The fresh bacon index is maybe less exposed to this kind of thing because, unless the world mass-converts to Judaism or something, someone will pay to eat bacon, so there's a floor on how low the value can go. But gold? Industrial use of gold is minuscule compared to speculative gold trading. Today GC trades at US$1773 per troy ounce, which is 10% down from a few months ago, late 02020, and 100% up from 02008. In 02001 it was barely above US$200. It could drop to US$200 again, and everyone who bought today and held will have lost 80% of what they invested.
That can happen with fresh bacon, too. What's different with gold is that, if enough people decide to sell, it could drop to US$20. It could drop to US$2. Or it could rise to US$20000. We have more history about gold: it's been a precious metal for many millennia and a widespread currency for the last three. So it's a lot less likely for it to lose 99% or 99.9% of its value like that, or go up 100× (though, as I said, it's gone up very close to 10× in a mere score of years.)
People — and, especially, central banks and governments — invest in gold because they dont think it's likely for that to happen, and because it doesn't have the secular inflationary tendency that fiat currencies do. It may bounce up and down by a factor of 10 in a couple of decades, but in 01687 it was probably also within that same factor-of-10 band.
They're not looking for an expectation of profit when they seek a "store of value".
They're just looking to reduce the risk of indigency.
Are people buying Google, Facebook and Amazon stock suckers as well?
That is an idea from the 70s. Not many people would agree that there is an actual fair value for a stock anymore, much less that it is driven solely by accrued future dividends.
No, that is an idea from economics predating the 1970s. Did you mean the 1870s? It predates that.
You can value a stock however you like. Good luck, I wish you well.
It really depends on what level of formalism you consider to be the basis of "the idea". I'm referring to the "dividend discount model" (DDM) here, which to me is the first real well defined model of this idea in modern economy. Exposed in early 60s and democratized in the 70s:
"The dividend discount model (DDM) is a method of valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value."
Bitcoin provides very little value outside speculation, not zero, but very little. That is the difference.
It remains to be seen how resistant Bitcoin is if powerful governments really decide to take it down.
Bitcoin and Blockchain is an interesting project but 1 BTC > 50k USD... Yeah, sure...
> Bitcoin and Blockchain is an interesting project but 1 BTC > 50k USD... Yeah, sure...
Bitcoin could conceivably become the next global reserve currency, 50k USD is horribly undervalued from that PoV.
> Why do you care so much about predictable supply if the price is anything but predictable?
Because the price will go higher. When the price goes over $x MM per BTC it will be very predictable.
> How is such high volatility commodity a good storage of value?
It stores more value than any other commodity. When the stock market started in 1920s it was no less volatile than Bitcoin. Volatility is a sign of disruption as much as it is a sign of value.
> 1 BTC > 50k USD... Yeah, sure...
If only you could see the data I'm seeing.
The stock market was never meant to be a way to store value but a public tool to finance and own projects that actually produce economic value. Comparing it to the bitcoin market is a false equivalence.
But best of luck for your investments.
To find something on a similiar scale to bitcoin you might actually need to go back to the 18th or 17th centuries (see the “South Sea Bubble” or the “Tulip Mania”).
Note I'm not saying that it's not possible to win in this system - clearly some people will, at the expense of many others. Perhaps it's my own ignorance, but I genuinely struggle to see how this isn't a zero sum game.