Why is Gold Worth Anything!?

JimmyJazz

musehead wrote: »

Is the demand for gold in jewelry, electronics etc small compared to the actual amount of gold?

If I was to convert my cash into something considered intrinsically valuable i'd probably buy land, because the reason for the value of gold does not seem that obvious. People are always going to want land.

Land is good, but it's got the downside of being large and immobile and therefore easy for the government to interfere and tax it, and hard to transfer your wealth to another place.

DiggerUK

To figure out why gold is valuable, aka expensive, ask yourself why anything is pricey.
Many reasons can be put forward.
It's the latest fashion, it's in short supply, it's got a good reputation for longevity, Victoria Beckham is wearing it.
They are all fair arguments for pricing of goods, and explain in part how a price is established.

I am with the classical economists on the "labour creating value" theories.
When you examine gold you will find a high ammount of labour is expended in it's production. Add to that it's scarcity, ease of transport, doesn't degrade etc., and you begin to get the picture.

If you think about this, consider the modern phrase "added value",
does this entail extra labour in the process, or magic beans.

Automation reduces costs by reducing labour time, leading to lowering of prices.
The costs, and labour, involved in production of gold are still very high, despite massive advances in mining and refining techniques.

As it represents stored value, from the labour expended in it's production, it also has a role as money, even though it's use as common coin has been surpassed by the money and plastic in your pocket. Not that gold coin was ever money for everyday shopping anyway.

Apart from that, it's a lump of metal.

sabretoothtigger

scandium looks shiny to me and doesnt seem it'd be cheap with such limited supply


Gold is valued for all of its properties but most important I think is its an easy display of wealth and you only have to look at personalised numberplate prices to realise people value their egos very highly

The absolute base value I think is below the cost of mining it, because of energy costs. Luckily it is fairly indestructible stuff and can easily be reused endlessly

When the nazis were about to seize a noble prize, the chemist who had it instead disolved it in acid and placed it on a shelf till after the war. Years later it was reconstituted perfectly and recast.

As a store of wealth its pretty adaptable, next important is its ease of use in jewellery, it can be crafted into any shape it seems

Gold used to be used as a standard for monetary exchange but this practice has been abandoned long ago.

Not true when the swiss franc was linked to the price of gold till recent years.
Many countries store gold because it can used internationally as payment for goods or payment owed.

Im pretty sure even in this country if you owed taxes the government would not refuse payment in gold especially from abroad, over 1.5bn per year is paid in stamp duty by foreigners to the british government and many will not hold large amounts of british currency I bet.

DiggerUK

SergeyLEM wrote: »

Quite probably, gold has such value only because so has historically developed. Therefore many people buy gold bullion for save money.
There are blog about this theme http://goldvender.com/2009/06/30/nothing-is-known-against-gold/

Hi Sergey, you seem to have abandoned your old thread, interesting blog you linked. Hope it does OK. Seems new.

Another forum is here if you are interested.
https://www.kitcomm.com/

Elderflower

Gold, platinum, titanium, silver - all rare and don't react with the body so you can wear em. But gold is the most beautiful and therefore most prized since it was discovered back in the mists of time and became a symbol of power. It's a tangible badge of superiority and very sexy! And it will always be in demand. Yum.

tradetime

In a world where we see fit to pay millions every year to people to kick a bag of wind around a field, or to pay millions to grownups to play pretend superheros, and whatever all they lives, so we can sit and watch, it really doesn't seem out of place.

Grek

SergeyLEM wrote: »

:T
Gold will always be in demand, because it's very sexy!

Gold isn't sexy. Gold is solid & serious.:cool:

evenasus

I have never understood the attraction of gold. I wouldn't thank you for anything gold. Although my wedding ring is made of 22ct gold, which was the norm in the 60's.

Now diamonds on the other hand!

sabretoothtigger

I think I prefer the colour of silver but it reacts with air which spoils things a bit I guess

Psatek

In some respects its a similar argument to why people value art, as you could claim art has no value (I would guess the value of the art would the value you could charge people to look at it) yet pieces sell for millions.