Before the Alex Jones crowd starts biting my head off - I love gold and silver. I own a fair amount myself. What I cannot stand is the assertion that "unlike fiat currency, Bitcoin, etc - precious metals have intrinsic value!". This is just not true. The only real, secure value commodities have are the value you place yourself in them. This is true of all things. The value that gold and silver have is the very opposite of intrinsic. They have value in the market because individuals value them. There's no reason why the gold price couldn't halve to 800 because, for example, convention when it comes to marriage and jewelery changes. The continued value of gold and silver in the market is tied to consumer demand - to ordinary people like you and I placing that value in them.
its only worth what someone else will pay you..when the demand is high the price goes up..when people stop buying it drops really fast..
Gold has intrinsic value as opposed to fiat money. Gold is useful for other things. Fiat money is money without intrinsic value because it is something declared to be of value by government. Other things with intrinsic value are things manufactured that have useful value such as an automobile or clothing.
Fiat currency has intrinsic value in that sense, it's just quite low. Makes a fine firestarter. The value found in metals through jewelery, electronics, etc is also subjective. If people stop demanding iPads, people stop demanding silver for that use. [hr][/hr] It just pushes the subjectivity a step backwards. No longer is your currency backed by trust, it's backed by practical applications, and the trust that people will continue to value them, just like the trust that people will continue to value the dollar. We can argue that gold and silver have a much higher chance of being valuable going forward, but value is an inherently human and subjective concept. Before humans gold and silver had no value because there was nobody around to value them. After humans are gone the same will be true.
Depends what you mean by "value". Classical Economists defined "value" as "the socially necessary abstract labour embodied in a commodity", "the technologically necessary cost of production". "Price" meant the market price. The difference between "value" & "price" was Economic Rent, unearned income derived solely from privilege. It is pure overhead that adds to prices & increases the cost of doing business, making economies high-cost & uncompetitive. The Classical Reformers sought to minimize Economic Rents by the nationalization of basic public infrastructure & the taxation/regulation of other rent yielding assets, in order to bring prices in-line with the cost of production, to lower the cost of doing business & to increase competitiveness.
Yes and No, Commodities like gold do have some amount of intrinsic value in that they will always be worth something. That being said that does not mean their value cannot fluctuate. The difference is unlike some things like stocks, bonds, currencies, etc. gold cannot loose all of its value. It also cannot produce earnings or interest, which means in an environment where returns are being seen in other investments, and the markets are perceived as being strong, people will seek to minimize investments which lack upside, in order to reinvest in more profitable investments. On the other hand when there is perceived risk in markets, there can be more demand for gold. Of course it is wrong to think that gold or any other commodity will gain in value in a highly deflationary environment because deflation by its nature requires the liquidation of assets in order to pay debt which lowers the value of everything except the legal tender which can be used for debt settlement.
yeah,and a huge chunk of that demand is for use in electronics, and a lot more of it is in (very justified) distrust of paper currency. That's ENOUGH to keep bullion gold coins a good place for up to 20% of your net worth.
Value. When I need my Gold / Silver, it will be there for me. Gold will have some purchasing power. I do not care what its' value is between now and then. My ATPG on the other hand isn't worth the paper of its' natural gas leases. ATPG will NOT be there for me. See the diff. My bank savings account will also be there for me, but it loses value with interest rates below costs of living realities. In conclusion ATPG, no value Bank Savings, shrinking value Gold, will be there for me when I need it. Moi r > g No
Yes, gold will always have some purchasing power. That's why it's bought as insurance against economic calamity. In a crisis, gold's price may soar hundreds of percent or even more. That's why only a small amount of gold can protect a much bigger portfolio. ATPG (now ATPAQ) will always be worth at least as much as its book value, now comprised mostly of cash. It does hold valuable assets, but there's a cost to extract these assets from the ground, so they're comparatively illiquid. A stock can't be worth less than its book value, which is what an owner would get if the company went out of business and dissolved. Of course, the market sometimes prices stocks below their book value. Many investors see that as a great buying opportunity. I have myself made money by buying the stock of a company about to be dissolved at a lower price than the dissolution price registered with the SEC. Bank savings will be there, but in a crisis there may be hyperinflation, devastating the purchasing power of cash. Gold protects against this risk. But gold pays no interest. Many investors get bank accounts in foreign currencies. These pay interest - sometimes much more than is available in the US - and protect against US currency risk. You can deal directly with foreign banks; with overseas branches of US banks, or with US banks that offer accounts in foreign currencies, such as Everbank.
