Sand has intrinsic value, you can use it make glass. Silver has intrinsic value, it is used in a multitude of products and industries
Lol! You and I both!! But dumping a miles worth of gold on the market would make it nearly worthless. Imagine how one thought oil blubber was the only way to produce light? Now we flip on a light bulb. Technology changes quick. And after it does we look back and say "Duh! It's obvious that would be the next step!" Hehehe!
Market prices don't reflect cold rational facts... Despite supply-demand ratio, despite silver being industrially consumed, despite people buying it all up and dealers running out of physical silver, despite of many other facts... I guess it depends a lot more on ETF's/speculation. That moves the PM market. Right now I don't think many would sell-off their paper silver. It's not high enough for them. They could have already done it. But after a while a big paper buy-up will come and that's when physical buyers will have to own a substantial amount already.
I agree. Silver's value is extrinsic, not intrinsic. eg (random but indicative) http://plato.stanford.edu/entries/value-intrinsic-extrinsic/ Also: $5/oz silver is cheap but $20/oz isn't. Good luck with the gambling.
"Market prices don't reflect cold rational facts..." Interesting comment, which I have been pondering for a while. If you consider fundamental theory, then I am struggling to think of a single market in existence in which prices represent 'so-called' "facts". However, if you step back and consider that all prices are actually a cumulative result of the supply-demand ratio (demand being somewhat orchestrated by sentiment, as well as need), then price could be considered an absolute representation of fact. A representation of the total demand of all market and non-market participants. Price is actually the only fact, in any market, and the rest is merely theory.
About "intrinsic"; intrinsic means belonging to the essential nature of some object/subject. It is something that can not be removed or separated from the object/subject otherwise that object/subject would be something else. Something that is intrinsic is always in the object/subject regardless of the passage of time or regardless of a human valuation of that object/subject. For example, water is fluid....it has an intrinsic character of being fluid regardless if you are there to observe it or not. "Water tastes good" is not an intrinsic quality or characteristic of water. If I were to remove all traces of hydrogen from water, what you have remaining is not water. If all people who believes that water tastes good died, water would still be water. An intrinsic characteristic of an object is very different than an extrinsic value held in that characteristic. 35,000 years ago, the fact that gold is one of, if not the best conductor of electricity meant nothing to the early humans that may have lived on earth. If you were to be able to go back to that pre-historic time with a huge chunk of gold and tried to barter it for something, I doubt any human then would give you a hand full of nuts for it. We can see that gold has no intrinsic value, only intrinsic characteristics. The value many humans today place on gold is a subjective desire to own or use it. Intrinsic is something that is timeless and requires no human valuation. An intrinsic character of iridium is that it is dense. An intrinsic character of a new star is that it produces heat as it burns. Intrinsic or an intrinsic characteristic of an object/subject must be separate from an external value judgement placed on it. For example, "fire is bad" is not an intrinsic value of fire, it's an external or extrinsic value judgement. Same applies to a faceted CZ (cubic zirconia), faceted ruby (or any gem), or a 5,000 ounce bar of .999 pure gold....the value that is placed on it which makes it cost what it does to buy is NOT intrinsic it is an extrinsic valuation. Sand can be made into glass and can therefore have an extrinsic value placed on it by those who value some glass product. For these reasons and sighting these examples, I completely reject the use of "intrinsic value" as it is applied by some to objects like gold or diamonds or any object where it is extrinsic human desire and valuation that gives rise to that object having the cost it does.
^^^ I think you are confusing the philosophical explanation of "intrinsic value" with the financial definition. While intrinsic value is usually calculated by discount pricing and some other considerations such as intangibles like trademarks etc. this cannot be calculated for gold, because it earns no income. Thus, intrinsic value for gold does in fact exist - in the form of "spot price".
Hmm. I'm getting abit confused. Wouldn't spot price be defined as "perceived value" instead, as prices are determined by the masses (in this case investors who trade it)? In my mind, food has intrinsic value as you can eat it. On the other hand it also has perceived value as some food like truffles are more expensive than other types of food.
I am fully aware that there is both a philosophical and a financial industry use of "intrinsic value". You argue that the spot price represents the intrinsic value of gold. My contention is that because of what the term intrinsic means (it's definition) I reject the financial use of it because the extrinsic valuation that the market places on an object (an ounce of gold or a share of GLD), is not intrinsic, can not be intrinsic because it is an external valuation....it is extrinsic (and quite subjective as stackers know). I reject the financial industry's use of "intrinsic value" because it just doesn't make sense from a logical standpoint. I can do that if I want....I don't have to be a slave to stupid conventions. I would further posit that the spot price of precious metals is really much more representative of a relative value (determined by those who investment in it and other assets and currencies, etc). Gold has no intrinsic value since the value that it is given is not intrinsic but rather external. Gold has intrinsic characteristics and traits but as soon as you attach whatever value to those traits, that is an extrinsic valuation of gold. . .
