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Can someone explain a concept to me? I never understood how gold rushes were profitable. If you suddenly found a mass quantity of a "rare" material, wouldn't it
by cooper12 9y ago
Can someone explain a concept to me? I never understood how gold rushes were profitable. If you suddenly found a mass quantity of a "rare" material, wouldn't it no longer be valuable since its value depended on its scarcity?
- tree_of_item 9y agoIt takes a bit of time for that information about abundance to propagate through the economy, and for prices to update to reflect it. During that lag time people are able to get rich.
- vram22 9y agoGold rushes tend to be more guaranteedly (I just made up that word, if it isn't one :) profitable to the people who promote them as being profitable - than to those who rush in trying to find the gold. Look up "picks and shovels".
- obastani 9y agoA "gold rush" probably didn't make gold abundant -- it was just enough to make a few people rich.
- JBReefer 9y agoGenerally people that sell inputs like shovels, jeans, and land. Prospectors generally lose money.
- cortesoft 9y agoDepending on the resource, there may be latent demand that can be met when a cheaper source of a resource is discovered. Demand curves are not linear. Often times, as a resource becomes more readily available, a ton of new uses spring up that were not economically feasible when the cost was higher.
- manmal 9y agoThe term for this is price elasticity: http://www.investopedia.com/terms/p/priceelasticity.asp http://www.investopedia.com/terms/p/priceelasticity.asp