Article: Does Gold Have Intrinsic Value?

[Sola_Fide]

http://americanvision.org/3893/does-gold-have-intrinsic-value/



Almost every conservative talk show is pushing gold and silver as a hedge against inflation, the devaluation of the dollar, and protection against uncertain economic times. Glenn Beck has been the most vocal proponent of owning gold, so much so that some liberals have called for an investigation. These are the same guys who create money out of thin air. Typical. In one particular Beck advertisement for gold, he mentions that gold has “intrinsic value.” I know a lot of people believe this, but gold does not have intrinsic value. Only God does. All other values are imputed. Some biblical background on the subject will prove helpful.

“Money is a commodity, a real thing which people value. It is the most marketable commodity. In the Bible, money is always gold and silver. Money makes exchange easier, because people can trade their goods for money and use the money to buy other things they want.”[ 1] Cattle, grain, salt, sugar, and other scarce commodities have served as money throughout history. Obviously, these types of monies can prove to be difficult to transport, especially over long distances. And they are perishable. This is one of the reasons why gold and silver are used as media of exchange. It is easier to carry coinage than to haul a ton of grain. This allows the consumer to exchange his gold or silver for needed commodities without having to find individuals who need the only commodity he has to sell. For example, if a farmer has grain to sell and he wants to buy cattle, but the cattleman does not need grain, the grain farmer will have to negotiate a second deal with someone who wants grain plus a commodity the cattleman may want. This can become very involved and time consuming. But if there is an agreed upon scarce commodity that cannot be easily counterfeited, then it can act as the medium of exchange for all other commodities and services.

In Eden, gold holds a special status: “And the gold of that land is good. . .” (Gen. 2:12a). “God provided high quality gold for Adam, and Adam and his heirs were (and are) expected to recognize God’s generosity in this regard. The gift of gold was a fine one indeed. It still is.”[ 2] Gold and silver have certain qualities that allow them to function as money: durability, divisibility, transportability, recognizability, and scarcity. Whatever the culture, gold and silver are recognized as money: “Then Asa[king of Judah] took all the silver and the gold which were left in the treasuries of the house of the LORD and the treasuries of the king’s house, and delivered them into the hand of his servants. And King Asa sent them to Ben‑hadad the son of Tabrimmon the son of Hezion, king of Syria, who lived in Damascus” (1 Kings 15:18; cf. Gen. 24:22). A kingdom outside of Judah recognized and accepted gold and silver as standards of value. Moreover, since these metals are easily divisible, they can be weighed in order to test their“value”: “And I [Jeremiah] signed and sealed the deed, and called in witnesses, and weighed out the silver on the scales”(Jer. 32:10). There are times when gold and silver are not t he most valued commodities.

When other essential commodities (e.g., food and water) are scarce, gold and silver lose their value for a time.

...

With devaluation of the dollar, the run-up of inflation, and mistrust of government, gold, silver, and other commodities are rising in value. But the day could come when even gold and silver are thrown aside for a handful of wheat and a cup of clean water.

[buck000]

Besides intrinsic value, how about just practical value:

http://www.npr.org/blogs/money/2010/11/18/131430755/a-chemist-explains-why-gold-beat-out-lithium-osmium-einsteinium

[Bern]

... but gold does not have intrinsic value. Only God does. ...

Stopped reading at that point.

[Sola_Fide]

Stopped reading at that point.

*shrugs*

Sorry to disappoint you man.


Gary North:


Whenever you hear someone speak of gold's having intrinsic value, you can be sure that he has a confused theory of economics in general and monetary theory in particular.

There is no such thing as a free lunch. There is also no such thing as intrinsic value. The meaning of the word "intrinsic" is always difficult to pin down. It means "autonomous." It implies fixity. There is neither in economic life.

It was Carl Menger's profound insight in 1871 to recognize that economic value is imputed by each individual. The value of the tools of production, the value of land, and the value of labor expended in the creation of a final consumer good do not move forward in time from the value of the inputs. They move in response to entrepreneurs' estimates of future value imputed by customers. This was Menger's great discovery.

http://www.lewrockwell.com/north/north772.html

[Seraphim]

Nothing has intrinsic value. Value is subjective and constantly changing. It's just so happens that the market place has atatched A LOT of subjective value to gold...since...forever? I can understand why that would make some think it has intrinsic value- but nothing has intrinsic value.

[Acala]

The value of gold money is intrinsic in that it derives from its substance. The value of paper money is NOT intrinsic because it derives from its symbolic content.

Melt a gold coin into a shapeless blob and it retains its value because its value is in its substance. Bleach a paper dollar and it becomes worthless even though its substance has not changed because its symbolic content has been altered. This is intrinsic value versus symbolic value. This is what is meant by saying that gold money has intrinsic value.

[Fox McCloud]

as pointed out by someone else here, properly understood, the intrinsic value argument makes sense for gold when compared to fiat paper money---but in an of itself, in a market of goods? No, it doesn't have intrinsic value.

[jon_perez]

Gold has intrinsic value of course. Even paper has intrinsic value, you can burn it to provide heat for example. "God", on the other hand, does not have "intrinsic" (concrete) value, since it is an intangible concept.

[Sola_Fide]

Gold has intrinsic value of course. Even paper has intrinsic value, you can burn it to provide heat for example. "God", on the other hand, does not have "intrinsic" (concrete) value, since it is an intangible concept.

Nope. Neither gold or paper have intrinsic value, since their value is always relative to something else. Intrinsic value is autonomous value. Intrinsic value is something that has value unrelated to anything else. Only God is autonomous and therefore intrinsically valuable.


If there are Austrians here who think that gold or anything in this universe has intrinsic value, then you need to dust off your Menger and give him a fresh read.


In regards to economic life, value is ALWAYS found in the subject, not the object, so therefore something is always relative to something else in value.


Also, tangebility is not a required condition for value. If this were the case, the very concept that you are positing (that since God is not tangebile, He has no value) would itself be without value because it is intangebile.

[YumYum]

Which G-d?

