The Water Diamond Paradox

Mises says nobody ever has to make a choice between all of the world's gold. And so that's why iron is cheaper than gold, even though iron has what may appear to be more essential functions and houses. Yet gold is much more expensive because these decisions of valuation are taken at the margin. So if I were on deserted island, where I had no access to water at all, then water would be a lot more valuable than diamonds.