A few words about gold

Gold. The “barbarian relic”. The word is mysterious and invokes a long history of adventure, from Roman times to the founding of the New World and the annihilation of vast numbers of people and life forms. There is power in it. If you have never seen or owned a gold coin, you should. It is easy to do. Any coin shop will have them, and the people behind the counter will take the opportunity to let you have one.

Hold up a one ounce coin. It is compact, beautiful. Heavy. Powerful. A gold coin feels very different in the palm of our hand than the coins we see every day, which are much lighter. They are made of much cheaper metals.

The first time I saw an adult gold coin was in 1998. It was a “Philharmonic” from Austria. It is a gold coin minted by Austria with an engraving of the philharmonic orchestra on the reverse of the coin. Mine was minted in 1908 and was in perfect condition. A work of art. This coin was considered “bullion”, which means that it had no “numismatic” or “rarity” value. It was priced just like gold, and gold was valued at $ 275 an ounce. The coin was mine for $ 300.00. Now it costs a lot more.

Don’t get caught up in a debate about whether gold has “intrinsic” value. Gold has certain industrial uses and some different qualities from other metals, but its value derives simply from the fact that people have always wanted it. It’s rare enough to fight, but common enough that everyone knows what it’s about. People have always wanted it, and will probably continue to want it, and it meets all the money requirements. Whether it is indeed “money” is a long-standing argument, but the question is academic. Gold is almost certain to hold its value and benefit against the currency of any country in the long run.

You could say that the “opposite” of gold is “fiat money”. In the United States, fiat money is federal reserve banknotes, generally (though perhaps incorrectly) called “dollars.” There was a time when the “dollar” was a unit of currency defined in gold or silver; it now exists on its own. Federal reserve notes derive their full value from the government’s mandate that they will be used to pay off all debts, public and private. Fiat currency can be printed at will and essentially at no cost to the government. Therefore, fiat money retains its value, if any, based on the government’s refusal to print more money. Because governments rarely resist the urge to print and spend, gold gains in value against fiat currency in the long run.

Gold, on the other hand, is not dependent on any government action or inaction. Therefore, some people consider that having gold is a “vote against the government.” While I recognize the political implications of having money that is independent of the government, I think it is simply common sense to keep some of what you own in a way that is outside the control of the power of the government.

Leave a Reply

Your email address will not be published. Required fields are marked *