Editing Store of value

{{Short description|Property that money is useful later}}

A '''store of value''' is any commodity or [[asset]] that would normally retain [[purchasing power]] into the future and is the function of the asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved.<ref>{{Cite web |title=Store of Value |url=https://corporatefinanceinstitute.com/resources/valuation/store-of-value/ |access-date=2025-01-10 |website=Corporate Finance Institute |language=en-US}}</ref>

The most common store of value in modern times has been [[money]], [[currency]], or a [[commodity]] like a [[precious metal]] or [[financial capital]]. The point of any store of value is [[risk management]] due to a stable demand for the underlying asset.<ref name ="Essentials">{{cite book |title=Essentials of Economics |last=Mankiw |first=N. Gregory |year=2012 |publisher=Cengage Learning |isbn=978-1133418948 |page=437 |url=https://books.google.com/books?id=sSY9AAAAQBAJ |accessdate=2 January 2017}}</ref>

==Money as a store of value==
[[File:Currency, Money,before Euro.jpg|thumb|Various bills and coins]]
[[Monetary economics]] is the branch of economics which analyses the functions of money. Storage of value is one of the three generally accepted [[Money#Functions|functions of money]].<ref name="esoec">{{cite book |title=Essentials of Economics |last=Mankiw |first=N. Gregory |year=2012 |publisher=Cengage Learning |isbn=978-1133418948 |page=437 |url=https://books.google.com/books?id=sSY9AAAAQBAJ |accessdate=2 January 2017}}</ref>  The other functions are the [[medium of exchange]], which is used as an intermediary to avoid the inconveniences of the [[coincidence of wants]], and the [[unit of account]], which allows the value of various goods, services, assets and liabilities to be rendered in multiples of the same unit. Money is well-suited to storing value because of its [[purchasing power]].<ref name="papc">{{cite book |title=Economics: Private and Public Choice |last=Gwartney |first=James |author2=Richard Stroup |author3=Russell Sobel |author4=David Macpherson |year=2008 |publisher=Cengage Learning |isbn=978-0324580181 |page=264 |url=https://books.google.com/books?id=yIbH4R77OtMC |accessdate=2 January 2017}}</ref>  It is also useful because of its durability.<ref name="funofec">{{cite book |title=Fundamentals of Economics |last=Boyes |first=William |author2=Michael Melvin |year=2011 |publisher=Cengage Learning |isbn=978-1133172994 |page=295 |url=https://books.google.com/books?id=qe08AAAAQBAJ |accessdate=3 January 2017}}</ref>

Because of its function as a store of value, large quantities of money are [[Hoarding (economics)|hoarded]].<ref name="primon">{{cite book |title=Primitive Money: In its Ethnological, Historical and Economic Aspects, Edition 2 |last=Einzig |first=Paul |year=2014 |publisher=Elsevier |isbn=9781483157153 |page=425 |url=https://play.google.com/store/books/details?id=RhejBQAAQBAJ |accessdate=3 January 2017}}</ref>  Money's usefulness as a store of value declines if there are significant changes in the general level of [[price]]s.<ref name="mea">{{cite book |title=Macro Economic Analysis |last=Currie |first=David A. |year=1981 |publisher=Nirali Prakashan |isbn=9380064195 |page=2.14 |url=https://books.google.com/books?id=01G0yTCZpB4C |accessdate=3 January 2017}}</ref>  So if inflation rises, purchasing power declines and a cost is placed on those holding money.<ref name="mpap">{{cite book |title=Macroeconomics: Public and Private Choice |last=Gwartney |first=James |author2=Richard Stroup |author3=Russell Sobel |author4=David Macpherson |year=2008 |publisher=Cengage Learning |isbn=978-0324580198 |page=264 |url=https://books.google.com/books?id=Byk5B7BJkr4C |accessdate=3 January 2017}}</ref>

Workers who are paid in a currency which is experiencing high [[inflation]] will prefer to spend their income quickly instead of [[saving]] it.<ref name="funofec"/>  When a currency loses its store of value, or more accurately when a currency is perceived to lose its future purchasing power, it fails to function as money.  This causes people to use currencies from other countries as a [[Currency substitution|substitute]].<ref name="funofec"/>

