Gold has value because it serves as an independent repository of wealth, and because it is for all intents and purposes indestructable.
Just like any other commodity it is subject to market forces. Increase supply without a concamitant increase in demand and the price will fall.
“When commodities are regarded the guarantor of value, we’re in deep sh!t.”
Not really. Commodities are a restoration from the insanity of fractional reserve banking. They have intrinsic value.
“work— in the general sense— doesn’t always create wealth either. Example: the buggy whip makers add no appreciable wealth regardless their effort.”
I did not say that all work creates wealth. All I said is that all wealth is created through work. You are quite right that work can in a sense be productive or unproductive.
“Wealth can’t be measured by any particular commodity, regardless it’s rarity, or as some repository of accumulated labor.( a marxist notion)”
True. Commodity values are always determined by supply and demand. However, so is one’s wealth. If one’s labour is in high demand, they are likely to be more wealthy than other people.
Thanks for you reply BenKenobi,
On my remark about work as the source of wealth, I was actually debating with myself—running down the alternatives if you will. I didn’t mean to suggest that you said that.
(At least I don’t recall it that way)
I just don’t trust the idea that Gold, or pork bellies or any commodity can store value or create wealth. On one hand they are potentially as unstable as stocks, and on the other, stagnant — like my old man once said about dead people:” you gotta take them everywhere they go.”
A material even gold offers little benefit beyond its purchasers and sellers, until someone does something to it— build electronics, make rapper JZ’s new gold caps, or the necklace I buy for my wife’s birthday (when it has great utility!)
Like you say, they are a refuge from stock bubbles inflation, panics and the like. It’s stupid not to use them in times like these. But it’s lamentable that we need to.
When capital flees to such harbors it’s bad three ways:
1. It shows that things are bad and that there’s no confidence. 2. It drives the price of raw materials up, and 3. It removes the capital from active investment to a relatively dormant stash which appreciates only while everything else decays. It compounds problems.
Disclaimer: I’m not an economist and don’t even play one on tv.