You keep making me laugh with foolish comments. You’re saying I think gold is pretty because it has value. You sir, need to go to logic 101.
Okey, for sake of discussion, lets assume that gold had estetic value before money was invented. But why was gold prefered for money use before all other commodities??? All metas are “shiny”, all are homogounes, all are fairly easily divisable and so on. Gold has no competitive advantages there.
I (try to) point out that one very important advantage of gold money is that it has no opportunity costs! You don’t need to break a sword in half in order to make a payment in gold, because it would be silly to make a sword out of such a soft metal as gold to begin with. Gold could be shaped into standard diameter strings to be cut or standard sized coins, and still you will have your iron tools and your wheat to eat.
if gold was like medicine that made the bearer fight off disease better, the value of gold would be greater, and it would be perfectly good money. if by having some gold in your car you magically made your car more fuel efficient, gold would be more valuable, and would still make great money. it would not be worse money because it has other uses ! money needs , be liquid (easy to trade), easy to store, easy to quantify, must have some value on the market. gold does all these things, and more so at higher value. lessening the value of gold, would make it inferior money to other possible moneys.
Because we think gold is pretty and other metals arent! Because, as with all symbols of wealth, it demonstrated that you were powerful/wealthy enough to have time to aquire something not essential to survival. Just as the swords you seem to think everyone had were status symbols. (Hardly anyone had metal weaponry, hence why only nobility fought in battles, because they were rich enough to afford weapons) Please just drop your argument and read the links people gave you.
I think we should use dried fish. It’s tasty.
in some prisons; rather than cigarretes, cans of tuna are currency.
i read it.
Ha!
So you have no clue whatsoever as to why gold became money instead of for example iron? It is just a huge mystery, isn’t? Iron has all that which you describe, plus it has all those alternative uses, which you claim are an advantage for a money metal. It’s very very practical to instead of having an iron plow, having an iron bullion in your bag, isn’t it? It’s very practical to having to break your knife in order to buy som butter, isn’t?
Why do you REFUSE to even consider the OPPORTUNITY COSTS of money use of different metals???
I believe this is how copper (lesser extent), silver, and gold came into use beyond religious/aesthetic justifications from what I’ve read. Bauxite ore was also used this way as Bauxite, even though very useful today, wasn’t of much use to the Romans beyond currency (and if they could, salt rock was the next best thing, which is where the word Salary derives its meaning as it was relatively useless, easy to extract and make portable). So, I think this point is moot at least for me. It’s not hard to see why gold works out the way it does.
Another modern justification for gold as money is the fact that it can be traced. How? Each lump of gold will have a trace amount of other isotopes from its source rock (sometimes very small traces of radium or uranium), so it becomes pretty easy to track where it came from, and possible when (via radiometric dating). So the supply can be more easily tracked than paper money by comparison (which even though can be radiometrically dated, you can’t really trace it with the same degree of certainty as a unit of gold as certain parts of the planet have certain rare/geographically-fixed isotopes).
Why do you refuse to admit that a utility theory of value is FALSE. Where’s LibertyStudent when you need him to beat someone over the head…
look at the price of iron per kilo, and the cost of gold per kilo. if you want to bring lots of ‘money value’ to market, would you rather bring a small bag of gold coins or donkey after donkey of iron ?
I think he’s thinking more from a marginal utility of the material. Gold had many factors influencing its initial valuations; cultural, material, and economic to name three. The first two ultimately influence the third, but economic in this sense would mean transactions/“trading patterns” and not literally the economy itself as a whole.
Iron ore per ton can make more money than gold per ton for two reasons: overall demand per volume is higher and over all supply is greater per the volume (but limited by process of extraction). That’s even taking into consideration reserves which require (in fact it’s probably all major ore reserves) the use of chemical leeching and electroplating to purify the iron oxides for use.
Gold, on the other hand, you have a relatively fixed set of reserves, lower demand per volume (possibly higher than the supply, not sure), and limited industrial use, but what keeps it profitable is the fact you don’t have as much of the extraction processes with it. So gold is a challenging metal to get to market for a profit, save for those that are setup for it.
All in all, I think you’re not grasping what PC is angling at here, which is the obvious fact that gold is partly subjectively valued and objectively valued depending on purposes for it. I think you’re all misframing his case so far. Maybe he’s not communicated it well, but I’ve been able to understand it. What part of it seems problematic?
i dont understand your point, lets say you love fancy cars and want to buy one. and you are bequeathed some inheritance
what would you rather inherit. a kilo of gold, or a kilo of iron?
then a richer uncle dies, would you rather inherit, 1000tonnes of gold or 1,000 tonnes of iron?
you’re right, i dont get your point.
ProudCapitalist, I don’t disagree at all with your position. I think you’re absolutely correct. What I see as throwing everyone off who argues against your position is your use of the term “useless”. And it also throws us when we use the term “value”.
Your premise is correct. Although gold can be and is used for certain important industrial applications, it’s obviously very minute applications: certain contact points that must remain free of corrosion, as someone pointed out. Gold does have that “value” – more than most other conductors. There are many others, including dentistry; but as you’ve outlined – nothing compared to copper, aluminum, steel, etc., at least as far as volume or quantity is concerned. Its value, as you’ve stated adequately, is its scarcity, the inability of government schysters to duplicate or counterfeit it, its storage capabilities, etc.
Today Lew Rockwell posted Gary North’s “Dialog #3” between Ron Paul (naw, I’m kidding – “Private Money Guy”) and Alan Greenspan (same – I’m spoofing – “State Money Guy”). I thought about downloading the whole shootin’ match here, but decided to just post the links:
Gary North Dialog #1: http://www.lewrockwell.com/north/north687.html
Gary North Dialog #2: http://www.lewrockwell.com/north/north690.html
Gary North Dialog #3: http://www.lewrockwell.com/north/north691.html
Gary does a good job of outlining the “position” of statists vs free market folks regarding gold as “money” – and the value thereof. And it’s fun reading – but takes a few minutes.
I’ll congratulate you, friend: you got a lot of action out of your little thread, did you not? Regards,
Geo. Keagle
Iron was too abundant. Not stable supply enough.
I see you conveniently skipped over my point, what about the millions of processors in one of the most important devices of our generation that NEED gold to run?
How is it useless?
Anyway, all value is derived from demand, so the reason gold is so highly valued is because, for whatever reason, there’s a large demand in relation to its supply(which is one of the reasons it’s used as money, how fun would it be to lug around 50 pounds of iron to buy a loaf of bread).
So, the concept of opportunity cost is per definition irreconceilable with Austrian Economics, is it? All use of the term “opportunity cost” must necesseraliy be deferred to the realm of “utility theory”???
I would have thought that the concept of opportuny cost was very central to human action, but since you claim that no human being can ever consider opportunity costs when deciding upon an action, I suppose that I’d just have to trust you without further explanation…
you are using opportunity cost incorrectly.
How many milligrams per CPU? And since gold is always used as a surface coating (for anti-corrosive, heat conduction radiation whatever purposes) and because it doesn’t form molecules, it is very easy to recycle it. And I heard about some new nanotechnology use of gold. Nano, i.e. extremely small quantities. There’s no big (non-monetary) demand for gold, because other more plentiful metals simply have better properties. You wouldn’t want to make a power cable out of gold, rather than copper. One single cross continental high power cable might well contain more copper, than what all electronic appliencies contains gold.
And gold is demanded because it is the best money metal. It is the best money metal because of its low (industrial) opportunity costs. That’s my proposition!