What intrinsic value???

[mmissinglink]

The question is flawed. There is no "specific value" to anything - especially not the fiat currency that you are asking others to measure it in.

The value of anything to anybody is "it depends" and all you can say from any transaction is that, at that point in time, the buyer valued something at least as much as the fiat currency they exchanged for it, while the seller valued it less than the fiat currency they received in exchange.

Value is subjective to the individual and is a ranked on an ordinal scale not a cardinal scale with all values shifting continuously based on what I currently possess, what I want in the future, what information I have and what my current physical circumstances are.

Based on my current circumstances I am not willing to purchase another ounce of gold at the current market price of ~A$1,780/oz. Why? Because I have alternative uses for my current savings that I value more.

But on the flip side, I am not willing to sell any of my unallocated at the current market price of ~A$1,780/oz (less conversion costs). Why? Because I value those holdings more than other potential alternative uses.

So, at the time of this post, the gold I currently own has a value of at least A$1,780/oz. If someone was to offer me $2,500/oz right now, no questions asked, then I would definitely part with some, but not all. So you could say that I value some of my gold at somewhere between $1,780-$2,500/oz (but value some at >$2,500/oz). However, the value to me of acquiring gold that other people own is currently way less than $1,780. I'm guessing that if someone offered me a verified ounce right now for $1,200 then I would buy it. Hence, you could say that the value of an additional ounce to me right now is somewhere between $1,200-$1,780. These indicative price ranges will no doubt change by tomorrow and again by next week, month etc.

You are wrong.

The question is certainly not flawed, your thinking is or you may just have misunderstood the simple point I made.

I never once suggested that we each individually don't attach a value to the physical precious metals (PPM) we own. In fact, countless times in this forum that's exactly been my position.

What you seem to be failing to understand is that there are people out there who think that PPM's have a specific enumerated value that can not be argued with....an "intrinsic value". Most commonly, those who hold that (ridiculous in my opinion) view suggest that the intrinsic value is the cost of production of a standard weight and purity of that given metal. Using this most common notion of "intrinsic value", there certainly would be a very specific value that would be associated with an ounce of .999 silver for example...and that specific value would be delineated in a fiat currency as it always is today. We don't value and buy an ounce of silver bullion in turtle dropping, coconut husks, or oak tree leaves....we all use a specific value delineated in a fiat currency because that's what they are being sold in/for.

I'm sorry to burst the bubble of those who are very narrow thinkers (those who believe that fiat currency can never be used to determine a value of anything), but indeed, it is fiat currency in today's world that is the standard for measuring the specific value of commodities like PPM's. That we each may attach a different number to how much we value that PPM is of course not only rational, but precisely my position and the position I've held all along.

When we are discussing the value of a commodity (which is precisely what gold and silver are for all practical purposes today), we are talking about a specific number delineated in money. Since the only meaningful form of money that the vast majority of the world sees and treats as such is fiat currencies, the obvious measure of value is in the fiat currency of your preference.



bordsilver, the remainder of your statement is making my case....you are arguing what my position already has been and is and naturally you are using fiat currency values to make your argument. That part of your comment is correct and I agree with that part.



Bottom line, metals have no "intrinsic" value. The only things intrinsic to gold and silver (or any metal for that matter) are their properties or characteristics....that's it. The cost of production of an ounce of .999 silver is the cost of production.....which can vary greatly in the same exact moment in different parts of the world based on numerous factors. That's not an intrinsic value...it can't be because of the fact that the cost of production can vary greatly in the same moment in different parts of the world based on numerous factors. And besides, that absurd notion of intrinsic value that some believe in has no answer whatsoever for the alleged intrinsic value of the raw gold nuggets and grains that are found by individuals who stumble across it or who incur little to no "production" costs.

All value is attached value....period. "Intrinsic value" for any metal is an absurd and meaningless notion.



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[scrooged]

bordsilver, the remainder of your statement is making my case....you are arguing what my position has been

With all due respect mmissinlink, you never once provided a case nor did you provide a position to actually argue. You asked a question. People replied.


I've re read this thread and I'm struggling to find "your case" or "your position"?.

