Crypto Currency Thread
Discussion
Hmmm.... I think it is quite hard to make a case that gold has intrinsic value. As a (professional) investor, I have always maintained that gold is not an investable asset - simply because the NPV of its future cash flows is zero. I have the same view on bitcoin, which generates returns for miners but not for holders. This is a key distinction!
That gold/bitcoins/whatevers have commercial use cases - and market prices / trading mechanisms - doesn’t confer investment status.
For a while I quite liked the line that bitcoin might best be seen as “digital gold”. I suspect that “digital tulips” may be closer to the truth.
That gold/bitcoins/whatevers have commercial use cases - and market prices / trading mechanisms - doesn’t confer investment status.
For a while I quite liked the line that bitcoin might best be seen as “digital gold”. I suspect that “digital tulips” may be closer to the truth.
WindyCommon said:
I have always maintained that gold is not an investable asset - simply because the NPV of its future cash flows is zero.
Warren Buffett said:
Today the world's gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce -- gold's price as I write this -- its value would be $9.6 trillion. Call this cube pile A.
Let's now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world's most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-aroundmoney (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?
A century from now the 400 million acres of farmlandwill have produced staggering amounts of corn, wheat, cotton, and other crops -- and will continue to produce that valuable bounty, whatever thecurrency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will beunchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.
Let's now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world's most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-aroundmoney (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?
A century from now the 400 million acres of farmlandwill have produced staggering amounts of corn, wheat, cotton, and other crops -- and will continue to produce that valuable bounty, whatever thecurrency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will beunchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.
James_B said:
You think gold has no uses? What about in electronics or heat shields for example?
I did not imply gold has no industrial use. Of course it does. It would be used more widely if it were cheaper and if it were not used as a store of value, it'd be cheaper. Iridium is about 100 times scarcer than gold (in the earth's crust), has plenty of industrial applications but costs roughly the same. You could take a similar approach to Platinum, Palladium & many others. You could fit all the platinum ever mined into a living room and yet its price is of the same order as other precious metals.See http://www.morningstar.co.uk/uk/news/120804/gold-h... and again Buffet: "it gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head".
James_B said:
You think gold has no uses? What about in electronics or heat shields for example?
.
The real use of gold is to facilitate the offloading of ugly daughters without having to give away so many prized goats and to generally facilitate the movement of ugly people in polite society. .
A credible secondary use is by scared old people who want to make sure they are shot quickly at the first signs of the apocalypse by the people who bought lead.
WindyCommon said:
For a while I quite liked the line that bitcoin might best be seen as “digital gold”. I suspect that “digital tulips” may be closer to the truth.
Except volatility doesn't mean tulips. The tulip mania lasted barely 6 months, if it ever existed at all ( https://www.smithsonianmag.com/history/there-never... ) . Bitcoin has gone through multiple ascending bubbles for much longer.Its death-by-bubble has become a cry-wolf call, so much so that someone created an obituary site for it https://99bitcoins.com/bitcoinobituaries/ . 1 year is a very short term view for something that likely needs a generation or two to take hold.
It has no utility to Warren Buffet as an investment, maybe.
Gold has utility to loads of people. it's shiny. It's inert. It makes pretty jewelery and has been used to do that forever.
Lots of things have value yet "produce" no utility. If you take Buffet's uniquely 1 faceted approach to utility, then no art, object or whatever has any value whatsoever unless it's some sort of machine that makes things.
You go apply that thinking to art, kids comic collections, music, old cars, anything - the result will be the same. Just because a bloke with a lot of money doesn't place value on an item doesn't mean that item has no value, otherwise a huge proportion of peope's possessions would be worthless and they are not.
Now on the flip side, since you are defining value purely by use, what is the value of a currency that can neither store wealth, or be used to procure goods and services efficiently?
ETA - Buffet's comments were made in Feb 2012, and many publications were suggesting it was a bubble already since the worlds highest gold price in Aug 2011. Put that into context because his comments may very well have been about the bubble itself, not the asset.
Gold has utility to loads of people. it's shiny. It's inert. It makes pretty jewelery and has been used to do that forever.
Lots of things have value yet "produce" no utility. If you take Buffet's uniquely 1 faceted approach to utility, then no art, object or whatever has any value whatsoever unless it's some sort of machine that makes things.
You go apply that thinking to art, kids comic collections, music, old cars, anything - the result will be the same. Just because a bloke with a lot of money doesn't place value on an item doesn't mean that item has no value, otherwise a huge proportion of peope's possessions would be worthless and they are not.
Now on the flip side, since you are defining value purely by use, what is the value of a currency that can neither store wealth, or be used to procure goods and services efficiently?
ETA - Buffet's comments were made in Feb 2012, and many publications were suggesting it was a bubble already since the worlds highest gold price in Aug 2011. Put that into context because his comments may very well have been about the bubble itself, not the asset.
Edited by Some Gump on Wednesday 21st November 13:30
Some Gump said:
Lots of things have value yet "produce" no utility. If you take Buffet's uniquely 1 faceted approach to utility, then no art, object or whatever has any value whatsoever unless it's some sort of machine that makes things.
I think he is just separating the two. His job at Berkshire is to make the best possible investments for his shareholders, nothing more.What he does with the returns from those investments is totally different.
When people blur the two they often end up with something that's not very good at being either an investment or a toy (i.e. holiday homes, classic cars, wine, art, etc).
Like I think I said before, one side of the debate can’t even manage to use words as they are generally understood by everyone else. It’s quite strange.
The next tranche of shares that I’m allowed to sell is buying a 1kg bar of gold as a present for my baby. It will fascinate him, it’s soft enough for him to teethe on and it’s shiny.
Anyway, has Dimots welched on his deal yet?
The next tranche of shares that I’m allowed to sell is buying a 1kg bar of gold as a present for my baby. It will fascinate him, it’s soft enough for him to teethe on and it’s shiny.
Anyway, has Dimots welched on his deal yet?
James_B said:
Like I think I said before, one side of the debate can’t even manage to use words as they are generally understood by everyone else. It’s quite strange.
One concurs. My gastronomic satiety admonishes me that I have arrived at the ultimate stage of deglutition consistent with dietetic integrity.NickCQ said:
When people blur the two they often end up with something that's not very good at being either an investment or a toy (i.e. classic cars, etc).
Your point is well made. Whenever you read the words "car" and "investment" in the same sentence it's time to run away! IMO the word "crypto" should be treated with a similar level of skepticism.
DonkeyApple said:
James_B said:
Like I think I said before, one side of the debate can’t even manage to use words as they are generally understood by everyone else. It’s quite strange.
One concurs. My gastronomic satiety admonishes me that I have arrived at the ultimate stage of deglutition consistent with dietetic integrity.bongtom said:
BTC $3675.
Now is the time to buy.
“And you can take that to the bank”
How much are you buying here, and will you let people know when you sell?Now is the time to buy.
“And you can take that to the bank”
I ask as people have a bit of a tendency to announce well after the event that they sold at a local high.
Edited by James_B on Sunday 25th November 11:09
La Liga said:
"15,000 - now is the time to buy!"
"10,000 - now is the time to buy!"
"5,000 - now is the time to buy!"
"3,500 - now is the time to buy!"
Etc etc.
Buy the dips, HODL for dear life, shaking out weak hands, $100k by December 2019 etc. etc."10,000 - now is the time to buy!"
"5,000 - now is the time to buy!"
"3,500 - now is the time to buy!"
Etc etc.
$3k by the end of the week?
Edited by anonymous-user on Sunday 25th November 17:34
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