Tilted
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Gold Hits Record High at $1,035.95 on Weak Dollar
I'm not sure I'm sold on gold as the long-term inflation hedge that it once was. Short term, it might not be bad though.
The bottom line is that there are better inflation hedges out there for money to flow to - ones with more tangible, more real, bases for value which can act as a backstop and provide support for the inflationary hedge value that they assume. The value of gold is somewhat tenuous. It relies on the collective desire, and the collective hope, of people that it remains the collective desire of people that it be a standard repository of the notion of inherent value. At some point, though we can't be sure when, the reality of what it really is will overwhelm that collective wish.
In reality, gold does not have a lot of practical use - at least not enough to justify the supply that we create. It isn't 'consumed' so to speak, so the world supply just continues to grow. And, gold producers have the ability to increase supply to account for increased demand, when that demand drives pricing that makes production very attractive. Since it isn't consumed, the arbitrary demand for it has to keep increasing to prevent the bottom from falling out from under it. Well, arbitrary demand can only increase so much before someone sufficiently convincingly points out that the emperor has no clothes on. At that point, without a strong real bases for value (for supply on the scale that the arbitrary demand created), all of the arbitrary value has to evaporate.
So, like I said, short term gold may be an okay play. But, long term, I don't think it is safe. And, there are other options for savvy investors, which are much safer. We live in a world that functions differently than the one that supported gold values for so long - and eventually that is going to matter. Other potential repositories for the notion inherent value are more liquid - more accessible - now.
I'm not sure I'm sold on gold as the long-term inflation hedge that it once was. Short term, it might not be bad though.
The bottom line is that there are better inflation hedges out there for money to flow to - ones with more tangible, more real, bases for value which can act as a backstop and provide support for the inflationary hedge value that they assume. The value of gold is somewhat tenuous. It relies on the collective desire, and the collective hope, of people that it remains the collective desire of people that it be a standard repository of the notion of inherent value. At some point, though we can't be sure when, the reality of what it really is will overwhelm that collective wish.
In reality, gold does not have a lot of practical use - at least not enough to justify the supply that we create. It isn't 'consumed' so to speak, so the world supply just continues to grow. And, gold producers have the ability to increase supply to account for increased demand, when that demand drives pricing that makes production very attractive. Since it isn't consumed, the arbitrary demand for it has to keep increasing to prevent the bottom from falling out from under it. Well, arbitrary demand can only increase so much before someone sufficiently convincingly points out that the emperor has no clothes on. At that point, without a strong real bases for value (for supply on the scale that the arbitrary demand created), all of the arbitrary value has to evaporate.
So, like I said, short term gold may be an okay play. But, long term, I don't think it is safe. And, there are other options for savvy investors, which are much safer. We live in a world that functions differently than the one that supported gold values for so long - and eventually that is going to matter. Other potential repositories for the notion inherent value are more liquid - more accessible - now.
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