 

[Pirocco]

Intrinsic value is the worth of a production that is justified by the information about its payoffs.
It's a fundamental analysis term, and it's an approaching value - one with a lowest degree of uncertainty. An uncertainty of zero is impossible hence your 'exact' value already conflicts with the used term in the question.
Payoffs are what people want to do the job (producing / recycling gold/silver).
For ex the intrinsic value of dollar notes is close to zero, main reason being that it costs as much to produce a 10000 as a 10.
What it worldwide is for silver and gold can only be determined by having global data avail, most of it with a (hefty) price tag.

 

[Pirocco]

What you seem to be failing to understand is that there are people out there who think that PPM's have a specific enumerated value that can not be argued with....an "intrinsic value". Most commonly, those who hold that (ridiculous in my opinion) view suggest that the intrinsic value is the cost of production of a standard weight and purity of that given metal. Using this most common notion of "intrinsic value", there certainly would be a very specific value that would be associated with an ounce of .999 silver for example...and that specific value would be delineated in a fiat currency as it always is today. We don't value and buy an ounce of silver bullion in turtle dropping, coconut husks, or oak tree leaves....we all use a specific value delineated in a fiat currency because that's what they are being sold in/for.

A "very specific value"?
I always interpreted those ppl you reference as that they handled it as a price under which production / recycling would cease, and eventual further price drops only possible by destockpiling, thus requiring big stocks at the moment, and peoples willing to sell at those further lower prices, which shifts the question to the ZIRP and record high stockmarket stories.

 

[mmissinglink]

bordsilver, the remainder of your statement is making my case....you are arguing what my position has been

With all due respect mmissinlink, you never once provided a case nor did you provide a position to actually argue. You asked a question. People replied.


I've re read this thread and I'm struggling to find "your case" or "your position"?.

If you would keep my comments in context, you'd realize you are dead wrong.

Here's the context you intentionally left out... "In fact, countless times in this forum that's exactly been my position."

My position was then also clearly stated at the conclusion of that post you've taken out of context.




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[mmissinglink]

Intrinsic value is the worth of a production that is justified by the information about its payoffs.
It's a fundamental analysis term, and it's an approaching value - one with a lowest degree of uncertainty. An uncertainty of zero is impossible hence your 'exact' value already conflicts with the used term in the question.
Payoffs are what people want to do the job (producing / recycling gold/silver).
For ex the intrinsic value of dollar notes is close to zero, main reason being that it costs as much to produce a 10000 as a 10.
What it worldwide is for silver and gold can only be determined by having global data avail, most of it with a (hefty) price tag.

It's a nonsensical, absurd term and those who hold fanatical faith in it don't have a logical answer to what I previously noted they don't have an answer to.


Intrinsic value is an absurd notion to apply to commodities. Production cost is not intrinsic value....it is production cost....period. Production cost, as I already noted is not fixed. It is different at the same moment from location to location and can change per location in an instant. The conflating of terms that some people do here is astonishing and reminds me of the devout Hindu's I've had discussions with who conflate their notion of their alleged god with anything and just about everything including all forms of energy, consciousness, etc, etc, etc ad nauseum.


For those who hold that uncritical devotion to the notion of "intrinsic value" of silver and gold, please stop conflating terms just because it somehow makes sense to you to do so.



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[Porcello]

Value is indeed a subjective concept, you'll hardly be able to agree with others on a specific number of a scale. The concept of "intrinsic" value is even harder to define unless you use the financial definition and in that case you might have better luck.


mmissinglink, it sounds to me that you are mostly in line with the Austrian school fellows on this matter:
https://mises.org/library/introduction-value-theory

 

[Porcello]

I think the intrinsic value of a metal, say silver, is spot at 999, in a recognised form.

That's the definition of market price, I believe.

 

[mmissinglink]

Value is indeed a subjective concept, you'll hardly be able to agree with others on a specific number of a scale. The concept of "intrinsic" value is even harder to define unless you use the financial definition and in that case you might have better luck.


mmissinglink, it sounds to me that you are mostly in line with the Austrian school fellows on this matter:
https://mises.org/library/introduction-value-theory

Intrinsic value implies a specific objective value.

The reason why the financial definition is just as meaningless or ridiculous as the labor theory definition is that by that definition (even if, for the moment we could allow the possibility that gold or silver can generate future income), it would render countless "intrinsic values" for an ounce of Au or Ag due to the fact that there are many variables which affect the outcome of future income generated.


