"Governments lie; bankers lie; even auditors sometimes lie: gold tells the truth." ~ Lord Rees Mogg
The Meaning and Value of Gold
Exclusive to STR
in·trin·sic (¹n-tr¹n“z¹k, -s¹k) adj. 1. Of or relating to the essential nature of a thing; inherent. --in·trin“si·cal·ly adv. ~ from the 1994 on-disk edition of The American H
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Does Gold Have Intrinsic Value? Does Anything?
In libertarian and pro-gold circles, it is common to hear that "gold has intrinsic value." That sentiment is based on an important kernel of truth, although the wording is colloquial rather than precise; like the commonplace use of "weight" in situations where "mass" is meant or saying "the sun rises in the east" (when the Earth rotates instead), the assertion that "gold has intrinsic value" is true informally but not technically – in the case of value, because a necessary element is assumed and left unspoken. Because the informal meaning seems clear, I have been surprised to find frequent and often heated discussion on the topic, but then gold itself is an emotional topic for several reasons. The argument over gold's "intrinsic value" would be simply a minor squabble over semantics except for one thing: the question of gold's value, or lack thereof, is sometimes used to support positions that are not only wrong but actively harmful. Given the importance of gold to human well-being – a subject I expand upon below – and also given that I have used the phrase "gold has intrinsic value" myself, perhaps it is time to address the topic directly and to clarify my meaning.
First: technically, value is a judgment, not a property. Value thus requires a conscious being to assess whatever is being valued. Value has two components: the thing which is valued and the person (or other being) who makes the valuation. Value cannot exist without consciousness; "X has value to a rock" is a meaningless statement, for example. Rocks cannot value; rocks are inanimate, insensate, and without consciousness. Nothing can be said to have value to a rock, or to most of the universe;
Life, then, values – must value – some things over others. Value is sparked into being by life itself; the value is bound up in the characteristics of the valued thing and in how those charact
Back to gold: does gold, can gold, have anything we might reasonably term intrinsic value? In the sense of an absolute, the answer is – as we have already seen – no. Properties are intrinsic, but value is a judgment. Value can only exist in reference to the one who values. Most of the universe cannot value anything, any more than it can enjoy the taste of cinnamon or appreciate the smile of a young child. But you can value gold, or cinnamon, or an innocent and charming smile. You are a human being, the preeminent apprais
As with every human activity, assessing value can be done well or poorly; those who bought stock in Pets.com near its peak of $14/share did a poor job of assessing the stock's value – the stock crashed and the company soon vanished. Likewise, those who bought gold near its peak of $850/oz in 1980 were buying at the peak of a mania and their gold was soon worth much less, at least in dollar terms (value exists in other frameworks as well; as the saying goes, money isn't everything). One big difference between gold in 1980 and Pets.com in 2000 is that unlike Pets.com, gold's monetary value diminished but, as always, did not vanish. Gold hit a dollar low of roughly $250 in 1999, and has been in a strong if bumpy uptrend ever since – an uptrend with years left to go, as I have described in several previous columns.
Not only has gold's value never vanished,*** it has remained high (relative to most physical things on a per-weight basis) for thousands of years; ancient Egyptians and others mined and used gold over 5,000 years ago. This brings us to the second answ
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Specific Reasons for Valuing Gold
Contrary to the arguments of many anti-gold commentators, gold is an exceptionally useful material. Gold is incredibly malleable, does not tarnish, is an excellent conductor of electricity, can be drawn into extremely thin wire, and has many other useful prop
A one-ounce gold coin from a ship lost at sea in the time of ancient Rome has precisely the same value (plus any numismatic value it may have attained) as does an ounce of gold mined yest
- Jewelry (The Primary Use of Gold)
- Financial Gold - Coinage, Bullion, Currency Backing
- Awards and symbols of status
- Gold Gilding and Gold Leaf
"The Many Uses of Gold" (worth reading in full, with interesting details) contains an insightful comment about future uses of gold:
"Gold is too expensive to use by chance. Instead it is used delib
"Most of the ways that gold is used today have been developed only during the last two or three decades. This trend will likely continue. As our society requires more sophisticated and reliable materials our uses for gold will increase. This combination of growing demand, few substitutes and limited supply will cause the value and importance of gold to increase steadily ov
Many of those newer uses for gold involve tiny amounts of gold in staggeringly large numbers of consumer products – in millions of cell phones, comput
Further more, gold is difficult and expensive to mine (although some gold may be found on the ground or in streams) and most of the easily and economically mined gold has already been mined, which means that, yes, "peak gold" is a near-future likelihood – in fact the peak may have already occurred. Combine that with the expanding numb
The difficulty and expense of mining gold adds to gold's value in two ways: the more obvious way is to make gold expensive in dollar (or oth
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Gold's Most Valuable Property
The intrinsic prop
"Anthropologists, archeologists and historians have discovered that for most every group of people that have ever existed, what was chosen as money had at least five prop
"1. It had accepted value to everyone. That's obvious. But what is less obvious is that in all societies, what emerged as money was some commodity that was valued by people for itself first, before it became money.
"2. It was durable. What's the use of money if it falls apart in a short time? It had to hold its value as long as possible. That's why lettuce has never been money, though in
"3. It was easily divisible. It could be broken down into small pieces or amounts for small purchases.
"4. Even when it was broken down into small pieces, however , it still had to be consistent in value and quality. One unit of it, gram, ounce or whatev
"5. Finally, money had to be convenient to use."
