Here we go! Silver under $18...

But VALUE is not intrinsic, it only exists in the minds of humans.

 

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I think what's going on is that you are assuming the intrinsic value of an item, or in the material within an item, applies equally to everyone across an entire population. Of course it doesn't. There are a lot of people who don't give a squat about owning precious metals. However, if you gave one of them a gold bar, I can guarantee they would not simply throw it in the trash, because they know that gold does have value to other people.

I don't care much for diamonds, so the only ones I own are really small and embedded in various saw blades and grinding bits. Does that mean diamonds have no intrinsic value? Absolutely not. It just means they have no value to me outside of their potential for resale.

The bottom line is that these things (precious metals, diamonds, etc.) do have intrinsic value to a large enough population that their value, even though it may fluctuate with the market forces, has been established.

 

Yes, indeed. And since I am a human and I interact with other humans, then their value to humans is really all that matters to me.

 

Much the same thing could be said for virtually all things that have value, especially money. That their value only exists in the minds of humans. Does that condition mean they have no real value?

I think it's also good to remember that "intrinsic" isn't necessarily defining that silver has value, because that's a given, but rather an object that contains silver has intrinsic value.

 

I'm here, lurking, not much time for posting. Legislative silly season in Harrisburg. To the person who asked earlier, yes, The Economist all audio is the one. Varies from 0-4 or so short clips a day. Aren't those accents a hoot? Would love to weigh in on value theory, but too little time to get into it. I am an intrinsic value skeptic, though. Examine any entry level Econ text and see how individual demand curves are grown into aggregate ones. All value of everything depends on "dollar votes", nothing more. Production cost is useless. There are many elements rarer than gold. Nobody has much of a perceived use for most of them. Do you REALLY believe uranium has an intrinsic value? Did rhodium when it crashed to 1/10 its previous price? Intrinsic is just a shorthand way to distinguish from raw naked speculation, and PM's have been ALL about raw naked speculation for years now.

 

What you are talking about is just market value? Why the word intrinsic?

 

yes.

What? How does this follow? Value doesn't emanate from things, it comes from peoples minds. Why is this a problem? Just because value comes from the minds of humans doesn't make it fake. It's not only real, it's measurable in what people are willing to trade for it. The most used thing in trade is called money and is what people use to measure the value of other things.

It is a given that silver has value today, but it is not a given that it always had or always will have value. Value doesn't come from silver, value comes from human desire to have and use silver.

No, silver has value because people have uses for silver that exceed the supply. If those uses go away or the supply exceeds all uses, the value goes away.

 

I'm trying to understand your argument. Are you saying that intrinsic value does not exist because it is not permanent? That there could come a time when people no longer place any value whatsoever on silver?

 

The auto industry owns the market for rhodium. Once most cars turn electric it'll become more worthless than irridium. I guess it's used to plate jewlery too, but they use very little. I can't see a lot of demand.

I doubt the majority of people even know what rhodium is, or palladium for that fact. I wonder if we should thank Croesus et al. for making it so darn popular B)

I think it will always have value.

I think coal has value, as well. Funny thing, if you make it dense enough...

 

I'm saying value isn't a property of things. Intrinsic value says that things are valuable regardless of humans thoughts of them, which is not true. Value is the human desire for things. Market value is the intersection of all those values and supply. Value is not a property of an object, it is the human desire for the object. Value doesn't exist without human thought and emotions, ie it is not intrinsic in the object.

Intrinsic means that value is contained in the object and humans thoughts don't matter. Value is not contained in an object, value is a measure of the human desire for an object. Objects have properties that humans desire. It's the desire that is the value.

 

For intrinsic value to be true, it would have to be permanent as long as the object didn't change. Otherwise it is not intrinsic in the object, it is something outside the object, that thing is human desire.

 

I'm guessing that any of you understanding what intrinsic value really is have never really truly been hungry or thirsty. If you've ever really been thirsty or hungry, intrinsic value would actually mean something to you, until then, by all means, please argue your ridiculous semantics. It's almost refreshing, almost, but not really.

 

Once again, the hunger and thirsty are human not anything intrinsic in the objects desired. If all you are going to do is cast insults, please do it somewhere else.

 

This value may or may not be the same as the current market value. Value investors use a variety of analytical techniques in order to estimate the intrinsic value of securities in hopes of finding investments where the true value of the investment exceeds its current market value.

 

No, value investors choose companies where they disagree with the market value and believe that the market will eventually move more toward their perceived valuation. They do this in a variety of ways, none of these involve intrinsic value because value is never intrinsic.

Some ways this is done:
Liquidation value - they attempt to estimate how much a company is worth if liquidated. This is just a sum of market values of pieces of the company, minus estimated losses incurred by breakup costs and value destroyed by the breakup process. So, this is a market value of the sum of parts.

Cash flow or earnings analysis - the investor estimates future cash flows or earnings and then discounts them to present values. Of course, the value of cash flows is not intrinsic, it is an opinion based on the discount rate chosen.

Comparative value analysis - They compare the company they are analyzing to similar companies and substitute their market value.

 

... implying investing is synonymous with buying stocks

What if the entire stock market was overspeculated? Then your "estimated losses" are pretty high since companies use this money for capital. If people start seeing a poor ROI they might turn elsewhere.

As of recently this doesn't seem to be happening. I'm not sure if that's because of stimulus/inflation or if the stock market will just magically keep going up and up in value forever (on average) as peope seem to believe it will. Again, I'm speaking of the average, not individual companies so I'm not disagreeing with anything you said. I just think there *has* to be an equilibrium at some point and I don't see stocks as a good investment when the entire market is saturated. This is assuming a completely diversified portfolio but just look at how many people are buying stocks vs. decades ago.

This is not long-term as it is really an unbounded system, but in the case of another recession I could see the possibility of a downward spiral a ot worse than 2008. Nobody can predict the future.

As far as "intrinsic" goes, I'm not one to debate semantics but I do find the conversation interesting. I still think the value of silver was much influenced by Lydia and the inventing of coinage.

 

But the idea/definition of intrinsic only exists in the minds of humans. Therefore the minds of humans have the power to create and define the idea of intrinsic value. It makes no difference whether value can be intrinsic or not.

 

Of course it's subjective. Back to rhodium, THAT has value right now mostly because of cars and catalytic converters. That might seem pragmatic, but what gives cars value?

Personally, I don't even WANT a car. I hate driving and dealing with traffic. I like living in a big city where I can just hop on a subway listening to KMFDM and not have to bother. It is also better for the environment.

The value of almost anything is in people's head. There is very litte we need but are so used to our comsumerist culture most things people feel they can't live without.

I've always wanted to start a commune in the middle of the rainforest; something like Walden but on crack. I wouldn't want to do it for more than a couple of years but just like Thoreau it would prove a point.

 

I think you're placing too many artificial constraints upon the definition of intrinsic:

Human thoughts and values DO matter, and intrinsic value does not have to be permanent. If you give up those constraints, which are not in the definition of intrinsic, then you have no argument.

 

Permanent is not a constraint, it is logically deduced from the definition. If the value is in the object, it can't disappear if the object doesn't change. If it can disappear we know it's not intrinsic.

Also if you are giving in that value comes from humans and not the object, why are you still arguing that the concept of intrinsic value is valid?