Value is subjective, reflective of one’s feelings or opinions. In the minds of those who value gold, throughout the ages and around the world, this precious metal is deemed to have an intrinsic value superior to most other assets. The well-used adjective, intrinsic, is also subjective, construed as essential, belonging naturally in its association with gold. In the end, ‘intrinsic value’ is elusive, a figment of one’s mind.
There are many, and we fall in this camp, who associate gold with an inherent preservation of wealth. This has been true throughout history but with intervening failures during some time frames. Failure may not be the most apt expression, but many detractors are happy to point out those times when gold did not retain its status as a wealth preserver, and in fact, losses were on the table for many who paid a price higher than for what their gold was sold. It happens. The net result of gold being a wealth preserver holds true, but with periodic, and some times substantial, yet temporary, reversals. This time will be no different.
Price is objective, not dependent upon one’s feelings or opinions for price is an actual number. The subjective value of gold is somewhat intertwined with the objective price of gold through the natural laws of Supply and Demand. The latter are a function of what is available [Demand], in relation to the desire to have what exists [Supply], The desire to acquire can be greater or less than what is available, and that is what eventually determines price.
This post was published at Edge Trader Plus on July 29, 2017.
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