“It has no utility.” Warren is a smart fellow, but in trying to make a point he made this ridiculous statement.
“Gold is insanely undervalued.”
This is quite incorrect by realistic measures. If you are only considering golds value from a paper or psychological value then golds price is exactly what it is. If you are considering the price from an actual usable commodity value, it is insanely overpriced.
Lets compare it to something highly needed in manufacturing, but much more rare, lithium. Lithium, however, is not characteristically price manipulated or with the same ownership stigma.
world gold reserves 114 billion tonnes estimated
world lithium reserves 13.4 million tons estimated (USGS)
pure refined lithium cost $123/lb, or if it were measured in troy ounces that would be about $10 per ounce.
So if lithium which is considerably more rare, and in high demand for batteries for electric vehicles and other things is $10 per ounce, then shouldn’t gold which is considerably more available be worth less than half that?
So in reality the price of gold over the cost of mining is just a big mental case.
The value of Gold comes from its role as money, not from its industrial uses.
Gold has an enormous stockpile to supply ratio. It has been stored - over 2000 years! - precisely because it is money, not an industrial metal.
If Gold was only an industrial metal then its supply profile would be that of an industrial metal. Users would keep just what they needed at hand to minimize warehousing costs.
But Gold’s value comes from its status as money. It has value because it possesses all of the properties of money. And money is stored. It retains value, so it is stored. Whereas nobody’s going to stockpile Lithium for 2000 years.
Not many things are truly money. Many people have difficulty realizing this, as the fiat currency in their pocket has *most* of the properties of money. It’s good enough - for now.
But fiat currency is not a store of value. In that sense it is not money. For instance: the dollar in your pocket is currently depreciating at about 7% a year.
This is because its only value comes from Government guarantee. The Government is hopelessly bankrupt and must create trillions more fiat dollars to meet its debts. It is doing this in a more or less controlled way: in the meantime the dollar is hemorrhaging buying power.
Gold is *also* depreciating in the short term. This is because of the vast supply of fake, not-real, paper promises of Gold that has been created solely to suppress the price of Gold.
Gold is suppressed because the Government needs time to devalue the dollar without causing too much friction - and if Gold were allowed to rise in line with the currency supply then they’d have no time at all. Everyone would ditch the dollar and jump into Gold.
But eventually Government intervention fails and the market has its say. The price of Gold will rise to a price where it accounts for the currency supply. This is well north of 5000 dollars per ounce in today’s currency.
Hope this proves helpful.