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> Gold is a tulip. ... The only reason we think it’s valuable is it’s sufficiently rare for other people to think it’s valuable. Absolutely not. Gold has a var

by mabbo 4y ago

> Gold is a tulip. ... The only reason we think it’s valuable is it’s sufficiently rare for other people to think it’s valuable. Absolutely not. Gold has a variety of functional uses in electronics. It's used for its physical properties in a lot of spacecraft. And until dentistry had modern options gold fillings were common (not even that long ago- my own mother has a couple gold fillings). He also skips over why it's called a Tulip: https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania

AbrahamParangi 4y ago
Tulips also have inherent utility as decorative flowers but that's tangential to the point.
- rafale 4y ago
  So food is tulip. Steel is tulip... everything is tulip? It's not the existence of utility that matters but the degree. Gold is much more useful than tulips.
  - sumy23 4y ago
    The value of gold is detached from its utility, just as the value of tulips during tulip mania were detached from their decorative value. The value of steel, on the other hand, is not detached from its utility value.
    - forum_ghost 4y ago
      gold is a reliable hedge and store of value that survived 5000 years: longer than any empire, longer than any bond issue, longer than any real estate holding, longer than any fiat currency. financial utility IS utility. nothing is detached from anything.
tsimionescu 4y ago
Even more relevantly, gold was a relatively dense solid substance that didn't corrode or otherwise degrade. It was an excellent choice for currency, once you could get enough of it to avoid problems of currency supply.
adhesive_wombat 4y ago
Gold is useful, but most of it's value doesn't derive from its industrial uses. Only 11% of gold production goes to non-jewellery industry. Furthermore, it's non-industrial value doesn't derive from its industrial use: if industry could switch to something else overnight (like fillings did), gold would still be a value store.
- helsinkiandrew 4y ago
  Theres the startling fact that Indian housewives hold 11% of all gold - presumably predominantly decoration and wealth storage.
  - bombcar 4y ago
    Heh fun to assume the 11% in both are the same; all industrial usage of gold is limited to Indian housewives.
  - gumby 4y ago
    > presumably predominantly decoration and wealth storage. People without access to banks wear their wealth on them. That seems super risky but you see it every day on the street. I suppose they have no alternative. I have seen in photos that when my parents married my mother was draped in gold, which she never wore again. As a kid I once was with her when she visited her safety deposit box and I picked up one of the bangles which immediately bent out of circularity. It wasn't designed to be worn, or at least to be worn once, very carefully. Jewelry stores in the US don't seem to sell by weight. I remember jewelry stores always pulling out the scale and calculator to tell you the price -- it must have changed every day.
  - more_corn 4y ago
    They also adorn their children. I asked why families living on the street would spend so much to give a child a gold earring. “So if they get lost the person who finds them knows someone cares about them and wants them back”
- gumby 4y ago
  > gold would still be a value store. Gold as an asset reminds me of those NASDAQ-listed companies that assert they will never declare a dividend. Any intrinsic value their stock might have is simply the belief that someday, somebody else will buy it.
anm89 4y ago
Honestly, there is no one left who doesn't know the Tulip story at this point. It's not some niche historical thing. A vast, vast majority of everyone tangentially related to crypto or finance and the HN crowd know what it is.
danuker 4y ago
> Gold has a variety of functional uses in electronics. It's used for its physical properties in a lot of spacecraft. The industrial uses made up 81.7 of the 474 tons in Q1 2022 (or 17.2%). That is not a lot. https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-q1-2022 https://www.gold.org/goldhub/research/gold-demand-trends/gol...
- forum_ghost 4y ago
  Total above-ground stocks (end-2021): 205,238 tonnes. 81 tons out of 205,238 tonnes used per year... rounding error.
  - danuker 4y ago
    Indeed, not a lot of gold gets traded, compared to what is mined. People joke that the metal is dug out of the ground just to be buried back (in vaults).
unsupp0rted 4y ago
I'm likely one or two generations younger than your mother and I have a gold filling. I got it intentionally when I needed a crown on a back molar, to remind myself of where I came from: my grandparent's generation had to sell their gold fillings for safe passage from harm. That's where but for the grace of an uncaring universe go I.
Negitivefrags 4y ago
