to. Even if you develop a quick, easy, and free test to determine the purity of cobalt or neodymium and demonstrate how they’re more functionally valuable, people will still default to trading au and ag to buy the amount of those metals they need. Copper would be next.
So why gold? Because everyone knows that enough people will trade for it, in the same way you know your landlord, grocer, and bar will all take your country’s currency, and that’s why you accept it in exchange for your labor
Why do people assume gold has intrinsic value? I just saw today they were freaking out about how much gold is fluctuating, it is just as imaginary as the dollar.
Technically the Big Mac does provide some form of intrinsic value in the form of food for the homless. but for the average person it would actually give them more value to take the big mac away so it has sorta a negative value, negative intrinsic value, I think I just invented that.
The word “fluctuating” implies the price of gold has been going up and down. That is not what has happened since the Commander-In-Thief took office.
Market price of one ounce of gold over the last five years:
Gold is nothing but an uncertainty indicator proxy, if gold price goes up, people are unsure in the market and future returns and thus buy gold, if the price is low the market and economy feels stable and people don’t buy gold
This comment actually made me think and look it up. I never thought about this. Why is gold valuable?
Yeah you were basically right. Because societies decided it would be. I mean gold has some practical applications but nothing that would justify it’s price.
First link I found says this:
Gold’s value is ultimately a social c- onstruction; its worth is sustained by ourcollective agreement about its importance and our belief in its future value.
Gold’s physical properties—its lustrous quality, relative scarcity, durability, and difficulty of extraction—reinforce and justify its perceived value.
Unlike other precious metals, gold strikes a balance of being rare enough to be precious but abundant enough to serve as a practical medium of exchange.
So I guess rare enough yet abundand enough and durable enough.
Wild tbh
But without gold how will we ever make high quality HDMI cables?
That’s a bit light on the “balance” many metals are precious and fairly rare, their physical characteristics like being poisonous, being visually indistinguishable from various cheap metals or malleable to the degree they will wear out as a coin are some issues.
Now look up conspiracy theorists who are obsessed with gold standard and its abandonment.
Planet money had great episode on this topic if you’re interested https://www.npr.org/2024/05/15/1197959089/-price-of-gold-periodic-table-elements
Btw, we just transmuted our first gold just recently.
Yeah but was the process cheaper than buying it? Converting a million dollars of lanthenides and energy into a few thousand dollars of gold isn’t a great trade off
Well, no. And I think it was just not a few atoms. But we did it.
Even so, in a scenario where all the currencies fall apart, Gold and Silver are very probable to become the basis of wealth.
Nowadays, stuff like SiIicon and Copper are pretty high value (and similarly, Germanium), but they really depend a lot upon hard to measure purity which goes with high-technology.
So Gold and Silver, which are easier to determine with lower technology (unless someone uses high-technology to spoof them) and also easier to make into useful products, will tend to hold intrinsic value.
Value of iron and others, break down due to abundance, while steel depends upon technology and expertise.
Also because gold and silver are what people will mentally default to. Even if you develop a quick, easy, and free test to determine the purity of cobalt or neodymium and demonstrate how they’re more functionally valuable, people will still default to trading au and ag to buy the amount of those metals they need. Copper would be next.
So why gold? Because everyone knows that enough people will trade for it, in the same way you know your landlord, grocer, and bar will all take your country’s currency, and that’s why you accept it in exchange for your labor