Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: prometheus1976 who wrote (70871)	12/28/2008 12:25:34 AM
From: Maurice Winn	2 Recommendations Read Replies (1) of 74559

Ok, being precise, as long as the gold hasn't actually been lost after being reburied, the value remains provided people want the stuff and are willing to pay to have more of it dug up. The intrinsic value of the stuff is the cost of producing some more of it. As with oil, if it's in short supply for a while, the price will rise. When the price of it exceeds the cost of digging it up, people will dig some more or otherwise come up with production techniques. When the price of it is near the cost of production, people will do more useful things. The price of gold over 2000 years is closely related to the cost of producing more of the stuff. It is just another commodity. It has special characteristics such as being easily transported, hidden and transacted with hordes of other people whereas a ton of pig iron is not so portable or tradable. So a ton of pig iron in Zimbabwe is worth less relatively than gold which has the important advantages of portability. Mqurice

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