Topic: Speculation rocks! (thanks for the price drop|please don't destroy it!) - page 2. (Read 7965 times)

The value of gold is not obtained from its use in computers / electronics at all. It is not not an industrial metal like silver. Gold's percentage of use in industry is about 5% of the mined supply. Gold is really only used as an investment/ hedge against inflation. And its only gone parabolic in the last 10 years because the dollar's debt has gone parabolic as well. Gold relies on a weak dollar for it's value. If you ever hold a piece of 24kt gold you will know why bitcoins can never be as good as gold/platinum/silver in the long run. There's nothing tangible to hold onto with bitcoins. While that may not stop its increase in value over the next few months, to compare it to gold is foolish at best.

I'm not speculating.  Without food, water, and shelter, people die.  That makes those items intrinsically valuable.  Any items directly connected to those items, like guns, ammo, tools, etc. will always have value as well.  There's no speculation involved in that.

Value is subjective and you dont know what will retain value because it depends on people's future valuation. You can speculate about it all you want. Intrinsic value does not exist.

EDIT: But let me explain you what you are trying to do: You are judging some valuations over others. You think that people valuing a car for transport is better than peole valuing gold as money. But your subjective valuation is not science, its only your subjective valuation that its blinding you. We could argue all the day about what adds more value the transport that a car provides or the economic coordination that gold as money provides... but you know what? our subjective opinion does not matter when its time to analize how the economy works. The fact of the matter is that it happens that way. We value a car and we value gold. And each person asign it a subjective value given their situation and their knowledge. You are implicitely deciding that you are superior to the rest and can decide that one is better than the other. You are not better than te rest of us. Peopel have their reasons to value gold as money. If you dont, fine, don use it. But it does not matter when it comes to analizing the economy.

Value is subject, but there are certain items that will always retain value regardless of market conditions and personal taste, this is called intrinsic value.  Gold is not one of these items.  Food, water, shelter, and clothing, and anything useful in procuring those items have real intrinsic value.

You can't seem to understand the difference between a commodity (an end in itself) and a store of value (a means to an end).  Gold's small percentage of commodity value only applies during good economic times and with the presence modern industry.

Fiat money is highly divisible, very durable, completely homogenious, and as scarce as the controlling body wants to make it.  In fact, it's specifically made to be all these things.  Yet you hate it.  Explain the inconsistency.

It's a little silly comparing gold with bitcoins.  2000 years ago gold was highly valuable.  It is highly valuable today, and will probably remain so in another 2000 years.  It works without electricity, computers, and is universally understood by pretty much every culture.  It has stood the test of time. 

I went out on Saturday night with BTC valued at 21.  Coming home, it's down to 17.5, and it was 31 a few days ago.  That's one heck of a correction.

And so does the value of a chair, and so does the value of a shirt, and so does the value of a car, and so does the value of a tv, and so does the value of a plain, ... Value is subjective, its Economics 101.


No, you are terribly wrong. ALL of gold value is because people asign it that value. Just like happens with anything else. Value is subjective.

People value things because of different reasons (and the task of economics is to analize not to judge. Judging is the task of moral/politics). Some people value gold for jewlery and some other value gold for money. And the main use is money. Those are the facts. In my subjective opinion the use of gold as money is far more valuable and benefitial to humans than its use as jewlery, but that is just my subjective opinion. You can have your subjective opinion, but it should not blind you when you are analizing the world.


I dont want to think you are being deliberately dishonest. Fiat money is not based on faith or trust or that "people asign it a value" (and nothing has intrinsic value, value is subjective). Fiat money is imposed using force by governments. Thats the reason why people use them, its not their own voluntary decission.


What am I supposed to understand?


You just discover value is subjective. Congratulations.


Actually no. Bitcoin was designed in a very clever way to have the characteristics that good money has, but for the internet.

You can theoretically use anything as money, but some objects make very good money while others make very bad money (with a full scale in the middle). This is why some things get selected as money (like gold) and others dont (like perishable food f.e.).