[brandon]

Nothing has intrinsic value. The phrase itself is a bit of an oxymoron because value is defined to be a subjective quality.

Here's a nice article written by an angry aspie, and he even bashes our own tmosley:

Gold Does Not Have Intrinsic Value (http://axiomaticeconomics.com/golden_calf.php)

[YumYum]

Nothing has intrinsic value. The phrase itself is a bit of an oxymoron because value is defined to be a subjective quality.

Here's a nice article written by an angry aspie, and he even bashes our own tmosley:

Gold Does Not Have Intrinsic Value (http://axiomaticeconomics.com/golden_calf.php)

Where does he "bash" tmosley?

[brandon]

maybe he removed the tmosley stuff from the article. it used to be there

[Sola_Fide]

U
Nothing has intrinsic value. The phrase itself is a bit of an oxymoron because value is defined to be a subjective quality.

Here's a nice article written by an angry aspie, and he even bashes our own tmosley:

Gold Does Not Have Intrinsic Value (http://axiomaticeconomics.com/golden_calf.php)

Hmmmm....That article falsely attributes to Gary North the position that gold has intrinsic value. I posted Gary's article a few posts ago where he explains that gold does not have intrinsic value.

[xd9fan]

gee something that for 5000 years has been money versus just another country in human history backing their "money" by 100% paper for the last 39 years......hmmmmmm

wait wait I'll figure it out......just a little more time.....stay on target.....stay on target....

Take your gold and silver (in any form) and take a time machine and see how others react to it.........now do the same with your Ben Bernank's when you come back........tell me how it went.....

and then tell me about the word intrinsic

“Reason obeys itself; and ignorance submits to whatever is dictated to it.”
Thomas Paine

[Acala]

Yes, it is true that gold money doesn't have intrinsic value because ALL value is subjective to the individual human and the individual transaction.

BUT that which is valued in gold money is intrinsic to the gold money: ie the element gold.

So gold money does not have intrinsic value, but that which is valued in gold money is intrinsic to it.

I said this before but I am trying to say it more succinctly. I strive for bumper-sticker-sized statements.

[Corydoras]

I would say it has a unique set of intrinsic characteristics that make it an outstanding store of value.

But as others have pointed out, you can't eat or drink it (as King Midas learned).

[xd9fan]

But as others have pointed out, you can't eat or drink it (as King Midas learned).

Did I miss something.....YOU cant eat the Ben Bernank's????????
God I love this lame A$$ arguement.

[Sola_Fide]

Nothing has intrinsic value. The phrase itself is a bit of an oxymoron because value is defined to be a subjective quality.
]



Yep.

[Sola_Fide]

The reason I posted this thread is because I hear a lot of these Tea Party types talk about "gold", yet they don't quite have a firm grasp on what a free market in money really is.

I am still learning about it, as we all are here I suppose. But one of the errors that I hear all the time is "intrinsic value". It doesn't exist...not on this side of eternity. All value is imputed and subjective.

[xd9fan]

http://www.thisamericanlife.org/

The Invention of Money

[Paul Or Nothing]

I agree with Acala that gold doesn't have "intrinsic value", in the sense that "it'll always be valuable or it's valuable to everyone", etc but it has value in the sense that it's value is derived from it's substance ie as has been said, whether you've an blob of gold weighing an ounce or if it's a nice designed coin worth ounce or make it into smaller units, its value still remains (especially when it's being used as money) but if you bleach a $100 note or tear into tiny pieces, it's worthless.

But these really are red-herring arguments about "intrinsic value" made by some people to convince others about why gold should be money but a more effective way of doing it would be to to bring in the scarcity argument & the fact that neither govt nor bankers can counterfeit it & that it's annual supply is extremely limited so it'll be inflation-proof, etc. Further, telling others about gold's "utility" in jewellery, industries, etc is also very much futile, if we're arguing for gold as money because being the best fit for money is in itself an argument for gold's "utility" & there wouldn't be any other more cogent argument that that for using gold as money.

[tmosley]

Intrinsic value means the value is held with the thing itself. For example, the value of a gallon of gasoline can be expressed as units of energy, or as units of value (dollars, gold, frog skins, whatever). Gold has the intrinsic value of a noncorroding element, much like many other rocks, with the added benefit of being extremely workable. That is the limit of its intrinsic value.

As such, gold has little intrinsic value, but rather, it IS value, simply because it is money. Universal money.

[xd9fan]

dog chasing his tail...this one...

now that we have that cleared up.....buy some..

[jon_perez]

Nope. Neither gold or paper have intrinsic value, since their value is always relative to something else. Intrinsic value is autonomous value. Intrinsic value is something that has value unrelated to anything else. Only God is autonomous and therefore intrinsically valuable.Nah. Intrinsic value means having value by itself not "autonomous value" whatever that means. The intrinsic value of paper would therefore be its usefulness for certain purposes, such as say starting a fire. Gold's intrinsic value on the other hand would be uses such as for electronics, as paperweight, etc...

"God" is fictitious, not autonomous. People can't even agree on what "God" is so it's laughable to say it's autonomous (that's just some people's opinion).

[Bruno]

dog chasing his tail...this one...

now that we have that cleared up.....buy some..

+ rep

[DamianTV]

You can print God, but you can't print Gold.

[Sola_Fide]

Hmmm. I don't get what you mean.^^^

[Sola_Fide]

"God" is fictitious, not autonomous. People can't even agree on what "God" is so it's laughable to say it's autonomous (that's just some people's opinion).

Agreement on "who God is" in no way affects His existence. Truth is not dependent on majority decision.

[virgil47]

Someone please tell me of any society that is aware of the existance of gold that does not value it. It has been used for everything from money ( or trading stock) to self adornment to manufacture of advanced electronics. I am not aware of any case where gold would not have value. Part of its aura comes from its malleablility, part from its lack of corrosion and of course partly from its rarity.

[onlyrp]

Stopped reading at that point.

yeah, seriously.

