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by mschuster91 4147 days ago
Serious question: what exactly is the value of gold? I mean, with other rare metals as palladium or titanium their value can be inferred from industrial consumption, but what is the actual usage of gold and silver other than for filling teeth, making jewelry (we have had artificial "prices" with the diamond cartels) and trace amounts used in electronics?
2 comments
AnimalMuppet 4147 days ago
It's an alternative to paper currencies. How much that's worth to you depends on how much you distrust paper currencies. How much that's worth to the global economy depends on how much the global economy collectively distrusts the money supply (and the central bankers and/or politicians that control the money supply).

This is a big part of why the price of gold moves the way it does. It's not that the value of currencies changes compared to gold, which is the unmoving reference point. Instead, what's going on is that peoples' trust in paper currencies fluctuates, which changes their desire to hold gold as an alternative.

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oafitupa 4147 days ago
It's not an "alternative", it's a store of value by its own merit, and has been so for thousands of years, while paper money is pretty recent and is by no means a good store of value or even a good medium of exchange, with the surge of digital money.
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AnimalMuppet 4146 days ago
Paper money, in most countries in modern times, has been a more stable store of value than gold. Consider, for example, the price of gold over the last 10 years - the run up to $1700, the fall below $1200, the small recent recovery. Has that been because of the change in value of the dollar? No, most of that change is in the value of gold, not in the value of the dollar. That's not a very stable store of value. Even the Swiss Franc has been more stable, despite the recent shock.

Paper money has mostly been a more stable store of value than gold... except when it hasn't. When the paper currency becomes toilet paper, gold looks like the perfect store of value.

The modern role of gold, then, is more insurance than it is a store of value. (Or you could think of it as a short on currency.)

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joosters 4147 days ago
Serious answer: go read wikipedia's entry on 'gold'.
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