The reason I bring this all up is because time and time again I hear seemingly intelligent people (mostly permabulls, pumptards, and a variety of stackers) latch onto this nonsensical notion that ppm's have an intrinsic value.

These permabulls, pumptards, and stackers should let that truly bad idea go because the more they regurgitate such a myth, the more this will allow others to perceive all stackers as a bunch of fools who believe that absurd notion and might also then believe any other ridiculous notions.


And yes, I agree with the Austrian Value Concept....it just makes sense.





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[Ronnie 666]

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[Gatito Bandito]

This is a mmissinglink thread, remember..



The "correct" answer is: Nothing has an agreed-upon intrinsic value.


Take a glass of water, for example..

What's the value of it to a man walking across a desert -- versus a man drowning in a lake?



Anyway, if mmissing has *any* example of something with a specific "intrinsic value," I'd be more than happy to hear it -- and happy to tear it apart.

 

[James]

I've followed this discussion. I've now developed an opinion that intrinsic value is not able to be defined.
However, we currently see a trend in preference to higher values in precious metal versus fiat currencies. This trend is happening because of rising risks of default within the financial system. Primary evidence of this is that Central Banks are attempting to fix interest rates as low(or negative) so that insolvent governments can in theory continue to have bond market financing. But the danger on non-repayment of government bonds to investors is becoming obvious. And, no , higher public taxes doesn't solve this, it just forces defaults of an over-indebted private and consumer sector. Trillions of dollars in bond markets (private and public) are at increasing risk of being lost. That's a real risk of loss of assets values (measured in fiat currencies).
In short, precious metals are becoming a more trustworthy measuring stick of value than fiat currencies (and associated debt). That's because gold and silver have many money properties like fiat currencies but aren't in the same basket of default risk as digital/fiat currencies (bitcoin I'm unsure of).

 

[Ronnie 666]

This is a mmissinglink thread, remember..



The "correct" answer is: Nothing has an agreed-upon intrinsic value.


Take a glass of water, for example..

What's the value of it to a man walking across a desert -- versus a man drowning in a lake?



Anyway, if mmissing has *any* example of something with a specific "intrinsic value," I'd be more than happy to hear it -- and happy to tear it apart.

You are right a waste of time

 

[bordsilver]

bordsilver, the remainder of your statement is making my case....you are arguing what my position already has been and is and naturally you are using fiat currency values to make your argument. That part of your comment is correct and I agree with that part.

Bottom line, metals have no "intrinsic" value. The only things intrinsic to gold and silver (or any metal for that matter) are their properties or characteristics....that's it. The cost of production of an ounce of .999 silver is the cost of production.....which can vary greatly in the same exact moment in different parts of the world based on numerous factors. That's not an intrinsic value...it can't be because of the fact that the cost of production can vary greatly in the same moment in different parts of the world based on numerous factors. And besides, that absurd notion of intrinsic value that some believe in has no answer whatsoever for the alleged intrinsic value of the raw gold nuggets and grains that are found by individuals who stumble across it or who incur little to no "production" costs.

All value is attached value....period. "Intrinsic value" for any metal is an absurd and meaningless notion.

I'm pretty sure we've had this discussion a couple of years ago but I forget the thread.

To me, the bottom line seems to be that the idea of "intrinsic value" is ill-defined and ill-defined concepts can often obscure things more than provide us with enlightenment. The question I would then ask is whether the people who use the idea of "intrinsic value" are really grasping for a way of explaining something that they feel is there but cannot properly define (like "love" or "justice"). It is clearly wrong to say that because "love" or "justice" cannot typically be adequately defined that they don't exist. Almost all people know these things exist when they feel or see them even if they cannot use words to say why they are real.

Is "intrinsic value" one of these sorts of concepts? Is there "intrinsic value" embodied within certain things because of their properties or characteristics?

 

[wrcmad]

The question I would then ask is whether the people who use the idea of "intrinsic value" are really grasping for a way of explaining something that they feel is there but cannot properly define (like "love" or "justice"). It is clearly wrong to say that because "love" or "justice" cannot typically be adequately defined that they don't exist. Almost all people know these things exist when they feel or see them even if they cannot use words to say why they are real.

