You can fondle the cube, but it will not respond.

You can fondle the cube, but it will not respond.

anyone who believes that the gold standard era was marked by price stability, or for that matter any kind of stability, just hasn’t looked at the evidence. The fact is that prices have been far more stable under that dangerous inflationist Ben Bernanke than they ever were when gold ruled.

the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be about $9.6 trillion. Call this cube pile A.
Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

though Rasmussen did find that 57 percent of likely voters agreed with the gold standard after they were asked this follow-up question: “Many say that adopting the gold standard would dramatically reduce the power of central bankers and political leaders to steer the economy. If you knew that returning to the gold standard really would reduce the power of central bankers and political leaders to steer the economy, would you favor or oppose returning to the gold standard?” However, framing the question like that is hardly a neutral wording of the question.

Gold is not an investment, it’s a speculation

Investments are made by evaluating underlying value. Speculative bets are made by looking at the price of something and simply hoping the price goes up. Investing is about value; gambling is about price.

Gold has no real underlying value. I know there is a market for it. I know it is real, just like real estate was real in 2007.

But what is the value of a bar of gold? 

It has no value except the one assigned by a herd of speculators. This is true for most commodities. They don’t actually produce anything. They are raw material. No value. No dividend. No cash flow.

From NYT

When you’re on the same side as Beck and TV pitchmen and there is GS and Soros on the other side of the bet, you are the dumb money.

Economic conservatism as a religion

But beyond the specific facts, it’s the logical structure of the argument that’s insane. Economic growth is a key predicate for an expansive welfare stare. So it’s completely true that if you just started throwing out the key institutional features of modern market economies that you’d strangle big government. But you’d be strangling big government by destroying the economy. Why do this? It’s like economic conservatism as a religion, with small government a totem to worship at.

From Bill Kristol, Gold Bug

At some point in the past two decades the libertarian wing of the conservative movement has shifted from the belief that shrinking government would promote growth, liberty and personal responsibility to a belief that shrinking government is a good in and of itself.