Wednesday, March 2, 2011

The case for gold

Some of my libertarian friends will tell me that gold has no intrinsic value, and pays no dividend so why bother owning it? Of course that is true. You can't eat gold, but it makes great jewellery, can be used in the electronics industry in small amounts, is still used by dentists, has a minor role in space exploration, but not much else. The point that is often missed in their argument, is this: for whatever reason gold has been used as a method exchange among people for thousands years. That is indisputable. Gold can, and has been used as money. However dragging around bullion or any other precious metals in your pockets has its downside, literally. The weight of the metal and the problems of storage have created proxies for gold. Once-upon-a-time paper money was a proxy for gold; no longer, too bad. Today if you want to buy gold you can at some banks, or other outlets. The other way to buy gold is through the proxy of an exchange traded fund (ETF), a little more scary but much more convenient. One of the largest ETF's, has the symbol GLD on the New York Stock Exchange. A friend of mine posted an article on the mises.org website today that simply must be read to understand why gold could be important soon. Have a look here.

1 comment:

  1. Their first mistake is in maknig the Smith thru Marx assumption that anything has an *inherent* value. We know from Menger that valiue is subjective.

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