Store of Value

The utility of a fish is that we can eat it. Alternatively, we can trade it with someone who wants to eat it. However, a fish is a terrible store of value. If it isn't eaten relatively soon, its value is lost.

The thing to note is that utility is a property of the fish, which is lost over time. Utility is not something outside of the fish, nor is its durability. While we all value fish differently, depending on all sorts of factors, utility and durability can be objectively quantified. We can all agree that fish is a poor store of value.

Another quantifiable factor that relates to value is scarcity. If something is useful, durable and scarce, we can be relatively sure that it is valuable not only to us, but to a lot of people. Furthermore, if scarcity can be expected to continue into the future, the value attributed to such a thing will remain steady.

In short, a good store of value has the following four qualities:

1. It has utility in and of itself
2. It is durable
3. It is scarce
4. Its scarcity is stable

These are objectively quantifiable qualities. While psychology and circumstances constantly change, no-one can disagree with the objective truth that fish is a bad store of value.

Similarly, gold can be objectively determined to be a reliable store of value. It has all sorts of useful properties. It is non-corrosive and therefore infinitely durable. It is scarce, and we can reasonably expect this situation to persist.

It is not mere psychology that makes gold a better store of value than fish.

By Diliff, CC BY 2.5, Link