Why is Gold Worth Anything!?

jdemaistre

DiggerUK wrote: »

We had to wait for the classical economists of the 18th and 19th centuries for "Labour Theories of Value and Wealth Creation".
That explains why anything has value, and why gold is valuable.

Does it? I think scarcity and utility are more useful for establishing a thing's value than the labour involved in its production. I don't think many modern economists - outside of Marxist strongholds - appeal to labour theories of value.

DiggerUK

jdemaistre wrote: »

I don't think many modern economists - outside of Marxist strongholds - appeal to labour theories of value.

Popular misconception, Marx supported the theories, but he didn't establish them.
They were championed by Adam Smith amongst others, an exponent of liberal economics, and he was dead before Marx was born.

Anyway, were are these marxist strongholds you talk of. You thinking of this guy?

http://www.dailymotion.com/video/xhve8_team-america-im-so-ronery_fun

jdemaistre

Yes, I know Adam Smith came up with the labour theory of value, but the fact is that nowadays - so far as I know - it's only Marxists who use it, following Marx himself. Those "in the tradition of Smith", neo-classical economists, don't.

DiggerUK

jdemaistre,
When you look at the total claptrap of Keynes, who said government ordered spending is the engine of growth, alongside the equally spurious nonsense of monetarists who argued that the free market determining were the printy-printy was spent would increase wealth, means that the grounded argument that the purpose of capitalism is to actually increase the commonwealth with a bit of "work and weal" has to be kicked into touch.

How convenient if you argue against "labour value theories" on the grounds that as Marx supported them they have to be wrong, and anybody who supports them is therefore a Marxist.

Liam Halligan in the Torygraph didn't get were he is today by being a marxist now did he.

sabretoothtigger

DiggerUK wrote: »

This is were Aristotle failed to complete his argument.
Instead of clearly explaining that it was the labour used in the production process that gave anything value. He just claimed it as some magically imparted gift of nature, not exactly taking it out of thin air, but as good as.

We had to wait for the classical economists of the 18th and 19th centuries for "Labour Theories of Value and Wealth Creation".
That explains why anything has value, and why gold is valuable.

That explains why its hard to get but not exactly why its valued.
Conspicuous consumption probably says more about why its valued in that because its hard to get it can become a status symbol
If you are dying of thirst in the desert then 10 kilos of gold is only worth one glass of water at most
Its value seems not definite to me and the base value of gold is probably less then half what it is now. The biggest point in its favour is constrained supply and a growing population

Anything can become a status symbol so gold has much competition, its high value is as money but why is platinum then not as good I wonder

Didnt realise gold could be used in medicine, thought that was silver

DiggerUK

sabre'r,
Something as hard to get as gold also means it ain't cheap.
Not only do you have to recoup the costs of what you find, you also have to cover the costs for when you didn't find.
Mining costs per ounce only give a glimpse of true costs, and most of them are between 5/600 US, some in the 800's, it's some of the most closely guarded and prized information to those in mining stocks.

At the moment there are no shortages of supply, all demand is being met. If we get to the point were there are constraints on supply then current prices will seem bargain basement.

Conspicuous Cartier bracelet consumption isn't what's driving the price. Nor will it ever.

As to why no other precious metals are in CB forex reserves, I'd say history.
Could be that CB reserves may include rare earths as well as other pm's in the future. No reason why not. Would still see gold as topdog though.

laehc

I suppose gold has what you might call 'apocalypse value'. I've seen gold, bottled water and plenty of ammunition mentioned in the same sentence before. I would guess that kind of thinking doesn't have any significant effect on current prices.

jdemaistre

Digger,

Not sure why you're getting so worked up. I'm not a Keynesian or a monetarist, so that tangent left me a little confused; you'll find that a lot of those who share your enthusiasm for gold nonetheless reject labour theories of value. Check out Murray Rothbard or Ludwig von Mises' writings on value for examples. (I don't really feel qualified to get into highly theoretical economic arguments!)

DiggerUK

jdemaistre,
Never thought of you as any particular school of economics, it's just that most dismiss the labour theories on the grounds that Marx supported them. Always seems a poor argument against the theory.

I've never found another argument that gets close to explaining how value and wealth come into existence. For me it's a theory that adds up.

laehc

I just don't get the labour theory of value. I tried Wikipedia but couldn't bear it for long. Presumably eyes have no value because no labour is involved in making them, but eyetests involve labour so they must have value.
Then there's planet Earth, no value to atheists, but some people would have to ask God how much work was involved on whichever weekday it was created on. If someone sold one of their kidneys I would expect the price to be more than £0.00.
Do you have to redefine value or labour, or something?