According to the Cambridge cash-balance theory, which is represented by the [[Cambridge equation]], money's ability to store value is more important than its function as a [[medium of exchange]].<ref name="ecam">{{cite book |title=Economic Concepts and Methods |date=2008 |publisher=FK Publications |isbn=978-8188597185 |page=297 |url=https://books.google.com/books?id=DyrqBToCDgQC |accessdate=4 January 2017 }}{{Dead link|date=May 2024 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>  Cambridge claims that the [[demand for money]] is derived from its ability to store value.  This is contrary to [[Irving Fisher|Fisher]] economists' belief that demand arises because money is needed for exchange.<ref name="amtp">{{cite book |title=Advanced Monitory Theory & Policies |last=Reddy |first=R. Jayaprakash |year=2004 |publisher=APH Publishing |isbn=8176486124 |page=50 |url=https://books.google.com/books?id=qem_6XaNkF4C |accessdate=4 January 2017}}</ref>

While most money can be hoarded, [[demurrage money]] is a type of money which is deliberately designed to not be used as a store of value.

==Other stores of value==
[[File:Bond of National Loan issued by Polish National Government 1863.png|thumb|Polish National Government bond, 1863]]
[[File:Gold-295936.jpg|thumb|Commodities such as [[Gold reserve|gold]] and other precious metals have historically been good stores of value]]

The term [[cash]] is often used to indicate both [[currency]], which is usually represented by [[paper money]] or [[coins]] in [[developed country|industrialized countries]],<ref name=currency/> and sums [[Deposit (finance)|deposited]] and payable almost immediately on order.

Apart from [[cash]], [[legal tender]] issued on the ''[[Glossary_of_policy_debate_terms#Fiat|fiat]]'' of a [[sovereign government]],<ref>{{Britannica URL|money/cash-money|Cash}}</ref><ref>{{Britannica URL|money/money|Money}}</ref> examples of [[asset|assets]] used as potential stores of value are:

* [[Financial asset|Financial assets]], e.g. [[Stock|stocks]], [[Bond (finance)|bonds]] and other [[fixed income]] [[investments]], [[Investment fund|investment funds]], [[private equity]]
* [[Real estate investing|Real estate]], e.g. [[home-ownership]], [[rental property]], or through [[security (finance)|financial securities]] or [[Fractional ownership#Real_property|fractional ownership]]<ref>{{Britannica URL|money/real-estate-investing|Wondering how to invest in real estate? Four ways to get started}}</ref>
* [[Commodity|Commodities]] (especially through [[financial assets]]), such as [[natural gas]] or [[soybean]]<ref>{{Britannica URL|money/investing-in-gold|Gold-plated investing strategy? Shiny metal and your portfolio}}</ref>
* [[Gold as an investment#Investment_vehicles|Physical gold]] or other [[Precious metal|precious metals]], such as [[gold coin|gold coins]], [[platinum as an investment|platinum]] or [[silver as an investment|silver]] [[Bullion|bullions]]<ref>{{Britannica URL|money/what-are-commodities|What are commodities?}}</ref>
* [[Collectible]]s or [[Work of art|artworks]], e.g. [[gemstone]]s, [[antiques]], [[coin collecting|coins]], [[paintings]], [[investment wine|wines]]<ref>{{Britannica URL|money/how-to-invest-in-collectibles|How to invest in art and collectibles: From pastime to portfolio}}</ref><ref>{{Britannica URL|money/investment-types|Investment types}}</ref><ref>{{cite web|url=https://corporatefinanceinstitute.com/resources/valuation/store-of-value/|title=Store of value|publisher=Corporate Finance Institute|access-date=August 1, 2024|quote=A store of value is an asset, currency, or commodity that maintains its value over a long period. An item would be considered a store of value if its value is either stable or increases over time but doesn’t depreciate.}}</ref>

In addition, [[currency]] can take many alternative forms, such as [[cryptocurrency]], [[livestock]] (e.g. some [[List of currencies in Africa#Pre-colonial era|pre-colonial African currencies]]),<ref name=currency>{{Britannica URL|money/currency|Currency}}</ref> [[labor voucher]]s, [[gift economy]] relationships or  [[stored-value card]]s (value is recorded directly on [[computer chips]] of the cards).<ref>{{Britannica URL|money/Credit-and-money|Credit and money}}</ref>

While the above-mentioned assets may be inconvenient to trade daily or store, and may vary in [[value (economics)|value]] quite significantly, they are expected to rarely lose all value. It need not be a [[capital asset]] at all, merely have economic value that is not believed to disappear even in the worst situation.

The disadvantage for land, houses and property as a store for value is that it may take time to find a buyer for those assets.<ref name="mpap" /> 

As stores of value, gold and precious metals are generally favored to industrial commodities, because of their demand and rarity in nature, which reduces the risk of [[devaluation]] associated with increased production and supply.

