Making the case for a Credit Contraction, Deflationary Depression. part 2

Now, the question must be asked: Why is Gold Valuable? Or, what makes Gold an excellent store of value? Better yet, let’s ask what is value and how does it apply to Gold.

Looking up the definitions of Value we get the following from Dictionary.com:

value  noun, verb, -ued, -u‧ing.

–noun 1. relative worth, merit, or importance: the value of a college education; the value of a queen in chess.
2. monetary or material worth, as in commerce or trade: This piece of land has greatly increased in value.
3. the worth of something in terms of the amount of other things for which it can be exchanged or in terms of some medium of exchange.
4. equivalent worth or return in money, material, services, etc.: to give value for value received.
5. estimated or assigned worth; valuation: a painting with a current value of $500,000.
6. denomination, as of a monetary issue or a postage stamp.
7. Mathematics. a. magnitude; quantity; number represented by a figure, symbol, or the like: the value of an angle; the value of x; the value of a sum.
b. a point in the range of a function; a point in the range corresponding to a given point in the domain of a function: The value of x 2 at 2 is 4.

8. import or meaning; force; significance: the value of a word.
9. liking or affection; favorable regard.
10. values, Sociology. the ideals, customs, institutions, etc., of a society toward which the people of the group have an affective regard. These values may be positive, as cleanliness, freedom, or education, or negative, as cruelty, crime, or blasphemy.
11. Ethics. any object or quality desirable as a means or as an end in itself.
12. Fine Arts. a. degree of lightness or darkness in a color.
b. the relation of light and shade in a painting, drawing, or the like.

13. Music. the relative length or duration of a tone signified by a note.
14. values, Mining. the marketable portions of an orebody.
15. Phonetics. a. quality.
b. the phonetic equivalent of a letter, as the sound of a in hat, sang, etc.

–verb (used with object) 16. to calculate or reckon the monetary value of; give a specified material or financial value to; assess; appraise: to value their assets.
17. to consider with respect to worth, excellence, usefulness, or importance.
18. to regard or esteem highly: He values her friendship.

Having read through all of the different definitions, we still have not found the fundamental reason from where Gold gets its value.

The question then becomes; who determines value? The answer; an individual. Now we are getting somewhere. If an individual determines value, does he determine value in an objective or subjective manner? Given that no two individuals are the same, how do they reach a consensus on what is the value of something? Or worst, how about if they cannot come to a consensus? How is such a conflict resolved? Well, at its most basic level, the individuals may agree to disagree or resolve the disagreement by violence, that is, the will of the strongest sets the value of the item or issue in controversy. It can then be said, that is the subjected will of an individual that sets value of an item in relevance to him. But how do we make the subjective value of one individual equal that of another? Although a strong individual may coerce a weak individual by violence to accept something as higher value, the weak individual may still disagree as to the value of the item or issue in controversy, but fail to express it by fear of incurring harm. Then, without coercion, how do we get the subjective will of two individuals to reach a consensus on a value of a certain item? The obvious answer is by achieving their voluntary consensus; that is, by the agreement of their own volition, or will, of the value of the item in controversy. Gold then becomes valuable by enabling an individual to persuade the voluntary will of another individual. Hence the cliché: Money is power.

Now we can clearly understand why Gold’s inherent characteristics make it an excellent storage-of-value, since it can’t be manufactured and its quantity can only be incremented by extraction from the earth and tedious labor. It is the individual’s belief that Gold can persuade the will of other individuals, as it has persuaded him that makes Gold valuable. That is to say, the individual has acquired faith in Gold’s ability to be used to persuade other’s will. Gold’s limited quantity, beauty and non-reproduction deny individuals the ability of making it worthless by careless reproduction or excessive supply.