this post was submitted on 04 Nov 2023
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[–] [email protected] 17 points 1 year ago (4 children)

Gold is agreed upon as a store of value. There's always someone willing to buy it. You're right that its intrinsic value as a material is lower than the actual price but people's belief in gold is the same as their belief in a fiat currency.

The difference is that gold is a physical asset, so that no matter what the rate of inflation or the fluctuation of the market price if you have a tonne of gold you will always have that tonne.

Also it is not administered by a central bank with a political agenda.

Lastly gold is rare and finite. Eventually there will be no more gold to be mined.

[–] [email protected] 10 points 1 year ago (5 children)

I think the fact that it's very chemically stable is likely a factor as well so it can be stored for effectively an infinite amount of time & it won't degrade/react, it'll still be gold.

[–] [email protected] 3 points 1 year ago

Very good point.

[–] [email protected] 2 points 1 year ago

Not if i shove it in the good old fusion reactor

[–] [email protected] 2 points 1 year ago

Yeah, it's more than just "shiny good"

[–] [email protected] 2 points 1 year ago

@lanigerous @Spendrill It's also very conductive. It's not an accident that gold is used in high-quality electronic contacts like cable ends or card edges.

[–] [email protected] 1 points 1 year ago

Historically, the value of gold was tied to its "incorruptibility". It is associated with purity and permanence.

[–] [email protected] 5 points 1 year ago (1 children)

Oh, look! An asteroid made almost entirely out of gold! T'would be a shame if someone were to mine it...

[–] [email protected] 1 points 1 year ago

Just back a transit van up to it, hack a lump off with a pneumatic drill, sling it in the back, we'll be back by teatime.

[–] [email protected] 4 points 1 year ago (1 children)

The price of gold fluctuates though. And it could potentially devalue significantly if a new source is discovered or a new method of mining or extracting it (such as filtering it from seawater) is developed.

So yes, if you have a tonne of gold, you will always have that tonne, but it could lose, say, 20% of its value quickly.

[–] [email protected] 6 points 1 year ago

It could indeed and has done so in the past. But the thing about it is that the price always recovers because people believe it will always be valuable. It's the belief that endures and because people will always pay for what they believe to be valuable the value of gold as a currency endures. Also the retail value of gold remains high as the single largest application is jewellery Source page So there's a conflation of the value of the labour that goes into making jewellery, adding value and in some cases the value of the piece will take that gold permanently out of circulation for use as currency e.g. the Mask of Agamemnon

[–] [email protected] 1 points 1 year ago

Until we can successfully mine asteroids, and then all precious metals will have nigh infinite supplies. I suspect we’re not too many decades away from that.