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  • Commodity money has intrinsic value

    Often claimed, but not convincing.

    Most of gold's "intrinsic" value comes from the fact that there's always someone to sell to who also thinks it has value, just the same as fiat currency.

    Its actual intrinsic value as a non-oxidizing conductor is tiny (because you only need very small amounts). Jewellery is fashion, there's nothing intrinsic about that demand. It might be reliable demand, but that's not the same as being intrinsic.

  • Your perspective highlights an important point: the notion of intrinsic value is largely subjective and context-dependent, particularly when discussing commodity money like gold, or cacao beans as I also mentioned. Value is a consensus. For both commodity money and fiat currency, their value comes from the collective agreement and confidence in their exchangeability for goods and services.

    Historically, the intrinsic value of gold and similar commodities has been attributed to their physical properties: scarcity, durability, divisibility, and others that make them suitable for use as money. However, as you've pointed out, the utility value of gold, especially in industrial applications like electronics due to its non-oxidizing properties, represents a fraction of its market value.

    The value attributed to gold for uses like jewelry is subject to cultural and fashion trends, which of course fluctuate. These provide a demand floor for gold, and that’s where "intrinsic" conflates reliability with inherent value.

    Fiat, however, is rather useless other than as currency.

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