Jump to content
House Price Crash Forum

Gold Thread Economics Related Issues


Recommended Posts

Probably going to regret this.

First of all, intrinsic value.

There is no such thing as intrinsic value. All such values are a human opinion about objects, that is they reside in the human mind, not in the objects themselves. They can go up, down, sideways. They can disappear entirely.

In the case of something like gold, Apple iPhones, the latest Justin Bieber CD, then yes.

In the case of something like food and water, no; it has some intrinsic value because it is essential to human existence.

The actual specific value would depend on how hungry or thirsty the person was and like anything else, how scarce it is. Supply and demand. Not all asset classes are the same.

Second, demand for gold.

Gold is now and generally has been throughout history mostly sentiment driven. The actual market demand, that is "omg I SO need some gold right now" demand is and has always been a vanishingly small part of it. Even that part of it has been due to various social paradigms which are not currently as in force as they used to be. Previously one needed gold to pay temple tithes, to get married (in an age where no marriage meant no socially sanctioned sex) and if you were rich enough, to give to the king so he could look like a medieval BA Baracus.

Yes, wearing gold meant status. This was in an age where most people wore burlap and the shiniest thing avilable to human beings was the sweat on their foreheads.

Supply and demand - gold has scarcity value (though the scarcity, I guess, like oil, depends on how much is dug out of the ground). Scarcity of circulation might be more accurate than simply scarcity full stop.

It has value as a store of value as a hedge against fiat currency hence why it has done so well since fiat currencies have been trashed.

It has zero intrinsic value because it is useless. It is just some metal.

Third, the gold standard.

This wasn't the market choosing gold, this was government choosing gold and then forcing everyone else to use it a gunpoint. Generally the government makes people do theings they don't want to do - i.e. it's inherently anti market.

The Government (whichever one) didn't force people to use gold. It forced people to use fiat paper. It decided that linking the scarcity of the metal to the fiat would mean the fiat could be a store of value. That the promises of the fiat paper could be made good. Of course we both know how well that has gone.

Fourth, Gold is money.

No, it isn't. Money is the most commonly traded item in an economy. If you are in prison, this will be ciggies, porn or drugs. If you are in a farming commuity, it'll be some form of crop. Something with universal value, high in natural demand, easily divisible and tradable. Not that gold is worthless to people, of course it isn't. it just is too scarce to function as money. History shows this, gold is for kings, silver for nobles, copper for peasants, debt for slaves goes the quote.

By your arguments, though, gold can be money, because anything can be money.

In the context of where we are now, gold is not money, because it is not good for the payment of taxes.

It could be exchanged for fiat to pay taxes, so it's an intermediate store of value simply by vitue of scarcity provided both parties to the transaction agree. But that's not the same.

How do we find out what money is?

We have a market. A free market. Then we let people trade amongst themselves. Eventually the most commonly traded item will appear. That's money. This is a process, one which no one gets to short cut by imposing their will on everyone else.

The most commonly traded item would surely be food. Therefore, it is different to other assets, because it is essential to human survival.

Fifth, Gold is chosen by all people at all times as money?

That's why theres fiat bloody money everywhere is it? And why fiat money keep coming back like a bad headache, is it? Gold is ace as money, that's why everyone always leaves it in vaults the first chance they get and wanders around with promissory notes instead, eh? Oh, add the bit about gold being for about 5% of the population, silver for 15-20% and everyone else on whatever happens to be the du jour.

For the purposes of a transaction, gold is money if you and I say it is.

Link to post
Share on other sites

Probably going to regret this.

In the case of something like gold, Apple iPhones, the latest Justin Bieber CD, then yes.

In the case of something like food and water, no; it has some intrinsic value because it is essential to human existence.

The actual specific value would depend on how hungry or thirsty the person was and like anything else, how scarce it is. Supply and demand. Not all asset classes are the same.

Everything is sibject to the subjectivity principle.

For example -

300px-Th%C3%ADch_Qu%E1%BA%A3ng_%C4%90%E1%BB%A9c_self-immolation.jpg

Supply and demand - gold has scarcity value (though the scarcity, I guess, like oil, depends on how much is dug out of the ground). Scarcity of circulation might be more accurate than simply scarcity full stop.

It has value as a store of value as a hedge against fiat currency hence why it has done so well since fiat currencies have been trashed.

It has zero intrinsic value because it is useless. It is just some metal.