[Steven Douglas]

The intrinsic value of one gallon of milk = one gallon of bona fide milk. Even if it's free. Even if it later spoils. Even if nobody likes milk. Even if nobody drinks it.

Likewise the intrinsic value of one ounce of gold = one ounce of gold. That's it. Even if it's still in the Earth. Or inside Eros, or in another galaxy. Even if gold was free, and 100% of the population hated gold, and vomited or turned their backs in disgust whenever they saw it. It would not lose its "intrinsic value", because it would not cease to be one ounce of gold.

[Sola_Fide]

lol...I used to be so snarky in these old threads:)

[onlyrp]

The intrinsic value of one gallon of milk = one gallon of bona fide milk. Even if it's free. Even if it later spoils. Even if nobody likes milk. Even if nobody drinks it.

Likewise the intrinsic value of one ounce of gold = one ounce of gold. That's it. Even if it's still in the Earth. Or inside Eros, or in another galaxy. Even if gold was free, and 100% of the population hated gold, and vomited or turned their backs in disgust whenever they saw it. It would not lose its "intrinsic value", because it would not cease to be one ounce of gold.
so you use the word value as synonymous to utility and property, whereas price, is a monetary measure , not value?

[Steven Douglas]

so you use the word value as synonymous to utility and property, whereas price, is a monetary measure , not value?

If you look at the Coinage Act of 1792, it is clear that value is nothing more than a physical property (a given quantity of a specific tangible) - not utility. It doesn't matter what you can do with gold or silver, it's melting point, ductility, etc., any more than it matters how useful, portable, fungible, desirable or anything else it is to anyone. Intrinsic only means "inherent to" the tangible (i.e., so many atoms of gold or silver). Even "monetary measure" is another way of saying the same thing, regardless what is considered -- so many grains of wheat, so many gallons of milk, so many ounces of silver. Price is nothing more than units of exchange between unlike things, regardless how it is derived.

[Watch]

S-E-M-A-N-T-I-C game

I see a lot of people agreeing in principle and arguing over semantics. Weird.
Steven Douglas and Aqua Buddha are both "right".

[Steven Douglas]

S-E-M-A-N-T-I-C game

I see a lot of people agreeing in principle and arguing over semantics. Weird.
Steven Douglas and Aqua Buddha are both "right".

Not arguing - clarifying so that there is no argument, which makes it not a semantic "game". Just semantics - which is extremely important, as DELIBERATE semantic games and a lack of clarification is what got our system this corrupted in the first place.

[Victor Grey]

Semantics schemantics. The point on meanings of words doesn't matter, in what is being otherwise argued and inferred upon;
the insistence of whether gold has a holding of worth that lasts in fashion that could be considered intrinsic, be that how the word itself isconnotated or denotated.

Semantics seems, as often the case for such things, seemingly being used to form some sophistic specious
arguments against the point of gold holding value, and as such semantics have no point in the larger discussion of the matter.
It's a distraction of attention from what is important. That wouldn't matter if the discussion didn't stray from the original line of though,
that being the word itself and if it fully applies, but it has spilled over into attacking arguments for the consistency of value, of gold.

There are the facts of things.
Gold has been accepted to have high value compared to other commodities, for nearly all of documented history where the metal itself is mentioned. Time and time again,
consistently, throughout history, through ages, periods, times and eras, among nearly all cultures and peoples, to a point of near being a universal phenomenon of
humanity's nature itself.

It is consistent. It is timeless, and on the metaphysical arguments, descriptions of God Himself seem to indicate He too seems to take a favor toward the stuff above other materials, and decorates where He is most present; so you could make the suggestion, that if a Creator has indeed created reality and the Universe, gold and it's
esteemed value is a preordained nature of the universe, written into it's conception, and Eternal.

That is the truth that matters, when discussing the value of gold. It spans the course of human history.


If I can articulate this statement out comprehensibly...

You can argue about semantics. Somebody can come around occasionally and try to make some fairly irrelevant "you can't eat gold" statement, or they can be one of the handfuls of people who place no value to the material. That really doesn't matter.
Society has valued gold almost always, society does value gold, and aside a handful, not to say this with a harsh manner, of an inconsequential small minority with opinions to the contrary,
(which a portion of societies at every generation probably have always had), does not a society as a whole itself make.

There's no reason to suggest society as whole won't see the same trend of
opinion in the future toward the value of gold within the foreseeable future.

~
Lastly, the purpose of semantics, is clarity in meaning. That is the intent. When that isn't the end result, or when it results in fairly
pointless arguments or discussion that deflect from meaningful ones, or put more tactfully, seeks by the use of it to spill over into other
arguments in a sophistic fashion, it semantics is counterproductive to what it's supposed to be intended for, is abused beyond it's intent, and it is useless.

[onlyrp]

If you look at the Coinage Act of 1792, it is clear that value is nothing more than a physical property (a given quantity of a specific tangible) - not utility. It doesn't matter what you can do with gold or silver, it's melting point, ductility, etc., any more than it matters how useful, portable, fungible, desirable or anything else it is to anyone. Intrinsic only means "inherent to" the tangible (i.e., so many atoms of gold or silver). Even "monetary measure" is another way of saying the same thing, regardless what is considered -- so many grains of wheat, so many gallons of milk, so many ounces of silver. Price is nothing more than units of exchange between unlike things, regardless how it is derived.

then Marx & Smith are not wrong, it doesn't matter what you do with labor, it's still labor, whether its worth a given dollar price, is not fixed, or is it, according to labor theory or intrinsic theory? Do their theories use "value" and "price/cost" interchangeably?

[Steven Douglas]

then Marx & Smith are not wrong, it doesn't matter what you do with labor, it's still labor, whether its worth a given dollar price, is not fixed, or is it, according to labor theory or intrinsic theory? Do their theories use "value" and "price/cost" interchangeably?

This is almost like pointing out that orange is a fruit as well as a color. They are NOT SYNONYMS. They are HETERONYMS -- the same spelling and pronunciation for a word that has two entirely different meanings.