Actually it does. And that is the reason why it was choosed by different cultures around the world that never knew each other. Ill let you investigate what this characteristics are.


Which is completely fine. Being money is a important and useful role to play.

A Real Gold Mine?
Principally used in jewelry, gold (chemical symbol Au) is also used generally in manufacturing (and by the electronics and computer industries in particular) due to its excellent thermal and electrical conductivity, resistance to oxidation, and inalterability. The computer industry uses several hundred tons (318 tons in 2003, for example) of the element every year.
The precious metal is found in almost all computer components--processors, motherboards, extension cards, memory...

- From http://www.tomshardware.com/picturestory/550-gold-motherboard-chemistry.html

318 * 2000 * 16 * ~$1500 > $15B/yr.

False.

I've posted this before and will post it again... "It's extremely important to understand why gold is valuable if one is to understand why Bitcoin may be even better. Gold's value comes from its physical properties - it's divisibility, durability, homogeneity, scarcity, etc.  Think of all things out there in nature... few offer all the same attributes as gold. Iron is divisible and durable, but it's not scarce enough. Wooden sticks are divisible, but not able to be recombined. Food can be used as money, but it spoils when saved and two pounds of food are not identical - not homogeneous. Cows make a poor money because dividing one in half would kill it. Gold, and other precious metals, are the only things mankind has found that work extremely well as a money. Anything CAN be used as a money, but some things are much better than others for this purpose. We use fiat paper now, of course, only because governments backed with violence and guns have forced us to do so."

The value of gold is based on the fact that it's properties make it useful as money. Not because everyone just "arbitrarily" assigns value to it.

Because the value of gold is based on the fact that people think it's valuable, nothing more.  It has some small, declining value for use in jewelry, and miniscule value for use in industrial applications, but otherwise, the majority of it's value is based solely on the fact that people assign it that value.  This is not different than any fiat currency.  The value of the USD is not based on anything intrinsic, but simply on the fact that people assign it a value.

Can't understand that?  Think of a true SHTF situtation.  You're shipwrecked on a deserted island.  How valuable is your gold then?  Do you think people are going to sell you their food or weapons for gold?  Of course not.


You can make anything into a currency, and Bitcoin is proof of this.  Gold makes no better of a currency than iron, rocks, ivory, toe nail clippings, etc.  Anything with a finite supply (which is everything) that doesn't decompose quickly can be used as a currency.  People have simply gravitated to gold historically (because "oooohh shiny" back in the caveman days), and it has maintained that appeal until this day because that's how it's always been.

No. Gold is useful as money. Its a very important role to play, because money is essential to coordinate the production of people that dont even know each other and allows human progress. How is that not important? How is that "based on nothing"?

Gold has some nice qualities that make it suitable for money. That is a very important role. And so does Bitcoin.


And you are wrong again. Your chart proves that people is using gold as money, and it makes sense since the governments and their banking cartels are trying to pay off their unpayable debts by printing the pieces of paper (or electronic accounts) that they force us to use as money.

^You hit the nail on the head.  It's tradition and historical demand (based on absolutely nothing, really) that drive gold these days.

Gold is no more useful than the USD or any other fiat currency.  In fact, at least you burn dollars to stay warm and cook food.  You can't even do that with gold.



Allow me to bitch slap you with facts...


As gold price has soared through the roof, demand for gold in jewelry use has been on a steady decline:





And that's even using a chart from an ultra-biased gold pumping site.  Actual speculative demand for non-physical gold is what's driving the price though the roof.

We kind of agree, but I dont think gold as jewlery sustains gold at these prices. Its monetary use is what sustains gold. Do you really believe that a drop of 90+% of its price would really not be a big deal? The real advantage of gold in this issue against bitcoin is centuries and centuries of tradition.