Is "intrinsic value" one of these sorts of concepts? Is there "intrinsic value" embodied within certain things because of their properties or characteristics?

Whilst "grasping" at irrational concepts is common place amongst stackers, these really shouldn't hold weight in the context of an investment decision.
Thus, considering the posts in this thread, it would seem that for PMs the concept of "intrinsic value" is a dead-ringer for the cognitive bias of anchoring.

 

[mmissinglink]

This is a mmissinglink thread, remember..



The "correct" answer is: Nothing has an agreed-upon intrinsic value.

Take a glass of water, for example..

What's the value of it to a man walking across a desert -- versus a man drowning in a lake?

Anyway, if mmissing has *any* example of something with a specific "intrinsic value," I'd be more than happy to hear it -- and happy to tear it apart.

There is no commodity or anything that is traded for that matter that has intrinsic value. So if you were just looking to get into an argument on some phantom intrinsic value in a commodity, I'm sorry to disappoint. :lol:




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[Gatito Bandito]

There is no commodity or anything that is traded for that matter that has intrinsic value. So if you were just looking to get into an argument on some phantom intrinsic value in a commodity, I'm sorry to disappoint. :lol:

But suppose one were to regularly write out-of-the-money covered calls on their physical?


Isn't that an asset producing income -- and thereby considered determining at least one mainstream definition of "intrinsic value"? :lol:

 

[mmissinglink]

bordsilver, the remainder of your statement is making my case....you are arguing what my position already has been and is and naturally you are using fiat currency values to make your argument. That part of your comment is correct and I agree with that part.

Bottom line, metals have no "intrinsic" value. The only things intrinsic to gold and silver (or any metal for that matter) are their properties or characteristics....that's it. The cost of production of an ounce of .999 silver is the cost of production.....which can vary greatly in the same exact moment in different parts of the world based on numerous factors. That's not an intrinsic value...it can't be because of the fact that the cost of production can vary greatly in the same moment in different parts of the world based on numerous factors. And besides, that absurd notion of intrinsic value that some believe in has no answer whatsoever for the alleged intrinsic value of the raw gold nuggets and grains that are found by individuals who stumble across it or who incur little to no "production" costs.

All value is attached value....period. "Intrinsic value" for any metal is an absurd and meaningless notion.

I'm pretty sure we've had this discussion a couple of years ago but I forget the thread.

To me, the bottom line seems to be that the idea of "intrinsic value" is ill-defined and ill-defined concepts can often obscure things more than provide us with enlightenment. The question I would then ask is whether the people who use the idea of "intrinsic value" are really grasping for a way of explaining something that they feel is there but cannot properly define (like "love" or "justice"). It is clearly wrong to say that because "love" or "justice" cannot typically be adequately defined that they don't exist. Almost all people know these things exist when they feel or see them even if they cannot use words to say why they are real.

Is "intrinsic value" one of these sorts of concepts? Is there "intrinsic value" embodied within certain things because of their properties or characteristics?

Yes to the first sentence of your comment....and some people still are spreading mis- and disinformation about the value of precious metals. That's the part that is troubling.



No to the later part. It's not a matter of not being able to describe something accurately, it's a matter of some folks not understanding terms and then conflating one thing for another. What they are doing is akin to believing and claiming that justice is love.

What people are doing, who believe that there is a specific, objective intrinsic value in an ounce of silver or gold, is they are conflating one thing for another. They are not only guilty of not questioning the drivel that unfortunately is being spewed by a handful of mainly pumptards and permabulls but also of poor reasoning because they are themselves relying on a logical fallacy argument (fallacy of ambiguity) when they trip all over them self trying to explain the convoluted notion they appear to not question. Production cost is NOT and can NOT be intrinsic value but this is what is being conflated by most who believe in the fairy tale of intrinsic value in commodities (labor theory of value).

Value is always attached by the individual....it is not embodied within a piece of metal, a dollar bill, a work of art, or dog poo from my dog. If it were, then the person who believes that intrinsic value is embodied within inanimate things would have no intellectually consistent argument against me claiming that my dog's poo has intrinsic value or that all fiat paper money has intrinsic value.



