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I don’t buy it - gold has a natural floor, for one thing. I can sell it to make pretty earrings or fancy computer cables. The risk of it losing all its value is

I don’t buy it - gold has a natural floor, for one thing. I can sell it to make pretty earrings or fancy computer cables. The risk of it losing all its value is basically the risk that we will move to a post-scarcity Star Trek style society with matter replicators. Crypto.. not so much.

gfodor 8y ago
Why does this floor influence your choice to purchase it over some other commodity to store value (crypto or otherwise?) What do you think that floor even is? (My working assumption right now is gold could lose 99.9% of its value if it was priced based upon it's utility as a metal and not as a culturally agreed upon store of capital.)
- sf_rob 8y ago
  I would think that most people buy gold as a safe-haven investment, so in this case its floor and/or non-correlation would be very important.
  - nostrademons 8y ago
    So your logic is that "people buy gold because other people believe it's a safe investment"? That same logic applies to crypto - if people stop believing that gold is a good investment and start believing that crypto is a good investment, gold will cease to be a good investment and crypto will become a good investment. I think gfodor is asking something more along the lines with "What can you do with gold that you cannot do with anything else you can buy?" There are valid answers to that - gold is a catalyst in several chemical reactions that won't work with any other metal, it's corrosion resistant, it's shiny, it's a very good conductor that's quite malleable. But I'm with him in surmising that if people only used gold for its metallurgical properties, absent any historical sentimental attachment, the price would drop 99.9%. Gold is actually quite abundant; 190kt have been mined so far [1], most of which is either locked up in jewelry or being hoarded as an investment, so if people ceased to believe it was valuable there'd be a very large oversupply for the few real industrial uses. [1] https://www.gold.org/about-gold/gold-supply/gold-mining/how-much-gold https://www.gold.org/about-gold/gold-supply/gold-mining/how-...
    - mattnewton 8y ago
      That’s still far more uses than if people think a particular coin has lost its value. When thinking about a store of value for loss-averse people, the intrinsically useful, always-been-valuable mineral I can hold in my hand seems like a psychological winner over numbers in a blockchain that require an industrial society with the blockchain to keep churning. My take was that people were speculating in bitcoin to get rich, not to weather government collapse.
      - wbl 8y ago
        Iron is much more useful. It also requires more energy to extract.
        kazen44 8y ago
        iron is far more abundant though.
        nostrademons 8y ago
        The price of a commodity depends more on the energy, labor, and technology required to extract it and consequent market power of the main producers than on its abundance in the earth's crust. Otherwise strontium ($1000/kg, 360 ppm in crust) would be a lot cheaper than tin ($16/kg, 2.2 ppm).
    - brandall10 8y ago
      Ignore the utility of gold, I feel that just muddies the waters. The volatility of crypto makes it a terrible store of value. While people may use it as such, it is primarily a speculative asset. OTOH, gold has historical precedent assuring its stability. So while that could suddenly change, its going to take a fairly sizable event to shift the perception. Like a nuclear holocaust or something. If there's any generational shift in this thinking it's purely naivety.
      - nostrademons 8y ago
- zby 8y ago
  Floor is better when it is higher - would you agree with that statement? But if floor is important and it is better when higher - then the best store of value would be a basket of long lasting useful commodities. Like iron. Their floor is practically their current market value.
- AareyBaba 8y ago
  Indian households have the largest private gold holdings in the world, standing at an estimated 24,000 metric tons. That figure surpasses the combined official gold reserves of the United States, Germany, Italy, France, China and Russia. So you'll have to convince a billion+ humans that gold is only worth it value as a metal before it loses 99.9% of it's value.
  - gfodor 8y ago
    I never claimed to think this will happen, I was stating that the "floor" on gold is very low if it did happen as per the OP.
theptip 8y ago
The mere existence of a price floor isn't particularly relevant; if your nest egg goes down to 1% it's basically the same as going to 0%. You've still lost your shirt. I don't know what the floor for industrial uses actually is though; if it's 10% of the current speculative price that might be germane, but if it's lower it might not.
- deleted 8y ago
  [deleted]
zby 8y ago
Floor is better when it is higher - would you agree with that statement? But if floor is important and it is better when higher - then the best store of value would be a basket of long lasting useful commodities. Like iron. Their floor is practically their current market value.

