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I always wondered about this. Gold is now valuable only as a shared fiction. In hard times I’d much rather have useful things (food, meds, water, fire) than a p
by kareemm 7y ago
I always wondered about this. Gold is now valuable only as a shared fiction. In hard times I’d much rather have useful things (food, meds, water, fire) than a pile of stuff that is valuable only because others think it is... which could and does change over time.
Clearly I’m missing something...?
- TheAdamAndChe 7y agoIt shouldn't be seen as an investment, but as a hedge against inflation IMO. Silver and gold has fixed supplies, unlike fiat currencies.
- aguyfromnb 7y ago>Silver and gold has fixed supplies, unlike fiat currencies. It can be counterfeited or debased. Will you carry around a scale and testing supplies?
- Symmetry 7y agoAnd historically the amount mined somewhat depended on the price so, as with fiat currency, there was at least some feedback mechanism on the price. Though if you discover a new source it can be bad, see the price revolution[1]. [1]https://en.wikipedia.org/wiki/Price_revolution https://en.wikipedia.org/wiki/Price_revolution
- evbpcapfxy 7y agoYou can transfer ownership of gold without moving your gold. Just as you can transfer ownership of a house without moving the house. Paper money began as a claim on an asset stored in a vault.
- londons_explore 7y agoOnly semi-fixed supplies. If gold gets too valuable relative to labour, more mountains in South America will be pulled down to extract the gold. Think of the way hundreds of millions of dollars have been put into bitcoin mining ASICS just because someone saw a return could be pulled out if thin air... Gold mining is pulling a return out of rock when the economic conditions are right.
- NickBusey 7y agoYup. There are plenty of dormant mines here in Colorado because "there is 100 million dollars worth of gold in that mine but it will cost 200 million dollars to extract it". Once the first number changes enough in relation to the second, those mines will start right back up.
- blevin 7y agoA high profile example is the Donlin project in Alaska. They've been spending decades on de-risking and logistics, and once the gold becomes valuable enough to extract it's likely to be one of the largest mines in the world. https://www.novagold.com/properties/donlin_gold/overview/ https://www.novagold.com/properties/donlin_gold/overview/
- lawn 7y agoYour analogy is slightly wrong, as more ASICs won't increase the Bitcoin supply. (Technically it will a little until the network difficulty adjusts.)
- AnimalMuppet 7y agoI seem to recall that when the Spanish conquered Central and (most of) South America, and found and mined huge amounts of gold and silver, it increased the supply of gold by 20%. Sure, mining may increase the supply of gold... a very small amount compared to the existing supply. It's not going to move the needle in terms of supply vs. demand, though.
- GrumpyNl 7y agoI place my bet on my vegetable garden.
- jonhohle 7y agoGold has utility as well: it’s highly conductive, doesn’t oxidize easily, is hypoallergenic, malleable, etc. Napkin math tells me that over 50 tons of gold have been used just in iPhones over the past 13 years. Just like any commodity - if there is demand, there is probably value.
- vermilingua 7y agoAnd to extract any of that utility, you need an industrial economy. People buy gold when they begin to question the longevity of such an economy.
- Symmetry 7y agoBismuth is priced at $.39 per gram, copper at $.0074. I would bet gold would end up somewhere in that range or so as opposed to the $48 per gram it's at now.
- neuronic 7y agoLooking forward to Bismuth necklaces and Bismuth dental crowns.
- Symmetry 7y agoBismuth has low toxicity for a heavy metal but I think I'd recommend skipping the dental crowns. Bismuth makes very pretty dangly bits handing off earring or necklaces though. https://www.google.com/search?q=bismuth+jewelry https://www.google.com/search?q=bismuth+jewelry
- logfromblammo 7y agoGold is valued because it doesn't tarnish. Bismuth, on the other hand, becomes beautiful only with a patina of oxide.
- DubiousPusher 7y agoNo because it's much more rare. All the gold mined in the history of the world could fit into one moderately sized warehouse. 190,000 tons of gold mined in the history of the world vs. 700,000,000 tons of copper.
- jariel 7y ago"Gold is now valued only as a shared fiction." Every Fiat currency is a 'shared fiction'. Currency is a social contract. Then, if we all agree that Gold is a currency, then it has value in that regard, and since it always has been a currency across pretty much all cultures, across all time, it remains a form of rough currency. If 'civilization fell apart' (and it won't) we would still need currency and if anything it would probably be gold.
- peteradio 7y agoGuaranteed lead.
- tsimionescu 7y agoWouldn't cash dollars be a better bet than gold? Harder to counterfeit, easier to carry around, easier to split.
- sfj 7y agoIf no one was printing more of 'em, they'd disintegrate after awhile if heavily used.
- jariel 7y agoFirst, it's worth remembering that the USD was ostensibly backed by gold up until one generation ago, until the Vietnam War. No kidding. There was some amount of Gold reserve to back dollars, that's why 'Fort Knox' exists. So even the USD was 'just a paper you could trade for gold'! Though really, you couldn't, it was a weird theoretically reality. Now (and really even then) USD is only as good as the integrity of the US Gov and the Fed. If they crash, USD won't be worth the paper it's printed on. In addition, mechanically, physical currency takes a lot of effort to keep going, and with nobody doing that, well it goes kaput. Digital currencies rely on various layers of trust: networking, security, legal, financial, regulatory, institutional. If any of those break, we can't use digital currency. Technically, there might be some kind of super cook block-chain that could work without needing the internet, surely, but it's too complicated for regular use as a currency. Maybe for larger transactions between fiefdoms! But gold and other precious metals would probably be used as s currency until institutional trust could be built back up into institutions so that they could have real fiat currencies. If knowledge and responsibility were very strongly maintained at the local level, it's entirely possible for regional economies to maintain their own fiats. This requires exceptional knowledge and fiscal/monetary discipline. If you have a populist, dirtbag leader who can corrupt the integrity of the monetary system, it will destroy everything. This is the source of most hyperinflation scenarios.
- _red 7y ago>Gold is now valuable only as a shared fiction. While this is true, its important to understand that "all value is subjective" the concept of "inherent value" is a fallacy that distorts ones worldview. A glass of water has a different value at the oasis vs the dessert.
- singularity2001 7y ago"all value is subjective" no, water and tuna have measurable and objective value to your biological system.
- whb07 7y agoNot if you live in a rainforest with ample access to water. It’s got very little value, whereas in a desert it’s got high value.
- js2 7y agoPlease edit your comment to remove the last sentence.
- AnimalMuppet 7y agoWhy? What's wrong with the last sentence? (Or has it already been removed?)
- js2 7y agoIt previously had an insult as the last sentence. I'm glad it was edited and I'm sorry it's too late for me to delete my request now.
- AnimalMuppet 7y agoEh, no worries. You gave good advice, and it sounds like it was heeded. You left me confused, but no big deal - I've been confused a few times before...
- zeckalpha 7y agoAll value of money is a shared fiction. Smith (1776) talked about this.
- hathym 7y agohow are you going to buy your 9999.99$ can of tuna?
- rabidrat 7y agoYou might be able to bribe the ticket taker or border guard with gold, which you can't do with items like food and meds that have lower value-density and less liquidity. IOW it's more useful when human systems and group behavior are the source of the trouble...which is usually.
- tmn 7y agoIt's not an either or. Someone can easily have 50k of gold and 10k of material goods. 60k of material goods may be excessive in volume and use.
- bagacrap 7y agoVikings lived in hard times and found good very useful/valuable as loot