Gold

[PKT_VOL]

What is the nature of gold?

Such a question might seem intuitively obvious. However, the more I think about this question the more perplexed I am. Maybe it just my philosophical mind.

I just finished watching a documentary that exposed the Federal Reserve and our fiat money system. It basically described our monetary system as one gigantic ponzi scheme. I don't disagree with this notion and it is not the subject of this thread.

I have studied monetary policy in the past, seen documentaries, and read Ron Paul's book End the Fed. The one thing they are crystal clear about is the difference between money and currency. Basically that gold, silver, and certain other commodities are "money" while the dollar, euro, etc. is "currency". The thought process behind this is that "money" has "intrinsic" value and ought to be the base of any monetary policy as it was during the Bretton Woods agreement.

This brings me to the question which I have pondered (quite unsuccessfully) for many years; what exactly gives gold its intrinsic value? It has been almost universally accepted since the beginning of human civilization that gold has intrinsic value.

I can understand in the old days that it was rare, durable, and could easily be made into jewelry and other things. In current culture, in places like India, gold is almost considered divine. So I can understand the intrinsic value there.

To me, maybe this is due to my philosophical mind or background in science or both, gold is merely another element with only a handful of useful properties. It is durable because it has a very low reactivity. It is shiny but then so are other metals. It does have a unique color. But outside of that, I am not really sure how it is intrinsically valuable. In fact, the more I think about it, the more I think gold is a bigger sham than fiat money.

What are your thoughts? Why is gold valued so in our society? Does it make sense to you?

I'll up the floor for your thoughts.

 

[davethevol]

I've had the same thoughts before. I'd be curious to find out as well.

 

[UTRavens]

It's pretty much the closest thing we have to a universal currency. It had to be something arbitrary, so we went with the one that was pretty and shiny.

 

[TennxxVol]

What is the nature of gold?

Such a question might seem intuitively obvious. However, the more I think about this question the more perplexed I am. Maybe it just my philosophical mind.

I just finished watching a documentary that exposed the Federal Reserve and our fiat money system. It basically described our monetary system as one gigantic ponzi scheme. I don't disagree with this notion and it is not the subject of this thread.

I have studied monetary policy in the past, seen documentaries, and read Ron Paul's book End the Fed. The one thing they are crystal clear about is the difference between money and currency. Basically that gold, silver, and certain other commodities are "money" while the dollar, euro, etc. is "currency". The thought process behind this is that "money" has "intrinsic" value and ought to be the base of any monetary policy as it was during the Bretton Woods agreement.

This brings me to the question which I have pondered (quite unsuccessfully) for many years; what exactly gives gold its intrinsic value? It has been almost universally accepted since the beginning of human civilization that gold has intrinsic value.

I can understand in the old days that it was rare, durable, and could easily be made into jewelry and other things. In current culture, in places like India, gold is almost considered divine. So I can understand the intrinsic value there.

To me, maybe this is due to my philosophical mind or background in science or both, gold is merely another element with only a handful of useful properties. It is durable because it has a very low reactivity. It is shiny but then so are other metals. It does have a unique color. But outside of that, I am not really sure how it is intrinsically valuable. In fact, the more I think about it, the more I think gold is a bigger sham than fiat money.

What are your thoughts? Why is gold valued so in our society? Does it make sense to you?

I'll up the floor for your thoughts.

Tell me about your philosophy.

What is your scientific background?

I thought you were an English teacher.

Gold has basically the same value as any currency since Roman times 2,000 years ago so how is gold a sham?

Gold maintains it's value because of it's usefulness.

It has been said that only one man in a million can understand the fiat money system and there will be no worry from that group because they will be so benefited from the fiat money system they will not object.

I don't see how one man in a million can't understand the scam but that's just me.

If you havn't read Paul's book; "the Revolution", you should read that also.

It's pretty much the closest thing we have to a universal currency. It had to be something arbitrary, so we went with the one that was pretty and shiny.

Gold does not oxidize and it is the most maleable of all metals.

"The fining pot is for silver, and the furnace for gold: but the LORD trieth the hearts." The Bible

 

[bamacheats]

I'm allergic to gold.

 

[Rasputin_Vol]

As long as you have women, you will have men there ready to impress them with diamonds and gold jewelry.

/end thread

 

[volprof]

Commodity fetishism?

 

[rjd970]

It's conductivity, malleability, rarity and look...and the fact all three are strong properties at the same time make it valuable. My opinion anyway.

 

[Velo Vol]

Gold maintains it's value because of it's usefulness.

For what (other than decoration)?

I know there are some industrial applications, but the vast majority is used for jewelry, coins, or sits in vaults.

 

[rmsmith]

For what (other than decoration)?

I know there are some industrial applications, but the vast majority is used for jewelry, coins, or sits in vaults.

my hdmi cables!

 

[PKT_VOL]

It's pretty much the closest thing we have to a universal currency. It had to be something arbitrary, so we went with the one that was pretty and shiny.

