1. Valuing gold is impossible - What kind of fool could write something like this? There is some kind of anti-vault argument used here (prejudice against stuff we put in vaults? - that's usually valuable stuff!). If this is true, it is also impossible to value diamonds, jewelry, works of art, etc. Gold's value is measured like the value of any other good on the market. It is a normal commodity. What I would like to ask the author is the following: How do you value money?! That seems like the tough question to me! After all it's just little multicolored pieces of paper!
2.Knowing when to sell is even harder - Agan, this is true for every investment in the history of the world. Stocks and government bonds work the same way. But, as I mentioned a moment ago, gold is safer because it has intrinsic value (unlike pieces of paper, whether bonds, currency, or stocks).
3. Trading costs are high - Again, at the risk of repeating myself too much, how is this not true for every single thing a person buys or sells? For example, if everyone wants to buy milk at the same time (i.e. bull market is milk) transaction costs will be high. This is true of everything including money itself (dollar, euro, frank, etc.)
4. Gold provides no income - I have two objections to this. For one, it may or may not be true. If the world demand for gold suddenly increases then indeed holders of gold to gain money through increase in their asset value. And even if this does not happen - gold is meant to be used as a hedge against loss, not as a money-making extravaganza scheme. Certainly people have a much better chance of gaining wealth (or at least not losing it) when they hold gold, versus the chance they have for the same results when holding money, bonds, or stocks.
5. Buffett doesn't like it - Another two ojections. First, Warren Buffett is a puppet of the government bailout machine. He supports all kinds of crazy things which I wrote about extensively before (here). And second, this is an argument from authority! Just because someone is against something in opinion doesn't make it wrong! Personally I wouldn't be surprised if Mr.Buffett owned quite a lot of gold (in secret of course).
6. Gold loses to inflation - Wait... what? Property values are subject to huge inflationary booms (this is why we are in a crisis!), so they are in no way a better investment than gold. And how does gold inflate? I mean it is mined out of the ground... but this tiny inflation of supply is a miniscule when considering the comparative advantage. Namely, gold is a very solid asset to hold. It is not subject to rapid and crazy price fluctuations that land or some other commodities are.
In other words the author, Mr. Neil Faulkner, is wrong. Maybe his aim is to persuade people to sell gold so that he can buy it up? I don't know. In my own opinion gold is the best hedge any average citizen can grab hold of to protect himself from serious economic troubles which are surely coming.
As the great Ron Paul once said, gold has retained its value and purchasing power for over 6000 years now. So to Mr. Faulkner and any other anti-gold buff out there: Can you came another asset of commodity which has done half as well? With the possible exception of silver, of course!
Nest time someone will write a article that trading is bad for the economy....
ReplyDeleteMasz racje bracie! But this already happened - Marx is a famous critic of the division of labour being too overdeveloped. My problem is not how to make these fools look like idiots (they do a good job of that themselves), but how to stop them from making me obey their crazy laws...?
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