Comment: I declare you the winner

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Michael Nystrom's picture

I declare you the winner

You are correct, gold & silver have no intrinsic value. They have value because we all (more or less) agree that they have value. But not all of us are in on that loop of agreement, as you point out with the Mark Dice videos.

(For those of you who haven't seen Mark Dice videos, he goes around trying to sell silver to people for a dollar. Or trade a silver dollar for a paper dollar, and usually gets no takers. (On the other hand, if some random, weird looking guy accosted me with a camera in my face on a public street, I'd probably ignore him too. So I take those videos with a grain of salt.))

Cigarettes are known to serve as currency in prisons. Cigarettes do have intrinsic value -- to smokers. But not to non-smokers. Non smokers use them as currency because there is an underlying demand for them, provided by the smokers.

Food has intrinsic value to everyone - everyone who eats, that is. Although a chicken leg might not have much value to a vegan. But if he gets hungry enough, I imagine he'd eat it. Food products - grains especially - have served the function of money & currency throughout history. Food has intrinsic value. You can eat it. Not so with gold.

FRNs also have no inherent value, but they do have an underlying demand: To pay taxes, mortgages, buy a beer at the bar, etc.

I don't know how "worthless" gold will become. I just know it has a long way to fall from here. I wouldn't be surprised to see it trading at $400/oz in a few years.

As far as price predictions go, I'm in the Jim Grant school. There is an incredible amount of wisdom in this interview:

The only way to make sense out of change is to plunge into it, move with it, and join the dance.
- Alan Watts