Gold has one more property that makes it a compelling choice for use as money: "new gold" cannot be created easily or rapidly, as can paper or electronic money. Significant monetary (and thus price) inflation is impossible when gold is the currency – an incredible boon to human well-being – but even more important is that gold-as-money limits government expansion and pow
To understand that truth, one must be willing to see at least the vague outline of coercive government's true nature; to face, if only briefly and tangentially, the outright evil and the horrifying, inhuman power of systematic coercion by government. Henry David Thoreau put it well in Civil Disobedience: "That government is best which governs not at all" – another way of saying that the only good coercive government is no coercive government. Why is that true? Because gov
War: the direct and purposeful mass-murder of human beings and the destruction of villages, towns, cities, or even entire nations, entire regions – or, here in the 21st Century, perhaps of the Earth itself.
Tyranny: the cold and often violent suppression of human rights and freedoms, including such stunningly-cruel features as torture, unjust imprisonment, confiscation of income and property, and the
"Just to give perspective on this incredible murd
Rummel also points out that this horror is almost invisible in both popular and academic lit
Can gold prevent such horrors? No, not entirely, but gold can and does reduce the likelihood of such horrors when used as a nation's money. Gold as money provides a strong limiting factor on the resources available to government, and in so doing, gold saves and improves the lives of millions. War, for example, is incredibly expensive – America's Iraq adventure has already cost perhaps $3 trillion, counting the future costs of care for wounded soldiers and replacement of materiel. Without the Federal Reserve to constantly expand the supply of money, it would have been impossible for the already-bankrupt and dramatically indebted U.S. to have begun wars in both Iraq and Afghanistan – neither of which had attacked America or even threatened us.
World War I provides an obvious example of central banking's dangers: this sudden and dramatic escalation of
The income tax and the Fed gave President Wilson the money to pursue his insane policy of "war for peace," which he cleverly called "making the world safe for democracy." Instead of making the world safe, one result of our entry into this European war – a war we had no reason to join – was to crush G
Gold-as-money could have saved those millions. It could also have prevented the incredible pain and misery of hundreds of millions of other victims who were maimed, crippled, blinded, or other wise wounded; who were systematically tortured or terrorized; who lost loved ones or were orphaned; whose homes or businesses w
To be clear: central banking (the Fed and other central banks around the world) has the sole function of siphoning vast sums of wealth from the people to the power elite in and out of government, and the eventual result is always pain, pov
There are problems with the manner in which gold standards have been implemented, but there is no arguing the historic reality of the effectiveness of a gold standard; hyperinflations (as in Zimbabwe today and dozens of other times and places in history) have never occurred with a gold standard in place, and military adventurism is far less likely (and when it occurs, is more likely to be brief) when government cannot simply print up money to pay for assaulting other nations. In contrast, episodes of fiat (non-gold-standard) currency fueling tyranny and war would fill a book.
In the term "fiat currency" I include debasement of precious metal coins in ancient Rome and elsewhere – which turned what had been a gold standard into a fiat currency – pointing to the major problem with the typical implementation of a gold standard: government is involved, and since government is naked power and coercion, every government attracts sociopaths who want power over others and who want to own and control more of everything.
Fiat currency is the holy grail for those sociopaths: the One True Ring of power, of control, of wealth stolen in secret and drained from the people silently and constantly, hour by hour, year after year. It is fitting that the oth
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The Meaning of Gold
The most important meaning of gold in human life is this: integrity, safety, and well-being.
Gold is, for all practical purposes, eternal. Gold is wealth in direct form that cannot be defaulted on. Gold-as-money replaces the scams of money-changers and of central banks with direct and honest value by weight. When used as money, the dollar value of gold is, by definition, unchanging, and the money thus has integrity. Because gold cannot be printed up or other wise dramatically and constantly increased in supply, price inflation is typically zero or less under a gold standard (as was true in America from the late 1700s through the early 1900s); your savings are thus safe in a way they can never be when central banks are at work inflating a fiat money supply. Even that most dangerous and violent of institutions, co
Integrity, safety, and well-being: if you sense a lack of these characteristics in the world, it is in part because the most important role of gold has been over thrown by the dishonesty and corruption of central banking. That tragedy happened a century ago, as one nation after another abandoned the gold standards that had kept money honest and governments partially restrained for more than a century.
The income tax and the Federal Reserve have together transformed
Today, the entire world financial system is in crisis because of central banking – which is to say, because we have allowed the power elite to replace the integrity and safety of gold-as-money with the fraud and theft-by-inflation of the Federal Reserve, and by oth
The present crisis will not end well – episodes of fiat currency never have, throughout history – but there is hope, at least, that in the after math, enough people will und
Bob Chapman of The International Forecaster describes our situation with charact
"Anything is bett
Because that will sound inflammatory, alarmist, and downright paranoid to many read
Will people demand a return to the integrity, safety, and resulting well-being of a genuine gold standard? Our children's fate, and indeed the fate of the Earth itself, is at stake. We won't last much longer in the 21st Century with our present system.
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This column was suggested to me by Victor Aquilar's Gold Does Not Have Intrinsic Value.
* There is a well-known "subjective theory of value" which includes the idea (as the Wikipedia article on the topic puts it) that "goods that are in unlimited supply, or in a greater supply than that demanded, would have no value." This is primarily a theory of monetary value – which explains why such a theory would place no value whatsoever on clean air or healthy food, assuming plentiful supplies of both. There are problems with such a theory, but I am not discussing them in this column. Here, I am interested in "value" in a broader sense.
** Note also that "intrinsic" in this sense is a sliding scale, in that some things are only slightly of interest to a particular species and other things are only of int
*** Naturally, by tightening up definitions and limiting time and place, one can find situations where gold has no value. (The same may be said of even something as essential as food, for that matter). Someone alone in the mid-Atlantic whose small boat has just capsized has no immediate use for gold, and the density of the metal would be a significant liability if one were trying to remain afloat.
**** Personal correspondence.