Gold - what intrinsic value?? (besides modern human technology)

Why does gold have value? Because billions of people say it does. Simple as that. There doesn't always have to be some overly complex reason for things. People like shiny things. Gold is shiny.

I knew a guy in college who believed (genuinely) that we had been bio engineered by aliens to love & mine gold. He smoked a lot of weed tho.

I dislike gold. I dislike precious metals.

This subject has been beaten to a bloody pulp on WSO. Rightfully so, it's a good debate. When in doubt, what would Paulson do?

CaR:

This subject has been beaten to a bloody pulp on WSO. Rightfully so, it's a good debate. When in doubt, what would Paulson do?

Loose 54% on his gold fund. ZING!

Hugo Bentley:

Just triggering a mini debate to help me wrap my head around the notion of gold as money...

So at t=0 we have three guys,
1) guy 1 has chickens but wants fish
2) guy 2 has fish but wants horses
3) guy 3 represents millions of other people with different possessions vs desires.

Therefore, I clearly see the need for a convenient intermediate commodity to facilitate trade between the 3 guys.

I also register that gold has various intrinsic properties that make it suitable for the task of being an intermediate commodity:
1) won't rust
2) rare
3) cannot be easily counterfeited
4) easily divided
5) easy to move

But what I struggle with is - the list seems incomplete. Apart from relatively recently in human history, gold does not seem to me to have any great practical application. If I was living in t=0 and I made the very first approach to the guy with chickens, offering gold for them... why would he agree?

So to continue the thought experiment, let me create another list for the element "Unobtainium" from Avatar movie...
1) presume it won't rust either
2) rare
3) cannot be easily counterfeited
4) presume it can be divided like gold
5) easy to move
6) has unique properties that make it vital to human technology

So now if I'm the guy with chickens... I am definitely nodding my head in agreement to accept Unobtanium. But Gold...?? ehhh....

Hope that made some sense, appreciate if anyone can help me understand the fixation on gold.

Well, in that example, I probably wouldn't trade my chickens for gold. But when you start introducing more and more participants into the marketplace it becomes quickly evident that you will need some medium, currency, to store value to be exchanged later. What you are really storing is the value of your labor and the time it took for you to create whatever your specialized skill set allowed you to do. You could pick any number of things to represent that in an economy and gold simply became that thing. It is relatively rare, you can control how much of it is around and as you said it doesn't simply disappear or degrade like other mediums will.

edit: sorry, didn't see the initial point but I think you answered your own question. In a very basic sense gold is just shiny and rare which makes it intrinsically valuable to us because... well.. we are human and we have placed a value on it. Add in the now historical precedent to the mix and you have an asset which should, theoretically, always hold some type of value.. whatever the actual value is who knows.

DCDepository:

Hugo Bentley:

I knew a guy in college who believed (genuinely) that we had been bio engineered by aliens to love & mine gold.
He smoked a lot of weed tho.

The Anunnaki. Yeah, this has been part of the History Channel's "Ancient Aliens" programming. Apparently, in ancient Sumerian culture (and some others) these "gods" came to Earth several hundred thousand years ago. They created humans as a slave race to mine gold (and/or just mining in general--can't remember). These slaves--humans--were made intelligent enough to do the job but not intelligent enough to revolt. Apparently, when the Anunnaki left they left some humans behind. There are some claims that 200,000 year old mines have been found (although not confirmed). Point is, it's not a thought necessarily out of his delusions, but I can imagine people who smoke reefer would be amenable to the concept.

How can something be considered 'found but not confirmed.' Especially when claiming that it's X years old. If it was found, get some geologists or whoever out there to confirm. If nobody was ever called and nothing was recorded, then it's bullshit for all intents and purposes.

Some random person exploring the wilderness stumbled upon an abandoned mine, decided that it's 200,000 years old, didn't take any action, left, and started telling people about his discovery?

The History Channel is a joke. All they air is conspiracy theory nonsense. At least change your name to the Unemployed and Given Up Channel.

thanks for input all. Gold price recently fell an awful lot to about 1300, and my thoughts were: the argument in favour of gold breaking 2000 are still in place (i.e. high demand from emerging eastern powers, limited supply, and most especially, central banks debasing currency).

But the more I think about it... the more I feel gold is totally resting on the "greater fool" idea.

It's industrial applications can presumably be replicated with modern technology for lower cost than 1300/ounce.

And as for its unique properties like being easily moved around, rare, hard to conterfeit... technology will answer that with alternatives like Bitcoins. If Bitcoins are essentially as useless as gold, then maybe gold will finally lose its power over man?

Hugo Bentley:

thanks for input all.
Gold price recently fell an awful lot to about 1300, and my thoughts were: the argument in favour of gold breaking 2000 are still in place (i.e. high demand from emerging eastern powers, limited supply, and most especially, central banks debasing currency).

But the more I think about it... the more I feel gold is totally resting on the "greater fool" idea.

It's industrial applications can presumably be replicated with modern technology for lower cost than 1300/ounce.

And as for its unique properties like being easily moved around, rare, hard to conterfeit... technology will answer that with alternatives like Bitcoins. If Bitcoins are essentially as useless as gold, then maybe gold will finally lose its power over man?

Doubtful, because when the next crash happens creditor nations are going to require that at least X% any countries balance sheet is backed by something.

heister:

Hugo Bentley:

thanks for input all.
Gold price recently fell an awful lot to about 1300, and my thoughts were: the argument in favour of gold breaking 2000 are still in place (i.e. high demand from emerging eastern powers, limited supply, and most especially, central banks debasing currency).

But the more I think about it... the more I feel gold is totally resting on the "greater fool" idea.

It's industrial applications can presumably be replicated with modern technology for lower cost than 1300/ounce.

And as for its unique properties like being easily moved around, rare, hard to conterfeit... technology will answer that with alternatives like Bitcoins. If Bitcoins are essentially as useless as gold, then maybe gold will finally lose its power over man?

Doubtful, because when the next crash happens creditor nations are going to require that at least X% any countries balance sheet is backed by something.

Couldn't you back money with a pile of different commodities, such as natural gas, oil, land, lumber, platinum, silver, gold, diamonds, and copper? The U.S. is absolutely flush with these types of commodities.