An excellent question imo!
I think perceived value has a lot to do with it, why does LGL rally if everyone wants their physical?
Nonetheless explod, for me the writing is on the wall for gold.
I know of at least one small cap gold miner who is in the enviable position that the high AUD price of gold coupled with high physical demand has allowed them to process the very lowest grade of dirt that is usually dumped as useless/unfeasible/unprofitable to pay the bills!
They are stockpiling their good stuff with no worries! I'm sure if these guys are doing it there must be other companies in a similar position.
I also saw 2 long plays on some "smallish" cap players BEFORE the market rally today!
The terms fiat currency and fiat money relate to types of currency or money whose usefulness results not from any intrinsic value or guarantee that it can be converted into gold or another currency, but instead from a government's order (fiat) that it must be accepted as a means of payment.
It's fiat money that has no value.
............................
Gold has intrinsic value, industrial uses etc
You guys have this around the wrong way. It's almost laughable.
It's fiat money that has no value. Just look up what the term Fiat Money means.
ie. It only has value because we (the government) says so.
Gold has intrinsic value, industrial uses etc
You seem to be contradicting yourself here.
In what way?
Pretty clear to me.
.......fiat money has no intrinsic value
An excellent question imo!
I think perceived value has a lot to do with it, why does LGL rally if everyone wants their physical?
A useful statistic to consider is that 95+% of the earths gold has been mined, all the stuff that was around 2000-4000 years ago founding and ruining empires is still above ground being used for the same function and we are still looking for more!
Sorry, no references. I am extrapolating from slightly older data (2004ish) because below-ground reserves are not evaluated too frequently (happy for someone to provide newer data).
But if we assume total above ground gold (pretty much all the stuff ever mined is still with us) to be at 140,000ish tonnes at 2004, with below-ground reserves ESTIMATED at 50,000 tonnes we are talking below ground rates of 22% total gold remaining below ground in 2004.
Roughly 2500 tonnes a year is dug up we can see below ground reserves quickly approaching <10% if you take into account destruction and diminishing returns on what is left. Just think, less than a decade ago cost of production per ounce for some producers was in the order of $6-10/oz and today I see more and more explorers-cum-producers running profit at costs of $680-750/oz (IGR estimate and TRY actual respectively).
As I mentioned earlier (or maybe in the other gold thread), some miners are RIGHT NOW using the very lowest grade of dirt because physical demand and price are so high that they can afford to pay the bills with what they would usually throw away as useless and keeping their good stuff for a rainy day!
From a pure theory point of view, gold is only worth what people are willing to pay for it.
If everyone suddenly decided that gold was worthless, then it would be just that.
A more specific question, which has already been answered somewhat, is; Why do people think gold is worth anything?
With this question its the supply side of the equation that comes into play.
Treasuries are down to 1% yield said:That is about half what the gold lease rates are now. Can’t remember ever seeing this in the FIAT era, when gold actually pays higher dividend than the dollar.
That is about half what the gold lease rates are now. Can’t remember ever seeing this in the FIAT era, when gold actually pays higher dividend than the dollar.
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