"intrinsic" is a bad word. really we should be saying like "non-speculative" or "utility" value or something. The price as if no one had ever thought to price it to sell to other speculators.
gold's price is some part speculative some part non-speculative. Non-speculative value gives it some kind of price floor, but the price can be way above the floor. For instance, if the price of gold jumps 2x it's not necessarily because gold jewelry became twice as popular in the same time period.
There's betting that the price will go up. That's speculative. There's industrial use. That's non-speculative. And there's kind of a third category that I don't know how to name.
I can invest in gold because I want something that will retain value, even if it doesn't grow. I'm gambling, if you like, but I'm gambling that people will still want gold for more than industrial and cosmetic uses. In a big world, where in a variety of places people fear that their government will try to take their assets (either through confiscation or inflation), that seems like a reasonable gamble. I have a hard time classifying it with "speculation". It's still a gamble, but it's a pretty conservative one.
You are also gambling that mining doesn’t increase, that new technology doesn’t make finding new reserves easier, etc... you are also giving power to the countries that mine the most gold (China, South Africa, Russia, Australia, Peru, Canada, the USA).
New gold is a very small fraction of the gold supply, so I'm not giving much power to those who mine the most (currently). A major new discovery could change things, but it would have to be huge. Mining (or, more probably, refining) becoming easier could change things more than a big discovery, by making many uneconomic deposits suddenly economically viable to work.
Most fundamentally, I'm gambling that the chemical composition of the earth's crust isn't going to change much. That part of the gamble I feel pretty confident about.
Mining yields 2% of existing supply every year, and gold isn’t used up (it is reused and recycled), that isn’t insignificant. We also have no idea how much China and Russia are actually mining, there is suspicion that they have a lot more than they say they do. Gold is not all that rare, it is abundant in the earth’s crust, those reserves are just largely inaccessible with today’s tech. See http://www.westcoastplacer.com/how-much-gold-is-left-on-eart....
gold's price is some part speculative some part non-speculative. Non-speculative value gives it some kind of price floor, but the price can be way above the floor. For instance, if the price of gold jumps 2x it's not necessarily because gold jewelry became twice as popular in the same time period.