Good Golly…what isn’t going up?! Commodities…equities…monies. They’re all on the march.
Yes, you read that right, Fellow Reckoner. Money is going up too. It’s going to the moon…and back. We mean real money, of course…not that flim flam fiat junk the Feds pass off as cash. We’re talking about gold. Gold and, to a lesser extent, silver. Look above at that first number again. Quite a bit higher than the $1,150 per ounce the Midas metal fetched a year ago, eh? Or the $650 it went for five years back? Or the $250 mark, where it started the new millennium.
[Silver, by the way, has performed even better. As we write this morning, an ounce of gold’s perennial bridesmaid is just a few dimes shy of $40 per ounce...quite a ways from the $5 per ounce at which it began the millennium.]
And all this while the naysayers were out with their…well, naysaying.
“Gold has no industrial use,” they said. “It is a relic of the past…a ‘barbarous’ throwback to a bygone era.”
Leaving aside for a moment the fact that gold does have industrial uses (albeit in a relatively limited area), the fact remains that gold’s primary function in an economy is as money, not as circuitry, dentistry or other.
Why? As Aristotle explained more than a few years ago, gold is the best money because it exhibits the necessary characteristics that make an acceptable money more so and better than any of the known alternatives. That is, it is durable, divisible, consistent, convenient, and has value in itself. In our time, as in that of the Ancient Greeks, we have come across no more reliable store of value, no superior medium of exchange, than this simple, humble, nobody-else’s-debt metal. While substitutes are invariably debased, debauched and devalued, gold mostly just keeps to itself, watching with amusement as the government-issued paper currencies commonly used to measure it dance in the wind, whimsical as the empty political promises that back them.
As Doug Casey explains, “The paper we use today is a medium of exchange – it got that way because governments made it illegal not to accept it – but it’s not a good store of value. And it’s rapidly and radically becoming less of a store of value. What we use as money today is actually not money; it’s currency. Technically, that’s simply a word that indicates a government substitute for money.”
So yes, gold is up…as measured in dollars. More correctly, substitute money is down…and headed much lower before this plays out once more as it always, everywhere does…
for The Daily Reckoning
Joel Bowman is managing editor of The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.
View articles by Joel Bowman The articles and commentary featured on the Daily Reckoning are presented by Agora Financial.
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