Gold is mostly demanded as money. 10-20% is jewelry, I think. Industrial demand is like 1-2% of total demand.
Ansury, yes - it makes sense to use something with low industrial demand as money. I think people would recognize this. This doesn’t necessarily imply a low value per unit weight, or a lack of gaining general marketability, and it would certainly have past market prices against other goods.
However, when an industrial commodity IS selected as money and is subject to increase in demand, there is nearly always some commodity that will replace it, if not altogether different production designs that eliminate the need for such. Silver is a key component of film. Does anyone really believe that if a silver standard were established, the film industry would die? No, those who innovate around these limitations would enjoy windfall profits and the industry would swiftly show no signs of technological constraints.
The oil bubble last year could in theory be seen as attempting to monetize oil - to use it for indirect exchange vitually without transformation. Things adjust, and we see the efforts to develop alternative energies. The same with real estate, corporate stock, and most other speculative investments.
No it doesn’t. Gold could be used 90% for ‘industrial uses’ and 10% for money - that would change nothing. Nominal prices may change to reflect that fact but that’s not even necessary.
Why are you jumping from “gold is useful for these applications” to “gold must be used for these purposes in every case”?
The market works this out: if gold is useful for a certain application, but scarce, then only those people who really need to use gold in their particular situation will do so. Hence, you can get electronic components with gold connectors, and you can get cheaper electronic components that don’t use gold, and you buy what you need and are willing to pay for.
“Many un-Austrian economists will tell you that there is simply not enough gold in the economy for a Gold Standard to ever be implemented. Is there any truth behind these claims?”
Think about what your asking here. You are wanting to be able to inflate the supply of gold at will?
We tried that with paper money. It becomes worth less and less every time you counterfeit.
The very reason you can increase the supply of gold at will is the reason it is so valuable.
Besides, who wants a gold standard anyway?
I like most people am tired of having the government control our money supply. I want freedom. Competing currencies.
When the government controls the money, they counterfeit it. So many people seem unable to grasp this very simple fact.
“The very reason you can increase the supply of gold at will is the reason it is so valuable.”
meant to say
The very reason you can’t increase the supply of gold at will is the reason it is so valuable.
“When the government controls the money, they counterfeit it. So many people seem unable to grasp this very simple fact.”
Let me add: When they counterfeit the currency, thats the same as stealing from us. Thats another simple fact people can’t seem to grasp.
And the only reason that is true, is because they force us to use the counterfeit currency.
Its like a king who sets a new rule that everyone in his kingdom must use the new crown’s gold coin. Only the new coin only has 1/10 of the gold the old solid gold coin the people used to use.
The obvious response is, noone in their right mind would use the counterfeit coin. But the king says you must use the new coin or else face the guillotine.
How gold once became money is now irrelevant. Maybe a freak religion fashion gave it “intrinsic value” once (since it might’ve been one of the first metals humans knew). Important today is that gold IS money! You can buy major items and pay with gold. Meybe the seller will use a bank or some other specialist as a middle man, but he surely will still consider the deal. It’s much like asking to pay in any foreign currency. And it’s very much easier than trying to pay with used cars or furniture or food. Such items are NOT money at all.
Compare MONEY value and OTHER value of different goods. The greatest difference between the two you will find for gold. Firstly because gold is so eminent for money use (identifiability, dividability, portability, lasting and so on). Secondly because gold is really so very useless for industrial applications (as a secondary good overall). Therefor GOLD MONEY - GOLD OTHER = BIG DIFFERENCE.
Paper has serious deficiencies for MONEY uses, since it might easily be replicated and inflated. Paper too has rather low value for OTHER uses. Incidentally. For very much the same reason! Paper production can be increased alot if demand would increase, keeping its value for OTHER uses low. Therefor PAPER MONEY - PAPER OTHER = SMALL DIFFERENCE.
Copper would work rather well as MONEY, but it is also very valuable for OTHER uses. Therefor COPPER MONEY - COPPER OTHER = SMALL DIFFERENCE.
Do the proponents of the “non-money intrinsic value of gold” really mean that the value of gold is uninfluenced by the demand for its use as money???
