I was trading e-mails with a friend when the subject of gold came up (which often happens when I’m part of the conversation). She allowed as how she owns some gold coins, but said “the fish in my freezer will be more useful come the end times.” Many people think the same way. They see an inherent Catch 22 in owning gold. If the social fabric falls apart your gold won’t do you any good. You will need a machine gun, not gold, to defend the food in your cupboard from your hungry torch-bearing neighbors.

I am certainly not about to declare the end times scenario impossible. But I think it is fair to consider it unlikely. This planet will always have its winners and losers, but the scenario in which everybody loses makes for great fiction (e.g. Mad Max), but seems like a longshot. (A compromise would be to have a gold machine gun, but then you would have to be James Bond.)

Profits in gold, however, don’t require a collapse of our current regime of fiat paper money much less the end of the world. They just requires a loss of confidence in the currency. And why would anybody lose confidence in it? Hmmm, how about:

1. The current 35 year experiment in floating unbacked paper money is unique in human history.

2. No one knows how much money is out there and who actually owns it.

3. The money is created out of thin air and, in the West at least, mostly exists in the forms of electronic bleeps and bloops.

There are other reasons, but if those don’t make you a little nervous about the contents of your bank account then you aren’t paying attention. It goes back to what I said in an earlier post: gold is money. Its value floats the same as that of all other money. There is one big difference, however. Governments can’t print it. The end of the world is therefore not required in order for gold, heavy as it is, to float to the top.

This entry was posted on Sunday, September 23rd, 2007 at 3:31 pm. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.