Or The Treasury Take It Back Through Financial Repression
This story was inspired by Jared A. Brock’s “Gold is Dead (And Honest Investors Know it)” I agree with everything he wrote. Indeed, I agree so much I bought some gold*.
He’s right, gold is not easy to buy and even harder to sell. It doesn’t feed anyone. Or heat their home in winter.
Governments are more likely to confiscate gold than buy it.
But if gold is such a bad investment, why do governments and banks make it so difficult? What are they afraid of?
If you put some effort into answering this question you may end up buying gold. For example, here are the basics of financial repression.
Gold is many things to many people and many things to the same person!
An irony of gold is that no investment is simpler, yet none a more powerful catalyst in our imagination.
Samuel Johnson said. “Were it not for imagination a man would be as happy in arms of a chambermaid as of a duchess.”
Is gold the chambermaid or duchess?
I bought gold because I think it’s the chambermaid.
Brock sees a duchess who isn’t as pretty as the ugliest chambermaid.
I see too much wishful thinking in the world.
There is no replacing water. Or a drop of oil in energy efficiency and usefulness. There is no avoiding violence or war when enough people have festering resentments. There is no making dumb people smart. No making selfish people generous. Or generous people vindictive. Or rich people understanding of poor people. Or people people understanding of rich people.
There is no way of preventing people from harming others in the name of righteousness.
There is no way of stopping droughts, floods, earthquakes, hurricanes and the occasional space rock.
I see no way to fix global climate changes with hyperloops, Teslas or rockets. Elon Musk and his fanboys, my favorite wishful-thinkers.
Gold connects us to the first cynic who told God, about the Garden of Eden — it ain’t gonna work out.
Investing in gold is not about doing better as an investor. Sure, I want my gold to increase ten times to lord it over my family and friends. I guarantee you that if that happens I will not be doing that. I’ll be consumed with generalized fear like everyone else.
Gold is about riding out human stupidity and hubris until reality becomes the norm and adults are favored over charlatans.
Most of the reason behind my investment is a simple bet that central bank currencies will depreciate in the future, leaving gold to reprice to its historical ratio, which is also a measurement of how trusting the poor half of humanity is to the wealthier half. And also how trusting the wealthier half is to the poorer half with pitchforks!
Sure, there are investors who buy gold because they believe the U.S. dollar will experience hyperinflation. I don’t see it, but no gold owner can pass judgment ;)
Many criticisms against goldbugs muddy the waters. They’re straw-man arguments. Brock points out gold is horrible for the planet and horrible for people. No one I know invests with that mind. Dinner conversation yes. Protecting their wealth, no.
There is nothing attractive to me about gold. I have only studied the history of mankind and looked for the investment that remained stable in previous periods of currency inflation and human unrest.
If you have a better investment to ride out today’s inflated currency and wishful thinking, please leave a comment.
In the meantime, I’ll probably sell my small stake in gold. Gold may survive fallen empires, but it never builds them.
*A small amount in a gold ETF