Golden future: $1500 an ounce
Thursday, December 11th, 2008
Though this seems counter-intuitive in a deflationary period, I think one of these days gold is going to pop to $1500 an ounce… maybe even $10k.
Investors are desperately seeking something, anything that holds its value from month to month.
Currencies crumble. Companies collapse. Oil oscillates. Real estate rots. Banks rupture.
Desperate for a safe haven for their savings, investors bought $32 billion in T-bills yesterday at a 0% interest rate.
Gold could become a refuge for panicking investors.
But gold has no real use, you say.
Well, what practical use is a $10 bill for anything other than kindling a fire?
Currency has value because everyone believes it has value and agrees to use it as a token of exchange. If or when that perceived value erodes, there’s going to be a mad scramble into some new token of value.
Gold has been a traditional proxy for economic value for 1000s of years. Why? It’s uniform and portable. It’s not so scarce that it can’t be used — in a sliver — to buy a loaf of bread. Yet it’s relatively finite and can’t be printed by governments desperately trying to buy off angry voters.
If you don’t think the next stable haven is gold, please write me and tell me what you think is a safe harbor for economic value.
Shotgun shells? Bottled water? Penicillin? It sure isn’t Picassos or Porsches or penthouses.