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> If a single market participant finds utility from the use of that commodity, distinct from hoarding, then acquiring access to more is beneficial. Your hoardin

by Retric 2y ago

> If a single market participant finds utility from the use of that commodity, distinct from hoarding, then acquiring access to more is beneficial. Your hoarding helped. Talking about marginal quantity for tiny fractions of a commodity get abstract so let’s scale it up and the assign a fraction of the difference to that 1kg. Total quantity of gold in earths crust is constant, so let’s assume what changes is the timing of when a mine gets opened. IE a bit of land is either mined in 1975 vs 2025. Everything else being equal it’s more efficient to mine today vs 50 years ago both from an effort perspective and environmental impact. EV mining equipment for example is a lot more common today than 50 years ago, they are also a lot safer. Thus removing 1kg of gold from the market for 50 years is also a dead loss.

yieldcrv 2y ago
Correct, and that EV mining equipment was only pursued because that 1kg of gold is $100,000 now instead of $5,750 in 1975. because of that constant quantity that is now unavailable. If gold was still worth $5,750/kg, it wouldn't matter what policy changes about mining regulations were done, nobody would pursue creating the more expensive equipment and mining gold. The conclusion in your stated logic is to actually hoard as much gold as possible so that mining in the year 2075 is even more EV+ and safer.
- Retric 2y ago
  You’re missing two important points. Gold mining alone has basically zero impact on Caterpillar’s R&D into EV mining equipment. The mining industry mines vastly more copper, iron, tin, etc ore and gold is at such low concentrations it’s basically indistinguishable from other types of mining until chemical separation. If nobody was holding gold as a store of value there’d be a glut of gold for industry and ~zero gold mining the next ~hundred years. Holding gold ultimately means mining sooner not later.
  - yieldcrv 2y ago
    I have counterpoints to that, but my main disagreement is where you draw the line. This feels arbitrary. You look at present energy expenditure as waste, if the asset itself is not consumed for an equally arbitrary reason that you approve of, or generates an even more valuable asset or ongoing revenue stream. I view it as all intertwined with commodity economics whether prices are cyclical, seasonal, or permanently bullish. Low float assets aren’t controversial, a small trading or consumed supply dictates the value of the entire supply, for balance sheets, lending, securitization and more. Thanks for explaining your preference.
    - Retric 2y ago
      > I have counterpoints to that How? Efficiency of scale can never drive marginal coasts below 0. > You look at present energy expenditure as waste, if the asset itself is not consumed for an equally arbitrary reason that you approve of, or generates an even more valuable asset or ongoing revenue stream. I think you’re missing my point, a gold ring may be purely decorative but people actually want the ring. A gold bar sitting in a safety deposit box for decades is there purely an investment, the nature as a physical piece of gold is essentially irrelevant the person wants is a store of value not gold. At that point why not simply leave the gold unearth and use the potential location of a mine as a store of value? IE, for a 50 gallon drum of oil to be sitting in my basement it must have already been extracted from the earth. We don’t extract oil as fast as possible and store it because the ground itself was already storing it instead people pump faster or slower in response to market conditions that’s efficient unlike silver, gold, etc sitting in a vault. Thus using mined gold as an investment is simply inherently wasteful, a pure dead loss for humanity.
      - yieldcrv 2y ago
        If people could use oil as an investment they would. It’s perishable and toxic to store. I understand your position. It doesn’t matter that you overlook key economic relationships in environmentally friendly methods, and you don’t recognize how illiquid balance sheets drive markets through lending and collateral or consider that utility, the goal post moves to disliking the extraction method occurring at all. I recognize that my counterpoints are all capitalist rationalizations and can be used to rationalize anything. So I’m just watching at this point.

by Retric 2y ago

yieldcrv 2y ago

Correct, and that EV mining equipment was only pursued because that 1kg of gold is $100,000 now instead of $5,750 in 1975. because of that constant quantity that is now unavailable. If gold was still worth $5,750/kg, it wouldn't matter what policy changes about mining regulations were done, nobody would pursue creating the more expensive equipment and mining gold. The conclusion in your stated logic is to actually hoard as much gold as possible so that mining in the year 2075 is even more EV+ and safer.

Retric 2y ago
You’re missing two important points. Gold mining alone has basically zero impact on Caterpillar’s R&D into EV mining equipment. The mining industry mines vastly more copper, iron, tin, etc ore and gold is at such low concentrations it’s basically indistinguishable from other types of mining until chemical separation. If nobody was holding gold as a store of value there’d be a glut of gold for industry and ~zero gold mining the next ~hundred years. Holding gold ultimately means mining sooner not later.
- yieldcrv 2y ago
  I have counterpoints to that, but my main disagreement is where you draw the line. This feels arbitrary. You look at present energy expenditure as waste, if the asset itself is not consumed for an equally arbitrary reason that you approve of, or generates an even more valuable asset or ongoing revenue stream. I view it as all intertwined with commodity economics whether prices are cyclical, seasonal, or permanently bullish. Low float assets aren’t controversial, a small trading or consumed supply dictates the value of the entire supply, for balance sheets, lending, securitization and more. Thanks for explaining your preference.
  - Retric 2y ago
    > I have counterpoints to that How? Efficiency of scale can never drive marginal coasts below 0. > You look at present energy expenditure as waste, if the asset itself is not consumed for an equally arbitrary reason that you approve of, or generates an even more valuable asset or ongoing revenue stream. I think you’re missing my point, a gold ring may be purely decorative but people actually want the ring. A gold bar sitting in a safety deposit box for decades is there purely an investment, the nature as a physical piece of gold is essentially irrelevant the person wants is a store of value not gold. At that point why not simply leave the gold unearth and use the potential location of a mine as a store of value? IE, for a 50 gallon drum of oil to be sitting in my basement it must have already been extracted from the earth. We don’t extract oil as fast as possible and store it because the ground itself was already storing it instead people pump faster or slower in response to market conditions that’s efficient unlike silver, gold, etc sitting in a vault. Thus using mined gold as an investment is simply inherently wasteful, a pure dead loss for humanity.
    - yieldcrv 2y ago
      If people could use oil as an investment they would. It’s perishable and toxic to store. I understand your position. It doesn’t matter that you overlook key economic relationships in environmentally friendly methods, and you don’t recognize how illiquid balance sheets drive markets through lending and collateral or consider that utility, the goal post moves to disliking the extraction method occurring at all. I recognize that my counterpoints are all capitalist rationalizations and can be used to rationalize anything. So I’m just watching at this point.