Speculation rocks! (thanks for the price drop|please don't destroy it!)

[hugolp]

Because the value of gold is based on the fact that people think it's valuable, nothing more.

And so does the value of a chair, and so does the value of a shirt, and so does the value of a car, and so does the value of a tv, and so does the value of a plain, ... Value is subjective, its Economics 101.

It has some small, declining value for use in jewelry, and miniscule value for use in industrial applications, but otherwise, the majority of it's value is based solely on the fact that people assign it that value.

No, you are terribly wrong. ALL of gold value is because people asign it that value. Just like happens with anything else. Value is subjective.

People value things because of different reasons (and the task of economics is to analize not to judge. Judging is the task of moral/politics). Some people value gold for jewlery and some other value gold for money. And the main use is money. Those are the facts. In my subjective opinion the use of gold as money is far more valuable and benefitial to humans than its use as jewlery, but that is just my subjective opinion. You can have your subjective opinion, but it should not blind you when you are analizing the world.

This is not different than any fiat currency.  The value of the USD is not based on anything intrinsic, but simply on the fact that people assign it a value.

I dont want to think you are being deliberately dishonest. Fiat money is not based on faith or trust or that "people asign it a value" (and nothing has intrinsic value, value is subjective). Fiat money is imposed using force by governments. Thats the reason why people use them, its not their own voluntary decission.

Can't understand that?

What am I supposed to understand?

Think of a true SHTF situtation.  You're shipwrecked on a deserted island.  How valuable is your gold then?  Do you think people are going to sell you their food or weapons for gold?  Of course not.

You just discover value is subjective. Congratulations.

You can make anything into a currency, and Bitcoin is proof of this.

Actually no. Bitcoin was designed in a very clever way to have the characteristics that good money has, but for the internet.

You can theoretically use anything as money, but some objects make very good money while others make very bad money (with a full scale in the middle). This is why some things get selected as money (like gold) and others dont (like perishable food f.e.).

Gold makes no better of a currency than iron, rocks, ivory, toe nail clippings, etc.

Actually it does. And that is the reason why it was choosed by different cultures around the world that never knew each other. Ill let you investigate what this characteristics are.

Anything with a finite supply (which is everything) that doesn't decompose quickly can be used as a currency.  People have simply gravitated to gold historically (because "oooohh shiny" back in the caveman days), and it has maintained that appeal until this day because that's how it's always been.

Which is completely fine. Being money is a important and useful role to play.

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[Cluster2k]

It's a little silly comparing gold with bitcoins.  2000 years ago gold was highly valuable.  It is highly valuable today, and will probably remain so in another 2000 years.  It works without electricity, computers, and is universally understood by pretty much every culture.  It has stood the test of time. 

I went out on Saturday night with BTC valued at 21.  Coming home, it's down to 17.5, and it was 31 a few days ago.  That's one heck of a correction.

[AyeYo]

Because the value of gold is based on the fact that people think it's valuable, nothing more.  

False.

I've posted this before and will post it again... "It's extremely important to understand why gold is valuable if one is to understand why Bitcoin may be even better. Gold's value comes from its physical properties - it's divisibility, durability, homogeneity, scarcity, etc.  Think of all things out there in nature... few offer all the same attributes as gold. Iron is divisible and durable, but it's not scarce enough. Wooden sticks are divisible, but not able to be recombined. Food can be used as money, but it spoils when saved and two pounds of food are not identical - not homogeneous. Cows make a poor money because dividing one in half would kill it. Gold, and other precious metals, are the only things mankind has found that work extremely well as a money. Anything CAN be used as a money, but some things are much better than others for this purpose. We use fiat paper now, of course, only because governments backed with violence and guns have forced us to do so."

The value of gold is based on the fact that it's properties make it useful as money. Not because everyone just "arbitrarily" assigns value to it.

Fiat money is highly divisible, very durable, completely homogenious, and as scarce as the controlling body wants to make it.  In fact, it's specifically made to be all these things.  Yet you hate it.  Explain the inconsistency.

[AyeYo]

You just discover value is subjective. Congratulations.

Value is subject, but there are certain items that will always retain value regardless of market conditions and personal taste, this is called intrinsic value.  Gold is not one of these items.  Food, water, shelter, and clothing, and anything useful in procuring those items have real intrinsic value.