I don’t know why people are so keen to dismiss aesthetic value of gold as somehow not being relevant as a functional use. We don’t just use gold for jewellery because it’s valuable, we also use it for that because it looks good. Better than many other materials we could use. Now you could argue that we only think it looks good because it’s valuable, and maybe that is how it came about, but I think it’s been embedded into the culture deeply enough that gold as a material looks great to us on it’s own merit at this point. Aesthetic value is real value, as we can tell due to peoples willingness to pay for artistic objects even if made from cheap materials.
- proc0 4y ago
  That's a good point, and I think there are many civilizations that have used gold only for its aesthetic value. The Incan empire had ornaments, statues, etc., in pure gold, yet they didn't use it as currency. One of the emperors gifted the Spanish conquistadors a big room full of gold, as a token of friendship. It all went downhill from there.
- rhn_mk1 4y ago
  That's because aesthetic value is intertwined with the value coming from "it's valuable". If aesthetic value dominated, fake gold would be much closer in price than it actually is. The value of gold being embedded in society is similar to the value a dollar bill derives from being embedded in society. It's valued because it's valuable, which really means it's a reflection of values coming from other sources, and not something on its own.
- Imnimo 4y ago
  I'm hardly an expert on gold aesthetics, but I would have guessed you could get all or nearly all gold's aesthetic properties from other cheaper materials. Like what's the cubic zirconium of gold?
  - aordano 4y ago
    Gold is a noble metal; bts low reactivity and stability make it excelent as a material to have in constant contact with the body. I am allergic to most metals, and only highest purity surgical stainless steel, surgical titanum, and noble metals can come in constant contact with my skin without generating rashes. I can only wear piercings made of surgical titanum, gold and platinum. Gold is extremely ductile, malleable, and is very easy to amalgamate, alloy, and mix with other metals. This and other minor properties, plus the aesthetic factor, is what makes it the best material for jewelry; it's extremely easy to work with, it's safe to use, it won't react under normal circumstances, degrade or get ruined by time. I don't know any alloy that has similar properties that isn't either super expensive, has a different color, or io hard to worx with.
cultofmetatron 4y ago
off the top of my head, gold is non corrosive. it doesn't react with anything. I'm convinced the great filter has something to do with the availability of gold to a species. There are all manner of gold based alloys that we haven't researched and There are all sorts of technological innovations locked away from us simply because gold is too expensive. case in point, a boat hull coated in a gold alloy could be non reactive. no more need for antifouling paint or sacrificial anodes.
- helsinkiandrew 4y ago
  Presumably barnacles would still stick to it though?
- theK 4y ago
  Wasn't this a theme in the Baroque cycle? </spoiler>
- thombat 4y ago
  Generally alloys can selectively corrode, so with a combination of gold and iron the iron may still be attacked. But certainly some gold alloys provide improved hardness without being very vulnerable. For a boat the gold coating would need to include all metal parts in contact with the water (rudder pins, prop shaft, etc) and it would be an interesting experiment to learn whether it really prevents fouling (I can imagine that wear and damage to the coating might provide cervices for growth to anchor)
chanc3e 4y ago
It would be remiss not to mention Gold makes incredible jewellery. And jewellery - or the act of decorating ourselves to distinguish between one another - is an innate part of all our cultures. An item can last longer than a lifetime, be passed down generations, melted and reformed into something new whilst being the "same" material. These are astonishing properties. Tulips and currency both rot, but at different rates. The value of it is relative. In happy times, sure, not worth so much. Bartering to get yourself out of trouble...a Rolex tells the time and opens cell doors. Gold is most certainly not a Tulip.
SilasX 4y ago
But the (eon-persistent) price premium on gold is well beyond what's justified by functionality. That's what merits the bubble comparison.
- soco 4y ago
  As you just called it, "eon-persistent" is very much not "bubble" so the comparison stays nonsense.
forum_ghost 4y ago
>until dentistry had modern options gold fillings were common gold inlays/crowns are still BY FAR the best dental material. People just don't like the looks of it, but it's still medically the absolute best. Gold crowns typically outlive the owners.
bakul 4y ago
Gold is even used in medicine since ancient times. Look up Swarna Bhasma, used in Ayurveda for several ailments. A more general article on bhasma: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3960793/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3960793/
yarg 4y ago
100% not - but it sure does bubble up in price (due to speculation). Gold is malleable, and non-degrading. It can be readily converted between blocks for storage, and other forms required for function purposes. It does not degrade - it will not react with water or air (or the water there-in); it is an effective indefinite store (until, that is, it gets stolen).