gfodor 8y ago

Why does this floor influence your choice to purchase it over some other commodity to store value (crypto or otherwise?) What do you think that floor even is? (My working assumption right now is gold could lose 99.9% of its value if it was priced based upon it's utility as a metal and not as a culturally agreed upon store of capital.)

sf_rob 8y ago
I would think that most people buy gold as a safe-haven investment, so in this case its floor and/or non-correlation would be very important.
- nostrademons 8y ago
  So your logic is that "people buy gold because other people believe it's a safe investment"? That same logic applies to crypto - if people stop believing that gold is a good investment and start believing that crypto is a good investment, gold will cease to be a good investment and crypto will become a good investment. I think gfodor is asking something more along the lines with "What can you do with gold that you cannot do with anything else you can buy?" There are valid answers to that - gold is a catalyst in several chemical reactions that won't work with any other metal, it's corrosion resistant, it's shiny, it's a very good conductor that's quite malleable. But I'm with him in surmising that if people only used gold for its metallurgical properties, absent any historical sentimental attachment, the price would drop 99.9%. Gold is actually quite abundant; 190kt have been mined so far [1], most of which is either locked up in jewelry or being hoarded as an investment, so if people ceased to believe it was valuable there'd be a very large oversupply for the few real industrial uses. [1] https://www.gold.org/about-gold/gold-supply/gold-mining/how-much-gold https://www.gold.org/about-gold/gold-supply/gold-mining/how-...
  - mattnewton 8y ago
    That’s still far more uses than if people think a particular coin has lost its value. When thinking about a store of value for loss-averse people, the intrinsically useful, always-been-valuable mineral I can hold in my hand seems like a psychological winner over numbers in a blockchain that require an industrial society with the blockchain to keep churning. My take was that people were speculating in bitcoin to get rich, not to weather government collapse.
    - wbl 8y ago
      Iron is much more useful. It also requires more energy to extract.
      - kazen44 8y ago
        iron is far more abundant though.
        nostrademons 8y ago
        The price of a commodity depends more on the energy, labor, and technology required to extract it and consequent market power of the main producers than on its abundance in the earth's crust. Otherwise strontium ($1000/kg, 360 ppm in crust) would be a lot cheaper than tin ($16/kg, 2.2 ppm).
  - brandall10 8y ago
    Ignore the utility of gold, I feel that just muddies the waters. The volatility of crypto makes it a terrible store of value. While people may use it as such, it is primarily a speculative asset. OTOH, gold has historical precedent assuring its stability. So while that could suddenly change, its going to take a fairly sizable event to shift the perception. Like a nuclear holocaust or something. If there's any generational shift in this thinking it's purely naivety.
    - nostrademons 8y ago
zby 8y ago
Floor is better when it is higher - would you agree with that statement? But if floor is important and it is better when higher - then the best store of value would be a basket of long lasting useful commodities. Like iron. Their floor is practically their current market value.
AareyBaba 8y ago
Indian households have the largest private gold holdings in the world, standing at an estimated 24,000 metric tons. That figure surpasses the combined official gold reserves of the United States, Germany, Italy, France, China and Russia. So you'll have to convince a billion+ humans that gold is only worth it value as a metal before it loses 99.9% of it's value.
- gfodor 8y ago
  I never claimed to think this will happen, I was stating that the "floor" on gold is very low if it did happen as per the OP.

theptip 8y ago

The mere existence of a price floor isn't particularly relevant; if your nest egg goes down to 1% it's basically the same as going to 0%. You've still lost your shirt. I don't know what the floor for industrial uses actually is though; if it's 10% of the current speculative price that might be germane, but if it's lower it might not.

deleted 8y ago
[deleted]

zby 8y ago

Floor is better when it is higher - would you agree with that statement? But if floor is important and it is better when higher - then the best store of value would be a basket of long lasting useful commodities. Like iron. Their floor is practically their current market value.