That's a win for society if the money is instead invested into something productive!

oraphalous 8 hours ago | parent | next [-]

But it's a loss if it's forced into risky investments that aren't productive.

WalterBright 8 hours ago | parent | prev | next [-]

I never invested in gold because it is not productive. I don't have any money, either (other than pocket money), because I've invested all of it.

Gold is usually invested in as a hedge against inflation. It's not really the gold that goes up and down in value, it's the dollar that goes down and up.

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pfannkuchen 8 hours ago | parent | next [-]

This is an oversimplification IMO. There are higher order effects on the price of gold that makes it not directly related to the value of the dollar.

I'm pointing this out because I have seen a lot of sentiment recently about how the dollar is crashing, just look at the price of gold. Yes, the dollar is decreasing in value faster than usual, but it also isn't crashing in the way that gold is spiking.

This sentiment I think drives speculative gold demand, from standard speculative investing FOMO as well as from emotionally driven inflation fear well beyond what is realistic. The same thing happens to the stock market.

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jazzyjackson 6 hours ago | parent | next [-]

You can call it emotionally driven, but if it’s taken as a fact that the dollar is and will continue to lose value ( and the president is incentivized to pump the price of Bitcoin, whatever level of hell/episode of Mr Robot that is) - then you should expect gold to go up infinitely, relative to a worthless dollar. People aren’t necessarily trading out of fear, just trying to predict the future.

	▲	pfannkuchen 5 hours ago \| parent [-]
		But the perception of future worthlessness of the dollar cannot actually make the dollar worthless. It doesn't work like that. In a theoretical scenario where there are many competing substitutable currencies it should work like that, but we are not in that theoretical scenario, are we?

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taneq 7 hours ago | parent | prev [-]

Wouldn’t gold be spiking in proportion to the market’s predicted future value of the dollar, rather than its current value? If the market’s paying attention you’d expect its gold valuation to lead the actual inflation numbers.

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fjordofnorway 8 hours ago | parent | prev [-]

Given that the gold and the dollar are not productive I think one is betting that society is less productive than inflation when one invests in gold and that one will need to pay a ransom over a long weekend when one holds dollars.

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jkhdigital 8 hours ago | parent | prev [-]

People choose to hold non-yield-bearing assets when they believe the returns offered by current investment opportunities are not sufficient to justify the risks.

It is the miracle of modern capital markets that enables almost anyone to quickly and easily invest their savings in productive assets, but of course capital markets aren’t perfect. The availability of “none of the above” options (like gold) that remove savings from the pool of active investment capital is the essential feedback loop that balances risk and return.

	▲	AlotOfReading 7 hours ago \| parent [-]
		Modern capital markets also have non-yield-bearing assets like gold ETFs. The only practical difference is a tiny expense ratio and more liquidity.