by mabbo 4y ago

AbrahamParangi 4y ago

Tulips also have inherent utility as decorative flowers but that's tangential to the point.

rafale 4y ago
So food is tulip. Steel is tulip... everything is tulip? It's not the existence of utility that matters but the degree. Gold is much more useful than tulips.
- sumy23 4y ago
  The value of gold is detached from its utility, just as the value of tulips during tulip mania were detached from their decorative value. The value of steel, on the other hand, is not detached from its utility value.
  - forum_ghost 4y ago
    gold is a reliable hedge and store of value that survived 5000 years: longer than any empire, longer than any bond issue, longer than any real estate holding, longer than any fiat currency. financial utility IS utility. nothing is detached from anything.

tsimionescu 4y ago

Even more relevantly, gold was a relatively dense solid substance that didn't corrode or otherwise degrade. It was an excellent choice for currency, once you could get enough of it to avoid problems of currency supply.

adhesive_wombat 4y ago

Gold is useful, but most of it's value doesn't derive from its industrial uses. Only 11% of gold production goes to non-jewellery industry. Furthermore, it's non-industrial value doesn't derive from its industrial use: if industry could switch to something else overnight (like fillings did), gold would still be a value store.

helsinkiandrew 4y ago
Theres the startling fact that Indian housewives hold 11% of all gold - presumably predominantly decoration and wealth storage.
- bombcar 4y ago
  Heh fun to assume the 11% in both are the same; all industrial usage of gold is limited to Indian housewives.
- gumby 4y ago
  > presumably predominantly decoration and wealth storage. People without access to banks wear their wealth on them. That seems super risky but you see it every day on the street. I suppose they have no alternative. I have seen in photos that when my parents married my mother was draped in gold, which she never wore again. As a kid I once was with her when she visited her safety deposit box and I picked up one of the bangles which immediately bent out of circularity. It wasn't designed to be worn, or at least to be worn once, very carefully. Jewelry stores in the US don't seem to sell by weight. I remember jewelry stores always pulling out the scale and calculator to tell you the price -- it must have changed every day.
- more_corn 4y ago
  They also adorn their children. I asked why families living on the street would spend so much to give a child a gold earring. “So if they get lost the person who finds them knows someone cares about them and wants them back”
gumby 4y ago
> gold would still be a value store. Gold as an asset reminds me of those NASDAQ-listed companies that assert they will never declare a dividend. Any intrinsic value their stock might have is simply the belief that someday, somebody else will buy it.

anm89 4y ago

Honestly, there is no one left who doesn't know the Tulip story at this point. It's not some niche historical thing. A vast, vast majority of everyone tangentially related to crypto or finance and the HN crowd know what it is.

danuker 4y ago

> Gold has a variety of functional uses in electronics. It's used for its physical properties in a lot of spacecraft. The industrial uses made up 81.7 of the 474 tons in Q1 2022 (or 17.2%). That is not a lot. https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-q1-2022 https://www.gold.org/goldhub/research/gold-demand-trends/gol...

forum_ghost 4y ago
Total above-ground stocks (end-2021): 205,238 tonnes. 81 tons out of 205,238 tonnes used per year... rounding error.
- danuker 4y ago
  Indeed, not a lot of gold gets traded, compared to what is mined. People joke that the metal is dug out of the ground just to be buried back (in vaults).

unsupp0rted 4y ago

I'm likely one or two generations younger than your mother and I have a gold filling. I got it intentionally when I needed a crown on a back molar, to remind myself of where I came from: my grandparent's generation had to sell their gold fillings for safe passage from harm. That's where but for the grace of an uncaring universe go I.

