Does gold have an intrinsic value per oz in USD?. What is it & why?

Load of Bullion

Load of Bullion

Well-Known Member
The question applies to today (society now).
This is such a complicated topic!.
Gold as money.
Some question whether gold even has intrinsic value, whilst other claim it has.
Gold would of perhaps had no intrinsic value until people formed a perception about it.
Human perception is often spoken of. The excerpt below from an article brings a perspective that is a little more 'solid'.

14_intrinsic_value_gold.png

Source: http://countingpips.com/forex-news/2014/01/finding-golds-true-value-part-one/

USDs have purchasing power against bread, milk and rice. To simplify, lets just use todays USDs.
Does 'intrinsic value' have any meaning when it comes to the purchasing power of gold against the todays USD?.

I could say gold has an intrinsic value of zero, 1 penny, $1000 or $10,000 USDs today butwhy.

A Zero Hedge article on golds intrinsic value says $10,000 USD is the fair value!!
Source: http://www.zerohedge.com/contributed/2013-12-13/golds-intrinsic-value-vs-us-dollar

I tend to suspect that the intrinsic value in regards to gold (the money), is the perception that others value gold as money.
Providing others value gold as money and are prepared to trade gold, the intrinsic value of gold as money is simply anything above zero. (geeshtough topic).

Baaahhhhhintrinsic value..complicated topic!!!. Any intelligent views out there?. (or topic too abstract!!other threads?)

Does Mark Dice shed any light on the situation??
[youtube]http://www.youtube.com/watch?v=ndshbH3qZ6Y[/youtube]
 
I'll kick off with a couple of random comments:

1. The measure of gold's value is in the value of the qualities that gold possesses, in other words gold is valuable because it is gold.

Gold has many qualities that have been recognised over 1000's of years, fiat currency also has qualities, namely wide acceptance, fungibility and ease of transportability but while these are valuable attributes, they are increasingly coming under threat. So for the author to attempt to measure gold's "intrinsic" value by using a yardstick that has little or no "intrinsic" value or declining value is meaningless.

We can't arrive arrive at the value of gold by applying mathematical equations based upon the vale of the USD - what you can come up with by applying that process though is a price signal which you can use to impress clients who are looking for investment advice. :/

2. As far as the Mark Dice clip goes, ignorance is not an indicator of value. (In fairness, how many of us would by a coin off some guy in the street? Many are cautious on this forum.)

Gold's value is subjective - which may seem to contradict my statement above, but I would argue you can't make any judgement value if you are ignorant - it has value because it is valued.
 
Load of Bullion said:
http://forums.silverstackers.com/uploads/14_intrinsic_value_gold.png
Source: http://countingpips.com/forex-news/2014/01/finding-golds-true-value-part-one/
Click to expand...

I saw the above chart and was suprised by how low the theoretical gold price is and smoothly his theoretical price rises.
it says he took into account the change in money supply and the change in gold supply in the last 100 years.

if the following is the increase in USD supply:
us-money-supply.gif

Source: http://thetruthwins.com/archives/instead-of-auditing-the-fed-obama-reappoints-bernanke

was there an equivalent increase in gold supply since QE? :/

Load of Bullion said:
Does Mark Dice shed any light on the situation??
Click to expand...

as for the above video, i doubt 100% of people interviewed were actually ignorant and turned down buying the gold coin for way under spot. this is probably just a collection of the dumbest most ignorant they found on the street to get the point they want to make across.
 
Looking at the wrong relationship -

Gold will have a long term relationship to the price of oil, as long as:

1. Oil countries continue to accept gold as payment for oil shipments

2. Oil continues to be a major cost factor in the mining of gold


can't see either of those 2 ending any time soon
 
mmm....shiney! said:
Gold's value is subjective - which may seem to contradict my statement above, but I would argue you can't make any judgement value if you are ignorant - it has value because it is valued.
Click to expand...

Yes, subjective, unlike price which is objective. We always have to include someone's perspective when asking the question about the value of gold.

To this guy, not much value:
krugman.jpg


From this guys point of view, quite a lot:
gold_shirt.jpg


How about from the perspective of society as a whole? What is the value of gold to all of us collectively?

I believe it's something akin to the value of collectables, antique furniture, vintage cars, gems, paintings, fine art anything that we associate with the idea of possessable wealth in society. But wait there's more, as well as that possessable wealth value, gold is also liquid like cash, easily carried in high value amounts and recognized and tradable like money. To society gold has extreme value as both wealth and as money combined.

How do we measure the objective price? How do we translate collective subjective value into an objective price that we all see at the same time? Using global unallocated gold-credit trades on computer screens without any real metal or delivery 99% of the time, a process that ignores the possessable wealth aspect mentioned above.

The gold price today is a measure of only one aspect, a bit like valuing this,
1963_aston_martin_db4-pic-1567021700207591548.jpeg


based on how much it costs driving to work everyday compared to catching the bus.
 
