My former co-blogger on gold:
I loved this line in the Economist:As a result, Mr Reade, who reckons that the fundamentals justify a gold price of only $700-750 an ounce, has “thrown in the towel” and now expects bullion to reach $1,025 within a month and $1,075 within three.The fundamentals? I would love to see any discounted cash flow for gold, an inert, industrially useless metal, whose only savings graces are 1) Bernanke cannot make more of it, 2) neither can anyone else, 3) people have agreed it's money for ten billions years.
this: "industrially useless metal," is so untrue, as to hurt one's mind.
http://www.utilisegold.com/
http://www.utilisegold.com/uses_applications/biomedical/
MEH,
I was going to point out that gold is one heck of a conductor. Looks like there is more to it. I had no idea it was used as a catalyst.
Yeah. Who'd ever want a metal that is highly conductive, biocompatible, very corrosion resistant, can be alloyed to get a fairly wide range of maleabilities from very soft upward, reflects IR radiation well, and is ammenable to aesthetically appealing finishes.
The biggest testament to the industrial usefulness of gold is that in spite of its price being ran up by its use in ornamentation and as a store of value, it's still used extensively for other applications.
Yeah. Who'd ever want a metal that is highly conductive, biocompatible, very corrosion resistant, can be alloyed to get a fairly wide range of maleabilities from very soft upward, reflects IR radiation well, and is ammenable to aesthetically appealing finishes.
The biggest testament to the industrial usefulness of gold is that in spite of its price being ran up by its use in ornamentation and as a store of value, it's still used extensively for other applications.
whose only savings graces are 1) Bernanke cannot make more of it, 2) neither can anyone else,
Sure you can. Its called "mining".
i once asked a true gold bug why he preferred gold to oil. or for that matter, gold to shares of a structurally good business positively leveraged to inflation (e.g., ADP, AXP, MA, PAYX, MO).
his answer was very telling. he said that if society collapses, one can carry around a substantial amount of gold in a backpack. oil has storage (and transport) problems. and shares may not be easily accessible if the financial system collapses.
he tries to only own the actual metal. the thinks the speculators buying the ETF's are kidding themselves if they think they will ever be able to turn their shares into cash if/when Armageddon comes.
i reckon that a very small fraction of the people who have jumped on the commodity supercycle train approach the sector the way this investor does. that makes me very nervous about commodity prices going forward. it's starting to feel like a one way trade.
Well, just looking at various calculated values over time, a $35 troy ounce of Gold in 1933 would be worth from between $500 and $1500 today, so $750 based on the gold-bug assumption isn't bad.
Half Canadian,
http://www.goldbulletin.org/downloads/CATGOLD_4_40.pdf
Picking up on catalysis, I'm surprised(hardly) that our pro-Carbon Tax Hostess doesn't appreciate Au's utility in picking Hg out of exhaust streams.
If only those chattering for more Regulations would understand more about Business, we'd have less of former, and more of the latter.
I don't need to restate the utility of gold, but I'd like to push back on your other points a little too - granted, you can't make more gold (until you can make artificial supernovae), but if you have tens of billions of years, that's very doable. The earth is around four billion years old, the universe around fourteen billion, so tens of billions of years predates the big bang. Human civilisation is maybe tens of thousands of years old. I know economics tends to make you blind to extra zeros, but being off by six orders of magnitude is a very leveraged bet, even by hedge fund standards.
If you want to attack staples of jewellery, have a go at diamonds, which are trivially manufacturable compared to silicon chips, let alone gold.
Sure you can. Its called "mining".
Mining is discovery, extraction and refinement of existing material -- not "making".
Replicator technology with arbitrary elemental synthesis is the only way that physical gold could be made as "elastic" as fiat currency -- and that remains solidly Star Trek tech.