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No, most of the gold in the world is not traded; but I don't remember ever hearing people talk about the "market capitalization of gold". Most stocks have a ra
by cperciva 10y ago
No, most of the gold in the world is not traded; but I don't remember ever hearing people talk about the "market capitalization of gold".
Most stocks have a rational basis for their price beyond mere scarcity: They pay dividends, or are expected to pay dividends eventually. Newly IPOed startups are something of an exception to this rule (lots of people chasing a small number of "hot" shares) and it's not surprising that they often have mythical market capitalizations.
- iaw 10y agoYou're half right, but you ignore market dynamics. Silver Tuesday [0] is a good scenario where the value of a precious metal was inflated due to the behavior of market participants and not an intrinsic value of the material. There is a rational basis for everything's price but scarcity and signaling making up huge components of that rationale. [0] https://en.wikipedia.org/wiki/Silver_Thursday https://en.wikipedia.org/wiki/Silver_Thursday
- beambot 10y agoHere, from Warren Buffett: http://fortune.com/2012/02/09/warren-buffett-why-stocks-beat-gold-and-bonds/ http://fortune.com/2012/02/09/warren-buffett-why-stocks-beat... > Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce -- gold’s price as I write this -- its value would be about $9.6 trillion. He then goes on to say why he doesn't care for it: it's not a productive asset.