Quote from: psyborgue on July 02, 2011, 03:28:57 AM

Quote from: killer2021 on July 02, 2011, 03:15:09 AM

Gold is obsolete money. Will never be used as money again. Gold is only valuable for its utility.

Gold is valuable and will continue to be valuable because people remember it to be valuable. It's part of our culture. There will always be this. Utility be damned. Idiots with disposable income will always exist, as will enterprising individuals willing to sell them worthless(?) shiny shit.

Now if only we could cover Ferraris with bitcoins.

Gold isn't just used by idiots with disposable income to cover Ferraris. It is found in things regular people's use every day such as cell phones, computers, televisions, cars, etc.

Quote from: libertyzeal on July 02, 2011, 08:29:35 AM

I prefer to look at it in a more relative fashion, because compared to other industrial metals such as silver, nickel, or copper, gold has far less industrial/commodity demand. But this is somewhat orthogonal to my point that the current price of gold is not a function of it's use value as a commodity, it wasn't an increase in commodity demands that drove the price from $300 to $1500 oz in the last decade. It was monetary demand, primarily fueled by reckless government spending.

Having your money tethered to industrial uses is not a good property for a currency, the price of silver dropped like a stone when the US economic downturn hit, mainly because the demand for it as an industrial metal fell as the auto manufacturing industry suffered. A good store of value shouldn't have this kind of tight coupling with industrial production, it should function independently, and that's why gold is a better store of value than silver, altho that's not to say silver is not also a store of value, or a great investment vehicle for someone who sees market opportunities.

I think gold's price does include a meaningful component of its commodity value. It isn't as volatile in the short term as silver because the above ground supply of gold is large compared to its yearly production and consumption. I agree the $300 to $1500 jump isn't a result of increasing commodity demand for gold as it is more a function of the dollar's devaluation and anticipated devaluation of the dollar combined with the historical knowledge that people typically rush to good physical stores of (commodity) value when they notice their money, that is backed by nothing of physical value, being devalued. However, I believe a strong component of both silver and gold is its their value as a commodity. If silver is valued as a commodity and gold isn't then why do the valuations of silver and gold track each other fairly well over the long term. For example, during the decade long $300 to $1500 jump in gold (a five-fold gain), silver went from like $5 to $35 (a seven-fold gain). Silver and gold are both good ways to store commodity value, but silver is just more volatile in the short term.

The main point I want to make on this topic is that if people want to make a case that having commodity value isn't important for a currency, then they should find another example to make their case other than gold.