My point is that there is no such thing as intrinsic demand.

The Government (whichever one) didn't force people to use gold. It forced people to use fiat paper. It decided that linking the scarcity of the metal to the fiat would mean the fiat could be a store of value. That the promises of the fiat paper could be made good. Of course we both know how well that has gone.

The government forced people to use gold. Then it forced them to use paper.

By your arguments, though, gold can be money, because anything can be money.

Yes, of course gold could become money in the future. But it isn't now, and it hasn't been in the past.

In the context of where we are now, gold is not money, because it is not good for the payment of taxes.

It could be exchanged for fiat to pay taxes, so it's an intermediate store of value simply by vitue of scarcity provided both parties to the transaction agree. But that's not the same.

Taxes are the mechanism for making paper into money - money being the most commonly traded item in an economy.

The most commonly traded item would surely be food. Therefore, it is different to other assets, because it is essential to human survival.

Deciding to survive is a subjective decision, which can be reversed.

For the purposes of a transaction, gold is money if you and I say it is.

If there re only you and me on earth, yes. With billions of others? Doubt it.

Link to post
Share on other sites

No, because you can change your mind.

No.

Value is inside your head, it is not inside objects.

I waited all this time for that.... You can change your mind.. how feckin lame..

.

Injin's right.

It's demonstrable.

Gold was perceived as a store of value up to Jan 1980. People handed over $850 for 1 ounce. Then they changed their minds and it fell 90% in real terms.

People changed their minds about silver in May 2011. It fell from $49 to $28.

People changed their minds about housing in 2007.

People changed their minds about oil in 2008. It fell from $147 to $35

People change their minds all the time and the value they ascribe to assets they own or don't own changes with it.

This isn't even debateable surely to goodness.

Link to post
Share on other sites

Like the post, can't flaw the logic but am a bit confused about the first statement.

Surely things have intrinsic value if the help / aid the species to survive, adapt and replicate? Food for instance has intrinsic value as it is a pre-requisite of survival.

You've stated that there is no such thing as intrinsic value but that can't be true for the above reasons.

I might be misunderstanding you though on this point and you are referring to gold which doesn't have any intrinsic value which I would agree with. But you do say 'nothing has intrinsic value' which can't be true because no species could survive without things having intrinsic value.

Am I just getting confused about what you mean here? Sorry, this is also a bit off topic.

First of all, intrinsic value.

There is no such thing as intrinsic value. All such values are a human opinion about objects, that is they reside in the human mind, not in the objects themselves. They can go up, down, sideways. They can disappear entirely.

Link to post
Share on other sites

Would I be correct in thinking that you consider Modern Monetary Theory to be an accurate description of the state of things as they are, but are horrified by it?

It's pretty accurate, apart from the level of control ascribed to it.

MMT has boundaries, such as the willingness of the slaves to put up with their burden, the diminishing of ignorance amongst people leading to overthrow, hard and fast economic rules about new additions of money leading to economic crash and so on.

Link to post
Share on other sites

Like the post, can't flaw the logic but am a bit confused about the first statement.

Surely things have intrinsic value if the help / aid the species to survive, adapt and replicate? Food for instance has intrinsic value as it is a pre-requisite of survival.

You've stated that there is no such thing as intrinsic value but that can't be true for the above reasons.

I might be misunderstanding you though on this point and you are referring to gold which doesn't have any intrinsic value which I would agree with. But you do say 'nothing has intrinsic value' which can't be true because no species could survive without things having intrinsic value.

Am I just getting confused about what you mean here? Sorry, this is also a bit off topic.

The species can make the choice not to survive.

That was the point of the burning monk. For humans, all values are up for change, even continued human existence itself.

Link to post
Share on other sites

Injin's right.

It's demonstrable.

Gold was perceived as a store of value up to Jan 1980. People handed over $850 for 1 ounce. Then they changed their minds and it fell 90% in real terms.

People changed their minds about silver in May 2011. It fell from $49 to $28.

People changed their minds about housing in 2007.

People changed their minds about oil in 2008. It fell from $147 to $35

People change their minds all the time and the value they ascribe to assets they own or don't own changes with it.

This isn't even debateable surely to goodness.

I believe this otherwise obvious truth is rejected because the results are too scary. Gold is a talisman, a mythical symbol to ward off anxiety.

Even diversification is no panacea. Risk is everywhere.

Link to post
Share on other sites
  • 2 months later...

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.