Comment by Retric
16 days ago
> If a single market participant finds utility from the use of that commodity, distinct from hoarding, then acquiring access to more is beneficial. Your hoarding helped.
Talking about marginal quantity for tiny fractions of a commodity get abstract so let’s scale it up and the assign a fraction of the difference to that 1kg.
Total quantity of gold in earths crust is constant, so let’s assume what changes is the timing of when a mine gets opened. IE a bit of land is either mined in 1975 vs 2025.
Everything else being equal it’s more efficient to mine today vs 50 years ago both from an effort perspective and environmental impact. EV mining equipment for example is a lot more common today than 50 years ago, they are also a lot safer. Thus removing 1kg of gold from the market for 50 years is also a dead loss.
Correct, and that EV mining equipment was only pursued because that 1kg of gold is $100,000 now instead of $5,750 in 1975. because of that constant quantity that is now unavailable. If gold was still worth $5,750/kg, it wouldn't matter what policy changes about mining regulations were done, nobody would pursue creating the more expensive equipment and mining gold.
The conclusion in your stated logic is to actually hoard as much gold as possible so that mining in the year 2075 is even more EV+ and safer.
You’re missing two important points.
Gold mining alone has basically zero impact on Caterpillar’s R&D into EV mining equipment. The mining industry mines vastly more copper, iron, tin, etc ore and gold is at such low concentrations it’s basically indistinguishable from other types of mining until chemical separation.
If nobody was holding gold as a store of value there’d be a glut of gold for industry and ~zero gold mining the next ~hundred years. Holding gold ultimately means mining sooner not later.
I have counterpoints to that, but my main disagreement is where you draw the line. This feels arbitrary. You look at present energy expenditure as waste, if the asset itself is not consumed for an equally arbitrary reason that you approve of, or generates an even more valuable asset or ongoing revenue stream. I view it as all intertwined with commodity economics whether prices are cyclical, seasonal, or permanently bullish. Low float assets aren’t controversial, a small trading or consumed supply dictates the value of the entire supply, for balance sheets, lending, securitization and more.
Thanks for explaining your preference.
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