alt Hacker NewsHow can you conclude that the current price and value is fairly close? Seems to me that all you are showing (rightly so) is that there are some use of gold which has higher value than today's price.
I agree that industry use creates a price floor, but that might be much lower than what the price is today. I.e if suddenly everyone lost faith in gold as a carrier of value, so everyone who keeps gold just as a passive keeper of value started selling it off, then we would get a new market clearing price which represents golds 'real value'. I have no clue what this would be, but it is certainly not obvious to me that it's close to today's price.
Replies
Gold's resistance to oxidation is pretty unique and valuable. Every metal with similar properties is also expensive — palladium is the most common and its price hovers around several hundred dollars per ounce despite being much less popular for jewelry or currency.
> current price and value is fairly close
I’m talking orders of magnitude here. Supply and demand curves generally have a slope. As in the demand for goods by industry increases as the price decreases. A significantly larger portion of minded gold is used for jewelry than industry or investment, but a price drop would also reduce the amount mined.
Combine those and yes gold could get significantly cheaper especially with the vast quantities on hand, but it would still be a very expensive metal vs steel, aluminum, etc.