Trust me, good agricultural land is worth a great deal more than that!
Solid fuel price warning
- Thread starter British Red
- Start date
Reading through this thread it's interesting to consider the difference between value and price. A tonne of smokeless fuel has, to me, a consistent stable value. It will heat our cottage for a Winter (we normally use sustainable firewood but the value argument is current). What's changing here is it's price, not it's value.
One can can expand the argument with land. An acre of land has a value. That value can be improved (by improving it's drainage, access, fertility and even what it contains from nothing to mature woodland). Whilst changing its value will affect it's price, it's price will also fluctuate irrespective of changes to it's value.
The gold Vs land debate captures this well. Land purchased for a price has more inherent value than gold purchased for the same price. However as a store of wealth, rather than a store of worth either may out perform the other.
One can can expand the argument with land. An acre of land has a value. That value can be improved (by improving it's drainage, access, fertility and even what it contains from nothing to mature woodland). Whilst changing its value will affect it's price, it's price will also fluctuate irrespective of changes to it's value.
The gold Vs land debate captures this well. Land purchased for a price has more inherent value than gold purchased for the same price. However as a store of wealth, rather than a store of worth either may out perform the other.
Gold has never had much intrinsic value beyond the fact that it doesn't tarnish and some limited uses in electronics.
However historically, in troubled times Gold has offered a safe harbour for wealth. It's perceived status as being more tangible and transferable than wealth in the form of fiat currency being, as it is, independent of a single currency or nation.
This is why I think it's interesting to consider that price, wealth, value and cost are all very different things. Gold has a high price and may be a store for monetary wealth. It has however very limited intrinsic value beyond its use as a medium of exchange or perhaps in jewellery - although even there it's value is largely one of perception.
I think Golds main - ( I'm cautious to use the word Value ) useful inherent function is that its a fairly standard , infallible METRIC of all over types of FIAT Value to be measured against. A yard stick of yard sticks - no applicable value over and beyond other currencies unless one see's it as the one true original currency.
In theory Crypto Bitcoin is in some senses more refined than Gold and rarer. More unique. More transferable. More easy to circumvent countries and legal systems. Which is perhaps why its so feared by most governments.
The idea that Price , Wealth, Value and Cost are separate things is a good line of thinking to explore.
If all things are sourced from the Earth ( Farmland and Gold ) then they are both potentially capable of providing a 'return' of sorts although we think Farmland returns more tangible edible products whilst it does so.
I'm not sure how one would separate the ideas of PRICE VS COST??
But I can see how WEALTH and VALUE are two very different things.
Price and cost are very different things.
We sell rare breed hens. When we sell a point of lay hen it has a cost to us. We have purchased feed, our equipment has incurred wear and hence depreciation. So each bird that we sell has, to us, a cost. The price at which we sell them is very different since we need to factor in our time, the need to make a profit, the loss incurred when a certain proportion of chicks don't thrive, are cockerels etc. So to us, the price of those birds and their cost, to us, are vastly different. For many years in supermarkets the cost of a tin of baked beans was higher than their price to the customer (a so called "loss leader).
From a business perspective, obviously, you are right - price sold minus total cost of production = profit. However, your sales price is your buyers cost 
I would also argue that the value of something (such as a piece of woodland) does go up as desires/fashions/needs change. How something is 'valued' depends on a load of factors including market demands - the price paid may be under or over its intrinsic value.
I would also argue that the value of something (such as a piece of woodland) does go up as desires/fashions/needs change. How something is 'valued' depends on a load of factors including market demands - the price paid may be under or over its intrinsic value.
Even then I would argue it can be different.From a business perspective, obviously, you are right - price sold minus total cost of production = profit. However, your sales price is your buyers cost
Let's continue with the tin of beans analogy. Those beans are priced at, say, 50p. So is that their cost to me as a consumer?
Well, no. I have to either pay a delivery charge OR go and buy them. Going to buy them also involves transportation costs - a proportion of my petrol cost or bus fare for example. My time is also a factor. I could spend two hours going to the supermarket - a proportion of which should be allocated against the notional beans or I could work for those two hours and pay a delivery charge
I think we can see that the price of those beans, to me, is relatively fixed but their cost to me may incorporate a never of additional factors.
[/Nerd]
I came into some money a few years ago to have enough along with my own savings to be able to afford a small very modest woodland. I talked myself out of it. Almost every time I see a 'woodland for sale' sign I dream of what could of been......I assume the value of the woodland I bought five(?) years ago has gone up proportionally - not that it makes any difference; I'm not planning on selling it
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But wouldn't then a Price and Cost equation have an ascending value and ratio at every point of the logistical production and supply chain?
As an example if you live next door to ACME tinned sardines factory you could access the sardines at post production cost with very little added 'on'
If you lived on a remote Island at the donkey end of the world the cost of the Sardines would have all the logistical elements placed upon the transit and movement equation.
So the PRICE of the sardines wouldn't be a static fixed thing but subjective on a few levels.
The COST however maybe static -at point of source creation.
That right?
Sort of - but these are the right questions. Even in business there are several versions of cost - it may be Inc or exc VAT, including duty & transportation (landed goods cost), the costs of labour and on transportation (cost to sell) and more. It's amazingly complex and often why arguments break out in boardrooms ( a lack of a "data dictionary").
One saying that is rude and untrue but helpful in understanding meaning is
"Accountants know the cost of everything and the value of nothing"
Historically gold and silver were identical to money. The royal stamp just guaranteed the weight.
That isn't the case anymore. It became just a rare material that everyone seems to want, whyever. Something that I don't need has no value to me. Should people realise that gold could loose the high price. I am unsure but I think it already did.
I think 2000 years ago you got much more for gold than nowadays.
That isn't the case anymore. It became just a rare material that everyone seems to want, whyever. Something that I don't need has no value to me. Should people realise that gold could loose the high price. I am unsure but I think it already did.
I think 2000 years ago you got much more for gold than nowadays.
When the herring industry was in full swing with exports from Stornoway to Russia, topsoil was used as ballast on the return at very little cost.
Today that topsoil supports really quite an impressive woodland in the Lews castle grounds free to access for all.
Almost zero cost, immense value at zero price to the consumer at point of use.
Smokeless coal in Stornoway has gone from maybe £8/bag a year ago, to £9 before Xmas to £10 now. Non-smokeless is still just under £8 maybe because it arrives by the boat load and bagged locally.
Today that topsoil supports really quite an impressive woodland in the Lews castle grounds free to access for all.
Almost zero cost, immense value at zero price to the consumer at point of use.
Smokeless coal in Stornoway has gone from maybe £8/bag a year ago, to £9 before Xmas to £10 now. Non-smokeless is still just under £8 maybe because it arrives by the boat load and bagged locally.
