AuSnow:
Many thanks to you and the others who helped me try to figure out the meaning of "intrinsic value" as it relates to currency in general, and gold in particular. I still have trouble with the whole idea of what constitutes "wealth," but I'm afraid that the conversation will get too esoteric if I try to pursue it too much further.
But, I can't resist a few comments. It wasn't all that long ago that salt was a universally accepted currency from the Roman era up into the 17th century. Once something is accepted as currency, be it cowery shells or 20-ton Fiji rocks, it has a psychological value in addition to its intrinsic value. If we can agree that that "consumption" of gold (that is, its actual use in manufacturing or jewelery) only accounts for about 30% of production, that means that 70% of all gold produced has only psychological value, and that currently hoarded gold (by individuals as well as CBs) would satisfy any real need for gold for a helluva long time, even without any more production at all.
So, my strawman arguement is that there seems to be an effort underway to reduce some of the psychological value of the yellow stuff, and replace it with psychological value of faith in world currencies. I agree with most of the comments that this is an effort that will ultimately fail, but between now and failure is a lot of chaos.
I guess that the bottom line is the cost of a bushel of corn, and whether one has the currency to bear that cost.
Good trading,
jim |
