There is no intrinsic value of gold or other commodities. They are inert, non-earning assets.

There is no intrinsic value of gold or other commodities. They are inert, non-earning assets. 

• As an investment, gold is a pure speculation because there is no internal creation of value. 
• Industrial metals, such as copper, are less speculative than precious metals because their prices more generally reflect demand and supply. 

Nevertheless, extrinsic factors operating through buyers and sellers determine the price of every commodity. 


In contrast, for equities and other claims on assets, their value is intrinsic because it is generated by the underlying operating enterprise in the form of earnings, dividends, and cash flows. 


There are no intrinsic prices, only intrinsic values.


http://www.numeraire.com/value.htm

What Warren Buffett says about Commodity Companies

COMMODITY COMPANIES

Warren Buffett does not like to invest in what he calls commodity companies - companies whose product does not differ from that of competitors in any significant way.

A company like this can be vulnerable to the actions of competitors and have limited power to raise prices to retain their profit position in the light of inflation.

WHAT WARREN BUFFETT SAYS ABOUT COMMODITY COMPANIES

Warren Buffett said this in 1982:

‘[Where] costs and prices are determined by full-bore competition, there is more than ample capacity, and the buyer cares little about whose product or distribution services he uses, industry economics are almost certain to be unexciting. They may well be disastrous.’