Many investors view gold as an investment with no intrinsic value, but that’s not an accurate assessment. Gold actually has a number of industrial uses from radiation shielding on satellites to its value as a conductor of electricity in almost every electronic device around the world. While its value as an industrial metal doesn’t equal its current trading price, it still creates a bottom for the metal that investors rarely take into consideration.

Most of the gold that has ever been produced in history still exists today in some form or another. As such, gold should be considered less rare, and therefore, less expensive, but in practice this hasn’t been the case. Take a look at copper prices and how since the material is readily recycled, it follows the standard rules of supply and demand. Gold, however, wears multiple hats.

As a worldwide standard of currency, as well as industrial metal, gold obeys a different set of laws that makes determining its true value much trickier. If it was simply based on the cost of extraction and refining, the cost would be reasonably easy to figure out—but as we mentioned before, gold is recycled with plenty of it to go around meeting demands.

Interestingly, if everyone in the world wanted to own just a few ounces of gold as an investment, there wouldn’t be enough to meet the demand, even if every gold mine in the world were tapped out. If demand were to spike significantly, gold’s value could skyrocket very quickly by applying basic demand/supply laws.

When gold really shines isn’t as an industrial metal or even as just a safe haven asset—it’s when inflation threatens the stability of a currency base. But inflation alone won’t do it. High inflation tends to mean higher interest rates allowing investors to reap higher returns to compensate for the rising cost of goods and services.

In order for gold to be a viable investment product, real rates need to negative. Gains from conservative assets like treasuries and savings accounts must be less than the rate of inflation. If that happens, gold is one of the only assets that maintains a steady value.

The value of gold is a complicated mixture of industrial application and investment value. Each one separately won’t justify gold’s price. In order to get an accurate figure, we need to look at why gold is being used and what value it holds in investors’ minds. Understanding that gold is part fundamental and part investor sentiment brings balance to gold’s price and makes it easier to ascertain its true value.