Gold, and any currency is a measure of excess wealth. True intrinsic value is on an individual level. As a society it is all got to do with the spirit of the times. If and when our ponzi scheme economy collapses it will be the life supporting goods and services (related knowledge) that will have the most intrinsic value. Even now I believe my 40,000 liters of off grid fresh water has more intrinsic value then any amount of gold or silver. That's my two cents worth anyway, fiat cents.
 
neonuke said:
Load of Bullion said:
http://forums.silverstackers.com/uploads/14_intrinsic_value_gold.png
Source: http://countingpips.com/forex-news/2014/01/finding-golds-true-value-part-one/
Click to expand...

I saw the above chart and was suprised by how low the theoretical gold price is and smoothly his theoretical price rises.
it says he took into account the change in money supply and the change in gold supply in the last 100 years.

if the following is the increase in USD supply:
http://thetruthwins.com/wp-content/uploads/2009/08/us-money-supply.gif
Source: http://thetruthwins.com/archives/instead-of-auditing-the-fed-obama-reappoints-bernanke

was there an equivalent increase in gold supply since QE? :/

as for the above video, i doubt 100% of people interviewed were actually ignorant and turned down buying the gold coin for way under spot. this is probably just a collection of the dumbest most ignorant they found on the street to get the point they want to make across.
Click to expand...
Was there an equivalent increase in all prices since QE?
No.
Why not?
Because most of QE didn't add to circulation, only an intrest rate part (the one that the Fed pays, a positive one that was negative before 2008). About +40%, instead of the +300% that QE suggests.
If one subtracts the excess reserves from the monetary base (or from higher money supplies - it doesnt matter since any higher includes all lower), then you get a net monetary base trend that appears very similar to that 'Paul Van Eeden's real gold value chart.
As some1 did here:
http://one-salient-oversight.blogspot.be/2010/12/using-monetary-base-as-recessionary.html
1798_netbase_zzddk.png
 
Gold and dog feces have zero intrinsic value. Intrinsic characteristics and properties they certainly do have. The video that was linked to in the initial comment box is actually quite instructive and it's almost exactly the idea I had last year to prove a point I have made many times....that gold is not money today in most places.

Certain people in certain cultures may place variable subjective value in gold, but so is the same for any asset, currency, or commodity that is sought after or even traded.

The "price" of gold does correspond to (is measured against) a certain currency and the value of that currency will affect the price of gold. There are other factors that affect the price of gold....but that "price" is always in relation to a currency.




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Intrinsic value - 2 minutes 40 seconds

[youtube]http://www.youtube.com/watch?v=0L7SOPDOvvI[/youtube]
 
Schiff is still pushing the same nonsensical "intrinsic value" crap argument and he is wrong on so many levels about BitCoin and paper currency. Neither gold nor elephant feces has intrinsic value yet they both have intrinsic characteristics or properties. The only value either has is the extrinsic value that some in our societies assign to them. Elephant feces may at times or at some point be assigned much greater value than gold. Just look at the value that some place on bear bile, certain minerals and natural crystals, tiger and horse urine, and shark's fins just to name a few products. No one can rightfully argue that at some point, elephant feces may attain a value far exceeding the value attributed to gold. The value that any and all of these has and ever will have is extrinsic value. The value of any of these things is a judgement made by humans who desire to have these things. Gold can not ever have an intrinsic value since it can never place a judgement on itself (or any other thing for that matter).

Contrary to Schiff's assertions, paper money requires mining (in the form of harvesting resources) such a pulp, ink compounds, and all the other physical materials that go into creating paper money. Paper money requires energy and labor to produce contrary to the assertions of Schiff. It requires storage and security and so on and so forth.

As for BitCoin, he makes equally significant untrue or purposefully dishonest claims. Too many to even point out but these should be obvious to anyone who uses their brain for anything but a hat rack.


.
 
Well, Schiff like the other clowns is in the business of selling gold - you bet he's gonna take down everything else and praise his product!
 
And please, for those who live in their own little bubble of delusion and like to make up lies about other members here, let me state emphatically, that while I will absolutely critique bad arguments others make (I don't care and am not intimidated at all by who it is making the bad arguments, whether that someone is well known in these circles such as Schiff, Morgan, or Duane or some anonymous forum member), I do believe that in the long term, precious metals and coins can be a very good investment. But like anything else, there are plenty of dishonest people saying all sorts of nonsense about precious metals trying to hype them because they personally benefit from people buying into the lies and hype.

At the same time, I have suggested to people I personally know, to consider owning some precious metals products but I refuse to tell them the lies that many permabulls spew about silver and gold shooting to the moon tomorrow. That does nothing but harm people because it is patently dishonest.


.
 
mmissinglink said:
I do believe that in the long term, precious metals and coins can be a very good investment. But like anything else, there are plenty of dishonest people saying all sorts of nonsense about precious metals trying to hype them because they personally benefit from people buying into the lies and hype.
Click to expand...

+1 and yes, let us be mindful of the hype.

