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>Which is ~$44 you wouldn't have to pay for another metal... You wouldn't have to pay $44 for another metal because they are vastly more abundant[1], the conse

by ddeck 13y ago

>Which is ~$44 you wouldn't have to pay for another metal... You wouldn't have to pay $44 for another metal because they are vastly more abundant[1], the consequence of which is that they are cheaper to produce. Yes, demand affects the price too, but given gold currently costs over $32/gram to produce[2] (average, individual mines vary considerably), I don't see how the price is going to magically drop if it stops being used as a store of value. [1] http://en.wikipedia.org/wiki/Abundance_of_elements_in_Earth's_crust http://en.wikipedia.org/wiki/Abundance_of_elements_in_Earth'... [2] http://www.barrick.com/Company/Profile http://www.barrick.com/Company/Profile

zanny 13y ago
The price drops because it rapidly becomes less scarce as hoarders of it rapidly sell it off for industrial use. See, for a similar case of a market flooded by a scarce good, the depletion of the strategic helium reserve floating away in party balloons the world over. Gold is expensive because billions of people think it is worth hoarding. You don't have that percepetion with aluminum, so in a lot of circumstances where gold would act as a better substitute, you have to use the less efficient element regardless of physical scarcity because billions of people want to just stick that gold in a box and hoard it rather than use it, and that demand means an elevated price. Gold isn't scarce because there isn't much on Earth in this sense. Gold is scarce because all the people hoarding it take that gold out of the market and there are billions of people that want gold not for practical utility of the element but to hoard.