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<p>[QUOTE=&quot;NorthKorea, post: 1988924, member: 29643&quot;]Explain *why* intrinsic value is &quot;one of the worst economic thoughts ever devised&quot; in your opinion. The idea of an intrinsic value incorporates the aggregation of &quot;subjective values&quot; when applied to the concept of commodities. Marginal utility of stores of wealth is fairly useless as a concept. If an individual has no use for a 400 troy ounce brick of .999 good delivery gold in their vault, that doesn&#039;t result in a $0 subjective value to the owner. It doesn&#039;t even result in a subjective value of 75% of spot. In fact, it results in a value defined as the highest bid price on the bid-ask spread for daily gold spot. It&#039;s a fixed value, regardless of the subjective value or marginal utility to an individual. The only times that this isn&#039;t the case is outside of the market, where liquidity and scarcity issues might come into play. If someone needs gold *today* (literally within two days), they might be willing to pay a premium for physical gold, since they don&#039;t have the luxury of waiting three days for their physical gold to be delivered to their custodian or warehouse. If someone needs to sell gold *now*, they might be willing to take a slightly under spot price to avoid dealing with seeking out a willing buyer. However, under normal circumstances, individual utility doesn&#039;t change the underlying value of the metal.</p><p><br /></p><p>Maybe I used the wrong word, when I said intrinsic, since I didn&#039;t mean spot price. I meant the marginal production cost of one troy ounce of silver, if it were possible to extract silver at the same cost, regardless of the number of units being produced. This number is based upon costs of labor, energy , research, refining and marketing. It excludes the costs of opening a new mine (acquisition of machines and land leases), and assumes a mine is already producing.</p><p><br /></p><p>Regardless of my choice to incorrectly use the word intrinsic, it doesn&#039;t change the fact that both a producer&#039;s value (my definition of intrinsic) and delivery value (Investopedia &quot;spot&quot; definition of intrinsic) do exist, even if you don&#039;t think they do.[/QUOTE]</p><p><br /></p>

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