You can't seem to understand the difference between a commodity (an end in itself) and a store of value (a means to an end).  Gold's small percentage of commodity value only applies during good economic times and with the presence modern industry.

[hugolp]

You just discover value is subjective. Congratulations.

Value is subject, but there are certain items that will always retain value regardless of market conditions and personal taste, this is called intrinsic value.  Gold is not one of these items.  Food, water, shelter, and clothing, and anything useful in procuring those items have real intrinsic value.

You can't seem to understand the difference between a commodity (an end in itself) and a store of value (a means to an end).  Gold's small percentage of commodity value only applies during good economic times and with the presence modern industry.

Value is subjective and you dont know what will retain value because it depends on people's future valuation. You can speculate about it all you want. Intrinsic value does not exist.

EDIT: But let me explain you what you are trying to do: You are judging some valuations over others. You think that people valuing a car for transport is better than peole valuing gold as money. But your subjective valuation is not science, its only your subjective valuation that its blinding you. We could argue all the day about what adds more value the transport that a car provides or the economic coordination that gold as money provides... but you know what? our subjective opinion does not matter when its time to analize how the economy works. The fact of the matter is that it happens that way. We value a car and we value gold. And each person asign it a subjective value given their situation and their knowledge. You are implicitely deciding that you are superior to the rest and can decide that one is better than the other. You are not better than te rest of us. Peopel have their reasons to value gold as money. If you dont, fine, don use it. But it does not matter when it comes to analizing the economy.

[AyeYo]

You just discover value is subjective. Congratulations.

Value is subject, but there are certain items that will always retain value regardless of market conditions and personal taste, this is called intrinsic value.  Gold is not one of these items.  Food, water, shelter, and clothing, and anything useful in procuring those items have real intrinsic value.

You can't seem to understand the difference between a commodity (an end in itself) and a store of value (a means to an end).  Gold's small percentage of commodity value only applies during good economic times and with the presence modern industry.

Value is subjective and you dont know what will retain value because it depends on people's future valuation. You can speculate about it all you want. Intrinsic value does not exist.

I'm not speculating.  Without food, water, and shelter, people die.  That makes those items intrinsically valuable.  Any items directly connected to those items, like guns, ammo, tools, etc. will always have value as well.  There's no speculation involved in that.

[Kroutonz]

A Real Gold Mine?
Principally used in jewelry, gold (chemical symbol Au) is also used generally in manufacturing (and by the electronics and computer industries in particular) due to its excellent thermal and electrical conductivity, resistance to oxidation, and inalterability. The computer industry uses several hundred tons (318 tons in 2003, for example) of the element every year.
The precious metal is found in almost all computer components--processors, motherboards, extension cards, memory...

- From http://www.tomshardware.com/picturestory/550-gold-motherboard-chemistry.html

318 * 2000 * 16 * ~$1500 > $15B/yr.

The value of gold is not obtained from its use in computers / electronics at all. It is not not an industrial metal like silver. Gold's percentage of use in industry is about 5% of the mined supply. Gold is really only used as an investment/ hedge against inflation. And its only gone parabolic in the last 10 years because the dollar's debt has gone parabolic as well. Gold relies on a weak dollar for it's value. If you ever hold a piece of 24kt gold you will know why bitcoins can never be as good as gold/platinum/silver in the long run. There's nothing tangible to hold onto with bitcoins. While that may not stop its increase in value over the next few months, to compare it to gold is foolish at best.

[hugolp]

I'm not speculating.  Without food, water, and shelter, people die.  That makes those items intrinsically valuable.  Any items directly connected to those items, like guns, ammo, tools, etc. will always have value as well.  There's no speculation involved in that.

Without good money to properly coordinate the production people die. There is no sspeculation involved in that.

As I said you are imposing your subjective valuation onto your economic analisys. Value is subjective. Something useful as food might be more valued in some situation and less in others. And something useful as money might be more valued in some situation and less in others. Stop trying to impose your subjective valuation as "the truth".

[FlyingFlapjack]

Oil is a better comparison than gold anyways.

