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Comment by autokad | Hacker News Reader

> "Golds value comes entirely from the fact that we as a society give it value."

thats true for anything. that includes currencies, what you get paid, the value of a hockey card, the value of a car, the value of a banana, etc. sure, if society doesn't want to pay you anything for 'it', you can do with it what you want, like eat the banana (before it becomes worthless to anyone).

I am not a gold bug, i personally dont think its a great investment. its not a hedge against a declining market, and its difficult to own in large quantities. however; statements like 'its only valued because people give it value' are not very informative. everything is valued that way. everything.

also, the industrial value of gold is not laughable. its negligible because we have plenty of gold to meet industrial needs. but its not laughable, its in your smart phone, its in your desktop / laptop, etc.

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> that includes currencies

Currencies have value because entities with monopolies on force (countries) give them special legal status to be used conveniently as means of exchange. This is one of the hurdles for Bitcoin, and was a big source of debate in 2016-2018. Every time you spend Bitcoin you have to keep track of the avg. acquisition cost and resulting realized capital gains for every transaction to be able to declare the appropriate gains or losses on your taxes at year-end. A heavy burden for a "currency".

> statements like 'its only valued because people give it value' are not very informative

If you go to first principles, sure, everything is an illusion. But gold, crypto, and other "stores of value" derive their value in fundamentally different ways than everything else. Our existing models and body of knowledge do not apply to them. This is worth investigating. All other things are consumed in some way or another, and the rate at which they are consumed, relative to their supply, determines their price. The consumption of gold relative to its supply is much too low to justify its price using the same models.

Perhaps a better way to frame the argument is that Gold is useful only because society has agreed that it is a store of value.

Things like cars and bananas are useful outside of being a medium of exchange. You can use a car to get around, and you can eat a banana if you are hungry.

Dollar bills and Gold are useful as long as society agree that you can exchange them for cars and bananas. When society stops agreeing that currency is worth anything (i.e. hyperinflation), money becomes worthless and people throw it away or burn it.

Typically, printing excess currency is what causes it to lose value. Gold avoids that because you cannot just "print" it - you have to physically mine it from the earth by exerting effort.

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