I love gold but no way am I handing over my nuts to anyone for all the gold in the world. :lol: Some things remain constant regardless of the passage of time.
OK, but in my head the intrinsic and extrinsic values of PM's are one and the same, and they have nothing to do with "intrinsic characteristics". Otherwise you would not have the market quoting "premium over spot" for everything like semi-numis - premium being the extrinsic value, spot being intrinsic value. This is the only way I can digest gold's value, and it works for me. If the "valuation that the market places on an object" or "it is extrinsic human desire and valuation that gives rise to that object having the cost it does" was always considered extrinsic, then this would account for just about everything in existence. You are correct, you don't have to be a slave to conventions, but ironically you are whilst debating the meaning of a convention.
If what you are saying is the convention, then you really should consider throwing that convention in the trash like I have. Allow me to explain. It's quite simple, actually. There's nothing special about a premium as compared to spot. Both are extrinsic valuations. The premium is simply the added value. This much more accurate way of looking at it exists all over the place. For example, when you buy a car, you have a base sticker price and then you have added value items which are basically premiums you pay for the added item's cost. With comic books and baseball cards, a signature of a notable artist or player is the premium or the added value you pay for that unusual feature on that book or card. In diamonds, you pay a premium for certain characteristics like clarity, shape of cut, color. With amber, the biggest premiums are paid for the type of inclusions like scorpions and lizards. Premiums on all these objects, just like with precious metals, are simply added value to a standard or base value. It is not that the base or spot value is intrinsic and the premium is extrinsic - it's that the premium is the added value. Both are extrinsic values placed on the object. With pm coins or bullion, the premium is the added value that is charged and paid by the buyer for things like name recognition of the mint, quality of design, type of finish, quality of production, and so on and so forth. Both the spot and the premium are extrinsic values that people subjectively use when deciding whether to buy a coin or not. I can give you a boatload of examples of why this is true but I think you probably agree with me already on this. .
The spot price has as much to do with actual gold as the non gold backed Fiat currencies. The value, intrinsic or other wise, of a piece of paper is practically zero. An electronic traded fund, even less. Regardless of semantics, we are still forced to play the game ("when in Rome do as the Romans do") but let's remain aware of the reality beyond the illusion. That is a core of my stacking agenda anyway.
Umm, yes. I can also trade fiat currency for items of value or exchange items of value for paper. Your point being what? My post was clear, we do have to play the game but remain aware of the underlying reality. There, I did it for you so no need for any of your offensive diatribe in reply.
I see your point. What I fail to see is how anything could ever have an intrinsic value using this logic. If market price = subjective extrinsic value, then intrinsic value does not exist for anything?
+1. Water is still water. Gold is still gold. Price is all from humans undertaking division of labour and trading their respective fruits and value is the reason why you voluntarily trade.
Objects do not have intrinsic value though they do have intrinsic qualities. The value of a gram of diamonds or gold is dependent on humans making valuation judgements on the the object's intrinsic qualities. That judgement represents an extrinsic value, not an intrinsic value. Only living, sentient individuals have intrinsic value. That value is based on individuals fulfilling their own interests....one of these interests that is obviously highly valued by the individual is the interest to live. Another highly valued interest is the interest not to be the property of another. So for example, in the US for about 400 years, some people placed EXtrinsic value in enslaved people who were shipped to the US namely from the African continent. Just like with gold and silver, the price of an enslaved person varied regularly and there was a premium paid for added value (a particularly strong individual for example). The obvious differences between the enslaved person and a chunk of gold are many but when it comes to intrinsic value, only the enslaved person is capable of having it while both can be valued extrinsically. The reason why owning gold is not an issue is because gold has no intrinsic value whereas owning another human is a big problem because people have intrinsic value and when someone else's extrinsic values are made to supercede by force and through subjugation of those intrinsic values, then this is a serious problem which all of us here should agree on. The reason why I think that it's important to not fall into the trap of claiming that some objects have intrinsic value is because unscrupulous people will take advantage of that convention and make all sorts of spurious claims like "only silver and gold have intrinsic value" and other such shit claims. It's purposefully misleading when used by some people and it's used to take advantage of unsuspecting people who have put their trust in those who they believe are giving them good investment advice. I've seen it done to purposefully manipulate others; that's why I reject its use in describing objects. .
After sending us off thinking about intrinsic qualities of water etc, we seem to be back at the basic point of price versus value, the latter of which is purely a thing derived from the mind of individuals whilst the former is the market's summation of all individuals valuations. It's basically like saying intrinsic rights don't exist without a mind to create the concept. Similarly value doesn't exist without a mind to comprehend valuing something. So, based on this definition, yes - gold has no intrinsic value and nothing that can't comprehend value has intrinsic value. Ayn Rand would be happy I think.