BTC is physical like gold, but has less real world use.

gold's value in jewelry is two-fold. it's pretty, and has always fascinated humans, and it is valuable. currently BTC is not that fascinating to look at, or rather to spend for goods or services, but it is value.

though i do not think the current price of BTC reflects its real world value.
i also think that if BTC were able to be spent at various large online outlets, then its current value is FAR under what it would be.


also, the price of gold is 100% on par with the market demand for jewelry. buying gold jewelry is no different than buying gold bars. typically you pay MORE for a gold ring, even. if the price of gold was not in line with the price of gold jewelry, then id be buying cheap ass gold rings, melting them down, and selling it for more USD. sorry if i didnt make myself clear, but i did not mean the price of gold is directly related to the jewelry and conductor market. but those things sustain the objects viability.

I think you are wrong.

First of all, bitcoins are physical too. Electric and magnetic fields are physical.

Second, the current valuation of gold is far far away from its utility as conductor or jewlery. The current price of gold is only explained by its monetary use. If gold stopped being used as money its price would probably drop by more than 90%. Is that so different from bitcoins? Yes if bitcoins stopped being money its value would drop 100%, but if you loose 90+% of your wealth its still a fucking disaster. So not so different gold from bitcoins.

The fact that originally gold started being used as money because people valued it as jewlery, and bitcoin was orignally valued by enterpreneurs with a vission is quite meaningless. Both gold and bitcons had an original value.


You are 100% correct in this one and it is very important for the Bitcoin community to start promotng itcons around merchants.


100% correct again.

i agree, it is mostly used as a representation of value.
if people stopped buying gold rings tomorrow, and threw them all away in the garbage. would you be digging through the trash to get those pretty rocks? i wouldn't. because nobody would want them, thus they are worthless.

if people have no use for an object, it is worthless. else rare, hard to get, useless objects would be valuable. kind of like pictures of UFO's.

Then you're admitting that it has absolutely nothing to do with the demand for jewelry.

As already stated, gold is intrinsically worth only a fraction of a fraction of what its current value is.  It's all speculation.  People are pulled to it not because it has any real intrinsic worth, but because of it's magical appeal as the "real" currency.  This comes from its history of being wanted and used as currency, which has now falsely lead the ignorant masses to believe that it has high intrinsic value.  In a true SHTF scenario, gold will be worthless - you cannot eat it, drink it, hunt with it, or defend yourself with it.

[SARCASM]Yeah, I know people and banks decorate their safes with gold bars in them and of course gold is just that expensive, because it looks nice.  

And of course it is not because it is a hard to get, limited resource that people therefor trust[/SARCASM]

I know it is used for lots of stuff, like jewelery and electronics. It's just that's its still mostly used as a store of value, even in form of jewelery. It's in peoples safes most of the time. You've got a few grams (at most) of it in electronics and decorative stuff. In most jewelery it isn't pure gold anyway. Also gold on it's  looking that nice. which is a highly subjective anyways, so nothing to justify the price. It also isn't as important as it was a long time ago, when it was maybe the most important status symbol. These days you aren't looking like an important person, because you wear gold.

I know the comparison isn't perfect, but I think it is at least as good as the comparison with a regular currency is. It is limited and it becomes harder to get. It can be used for stuff like Namecoin and maybe someone finds a way to make it look aesthetic.

when i see that graph, i turn it upside down in my head and change the title to "USD Value"
if gold were useless, we may as well trade pictures of UFO's.
gold's usefulness secures its value.
if gold is expensive, your currency is cheap.

gold has seen such a large, out of line with inflation, rise not just due to our cheap USD but has been compounded by people's faith that gold is a more secure investment. gold's usefulness remains pretty constant, which is one reason people like it. it has a use, and the demand for the things it's used for doesnt vary wildly.

just tonight i seen a guy on "pawn stars" sell his 31 lincoln (believe it was a 31) for about 95kUSD then bought gold (because he was not legally able to sell the car for gold). gold has been going UP in price as the dollar has been going down.

but aside from that, the value of the USD fluctuates often. why then do people allow you to pay your rent with USD?

in an ideal and usable market, BTC will remain steady with hopefully (and likely) a small increase in value over time. if you ask me, i would consider the gawker article, and all the ensuing popularity of BTC after that, as BTC's "IPO". its not uncommon for a stock to vary wildly after its IPO.