Let's say that you ONLY think of orange as a fruit. You can describe this fruit in term of cost, price, nutritional value, deliciousness, acidity, juice content, etc., and you may be correct on any or all counts. Then you hear someone talk about the heteronym of orange, in terms of color only, or narrow band of the electromagnetic wave spectrum called light. You conflate the two by asking, "So, are you saying that light and color are also forms of fruit, or that someone can live on light?" The question would be absurd, because the two words (same spelling, different meanings) are completely unrelated. You might counter by saying, "Yes, but an orange is also orange in color, so they ARE related, right?" Right, and completely incidental.

Likewise with the word value, which is also an heteronym.

"Intrinsic value" as it relates to tangible things is not a theory. It is just simple, testable, matter-of-fact math and physics observation, having nothing to do with, price, cost, or anything economics related. It is just a statement of fact: Blob A contains X quantity of Y. That is its intrinsic value. Labor theory of value, on the other hand, is part of an economic theory, completely unrelated, which attempts to define another heteronym of the word value, as a function of a theory, as it applies to labor.

Where we get confusion: just as an orange is also orange in color, the metal gold, which has intrinsic value (MATH/PHYSICS DEFINITION ONLY) also HAPPENS to have economic value. But the economic value is NOT its "intrinsic" value. The fact that it has intrinsic and economic value is incidental, even if someone claims that the economic value is based in part on the fact that it has intrinsic value. They are two very different words, with two completely different and unrelated meanings.

Does that help?

* * * * *

Now, how that relates to confusion in economics. Take the following sentence:

"I value gold because it has intrinsic value".

In the above sentence I am using two different words, or heteronyms, for the word value. I am only saying that I value gold because it is REAL, or tangible, as gold. Nothing more! No other reasons, economic theories, or qualifications are needed. It is but ONE of the reasons I value gold. I could just as easily say, "I value tangible wheat over imaginary wheat (or a paper promises for future wheat), precisely because real wheat is REAL (it is physical wheat, and therefore has intrinsic value as such).

Where the sentence, "I value gold because it has intrinsic value" gets mushy-fuzzy and poop-stupid: Someone sees both instances of the word value as basically synonyms - essentially a noun and verb form of the same word. They then can successfully argue that gold has no "intrinsic value" - but ONLY when argued in the economic sense of the word value. It would be no different than someone telling me that an orange on a tree is not a wavelength of light. True, but also absurd, since that was not claimed.

[torchbearer]

i was under the impression that all pathways on circuit boards were made of gold. you know- like cell phones, ipads. laptops. desktop pc, etc.

[Steven Douglas]

i was under the impression that all pathways on circuit boards were made of gold. you know- like cell phones, ipads. laptops. desktop pc, etc.

No, PCB traces, like those on PC motherboards and such, are mostly copperfoil traces. It's cheap, but mainly for ease of wave flow soldering of components onto the board during assembly.

Where gold comes into play (I have a semiconductor background, btw) is on the inside of an integrated circuit (IC Chip) package, where gold is used as conductive leads from the finished silicon substrate to the external leads. After a large silicon wafer is finished and tested, it is sliced into individual substrates and mounted into a package.

http://www.macrophotographer.net/images/ss_microchip_4.jpg

Those tiny wires that you see extending from the chip in the center to the other edges are delicately extruded gold wires. It is a VERY tiny amount of gold, which is valued for this process mainly because it is so ductile, and can be extruded so finely.

[heavenlyboy34]

The value of gold money is intrinsic in that it derives from its substance. The value of paper money is NOT intrinsic because it derives from its symbolic content.

Melt a gold coin into a shapeless blob and it retains its value because its value is in its substance. Bleach a paper dollar and it becomes worthless even though its substance has not changed because its symbolic content has been altered. This is intrinsic value versus symbolic value. This is what is meant by saying that gold money has intrinsic value.That just means that it can retain whatever value is ascribed to it and that it meets the qualities necessary for something to be "money" (divisibility, etc). There's absolutely nothing "intrinsically valuable" about gold. Since you can't eat or drink it, some people may not value it at all because they are too hungry/thirsty to care. The North article posted earlier is excellent.:cool:

[torchbearer]

No, PCB traces, like those on PC motherboards and such, are mostly copperfoil traces. It's cheap, but mainly for ease of wave flow soldering of components onto the board during assembly.

Where gold comes into play (I have a semiconductor background, btw) is on the inside of an integrated circuit (IC Chip) package, where gold is used as conductive leads from the finished silicon substrate to the external leads. After a large silicon wafer is finished and tested, it is sliced into individual substrates and mounted into a package.

http://www.macrophotographer.net/images/ss_microchip_4.jpg

Those tiny wires that you see extending from the chip in the center to the other edges are delicately extruded gold wires. It is a VERY tiny amount of gold, which is valued for this process mainly because it is so ductile, and can be extruded so finely.

i guess i'm really old school. i thought the condtucive edges of my ram was gold.

[thoughtomator]

There is a very good reason why gold has value but it would be extremely politically incorrect to say so.

[Steven Douglas]

There's absolutely nothing "intrinsically valuable" about gold.

That is correct, and a perfect way of putting it, interestingly enough, because you used the word "valuable" and not value.

Take X + 2 = 4 Solving for the "value" of X does not mean that the value of X is "valuable".

Example of intrinsic value: "That piece of gold bullion has intrinsic value. It's intrinsic value is 1 oz. of .999 fine gold."

To say that it is "intrinsically valuable" is absurd, because all value in the economic sense are internal to the person. "Intrinsic value" (i.e., "it really is a quantity of a given thing") may be ONE reason for valuing a thing personally, but that valuation does not transfer and become "intrinsic" to the thing itself.

[Inny Binny]

Of course it doesn't have intrinsic value - the word 'value' is intrinsically subjective.

[Steven Douglas]

Of course it doesn't have intrinsic value - the word 'value' is intrinsically subjective.

Yep, most definitions of the word 'value' are founded in subjectivity. Not all, but certainly most.

