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Comment by DanBlake | Hacker News Reader

Golds value comes entirely from the fact that we as a society give it value.

The beauty line doesnt work, because then platinum shouldnt have any serious value despite its rarity (it just looks like silver basically)

The industrial value is laughable, but read comments below/above to debate that more at length.

The scarcity line doesn't work, because you have elements like bismuth which are also (Arguably) more beautiful than gold https://66.media.tumblr.com/61ce390242a79a767772d4b2027eb902... but command prices far less despite being .025 vs .0031 on the PPM abundance on earth. Or even look at ruthenium which has a similar look to platinum and is even rarer than gold. Did I mention it also goes for about 400 an ounce? Quite a savings over gold.

The only thing that makes sense is that we as a collective have decided gold has value of X.

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Platinum is valuable because it's an unbelievably good reaction catalyst and is unbelievably rare. Look at Palladium (also used in catalytic applications, and still quite rare) price charts for confirmation.

Bismuth's attractiveness is subjective, but what is not subjective is that it's found in ore in mineral form, not in pure form like gold. It's also brittle, and not easily worked to jewelry by primitive methods like gold.

Anyway, agree that gold is largely assigned it's value based on social reasons. Also would say that, in spite of its many faults, it's a much, much better investment than cryptocurrencies.

> it's a much, much better investment than cryptocurrencies

I'm not going to argue that, on the basis that crypto is super volatile and has potential to outperfrom etc etc. Gold is a far safer store of value, a much better hedge against market turmoil, and generally easier to "own" at low risk of having it nabbed.

> "Golds value comes entirely from the fact that we as a society give it value."

thats true for anything. that includes currencies, what you get paid, the value of a hockey card, the value of a car, the value of a banana, etc. sure, if society doesn't want to pay you anything for 'it', you can do with it what you want, like eat the banana (before it becomes worthless to anyone).

I am not a gold bug, i personally dont think its a great investment. its not a hedge against a declining market, and its difficult to own in large quantities. however; statements like 'its only valued because people give it value' are not very informative. everything is valued that way. everything.

also, the industrial value of gold is not laughable. its negligible because we have plenty of gold to meet industrial needs. but its not laughable, its in your smart phone, its in your desktop / laptop, etc.

> that includes currencies

Currencies have value because entities with monopolies on force (countries) give them special legal status to be used conveniently as means of exchange. This is one of the hurdles for Bitcoin, and was a big source of debate in 2016-2018. Every time you spend Bitcoin you have to keep track of the avg. acquisition cost and resulting realized capital gains for every transaction to be able to declare the appropriate gains or losses on your taxes at year-end. A heavy burden for a "currency".

> statements like 'its only valued because people give it value' are not very informative

If you go to first principles, sure, everything is an illusion. But gold, crypto, and other "stores of value" derive their value in fundamentally different ways than everything else. Our existing models and body of knowledge do not apply to them. This is worth investigating. All other things are consumed in some way or another, and the rate at which they are consumed, relative to their supply, determines their price. The consumption of gold relative to its supply is much too low to justify its price using the same models.

Perhaps a better way to frame the argument is that Gold is useful only because society has agreed that it is a store of value.

Things like cars and bananas are useful outside of being a medium of exchange. You can use a car to get around, and you can eat a banana if you are hungry.

Dollar bills and Gold are useful as long as society agree that you can exchange them for cars and bananas. When society stops agreeing that currency is worth anything (i.e. hyperinflation), money becomes worthless and people throw it away or burn it.

Typically, printing excess currency is what causes it to lose value. Gold avoids that because you cannot just "print" it - you have to physically mine it from the earth by exerting effort.

Those qualities are part of it, but not the whole story, gold is also:

- divisible (including literally soft to divide)

- fungible

- identifiable

- verifiable

- scarcity tested (people have been looking for, and trying to create, gold for so long without success that supply estimates can be trusted)

And the big one: branding.

Money is only useful when everyone uses it. It has one of the most powerful network effect of any system. The fact that it was successfully used as money for thousands of years, and everyone knows it, making it the default non-fiat money in terms of mind-share - has enormous value. Are you really going to try to convince everyone to exchange bismuth instead when fiat collapses?

Gold has embedded demand via governments, a global jewelry industry, and yes industrial demand. Bitcoin demand is speculators (mostly) and a handful of people who use it as a transactional value store. Comparing the two is a waste of time - they are nothing alike - but ignoring that the supply and demand picture for gold is way more stable -- global demand for gold does not halve over a few months, which is likely what drove the price shock with Bitcoins.

Gold's value comes from two main things - it's nice for jewellery and it's expensive to mine. The price has for many centuries approximated (within 3x or so) the mining cost and it doesn't drop to zero because it made nice jewellery from Varnian jewellery 6000 years ago (http://www.ancientfacts.net/7-oldest-pieces-jewelry-world/) to modern wedding rings and that's not changing in a hurry. Both mining costs and market price are about $1200/oz at the moment. Financial uses are a secondary effect that has kind of come and gone.

Supply and demand determine the value of everything and they are both additive. Each piece of supply tips the price scale lower, each piece of demand tips it higher. You have taken several key pieces off the scale, argued (unconvincingly) that each one individually cannot explain the scale's reading, and then (even more unconvincingly) claimed that the scale's reading is therefore completely arbitrary.

It isn't. You just don't seem to understand how it works.

The comment is just a direct rebuttal of the claims from CPLX for the reason that gold is so valuable.

Read up on sunspot equilibria and multiple equilibria.

the combination of malleability and resistance to corrosion and acid makes gold a very useful material beyond its value as a currency. there are things you can do with gold that you just can't do with other metals, especially in the field of art and jewelry.

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