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[bordsilver]

Whilst "grasping" at irrational concepts is common place amongst stackers, these really shouldn't hold weight in the context of an investment decision.
Thus, considering the posts in this thread, it would seem that for PMs the concept of "intrinsic value" is a dead-ringer for the cognitive bias of anchoring.

I'd say that "grasping at irrational concepts" is common place among people not just stackers.

But I'd not go so far as say that people grasping at a way of describing the intrinsic value of something is "irrational". Yes people can be misled by the heuristics of their decision making (cognitive biases) but those heuristics form for many valid reasons. Better investors are probably those people that use systems to overcome any biases that create more losses than successes (or by trimming the losses) and if you are buying gold for investment reasons then your system may say to ignore ideas of intrinsic value. This does not mean that whatever concept people are trying to voice when they use the term "intrinsic value" is wrong or irrational however - merely that it is not necessarily helpful for the purposes of investing.

Following up on my previous post, we know that human brains have evolved to have a proclivity toward certain things and certain actions (with male brains having different tendencies to female brains). Perhaps the people using "intrinsic value" are grasping for a way of describing some innate tendency for the average human to "like" gold? "Intrinsically" humans value it because that's the way we evolved just like we "intrinsically" value certain colours, physical traits, etc?

 

[bordsilver]

bordsilver, the remainder of your statement is making my case....you are arguing what my position already has been and is and naturally you are using fiat currency values to make your argument. That part of your comment is correct and I agree with that part.

Bottom line, metals have no "intrinsic" value. The only things intrinsic to gold and silver (or any metal for that matter) are their properties or characteristics....that's it. The cost of production of an ounce of .999 silver is the cost of production.....which can vary greatly in the same exact moment in different parts of the world based on numerous factors. That's not an intrinsic value...it can't be because of the fact that the cost of production can vary greatly in the same moment in different parts of the world based on numerous factors. And besides, that absurd notion of intrinsic value that some believe in has no answer whatsoever for the alleged intrinsic value of the raw gold nuggets and grains that are found by individuals who stumble across it or who incur little to no "production" costs.

All value is attached value....period. "Intrinsic value" for any metal is an absurd and meaningless notion.

I'm pretty sure we've had this discussion a couple of years ago but I forget the thread.

To me, the bottom line seems to be that the idea of "intrinsic value" is ill-defined and ill-defined concepts can often obscure things more than provide us with enlightenment. The question I would then ask is whether the people who use the idea of "intrinsic value" are really grasping for a way of explaining something that they feel is there but cannot properly define (like "love" or "justice"). It is clearly wrong to say that because "love" or "justice" cannot typically be adequately defined that they don't exist. Almost all people know these things exist when they feel or see them even if they cannot use words to say why they are real.

Is "intrinsic value" one of these sorts of concepts? Is there "intrinsic value" embodied within certain things because of their properties or characteristics?

Yes to the first sentence of your comment....and some people still are spreading mis- and disinformation about the value of precious metals. That's the part that is troubling.



No to the later part. It's not a matter of not being able to describe something accurately, it's a matter of some folks not understanding terms and then conflating one thing for another. What they are doing is akin to believing and claiming that justice is love.

What people are doing, who believe that there is a specific, objective intrinsic value in an ounce of silver or gold, is they are conflating one thing for another. They are not only guilty of not questioning the drivel that unfortunately is being spewed by a handful of mainly pumptards and permabulls but also of poor reasoning because they are themselves relying on a logical fallacy argument (fallacy of ambiguity) when they trip all over them self trying to explain the convoluted notion they appear to not question. Production cost is NOT and can NOT be intrinsic value but this is what is being conflated by most who believe in the fairy tale of intrinsic value in commodities (labor theory of value).

Value is always attached by the individual....it is not embodied within a piece of metal, a dollar bill, a work of art, or dog poo from my dog. If it were, then the person who believes that intrinsic value is embodied within inanimate things would have no intellectually consistent argument against me claiming that my dog's poo has intrinsic value or that all fiat paper money has intrinsic value.



.

Sorry, I don't actually follow what you mean. Maybe I don't read the same pumptards and permabulls that you do so I am missing context. Are you saying certain things are NOT valued because of their physical properties or characteristics?