[Roy L]

Nothing has intrinsic value.
"Intrinsic value" is a term that has been used in the coin business to denote the bullion value of specie money (semi-precious and precious metal coins). It is contrasted with "face value" (the amount stamped on the coin when it was minted) and numismatic value, which is the amount of money a coin can be traded for based on its rarity and the demand for it from collectors.

[bolil]

Whoops, there it is.

[Sola_Fide]

"Intrinsic value" is a term that has been used in the coin business to denote the bullion value of specie money (semi-precious and precious metal coins). It is contrasted with "face value" (the amount stamped on the coin when it was minted) and numismatic value, which is the amount of money a coin can be traded for based on its rarity and the demand for it from collectors.

RoyL! You've ventured out of the LVT thread!

[Steven Douglas]

"Intrinsic value" is a term that has been used in the coin business to denote the bullion value of specie money (semi-precious and precious metal coins).

Precisely - and by value, only the content; weight and purity, regardless of "market value" of the same, which is an entirely different value altogether (i.e., market value is transient, intrinsic to nothing).

[William R]

Intrinsic value depends on the context. The ultimate worth of an object is subjective. If nobody wants it, it has no value.

However, when contrasting fiat money to gold, one can say that gold has intrinsic value compared to paper money. In that context it means that, stripped of its use as money, paper fiat money would have almost no [subjective] value, certainly not even close to the number printed on it. Gold on the other hand has [subjective] value even if it is not legal money.

[Roy L]

Precisely - and by value, only the content; weight and purity, regardless of "market value" of the same, which is an entirely different value altogether (i.e., market value is transient, intrinsic to nothing).
No, it means the market value -- which is of course never subjective -- of the bullion content of the coin: i.e., considering the coin as a bullion bar of its given weight and purity.

[Roy L]

Intrinsic value depends on the context.
True. But in general, "intrinsic value" is a technical term in the coin business or in finance (used to denote the face value of a bond, the break-up value of a company, etc.), and has no meaning in economics.

The ultimate worth of an object is subjective.
But what does "ultimate worth" mean? You seem to be saying it is utility in some individual's subjective opinion, but why should that individual's opinion carry more weight than others' opinions?

If nobody wants it, it has no value.
That doesn't mean its value is subjective.

However, when contrasting fiat money to gold, one can say that gold has intrinsic value compared to paper money.
If you mean its value is not dependent on government, you're right.

In that context it means that, stripped of its use as money, paper fiat money would have almost no [subjective] value, certainly not even close to the number printed on it. Gold on the other hand has [subjective] value even if it is not legal money.
Gold has more than subjective value, it has MARKET value even if it is not legal money. Paper money also has MARKET value, but only to the extent that government makes it valuable by accepting it in discharge of tax liabilities, requiring its payment to satisfy court judgments, or forbidding use of other media in transactions.

[Roy L]

RoyL! You've ventured out of the LVT thread!
I've posted in other threads before.

[Steven Douglas]

Intrinsic value depends on the context. The ultimate worth of an object is subjective. If nobody wants it, it has no value.

However, when contrasting fiat money to gold, one can say that gold has intrinsic value compared to paper money. In that context it means that, stripped of its use as money, paper fiat money would have almost no [subjective] value, certainly not even close to the number printed on it. Gold on the other hand has [subjective] value even if it is not legal money.

Yeah, intrinsic just means "inherent", or belonging to a thing by virtue of its nature or constitution, the property(ies) of which is/are the "value(s)". Examples of intrinsic values are properties like size, shape, color, mass, weight, composition, purity, elasticity, tensile strength, breakage strength, melting point, boiling point, etc., (all "values"), while things like price, market value, desirability, usefulness, etc., are EXTERNAL, and therefore not "intrinsic" to a thing, and using a completely different definition of a completely different word that just happens to be spelled and pronounced the same.

[Steven Douglas]

No, it means the market value -- which is of course never subjective -- of the bullion content of the coin: i.e., considering the coin as a bullion bar of its given weight and purity.

Weight and purity are certainly not subjective. Those are intrinsic values - they are whatever they are, even if nobody is around to test or prove it. The intrinsic values for theoretical "dark matter" (if such a thing exists), exist without regard to human cognizance - just as X-rays (that entire electromagnetic wave spectrum) existed and had intrinsic values of their own long before discovery and evidence conclusive enough to prove their existence. Take any THING and describe its inherent physical properties, and you will have examples of its "intrinsic values".

Market value, on the other hand - not subjective? Nonsense. Prove otherwise, that's your burden. ALL market value is based on a transient rate of exchange for unlike things, and therefore intensely subjective. I defy you to give a single example of where it is not.

In the "bullion content of coin" example, the "intrinsic value" (weight and purity - read: objective, intrinsic values) must first be determined to get a completely separate "market value" (exchange value - subjective, extrinsic, transient, acquired). They are not synonymous. Market value is not "intrinsic" to bullion, only the weight and purity are (likewise any other physical property inherent to bullion, like mass, color, conductivity, physical composition, etc., all of which are intrinsic values).

Even in an economic context, intrinsic value is not a suggestion that economic value is intrinsic - only that an externally derived, and wholly subjective, market value is placed on that which is objectively intrinsic to a thing. That's what coin dealers mean by intrinsic value (referring to the value they externally place on a specific internal, or "intrinsic", quantity of specific bullion content only), no different than "scrap value", which is an example of intrinsic value, or market value for that which is fundamentally intrinsic only, to distinguish it from other types of value (e.g., artistic, numismatic, utility, etc.,).

[TomL]

This is something I have wondered about for a while. Trouble is, I still don't have an answer. I have thought for a while that gold only has the value given to it by people, which would mean it has no intrinsic value. The word intrinsic means "inward."



intrinsic |inˈtrinzik; -sik|
adjective
belonging naturally; essential : access to the arts is intrinsic to a high quality of life. See note at inherent .
• (of a muscle) contained wholly within the organ on which it acts.
DERIVATIVES
intrinsically |-ik(ə)lē| adverb
ORIGIN late 15th cent.(in the general sense ): from French [I]intrinsèque, from late Latin intrinsecus, from the earlier adverb intrinsecus ‘inwardly, inward.’ Oxford American Dictionaries

When something or someone has intrinsic value they have value "in and of itself." Such as God as the author stated. But, I don't believe God is all that has intrinsic value in the universe. I believe love also has intrinsic value. I also believe when someone has natural talent or ability, that also has intrinsic value.

