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To act as a store of value, a commodity or form of money or financial capital must be able to be reliably saved, stored, and retrieved - and be predictably useful when it is so retrieved.This is distinct from the standard of deferred payment function which requires acceptability to parties one owes a debt to, or the unit of account function which requires fungibility so accounts in any amount can be readily settled. It is also distinct from the medium of exchange function which requires durability when used in trade, and a minimum of opportunity to cheat others.
When currency is stable, money can serve all four functions. When it isn't, or when complex and volatile forms of financial capital are involved, it becomes important to identify stores of value, of which common ones are:
- real estate - actual deeds in protectible land
- gold - once the basis of the gold standard
- more stable currencies, e.g. the Euro
- less globally connected currency, e.g. the yuan
- collectibles, e.g. original art by famous creators, antiques
- livestockSheep are commonly bred as livestock. Livestock refers to domesticated animals, that may be kept or raised in pens, houses, pastures, or on farms as part of an agricultural or farming operation, whether for commerce or private use. In many countries the l
While these are clumsy to use in daily trade or to settle accounts, and may vary in value quite significantly, they rarely or never lose all value. This is the point of any store of value, to impose a natural risk managementRisk management is the process of measuring, or assessing risk and then developing strategies to manage the risk. In ideal risk management, a prioritization process is followed whereby the risks with the greatest loss and the greatest probability of occur simply due to inherent stable demand for the underlying asset. It need not be a capital asset at all, merely have economic value that is not known to disappear even in the worst situation. In principle, this could be true of any industrial commodity; gold is favored because its economic utility far exceeds its supply, which puts a higher floor on the value of gold than on many other commodities.
See also: Bretton Woods systemThe Bretton Woods system of international economic management established the rules for commercial and financial relations among the major industrial states. The Bretton Woods system was the first example of a fully negotiated monetary order in world hist, fractional-reserve bankingIn economics, particularly in financial economics, fractional-reserve banking is the near-universal practice of banks of retaining only a fraction of their deposits to satisfy demands for withdrawals, lending the remainder at interest to obtain income tha, Value of EarthIn economics, value of Earth is the ultimate in ecosystem valuation, and important to value of life calculations. It begins with the simple problem that if the Earth ceases to support life, and human life does not continue elsewhere, all economic activity
