Friday, 21 March 2008

What's so great about gold?

Can someone tell me, please? In these uncertain times, there has been a striking move back to owning gold as the only certain investment– and jolly well done Mr McBroon, Britain's greatest-ever chancellor (until Ed So What, of course), for selling off so much of ours!

Thus, banks in turmoil, stock markets disintegrating, confidence plummeting, recession apparently looming, billions being lost daily around the globe ... and people turn to gold? Because it is the only safe, the only certain option? Because it always holds its value?

Why? I have never understood this. It is just a metal. It has no inherent value. You can't eat it. In fact, you can't do anything with it except put it in vaults with VERY big steel bars. Or make jewellery out of it. This hardly suggests it might be the bedrock of a global financial system, the underpinning of economies across the world, the investment of last resort.

True, it's quite rare. True, it also doesn't tarnish: you can bury in your garden, chuck into the sea or hide it under you mattress and it will always emerge with its dull gleam intact. There is also the matter of what Goldfinger called its 'glorious heaviness'. But then lead is heavy, too. So is concrete. I am not aware of the globe's bigger financial brains rushing to stock up on paving slabs as an investment of last resort.

Christ, if you want 'heavy', to say nothing of dense, take a look at Jackie Baillie (conveniently located immediately below this post). You could hardly get much heavier than her mighty frame. Is she supposed to become a unit of universal global worth (though if she is, I would seriously suggest not hiding any gold you might be hoarding under any bed in which she is sleeping – unless that is your taste is for gold leaf ... and your floors are reinforced).

It's not even as though gold has always been thought valuable. The Incas considered it purely decorative, though admittedly this may be because they had so much of it. They assumed the conquistadores' fanatical determination to get their hands on theirs was because they wanted it as food.

Nonetheless, why should these lumps of useless, inert metal invariably be believed to have such value?

Is this any way for grown-ups to behave?


Mark Wadsworth said...

Quite right. Ye olde house price bubble is deflating and gold bubble is inflating. As somebody once said, what is the point of paying thousands of people in Africe is scrape this stuff out of the ground at huge expense, only to ship it across the Atlantic and store it in underground bank vaults in Fort Know and Switzerland? BTW, gold is an excellent conductor - they cover airplane windows in very thin layers of the stuff and use it to keep them condensation-free.

Anonymous said...

It is used in some computers as it is very ductile and a great conductor.

And it is of great use in those hugely expensive cocktails which hedge fund managers drink, until the crash comes and they are reduced to penury..

The one silver lining on the cloud of the credit crunch is recalling the line of Gordon Gecko in the film 'Wall Street' - 'If you have money, and lose it, you will soon discover it is worse than never having had any money at all..'

As some of these bastards are soon going to discover for the first time - Hooray !!!

Umbongo said...

The attraction of gold as a store of value is, of course, atavistic and irrational as is - we are told by social workers, teachers and the Guardian - love for our children and family, a desire to "get on", a preference to support ourselves rather than depend on state hand-outs, wanting to live among our own kind, self-discipline, love of country and so on.

I admit I've made a bit by being atavistic and irrational and investing in gold. You could do worse in the long run, like investing in windfarms.

Anonymous said...

Whats great about gold is that it cannot at present time be duplicated and its very rare, these 2 characteristics make it a great store of value. Paper money can be printed by anybody therefore its only worth is that the government backs its value. Governments hate gold because they have no control over its value therefore it becomes a global equalizier. In Zimbabwae a fleck of gold is worth more than 1 billion Zimbabwean dollars, Mugabe ie. the government can print all the money it wants but they can't make gold.