Intrinsic value comes from within, not from without. Gold has value from without. It has value because someone says it does.

Plus, it seems to me that there is an ineffable quality and an immeasurability to intrinsic value. Can one measure the value of God? Can one measure the value of love? Can one measure innate talent or ability?

However, the term "intrinsic value" is often used in finance in reference to the true value of a company. I am not sure the term is accurately used in those cases.

By the way, is there a reason why Roy L can't be in this thread? Just curious.


:cool:

[Steven Douglas]

When something or someone has intrinsic value they have value "in and of itself."

Two things:

Firstly, for the term 'intrinsic value' to have any meaning whatsoever, both words, including the word 'value', must first be specifically defined. Are we looking at the maths/physics definition of value or some other? Secondly, 'intrinsic' is an adjective which modifies a noun. How the word 'value' is defined will also determine its meaning when combined with another word, like 'intrinsic'.

Take, for example, the sentence: "Sonya was required to wear a red (adjective) dress (noun) for work, and was able to find such a dress at a yard sale." Because red is a property 'inherent' to the dress ("in and of itself"), red is but one value that is intrinsic to that dress, which is THEN used, in part, to determine a separate value, which is not intrinsic to the dress.

Sonya places internal 'value' on the dress only because it is red, and not any other color. The value Sonya places on the color red, as it applies to that dress, is intrinsic to Sonya, not the dress. And even that value is not for a red dress, but for A JOB that requires her to wear one. The company she works for only values Sonya's labor, but only IF she wears a red dress. Regardless, Sonya's need/desire for a red dress (specifically red), and the [transferred] value she is required to place on it only because it is red, is never 'intrinsic' to the dress itself.

External "values" can be, and often are, based on intrinsic values. Like coin dealers who look only at "intrinsic value" of coins. By 'intrinsic', they mean "external value that is based on internal values", namely, weight and purity, or bullion content alone. (It is a slight misnomer, given that numismatic qualities are also physical attributes, each of which represent 'values' which are intrinsic to each coin, apart from the why or how of 'market value' imparted by coin dealers.)

In the coin dealer example, "intrinsic value" only means "extrinsic value (market) which is based on intrinsic values (maths/physics)". That external-to-the-object-internal-to-the-person "market" valuation, which is transient, does not suddenly, or ever, become intrinsic to a thing.

[-C-]

People say "Gold is never worth zero." Apparently they completely ignored the Gold Florin in the 14th century, which was worthless for a time, while Venice was sitting on Silver, which was then the imperial monetary vehicle of choice. Dante joked about it.

Sometimes I wish the movie Armageddon, with Bruce Willis, was actually the asteroid Eros, which is said to hold more gold, silver, platinum than has ever, or will ever, be harvested from earth. That way, once they blew it up, it'd rain down little nuggets of so-called "precious metals," and the idea of them being the savior in the religion of usury/money, would be contested, and probably destroyed.

It is quite obvious to me that in society it matters not what your currency is, as a Nation State, if you have no productive capacity, per capita, to back the currency. It matters little if its gold, silver, paper, or whatever. If you have a monetarist system which thrives off monetary "profit" alone, usually the productive capacity of the nation state will be destroyed, and/or looted over time. This leads to the collapse of the energy flux density of the population, and thus their per capita production. Add that along with rising monetary aggregates to prop up artificial financial aggregates and it blows out. They did the same thing paper trading derivatives on gold in Florence, and this was in the 14th century!

[JasonC]

Nothing has intrinsic value. Value is subjective and constantly changing. It's just so happens that the market place has atatched A LOT of subjective value to gold...since...forever? I can understand why that would make some think it has intrinsic value- but nothing has intrinsic value.

I was going to reply.. but this guy said it for me^

[Steven Douglas]

Nothing has intrinsic value. Value is subjective and constantly changing. It's just so happens that the market place has atatched A LOT of subjective value to gold...since...forever? I can understand why that would make some think it has intrinsic value- but nothing has intrinsic value.I was going to reply.. but this guy said it for me^

In that context alone, "intrinsic value" means "intrinsic economic value" (of a thing), and within that narrow, but broadly used context, I completely agree, as there is no such thing as "intrinsic economic value". It is an oxymoron, in fact, unless you consider that economic value is only intrinsic to people.

Like Seraphim said, "...the market place has attached A LOT of subjective value to gold..." Attached. External. Not intrinsic to gold.

[TomL]

Nothing has intrinsic value. Value is subjective and constantly changing. It's just so happens that the market place has atatched A LOT of subjective value to gold...since...forever? I can understand why that would make some think it has intrinsic value- but nothing has intrinsic value.

If nothing has "intrinsic value" then where did the words come from? Did someone created them to describe nothing?

[Steven Douglas]

If nothing has "intrinsic value" then where did the words come from? Did someone created them to describe nothing?

It originated with PHYSICS! It only got mush-brained into economics through common (mis)usage, and common conflation of unlike terms.

Look up Webster's definition for intrinsic (http://www.merriam-webster.com/dictionary/intrinsic), and you will see "The intrinsic brightness of a star." used as the very first example.


INTRINSIC
a : belonging to the essential nature or constitution of a thing <the intrinsic worth of a gem> <the intrinsic brightness of a star>

The intrinsic brightness of a star is a bona fide intrinsic "value", separate from the "apparent brightness of a star", which is another value that is dependent on a number of factors including distance from the observer.


