Final Word from Thursday, December 8, 2005
As gold rises, efforts to bad-mouth it as a hedge against disaster strengthen. The Economist, that staunch defender of the status quo, said gold is a "barbarous relic." This kind of mainstream pooh-poohing merely confirms to gold bugs that they're right. Only gold in pocket - no forward contracts, please - will save them when that day comes, they say. But neither The Economist nor the bugs speak about the possibility of confiscation if that day arrives. For centuries, governments have had gold essentially under their control. The U.S. famously confiscated it in 1933, and the Communists didn't allow anyone but numismatists to hold more than a few coins. Today, central banks manipulate the price. If there is a global disaster, chances are that governments will again round up the "barbarous relic" at a fixed rate. Meanwhile, gold bugs at least have a rising spot price and some (false?) peace of mind. [Czech Republic Czechoslovakia economic disaster]