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Why does Gold/silver have value?

May 24th, 2009 at 04:23 am

Many folk are buying gold and silver as insurance against the collapse of the US dollar.

Why? What good is it!

With the paper money I can at least insulate the attic or burn it for heat.

Gold on the other hand serves no useful purpose. Can't eat it, can't burn it, can't grow anything out of it. It isn't even useful as a container to cook in.

Though I think silver at least can make decent silverware, so long as you have the time to care for it.

I personally would prefer a few apple trees or some potatoes.

2 Responses to “Why does Gold/silver have value?”

  1. Broken Arrow Says:

    Hehe. Well, I'm no personal fan of precious metal investing myself, so I don't disagree with you there.

    But that's also why I do try to be fair and state that it's still a viable option as a way to hedge against inflation for example.

    In a sense, it's no accident that gold became a medium of value, exactly because it's been so stable, workable, difficult to fake, and is limited in quantity through all these centuries.

    Having said that, I don't see why some people are as enamored with it as they do. I think it's more of a fundamental issue rather than sound investing.... There just some people out there who will never get used to the idea of owning equity shares, because all they see is a piece of paper, and in today's world, it's not even that anymore, but is a number on the computer screen. Some people like that don't even trust fiat currency.

    Gold, on the other hand, has that "physical property" where you can hold it in your hands, you can touch it, carry it with you, and know it's there for you, and it won't lose value.

    However, if you can put aside the abstract concept of shares and the physical qualities of precious metal itself, then one also needs to realize that such an immutable value also presents an inherent challenge in that, just as something can not fundamentally lose value, it also means that it can not fundamentally gain value. Not really.

    Equity shares, and even fiat currency, can fluctuate, but it also means it can lose but also grow in value. That's the difference. That's basically why, while I personally don't have a problem with precious metal, I also don't like get too caught up in it, and focus on equity shares instead....

    So, kind of a long about sort of way to say that I agree with you.

  2. dmontngrey Says:

    The gold I have invested a lot of time and money into provides quite a bit of value to me! Oh wait, not what you meant... my four gold crowns! Big Grin

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