The question is why though. Arbitrary, pretty, and shinny seem to be what people fall back on. I guess we are bunch of raccoons.

 

[milohimself]

my hdmi cables!

Congrats you just wasted money

 

[PKT_VOL]

Tell me about your philosophy.

Depends on the topic.

What is your scientific background?

Major in BCMB.

I thought you were an English teacher.

I was.

Gold has basically the same value as any currency since Roman times 2,000 years ago so how is gold a sham?

Because it is subjective value. It is almost as if we are somehow hardwired as a species to love gold. When you logically examine gold, it becomes pretty illogical.

Gold maintains it's value because of it's usefulness.

What usefulness? I am not saying it isn't useful, but is its utility worth $1800 an ounce?

It has been said that only one man in a million can understand the fiat money system and there will be no worry from that group because they will be so benefited from the fiat money system they will not object.

There is a certain level of truth here. However, there is nothing wrong in and of itself with fiat money. The mistreatment of a fiat money system causes all sorts of problems which you see today.

I don't see how one man in a million can't understand the scam but that's just me.

Please tell me why gold is sooooooo valuable.

If you havn't read Paul's book; "the Revolution", you should read that also.

I probably should.

Gold does not oxidize and it is the most maleable of all metals.

Platinum doesn't oxidize is and more ductile than gold.

"The fining pot is for silver, and the furnace for gold: but the LORD trieth the hearts." The Bible

Lets not bring scripture into this.

 

[PKT_VOL]

It's conductivity, malleability, rarity and look...and the fact all three are strong properties at the same time make it valuable. My opinion anyway.

Other metals and alloys have similar properties at a much lower demand.

There seems to be something else to gold.

 

[PKT_VOL]

For what (other than decoration)?

I know there are some industrial applications, but the vast majority is used for jewelry, coins, or sits in vaults.

This.

 

[MG1968]

sort of makes you wonder why there are people screaming for the US to return to a gold standard, doesn't it?

 

[Rasputin_Vol]

then what else should we base our currency on... black gold?

:whistling:

 

[YorkVol]

I think there are two main factors that gave it the "intrinsic" value. First, because of its properties it was fairly easy to identify and the consistency of those properties made it a viable solution for trade. When you barter with animals, for example, you learn what to look for to ensure you are getting healthy animals. When people started using coins for trade, you needed consistency in size, shape, weight etc to ensure you were trading in known quantities. Precious metals, gold, silver, copper etc gained their value because they had consistency in their properties and could be distinguished from other ores.

The second was the relative rarity of the metal and the difficulty in harvesting it. I would suspect that whatever methods the ancients used to mine for precious metals, they found gold to be the most difficult and therefore, it became the most precious. I would also suspect they didn't find good uses for platinum and uranium etc until modern times when these others already had the intrinsic value.

Does that really make gold worth $1800 an oz? Probably not, more market factors at play there.

 

[BigPapaVol]

then what else should we base our currency on... black gold?

:whistling:

what's the difference? In the end, it's all going to fall back on something subjectively valued, whether it's pieces of paper, gold, gorilla dung or drachmas.

 

[OldandStillaVol]

I think there are two main factors that gave it the "intrinsic" value. First, because of its properties it was fairly easy to identify and the consistency of those properties made it a viable solution for trade. When you barter with animals, for example, you learn what to look for to ensure you are getting healthy animals. When people started using coins for trade, you needed consistency in size, shape, weight etc to ensure you were trading in known quantities. Precious metals, gold, silver, copper etc gained their value because they had consistency in their properties and could be distinguished from other ores.

The second was the relative rarity of the metal and the difficulty in harvesting it. I would suspect that whatever methods the ancients used to mine for precious metals, they found gold to be the most difficult and therefore, it became the most precious. I would also suspect they didn't find good uses for platinum and uranium etc until modern times when these others already had the intrinsic value.

Does that really make gold worth $1800 an oz? Probably not, more market factors at play there.

Naive Question: Do gold, silver and copper prices tend to move in tandem or are they independent of each other?

 

[BigPapaVol]

Naive Question: Do gold, silver and copper prices tend to move in tandem or are they independent of each other?

independent, but can move in tandem as inflationary hedges.

Theoretically, each is priced based upon supply and demand within its own space.

 

[Velo Vol]

what's the difference?

You can use oil for something practical, apart from its assigned value.

 

[BigPapaVol]

You can use oil for something practical, apart from its assigned value.

still carries a subjective value.

 

[volinbham]

what's the difference? In the end, it's all going to fall back on something subjectively valued, whether it's pieces of paper, gold, gorilla dung or drachmas.

agreed - value is only realized when the exchange partner agrees to that value. Ask a homeowner who believes their house is worth one thing but can't sell it for anywhere near that value.

 

[OldandStillaVol]

independent, but can move in tandem as inflationary hedges.

Theoretically, each is priced based upon supply and demand within its own space.

Thanks. That implies to me that if you wanted to include precious metals in your investment portfolio, it would be better buy a fund which has a mixture of precious metals rather than rely on a single metal fund.