High prices create new supply. Look at a historical chart of oil prices going back to the 1800s. When the price gets high in real terms, exploration is funded and new supply comes online.

High BTC price causes people to hear about BTC, and start mining.

Also, some will expect mining difficulty to drop because of the BTC exchange market price drop.

I don't.

Again, it's like oil.

You bought the rig. You either have payments to make on the rig, or you have a paid off rig.

Either way, the sunk costs have nothing to do with your decision whether to keep mining or stop mining. You can't stop mining just because of the price drop. You would only stop mining if the variable cost of mining became higher than the expected return on mining.

You might stop selling BTC for a while if you have a paid off rig but you won't stop mining. If you are counting on BTC sales to make payments on your rig, then your smart move is to keep selling BTC. Even when it gets very cheap, it still helps at least offset the cash out on the payment while you try to sell the card.

In other words, you don't stop until you literally don't make any profit at all based on your power bill. Or, if you were a bit more savvy, you might also consider the depreciation on your video card etc. That just means you'd stop a little bit sooner, at a slightly higher BTC price than somebody who was only considering their power bill.

Oil prices are like this...while there is always talk of a new paradigm, and a new paradigm is always possible, looking back over the past ~170 years you see that there has often been talk of a new paradigm and one never showed up. To the extent that there were new paradigms, it was new paradigms of supply as much as new paradigms of demand.

As oil prices move higher, they eventually cause businesses to fail. This creates less demand for oil. It's called 'demand destruction.' Eventually, what you have is a lot of supply compared to weak demand and the price plummets.

The price plummets because oil producing countries overextend themselves. That's exactly like miners who bought a bunch of high end cards on credit. They are like a Venezuela. When the oil price goes way up, Venezuela spends more and more money.They can't afford to stop pumping. The Saudi's have been the smarties in the game for a loooong time now. They understand that oil goes up and oil goes down.

The Saudis shut down production when there are large price drops and wait for the price to go back up. When prices are high, the Saudis want OPEC to agree to production increases, like has been going on lately. Currently, countries like Venezuela do not want OPEC to increase oil production. They want the highest possible prices because they are dependent on those prices. It's not sustainable, but they are short sighted crooks.

The Saudi's are so much smarter. They understand that if there is not some relief on market prices, a high oil price will cause demand destruction.  They know it takes some time, months really, to get going, but they know it will happen. So they want to increase production to halt the upward price momentum and possibly even drop the price back a bit for a while. This will give businesses time to make adjustments and will result in less demand destruction. It will (hopefully) prevent a 'overheating' of the thermometer...or a 'overblowing' of a bubble or however you want to put it.

So while I'd expect a low BTC market price might discourage some of the 'little guys' from mining, it will not stop the people who bought hardware...until it gets so bad that you see them selling that hardware.

And of course as they say, oil is like a drug that the world is addicted to.

[AyeYo]

I'm not speculating.  Without food, water, and shelter, people die.  That makes those items intrinsically valuable.  Any items directly connected to those items, like guns, ammo, tools, etc. will always have value as well.  There's no speculation involved in that.

Without good money to properly coordinate the production people die. There is no sspeculation involved in that.

As I said you are imposing your subjective valuation onto your economic analisys. Value is subjective. Something useful as food might be more valued in some situation and less in others. And something useful as money might be more valued in some situation and less in others. Stop trying to impose your subjective valuation as "the truth".

You obviously don't have a clue what you're talking about.  Have you ever heard of a barter system?  Money is absolutely not necessary to sustain life.  You're grasping at those straws pretty hard.


Try to understand this:

-Currency is a means to an end, not an end in itself.  It's only value is derived from its ability to be converted into commodities.

-Commodities are an end in the themselves.  They are intrinsically valuable because of this.


Gold is primarily a currency, it is not a commodity.

[hugolp]

You obviously don't have a clue what you're talking about.  Have you ever heard of a barter system?  Money is absolutely not necessary to sustain life.  You're grasping at those straws pretty hard.


Try to understand this:

-Currency is a means to an end, not an end in itself.  It's only value is derived from its ability to be converted into commodities.

-Commodities are an end in the themselves.  They are intrinsically valuable because of this.


Gold is primarily a currency, it is not a commodity.

