Legitimately curious... what exactly is the intrinsic value of gold? Are you basing it's "intrinsic" value on its commercial value or something else?
There are a number of metals that have much more useful applications than gold. From what I've read, gold's intrinsic value was ultimately a western idea that, again, stemmed from a confidence in it's value. When the Spanish discovered gold in central Mexico, the Aztecs had no idea what they were so excited about -- it had no intrinsic value to them. There's a great discussion of the history of gold as money in "The Ascent of Money"
Computer electronics have more gold per ton than a gold mine, because of golds physical conducting properties.
So gold is needed to make efficient computers, which can again be used to produce real value in terms of production. I think that is fair to call that intristic value.
Gold is always in demand as a luxury item for jewelry and decoration. The fact that it's primarily wanted for luxury and not for practical purposes is actually in its favour - peoples wants are unlimited, whereas their needs are finite. And a metal that's needed for some practical purpose one day, might become obsolete the next.
Aside from that it's ideal for currency because it's fungible (all gold the same, so exchange is easy), portable (small amount is worth a lot, also easy to melt down into smaller lumps), durable (doesn't rust or rot).
It's a virtuous circle whereby its intrinsic physical properties and luxury status make it a good choice for money/currency, which then gives it a new dimension of value as that idea spreads.
there is no intrinsic value, but if one produces more than one consumes then one must save their excess production by some means. One could hoard potatoes but thereby deprive some people of eating. plus they have a shelf life. so potatoes are not a good choice.
Gold's value is it's uselessness! It's value is derived from the network effect of other producers willing to trade their services/goods in the future for the gold you have stored.
Currency is for earning and spending. there is no bound to how much currency can be conjured to claim on goods from the real world. When the currency system fails under the weight of debt incurred in that currency - then those holding physical tangible goods will do well against those whose wealth is denominated in an arrangement of 1's and 0's.
Gold is shiny, the paper is bendy and has a picture of some dude on it.
In the absence of other people and their ideas of value,
given enough cotton paper I could make clothing or a fire. Given enough gold I could probably make a bludgeoning weapon...
Both have fairly minor value in the absence of shared delusion. And even beyond that, what the hell is 'intrinsic' value? Has the universe decreed that there is a property of matter called 'value'? Like particle spin, or atomic number?
If there is a high demand for fiat money -- observable through a rise in interest rates, a measure of the inter-temporal preference for money now versus later -- the Federal Reserve can print more. If there is a high demand for gold money, at the margins we can produce more, but basically the supply is fixed. This limits the rate at which the real economy can grow.
Many people who favor a return to a "gold standard" do so because they have experienced inflation, but have never experienced a deflation. Deflations in general are more painful than inflations.
> This limits the rate at which the real economy can grow
I don't believe this is true if you allow speculation and credit in the economy. AFAIK even on the gold standard banks were not required to be able to satisfy every gold-backed bill they distributed out.
Of course, it helps more than having no scarce item would, but if the problem continued then people would eventually shift to trade in something else while conserving their gold-backed currencies to pay government taxes.
I am simply gob-smacked that people who are communicating over the Internet (needs gold, even if you are using fiber for much of the way) via their computers or smartphones (needs gold) don't realize how much gold is used in modern tech. Admittedly, fractions of a gram, but times millions of items!
And gold has been used in jewelry, art, decoration as well as monetary purposes for 1000s of years.
> I would expect at the least, American readers to be familiar with the "Continental currency" and its devaluation to 1% of it previous value
Indeed, we're all taught in high school about things "not being worth a Continental" during the American Revolution.
This doesn't really disprove my point though. No one believed in the government backing the Continental currency (for good reason as it turned out, the Articles of Confederation later gave way to the Constitution).
You're saying gold is valuable, but again, it's because people give it value. Whatever contribution of value gold makes to our electronics is included in the component cost, you could as well be arguing that plastic, glue, or lithium is intrinsically valuable.
And if we theoretically started finding gold nuggets in every square meter of soil in every home in America then guess what: the perceived value of gold would drop. This has happened throughout history: The Roman Empire switched to using gold coins instead of silver in response to an oversupply of silver being found in their new colonies. The finding of gold in the New World caused prices in Europe to shoot up as a result (people had more gold money to spend but the same amount of goods to buy, so the goods simply became more expensive).
Gold, like _everything else_, is worth exactly what people think it is worth.