So if you today exchange your house for a fistful of gold, and tomorrow gold is abolished as money (for whatever reason), then you’d be as happy to turn your gold to an electric cable of a few meter? The “intrinsic value” of gold hasn’t changes at all, and only that was what you exchanged your house for, wasn’t it?
I don’t buy nig’s fake argument that “there exists no opportunity costs (for metals)”. Of course it does! Without opportunity costs, choice and human action would be impossible or random.
what is the opportunity cost of ‘paintings by Leonardo’ ?
you were jumping around saying, ‘painting by leanardo’ have huge opportunity costs.
do sentances like that have any meaning? the mind struggles with how to understand them, let alone determine if they might be true or false. they are soundbites.
i hope you will be big-hearted enough to admit how unhelpful to a meaningful conversation such sentances can be.
writing well is a challenge we all struggle with. in economic issues its particularly hard. I was trying to do you a service by pushing you to write more extended better worder arguments than such jumbles of words that seem plausable. i hope you do the same for me if and when you find me playing too loose and fast with the language to be understood.
Whatever is highest of what the highest bidder offer, and the value you (as the owner) personally put on it. What else did you imagine an answer could be???
I just consider market prices of higher order goods containing copper (and other metals and substitutes), and higher goods containing gold. Then I draw the very obvious conclusion regarding the usefulness of gold relative to that of copper (or iron or cheramics or plastics). According to market prices, non-money use of gold is not very much in demand at all. If gold wasn’t money, it’d be dirt.
He? Well, for one, most teeth placeholders are made of cheramics or plastics nowadays. And no electic cables at all are made of gold. And no plumbing at all. And no weapon.
Really, what IS made of gold except for bullions? Jewelry are of course made of whatever is valuable. Gold is valuable because it IS money. Are you fishing for the extremely thin coating of some satellites or of some contacts in rare highly corrosive environments where electric failure costs are high? Well, even sand from Saudi Arabia finds its rare uses, as does dirt (even sh!t is used as manure, you know).
Where is YOUR “evidence” for non-monetary use of gold? What would the “intrinsic value” of gold be according to you???
PC’s logic : gold is the perfect money because it has no other uses, except being money (circular ? you bet). Gold has value as money because it’s money, which has value (kinda by definition of money I guess).
Still no one has given examples of how gold is valued, other than as money! What is meant with the “intrinsic value” of gold, if it is not non-money value? So, what are the non-money uses of gold?
It is such a very simple question to answer, why does everyone here refuse to adress it???
Okey, I’ll dig through the links you’ve given (because I do respect the level of knowledge in this forum, from which I’ve learned alot, I’m sure your arguments are relevant). Though I do find it strange that you fail to formulate the relevant essence of it in your own words here.
Dammit! AGAIN the very symbolic uses which I have long time ago here dismissed, are raised as arguments for the “intrinsic value of gold!”
It’s all very horrible. No use linked to by Nig, is anything other than monetary use (including of course jewelry and medal use) OR extremely exotic uses which require microscopic amounts of gold. Such as surface coating or nano-particles.
Still there has been noting at all which has indicated that gold could have any value at all, separate from its value as money. And then again, why would “money use” be excluded from the category of allowed basis for “intrinsic value”? It is obvious that gold is valued because its comparative advantage lies in its use as money.
First of all, gold isn’t consumed when it functions as jewelry. Nor in its use as tooth. Gold then simply represents gold coins which are temporarily “deposited” in another place than the pocket. Gold as jewelry is not consumed.
Secondly, jewelry is not a function, it is a fashion. Gold will be jewelry as long as gold is expensive. The same day that gold gets cheap, it will cease to be jewelry. And gold is obviously expensive because gold is money, to some degree always everywhere. Otherwise, gold painted iron could substitute gold in all jewelry applications, couldn’t it?
so why dont people ‘deposit’ their gold in wires and things? and industrial machinery?
you are trying to say that jewellery serves no purpose. that it does not give subjective value to any valuers who see it as a means to their ends. i say if people want to have pretty jewellery then gold is a great means with which to achieve that end, how do i know this, cause the people that like jewellery demonstrate their preference for putting gold in it. it is used. whats so hard about this? when i use my fork, do i ‘use it up’? (consume it?) i certainly use it, whether or not its consumed.