Here is Schiff from 2002 predicting the fall of the USD and more soon.. ("USD collapse" at 1:38 sec into the vid)

[youtube]http://www.youtube.com/watch?v=RATjRTQWy6k[/youtube]

The mindset of a collapse in the near future perhaps stifles potential innovation from people as they wait in an apprehensive holding pattern (and waggle the finger at others for not doing the same).
Off the top of my head (ducks for cover) >>>> An interesting thing about "intrinsic value" vs gold is that times have changed dramatically. For thousands of years there was a distinct lack of human technological progression.
These days, things are moving much more quickly. Knowledge has value, thus people can receive large salaries due to their knowledge. We value technologies and new innovations greatly.
Society would have to be knocked back thousands of years (and people current technical expertise would have to wiped from their brains) for technology not to continue to thrive.
Physical gold perhaps factors less in the modern technological based environment than it has in the past environments pre the industrial revolution and computers.
If gold has "intrinsic value" as per the perception of humans, has gold's intrinsic value faded somewhat in the face of ongoing technologies.
 
yes Gold does have intrinsic value!

[youtube]http://www.youtube.com/watch?v=DmonXlifOH0[/youtube]
 
@ holdfast,

Gold has no intrinsic value. The only value it has is the value placed on it by those who desire it...period. That's extrinsic value...the only value gold can possibly have.

Gold has intrinsic characteristics and properties....very different from intrinsic value.



@ Load of Bullion

Yes, you make excellent points about how the world is changing and how technology and technological knowledge are slowly supplanting archaic or traditional assets. My view is that to inaccurately label the extrinsic value that some people place on gold (or any commodity) as "intrinsic" value is to not be honest, therefore I won't even use that faulty term ("intrinsic" value) to make an analysis of the value of gold today. So, as to the changing value of gold, my view is that it will be valued by the same people in the same societies in the same way for a long time....far longer than our natural lifespan. Therefore, it's a very good long term asset, which will continue to have the same intrinsic characteristics, will continue to have zero intrinsic value but will also continue to have substantial extrinsic value, in my view.



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I would argue YES. As a measure of labour required to mine/refine it. Sure we might be more efficient at mining it nowadays but we have also grabbed all the easy stuff. Labour has been a requirement to mine it for thousands of years and it can be traded for labour in most parts of the world today. Don't base your thoughts on the value of gold on a couple of videos of stupid Americans not wanting to buy ASE's at face value. Most of the world still gets it to some degree and every other attempt at ponzi money failed. So in that sense perhaps not a USD value but certainly it has an intrinsic value better defined in labour.
 
^ Sugar has zero intrinsic value. The value that is placed on anything desired is always (individually or collectively) subjective (from the vantage of the human(s) desiring it) and therefor it's always an extrinsic value placed on the thing.

Any costs associated with procuring or acquiring a thing does not equal its 'intrinsic' value as some mistakenly believe. For example, if after a massive landslide (in some tiny, hypothetical, off the map town of Paayu Wuy in Taavo county) due to an earthquake, I found 20 kilos of natural gold nuggets (with minimal lode matrix material) in the earth that was ripped apart by this natural event (perhaps an ancient stream was exposed by this event), the cost to procure this 20 kilos of gold is basically zero. Does that mean that gold in Taavo county has an intrinsic value of zero? It would if your argument is that the cost associated with procuring a thing is the measure of its 'intrinsic' value.

The argument that because a thing may have costs associated with its procurement or acquisition, that therefore this varying and fluctuating cost is the measure of its 'intrinsic' value is really an inane argument.

In the hypothetical scenario above, that 20 kilos of gold has a whole lot more than zero value because collectively, those people who desire to own gold would pay a whole lot more than zero dollars to purchase this gold acquired. The amount each would pay depends on a whole slew of factors including the day of the week, the location of the buyers, etc, etc, etc, etc, etc. So the value that this or anything has is always a fluctuating value that is subjectively realized by the buyer. The old adage, "It's only worth what someone is willing to pay for it" really is my position in a nutshell.

The value of any thing is always extrinsic because the value is always based on (individual or collective) subjective valuation of the thing desired. Collectively, people who desire to own a blob (a common non-denom bar) of silver or gold agree to use the current standard in place (the spot price) to buy, sell, and trade this commodity / asset.

Further, the fact that me being in the US in a city where it's easy for me to get to one of the largest Central Banks in the world I can buy a 1 oz silver bullion American Eagle (which required less cost to design, produce, transport, etc than a Perth Lunar 1 oz silver bullion coin) but I can get the later in the US for about the same cost to me, is proof to me that any and all value of anything is extrinsic and based on individual or collective subjective valuation.

Gold does not value itself therefore it has no intrinsic value. Conscious humans who desire to own gold gives gold its only value based on a whole slew of variable factors. This only value is an extrinsic value.
 
It has value in terms of its industrial worth. If you can't make product 'x' without a gram of gold, and you make $100 on each 'x' you make, then gold has an intrinsic worth to industry of $100.

It also has a notional minimum intrinsic value based on its production cost. So, that gold you found after the earthquake - for zero cost - you wouldn't sell it for less than zero. Likewise, if you knew the next ounce of gold would cost you $10 to mine, you wouldn't sell it for less than $10 / ounce.
 
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