[[Cryptocurrency|Cryptocurrency's]] role as a store of value is currently a matter of debate.<ref>{{Cite web|url=https://www.cnbc.com/2020/12/17/mark-cuban-bitcoin-is-a-store-of-value-that-is-more-religion.html|title=Mark Cuban: Bitcoin is 'more religion than solution' and won't help in 'doomsday scenarios'|publisher=[[CNBC]]|date=17 December 2020}}</ref><ref>{{Cite news|url=https://www.ft.com/content/625fbd5a-d90c-434f-998d-5e0eeb4c0f71 |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/625fbd5a-d90c-434f-998d-5e0eeb4c0f71 |archive-date=2022-12-10 |url-access=subscription|title=Bitcoin has ambitions for gold's role|newspaper=Financial Times|date=10 January 2021|last1=Davies|first1=Gavyn}}</ref><ref>{{Cite news|url=https://www.nytimes.com/2017/12/15/business/bitcoin-investing.html|title=What is Bitcoin Really Worth? Don't Even Ask|newspaper=The New York Times|date=15 December 2017|last1=Shiller|first1=Robert J.}}</ref><ref>{{Cite web|url=https://www.cnbc.com/2018/01/16/skeptics-say-bitcoin-has-no-value-heres-why-theyre-wrong.html|title=As bitcoin's price plunges, skeptics say the cryptocurrency has no value. Here's one argument for why they're wrong|publisher=[[CNBC]]|date=16 January 2018}}</ref> The [[Internal Revenue Service]] has issued guidance on "virtual currencies" that refers to them as "a medium of exchange, a unit of account, and/or a store of value."<ref>{{Cite web|url=https://www.irs.gov/irb/2014-16_IRB#NOT-2014-21|title=Internal Revenue Bulletin: 2014-16 &#124; Internal Revenue Service}}</ref> The cryptocurrency [[Bitcoin]] is often compared by advocates to [[gold]].<ref>{{Cite web|url=https://www.cnbc.com/2021/02/04/tom-lee-on-bitcoins-price-and-why-its-better-than-gold.html|title=Tom Lee gives the long-term bullish case for bitcoin and why it's better than gold|publisher=[[CNBC]]|date=4 February 2021}}</ref><ref>{{Cite web|url=https://www.cnbc.com/2021/01/05/jpmorgan-bitcoin-price-could-rise-to-146k-as-it-competes-with-gold.html|title=JPMorgan says bitcoin could rise to $146,000 long term as it competes with gold|publisher=[[CNBC]]|date=5 January 2021}}</ref> In their role as a store of value, cryptocurrencies often elicit concern, due to their extreme [[volatility (finance)|volatility]],<ref>{{Cite news|url=https://www.nytimes.com/2017/12/15/business/bitcoin-investing.html|title=What is Bitcoin Really Worth? Don't Even Ask|newspaper=The New York Times|date=15 December 2017|last1=Shiller|first1=Robert J.}}</ref> or due to concerns about the emergence of regulation and contradictory handling by governments.<ref>{{Cite web|url=https://www.theregreview.org/2020/08/31/feinstein-werbach-does-regulation-chill-cryptocurrency-trading/|title=Does Regulation Chill Cryptocurrency Trading? |work=The Regulatory Review|date=31 August 2020}}</ref> Note that the Bitcoin blockchain ledger is unalterable and that Bitcoin cannot be taken from someone, except by force, known as the 'five-dollar wrench attack'.<ref>{{Cite web |last=Kamau |first=Rufas |title=How To Send And Receive Bitcoin Privately |url=https://www.forbes.com/sites/rufaskamau/2022/10/24/how-to-send--and-receive-bitcoin-privately/ |access-date=2022-11-05 |website=Forbes |language=en}}</ref>

==See also==
{{columns-list|colwidth=30em|
*[[Bretton Woods system]]
*[[Cincinnati Time Store]]
*[[Constant purchasing power accounting]]
*[[Full-reserve banking]]
*[[Great Depression]]
*[[Official gold reserves]]
*[[Value network]]}}

==References==
{{Reflist}}

==External links==
* {{cite web |url= http://www.egwald.ca/ubcstudent/aboriginal/exchanges.php |work= First Nations Studies |title= Linguistic and Commodity Exchanges |first= Elmer G. |last= Wiens |date= 2005 |quote= Examines the structural differences between barter and monetary commodity exchanges and oral and written linguistic exchanges }}

{{Economics}}
{{Means of Exchange}}

[[Category:Currency]]
[[Category:Valuation (finance)]]