@Rafikichi The dollar is not in the equation. I realize that dollars/pounds/yen are just pieces of paper whose values can be bubbles or (like the American dollar probably soon will) rapidly devalue.<br><br>Gold/silver are like currency in many ways though. They do have the advantage that, since it is difficult to print gold the market isn't likely to get flooded with gold - but many minerals and stones share this characteristic.What makes gold so special? It's all in our heads - just like every other bubble. <br><br>Land is even more difficult to print than gold. It grows more scarce with increases in population. Houses often come with land and represent a significant amount of labor. If one owns a home with a value of 'x' they will enjoy far more benifits than a person who owns a sum of gold with an equal value. The housing bubble was dumb but not as dumb as the gold bubble. <br><br>I'm not saying buying gold is necessarily stupid - you can get very rich off of bubbles as many did with housing - just be aware that they pop.<br><br>Also wealth is destroyed. Depreciation, vandalism, consumption (eg. food), and reduction in number of services provided all destroy wealth. I believe what you are getting at is that wealth doesn't instantly evaporate unless ICBMs are launched. It is important to be aware that these factors do erase wealth because as a recession or depression wears on they will force some gold owners to cash in their investment to replace other assets. This will cause gold to start consistently losing value. This will cause a loss of confidence in the bubble - then it will pop.
@Rafikichi The dollar is not in the equation. I realize that dollars/pounds/yen are just pieces of paper whose values can be bubbles or (like the American dollar probably soon will) rapidly devalue. <br><br>Gold/silver are like currency in many ways though. They do have the advantage that, since it is difficult to print gold the market isn't likely to get flooded with gold - but many minerals and stones share this characteristic. What makes gold so special? It's all in our heads - just like every other bubble. <br><br>Land is even more difficult to print than gold. It grows more scarce with increases in population. Houses often come with land and represent a significant amount of labor. If one owns a home with a value of 'x' they will enjoy far more benifits than a person who owns a sum of gold with an equal value. The housing bubble was dumb but not as dumb as the gold bubble. <br><br>I'm not saying buying gold is necessarily stupid - you can get very rich off of bubbles as many did with housing - just be aware that they pop. <br><br>Also wealth is destroyed. Depreciation, vandalism, consumption (eg. food), and reduction in number of services provided all destroy wealth. I believe what you are getting at is that wealth doesn't instantly evaporate unless ICBMs are launched. It is important to be aware that these factors do erase wealth because as a recession or depression wears on they will force some gold owners to cash in their investment to replace other assets. This will cause gold to start consistently losing value. This will cause a loss of confidence in the bubble - then it will pop.