RSS

Contact us

Friday 5 December 2008

The Goldwatcher: Demystifying Gold Investing

Go for gold

Tim Price says that in the current climate, whatever you own, you want to own gold: here’s a book that explains how

‘Gold still represents the ultimate form of payment in the world. Fiat money in extremis is accepted by nobody. Gold is always accepted.’ Not the words of some apocalyptic ‘gold bug’ (financial markets are nothing if not disparaging about precious metals enthusiasts), but of arch-inflationist and serial debaucher of the US currency, former Federal Reserve chairman Alan Greenspan. Indeed if anyone can be said to be responsible for gold’s recent surge through $1,000 an ounce, it is Greenspan himself – for overseeing an overly easy monetary policy in the US and then for essentially doing nothing while its property and credit bubbles messily burst.

Now that central banks have lost control of their printing presses and investment banks have lost control of their senses, gold is back. As John Katz and Frank Holmes remind us in this engaging tour d’horizon of gold as both a store of value (take that, Yankee dollar!) and as a ‘stateless currency,’ gold never really went away – it was just shinily biding its time on the periphery of markets, until those same markets became dangerously unhinged following decades of uncontrolled and perhaps uncontrollable credit growth.

The only realistic threat to the price of gold lies in the reserves of central banks overhanging the market. Central banks are wise to fear gold because its statelessness – gold is beholden to no government, corporation or individual for its value – threatens the political survival of institutions attempting to maintain ultimately indefensible exchange rates. The arguments for gold as an investment and a hedge against disaster are widely acknowledged. Its fundamental scarcity is its greatest strength. Meanwhile the US dollar managed to lose over 98 per cent of its purchasing power during the 20th century. As sceptics of fiat money love to point out, currencies don’t truly float – they just sink against each other at different rates. If the dollar crisis metastasises into a fully fledged collapse, whatever you own, you want to own gold.

Print this article  |  Email to a friend  |  Permalink  |   Comment   |  Apollo Art Books

Post this entry to:   del.icio.us | Digg | Newsvine | NowPublic | Reddit

Advertisement

Spectator Business | Apollo Magazine

Corporate | Advertising | Privacy | Terms

Spectator, 22 Old Queen Street, London, SW1H 9HP

All Articles and Content Copyright ©2008 by The Spectator | All Rights Reserved