Negitivefrags 4y ago

I don’t know why people are so keen to dismiss aesthetic value of gold as somehow not being relevant as a functional use. We don’t just use gold for jewellery because it’s valuable, we also use it for that because it looks good. Better than many other materials we could use. Now you could argue that we only think it looks good because it’s valuable, and maybe that is how it came about, but I think it’s been embedded into the culture deeply enough that gold as a material looks great to us on it’s own merit at this point. Aesthetic value is real value, as we can tell due to peoples willingness to pay for artistic objects even if made from cheap materials.

proc0 4y ago
That's a good point, and I think there are many civilizations that have used gold only for its aesthetic value. The Incan empire had ornaments, statues, etc., in pure gold, yet they didn't use it as currency. One of the emperors gifted the Spanish conquistadors a big room full of gold, as a token of friendship. It all went downhill from there.
rhn_mk1 4y ago
That's because aesthetic value is intertwined with the value coming from "it's valuable". If aesthetic value dominated, fake gold would be much closer in price than it actually is. The value of gold being embedded in society is similar to the value a dollar bill derives from being embedded in society. It's valued because it's valuable, which really means it's a reflection of values coming from other sources, and not something on its own.
Imnimo 4y ago
I'm hardly an expert on gold aesthetics, but I would have guessed you could get all or nearly all gold's aesthetic properties from other cheaper materials. Like what's the cubic zirconium of gold?
- aordano 4y ago
  Gold is a noble metal; bts low reactivity and stability make it excelent as a material to have in constant contact with the body. I am allergic to most metals, and only highest purity surgical stainless steel, surgical titanum, and noble metals can come in constant contact with my skin without generating rashes. I can only wear piercings made of surgical titanum, gold and platinum. Gold is extremely ductile, malleable, and is very easy to amalgamate, alloy, and mix with other metals. This and other minor properties, plus the aesthetic factor, is what makes it the best material for jewelry; it's extremely easy to work with, it's safe to use, it won't react under normal circumstances, degrade or get ruined by time. I don't know any alloy that has similar properties that isn't either super expensive, has a different color, or io hard to worx with.

cultofmetatron 4y ago

off the top of my head, gold is non corrosive. it doesn't react with anything. I'm convinced the great filter has something to do with the availability of gold to a species. There are all manner of gold based alloys that we haven't researched and There are all sorts of technological innovations locked away from us simply because gold is too expensive. case in point, a boat hull coated in a gold alloy could be non reactive. no more need for antifouling paint or sacrificial anodes.

helsinkiandrew 4y ago
Presumably barnacles would still stick to it though?
theK 4y ago
Wasn't this a theme in the Baroque cycle? </spoiler>
thombat 4y ago
Generally alloys can selectively corrode, so with a combination of gold and iron the iron may still be attacked. But certainly some gold alloys provide improved hardness without being very vulnerable. For a boat the gold coating would need to include all metal parts in contact with the water (rudder pins, prop shaft, etc) and it would be an interesting experiment to learn whether it really prevents fouling (I can imagine that wear and damage to the coating might provide cervices for growth to anchor)

chanc3e 4y ago

It would be remiss not to mention Gold makes incredible jewellery. And jewellery - or the act of decorating ourselves to distinguish between one another - is an innate part of all our cultures. An item can last longer than a lifetime, be passed down generations, melted and reformed into something new whilst being the "same" material. These are astonishing properties. Tulips and currency both rot, but at different rates. The value of it is relative. In happy times, sure, not worth so much. Bartering to get yourself out of trouble...a Rolex tells the time and opens cell doors. Gold is most certainly not a Tulip.

SilasX 4y ago

But the (eon-persistent) price premium on gold is well beyond what's justified by functionality. That's what merits the bubble comparison.

soco 4y ago
As you just called it, "eon-persistent" is very much not "bubble" so the comparison stays nonsense.

forum_ghost 4y ago

>until dentistry had modern options gold fillings were common gold inlays/crowns are still BY FAR the best dental material. People just don't like the looks of it, but it's still medically the absolute best. Gold crowns typically outlive the owners.

bakul 4y ago

Gold is even used in medicine since ancient times. Look up Swarna Bhasma, used in Ayurveda for several ailments. A more general article on bhasma: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3960793/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3960793/

yarg 4y ago

100% not - but it sure does bubble up in price (due to speculation). Gold is malleable, and non-degrading. It can be readily converted between blocks for storage, and other forms required for function purposes. It does not degrade - it will not react with water or air (or the water there-in); it is an effective indefinite store (until, that is, it gets stolen).