You need to learn economics and stop ashaming yourself. Value is subjective, nothing has intrincsic value. This is Economics 101. Im done here.

[AyeYo]

You obviously don't have a clue what you're talking about.  Have you ever heard of a barter system?  Money is absolutely not necessary to sustain life.  You're grasping at those straws pretty hard.


Try to understand this:

-Currency is a means to an end, not an end in itself.  It's only value is derived from its ability to be converted into commodities.

-Commodities are an end in the themselves.  They are intrinsically valuable because of this.


Gold is primarily a currency, it is not a commodity.

You need to learn economics and stop ashaming yourself. Value is subjective, nothing has intrincsic value. This is Economics 101. Im done here.

I have a degree in Econ. 

Items that sustain life have intrinsic value in this world.  Their relative values will change, but they'll never be worthless because they're necessary to keep people alive.  Gold and every other item that's used to store value is not necessary for sustaining life and can easily turn worthless if people decide they don't want to use it anymore.  People can't just decide they don't want to eat food anymore, therefore it is intrinsitcally valuable.

[hugolp]

I have a degree in Econ. 

Items that sustain life have intrinsic value in this world.  Their relative values will change, but they'll never be worthless because they're necessary to keep people alive.  Gold and every other item that's used to store value is not necessary for sustaining life and can easily turn worthless if people decide they don't want to use it anymore.  People can't just decide they don't want to eat food anymore, therefore it is intrinsitcally valuable.

Troll.

[Justsomeforumuser]

It's way easier to make money buying cheap BTCs and sell them at higher prices than it is setting up new rigs. I don't even have to leave the desk!

The golden rule for making money: Rely on the stupidity of the masses, it will always pay off!

I liked the part where you thought something still priced at > 2000% price increase within 12 weeks was cheap.

I also liked where you quoted relying on the stupidity of the masses after stating quite clearly that your market understanding is restricted to a constant computer game like loop of the same price behavior.

[DrSammyD]

People can't just decide they don't want to eat food anymore, therefore it is intrinsitcally valuable.

Yes they can. They'll die because of it, but they can. Most people however value not dying. Just like Most people value gold.

Commodities are NOT an end in themselves. Not starving is the end, eating is the means.

[Justsomeforumuser]

 Without food, water, and shelter, people die.  That makes those items intrinsically valuable.  Any items directly connected to those items, like guns, ammo, tools, etc. will always have value as well.  There's no speculation involved in that.

Money is absolutely not necessary to sustain life.  

Try to understand this:

-Currency is a means to an end, not an end in itself.  It's only value is derived from its ability to be converted into commodities.

-Commodities are an end in the themselves.  They are intrinsically valuable because of this.

Trying to explain actual reality to the majority of this forum ends up in one being exhausted, misunderstood.

It's kind of sad, but maybe it helps if you know that at least one other person knows about the real outside world, too.

AyeYo is spot on. Economic theory might be 99% silly esoterics, but the first 1% of it's core understandings and foundation are simply matters of fact. The above statements are just that.

[kiba]

Intrinsic value is part of the subjective theory framework, not the other way around.

Things in nature don't have an inherent value unless a human thinks it's useful.

[FlyingFlapjack]

Items that sustain life have intrinsic value in this world. Their relative values will change, but they'll never be worthless because they're necessary to keep people alive. 

Lol how much do you pay for the air you breath? How much do you pay for gravity?

[AyeYo]

Items that sustain life have intrinsic value in this world. Their relative values will change, but they'll never be worthless because they're necessary to keep people alive. 

Lol how much do you pay for the air you breath? How much do you pay for gravity?

Obviously you don't understand the concept of value.  Value has nothing to do with payments and money.


Ponder this to help you understand it:  I'll give you a choice between ten tons of gold or breathable air.  Which would you rather have?

How about one-thousand tons of gold or breathable air?  One-million tons of gold or breathable air?  How much gold do I have to give you for your to give up breathing?

[AntiVigilante]

Also, is the bottom reached? I want to invest even more money, but not at once, so I have been splitting it up to lower levels. Half of it has already been used, but this price drop doesn't appear to be over now.  Is there a good reading on this topic or some common practices on how low the buy-price should be?

Lack of spectrum caused this. Spreading your bets is what brings it back.