You all realize that gold is just a shiny rock? Right?
poly replies: True. And its worth whatever people ultimately agree its worth. People pay $20 for a shirt with an inherent value of just fifty cents every day of the week.and consider it a bargain.
Many years ago I found it highly amusing...that if I gave a theater a few pieces of just paper, I could see a movie and get some popcorn.. The theater agreed the paper was worth something.The engraving on it was rather good...but was it really equal to a movie and popcorn when there were so many of the same engraving floating around?.
The value of most things depends on what people agree it is. Perceived values rather than real values. If people agree a shiny rock is equal to a new house...it is. They can just as easily agree its worth nothing. In a food crises, it may be worth a potato if someone has a spare potaato. ..Can't eat the shiny rock.
The true value of anything is the combined labor time from all inputs used to obtain or create it. We don't, however, exchange inherent value for inherent value.
I encouraged my family to buy gold when it was in the $300-$400 range and encouraged others to do the same about 5 message boards back..Access to those boards is no longer available. People now agree that gold is worth more than that..
Retired Monk - "Ideology is a disease"
There is a very tanglible difference between those 'pieces of paper' and the pieces of shiny rock. The pieces of paper are government notes, currency, with a legal backing. You can pay taxes, an obligation to the gov't, with them. (From this, we can use it as a measure of value.) The gold is still just a shiny rock. There was a time when the gov't gave gold the value of a currency, based on its weight. It does not do that anymore. Try to pay your taxes in gold. The IRS will send you away and tell you to come back with money.
Without gov't backing, the value of 'currency' is the value of the material it is made from, based on its use. Gold is used in some electronics, and for fillings, and to make things look pretty, but that is its only value. A paper currency with no gov't backing is worth, maybe, the BTU value of burning it, or some value to collectors. This gold frenzy is nothing more than people believing that a shiny rock has magical powers, that it 'holds' value, that it 'protects' investment, etc. It really is just a shiny rock. 99% of it's value is based solely on belief. It is the proverbial Jesus toast. Its value is a measure of how crazy people are.