Astronomers use the term intrinsic brightness (also termed absolute magnitude) to refer to how bright a star would be without the effects of distance or absorption due to interstellar dust or gas. While a bright distant star's apparent brightness might be less than a nearby dim star, due to the inverse square law for brightness, astronomers can discuss its intrinsic brightness meaning how bright the stars would be at a common distance.

Intrinsic value is a REAL TERM. It does have real meaning -- until, that is, someone mushy-fuzzies it up with unlike terms, trying to impute economic value as being somehow intrinsic to a thing. Which it never can be.

[onlyrp]

People say "Gold is never worth zero." Apparently they completely ignored the Gold Florin in the 14th century, which was worthless for a time, while Venice was sitting on Silver, which was then the imperial monetary vehicle of choice. Dante joked about it.

We don't ignore it, it's a lie created by inflationists to hurt real money. It never happened!

[Steven Douglas]

People say "Gold is never worth zero." Apparently they completely ignored the Gold Florin in the 14th century, which was worthless for a time, while Venice was sitting on Silver, which was then the imperial monetary vehicle of choice. Dante joked about it.

You could have hit an example closer to home. The bi-metallic standard, Congress' attempt to fix (regulate) the exchange value between gold and silver coin, ended up with gold and silver coin each being driven out of circulation at different times (e.g., the gold rush, which caused a disparity in the gold/silver ratio). Likewise, the gold used to strike the florin coins was overvalued, which resulted in the coins being rejected by merchants. The florin was withdrawn after only a few months in circulation, not because the gold was worthless (gold has never, EVER been considered worthless), but because the coins themselves were overvalued - and with no 'legal tender' laws requiring their acceptance, Thiers law assured that the bad money would remain driven out of circulation.

[Sola_Fide]

If nothing has "intrinsic value" then where did the words come from? Did someone created them to describe nothing?

Even if the word was solely proposed to define the objective value of anything in economic life, it would still be inaccurate.

Value is imputed subjectively. There is no such thing as objective, autonomous, or intrinsic value in this universe.

[Steven Douglas]

There is no such thing as objective, autonomous, or intrinsic value in this universe.

Again, and it's a bone I can't turn loose of -- that is absolutely true, but ONLY if we are not talking about math/physics definition of value.

When you assay and weigh a nugget of gold bullion, and you find after testing that it contains 1 gram of .999 fine gold, that is its 'intrinsic value', which relates to nothing but that which is inherent in the nugget itself. In that respect ALL matter in the universe has intrinsic value - including particles of matter we have yet to discover.

[Steven Douglas]

This should illustrate it.

http://img19.imageshack.us/img19/7152/intrinsicvaluemorgan.jpg

[Steven Douglas]

http://img403.imageshack.us/img403/9883/millerlite.jpg

[onlyrp]

This should illustrate it.

http://img19.imageshack.us/img19/7152/intrinsicvaluemorgan.jpg

did you make this? this is awesome, thanks

[Steven Douglas]

did you make this? this is awesome, thanks

Yeah, in Illustrator - the picture illustrates it much better than l can with just words.

[heavenlyboy34]

i was under the impression that all pathways on circuit boards were made of gold. you know- like cell phones, ipads. laptops. desktop pc, etc.Yep. For those interested:
The Many Uses of Gold (http://geology.com/minerals/gold/uses-of-gold.shtml)

[TomL]

http://img403.imageshack.us/img403/9883/millerlite.jpg

What is so intrinsic, or valuable about beer?

Steven, sometime you make me laugh.

[SilverDollarStandard]

Silver is also ductile! It's used in the best audio wires for musical instruments because it is more conductive than any other element.

[Roy L]

Market value, on the other hand - not subjective? Nonsense. Prove otherwise, that's your burden. ALL market value is based on a transient rate of exchange for unlike things, and therefore intensely subjective. I defy you to give a single example of where it is not.
You don't seem to know what "subjective" means. Market value can't be subjective, as it requires more than one person's input to establish.

Market value is not "intrinsic" to bullion, only the weight and purity are (likewise any other physical property inherent to bullion, like mass, color, conductivity, physical composition, etc., all of which are intrinsic values).
Right. That is why "intrinsic value" only has technical meanings in certain fields, not an economic one.

Even in an economic context, intrinsic value is not a suggestion that economic value is intrinsic - only that an externally derived, and wholly subjective,
Self-contradiction. The subjective is by definition internally derived.

market value is placed on that which is objectively intrinsic to a thing.
No, just because market value is not intrinsic or objective does not mean it is subjective.

[Steven Douglas]

What is so intrinsic, or valuable about beer?

Look again at the pic. The "intrinsic" side said nothing about "valuable" in the economic sense. Each "value" on the left side only described physical properties, which alone are intrinsic. That is why "intrinsic value", as Roy stated, "...only has technical meanings in certain fields, not an economic one."

Now my love of beer, on the other hand, does equate to human values (economic and other) which are intrinsic to me ("Love it, cheap, tastes great, gets me drunk, etc.,..."), regardless who might share such value, which would be intrinsic to them.


You don't seem to know what "subjective" means. Market value can't be subjective, as it requires more than one person's input to establish.

You are the one who seems not to understand what objective or subjective means, Roy.

Objective - SOURCE (http://www.merriam-webster.com/dictionary/objective)
a: of, relating to, or being an object, phenomenon, or condition in the realm of sensible experience independent of individual thought and perceptible by all observers : having reality independent of the mind

Two or more subjective inputs don't combine to equal one "objective" - or reality that is perceptible, sensible by all observers, and independent of the mind.

We might independently and objectively observe that subjective inputs were combined, but our objectivity is only in the fact of the observation itself. It will not infuse any objectivity to the meaning of the output observed.

For example, a thousand athiests can all objectively observe that the Q'uran, Gita or Bible has certain words. That would be an objective observation on their parts, but it does not make the meaning of the words themselves objective - even with 1,000 "inputs".

Likewise, "market value" is always rooted, at the very core, by a transient combination of inherently subjective individual inputs. That we can objectively observe such a thing is true, but objective observation of a subjective valuation does not change its subjective nature to one that is objective.



