Gold has a lot more intrinsic value than bitcoin will ever have. It’s quite reasonable to explain a large part of gold’s price as speculation on continued demand for jewellery.
There’s a 5000 year history of gold. But only a few grams per person in this world; and a great number of people feel some sort of pressure to buy a few grams for their spouses.
Obviously what I’m saying is an oversimplification. But if we imagined a world where gold did not have its lustrous history, it might still be sold at the same price. In this world, gold would still cost around 800 dollars an ounce to mine; but the only difference would be the market cap for gold would be very small and would serve its niche applications (comparable to the market for terbium or platinum).
Gold might be overpriced a little bit. But the debate about bitcoin is if it’s worth anything at all.
Gold has its niche applications where you need a malleable and nonreactive metal (like dentistry). If this was the only use for gold, it would still be at least 800-900USD an ounce, because it that’s what it costs to extract.
The market cap for gold would be like 1 billion USD, rather than 11 trillion USD.
Ironically in a world where gold wasn’t ‘lusted’ after, it might even be more expensive because the market would be illiquid. And a small oligopoly of suppliers would be able to gouge buyers.
This is what happens in the rare earth metals market.
There’s a 5000 year history of gold. But only a few grams per person in this world; and a great number of people feel some sort of pressure to buy a few grams for their spouses.
Obviously what I’m saying is an oversimplification. But if we imagined a world where gold did not have its lustrous history, it might still be sold at the same price. In this world, gold would still cost around 800 dollars an ounce to mine; but the only difference would be the market cap for gold would be very small and would serve its niche applications (comparable to the market for terbium or platinum).
Gold might be overpriced a little bit. But the debate about bitcoin is if it’s worth anything at all.
Disclosure: I work for a bitcoin trading firm.