Gold is a commodity just like any other commodity.
If you’ve ever talked to a retail level financial advisor that was recommending stocks or mutual funds you’ve probably heard this exact position on gold. There is a mountain of mainstream media propaganda that reinforces this position as it attempts to convince you to tie up all your assets in tax deferred retirement accounts. I’ve read a lot of it myself.
Gold is money and nothing else. -JP Morgan source.
If you’ve ever seriously considered gold as an investment you’ve probably come across this quote from a famous banker. Many advocates of gold say similar things. Yet we know gold is not money. We no longer buy groceries or cars with gold coins.
The truth is that gold is not like any other commodity. Gary North’s recent article explains some of the misstatements surrounding gold made by those interested in trading US dollars for gold.
Gold Has An Almost Permanent Durability
Gold stands the test of time. It doesn’t rust and it doesn’t deteriorate. Coins found at the bottom of the ocean submerged for hundreds of years are just as marketable as recently mined gold.
Is there any other tangible good or commodity that can be stored indefinitely? What if you wanted to purchase a year’s supply of gasoline at today’s prices? How would you store it?
Gold Has A Long History Of Value
Have you ever heard that a thing is only worth what someone is willing to pay for it? North explains this in economic terms by stating that people impute value to an object. People have valued gold for thousands of years. A two thousand year old one ounce gold coin could be traded for roughly $1400 worth of goods and services today. What other physical object could last that long and still be used to purchase goods and services? Gold is something that could be passed on to future generations.
Whether you already own gold or have never considered it as an investment, read North’s article. If you are curious, find a local coin shop and go in to see what a 1/10th ounce Gold American Eagle looks like. You could also feel the weight of a 1 ounce Gold American Eagle while you are there.
Do you think gold is a barbarous relic or a valuable commodity? Let me know in the comments section.