Even in an economic context, intrinsic value is not a suggestion that economic value is intrinsic - only that an externally derived, and wholly subjective, Self-contradiction. The subjective is by definition internally derived.

Hardly, as now you are placing it in a different context by shifting the perspective of the observer. I already stated that economic value is a transient property that can be viewed as intrinsic to each individual. That is the ONLY way that "intrinsic value" can exist in the economic sense -- not to "the market", and not to "the object"; only to each individual, and therefore, at all times, subjective (subject to that individual mind).


No, just because market value is not intrinsic or objective does not mean it is subjective.

Market value (exchange value, as determined by humans, between two or more unlike things), regardless how such a value is derived, is always a culmination of inherently subjective inputs. As already stated, a combination of subjective inputs does not equate to an output that is objective - even though the fact that it occurred may be "objectively" observed.

[TomL]

It seems to me we are all understanding the word "intrinsic" differently. I view "intrinsic" as something essential to life, such as oxygen. No one can live without breathing. Therefor oxygen has intrinsic value. But who can measure the value of oxygen. To do so, one would have to put a price tag on life. But, I believe, life is priceless.

And may I say, Steven, you are playing semantics with the words "value" and "valuable." The word "valuable" simply means "able to have value."

[Steven Douglas]

It seems to me we are all understanding the word "intrinsic" differently. I view "intrinsic" as something essential to life, such as oxygen. No one can live without breathing. Therefor oxygen has intrinsic value. But who can measure the value of oxygen. To do so, one would have to put a price tag on life. But, I believe, life is priceless.

Intrinsic just means inherent. Oxygen is essential to life, but the only oxygen that is intrinsic to you is that which is "part of you" (however you define it) at a given moment in time. The oxygen in the air that is twenty feet away from you, which you have yet to breathe, may be essential, but it is not intrinsic to you.

Also, intrinsic is a property relative only to the grammatical object (i.e., "intrinsic to what?"). How you personally value oxygen (as being essential to your life), is a "need" or "valuation" that is intrinsic to you. That need of yours, however, can never be intrinsic to oxygen itself.


And may I say, Steven, you are playing semantics with the words "value" and "valuable." The word "valuable" simply means "able to have value."

The reason I don't believe that: While it would be technically correct to say that the SUM of X + Y is "valuable" (able to have a value, or to "be valued" with a value following an equal sign), that is neither a common nor esoteric use of the word. When someone says "valuable", by implication the meaning is narrowed to something other than a maths/physics definition. That is not true of the word "value", even though most people will instantly think of value in strictly emotional or economic terms.

[heavenlyboy34]

Weight and purity are certainly not subjective. Those are intrinsic values - they are whatever they are, even if nobody is around to test or prove it. The intrinsic values for theoretical "dark matter" (if such a thing exists), exist without regard to human cognizance - just as X-rays (that entire electromagnetic wave spectrum) existed and had intrinsic values of their own long before discovery and evidence conclusive enough to prove their existence. Take any THING and describe its inherent physical properties, and you will have examples of its "intrinsic values".

Market value, on the other hand - not subjective? Nonsense. Prove otherwise, that's your burden. ALL market value is based on a transient rate of exchange for unlike things, and therefore intensely subjective. I defy you to give a single example of where it is not.

In the "bullion content of coin" example, the "intrinsic value" (weight and purity - read: objective, intrinsic values) must first be determined to get a completely separate "market value" (exchange value - subjective, extrinsic, transient, acquired). They are not synonymous. Market value is not "intrinsic" to bullion, only the weight and purity are (likewise any other physical property inherent to bullion, like mass, color, conductivity, physical composition, etc., all of which are intrinsic values).

Even in an economic context, intrinsic value is not a suggestion that economic value is intrinsic - only that an externally derived, and wholly subjective, market value is placed on that which is objectively intrinsic to a thing. That's what coin dealers mean by intrinsic value (referring to the value they externally place on a specific internal, or "intrinsic", quantity of specific bullion content only), no different than "scrap value", which is an example of intrinsic value, or market value for that which is fundamentally intrinsic only, to distinguish it from other types of value (e.g., artistic, numismatic, utility, etc.,).
Exactly. Even if we can say that product x costs exactly x to make, there is no guarantee that the market will pay that price (except in command/control economies, but these never last for any significant amount of time).

[TomL]

Intrinsic just means inherent. Oxygen is essential to life, but the only oxygen that is intrinsic to you is that which is "part of you" (however you define it) at a given moment in time. The oxygen in the air that is twenty feet away from you, which you have yet to breathe, may be essential, but it is not intrinsic to you.

Also, intrinsic is a property relative only to the grammatical object (i.e., "intrinsic to what?"). How you personally value oxygen (as being essential to your life), is a "need" or "valuation" that is intrinsic to you. That need of yours, however, can never be intrinsic to oxygen itself.

I quoted this back in #59, but I guess I have to do it again:

intrinsic |inˈtrinzik; -sik|
adjective
belonging naturally; essential : access to the arts is intrinsic to a high quality of life. See note at inherent .
• (of a muscle) contained wholly within the organ on which it acts.
DERIVATIVES
intrinsically |-ik(ə)lē| adverb
ORIGIN late 15th cent.(in the general sense [interior, inner] ): from French intrinsèque, from late Latin intrinsecus, from the earlier adverb intrinsecus ‘inwardly, inward.’ Oxford American Dictionaries

Whatever is intrinsic is essential.


The reason I don't believe that: While it would be technically correct to say that the SUM of X + Y is "valuable" (able to have a value, or to "be valued" with a value following an equal sign), that is neither a common nor esoteric use of the word. When someone says "valuable", by implication the meaning is narrowed to something other than a maths/physics definition. That is not true of the word "value", even though most people will instantly think of value in strictly emotional or economic terms.

When I was little boy in Elementary School, I learned this rule about compound words. When you have a compound word you look at both words to see the definition. "Valuable is a compound word, made up of "value + able." Hence, "able to have value." Why modern dictionaries don't have that definition, I do not know.