The Gold Standard

I am running around with an ounce of gold in my pocket.

I bought it this morning at a wholesale gold distributer I know of in NY at a price 2.4% above the last fixed price in London. Not too shabby really.

It is, of course, just gorgeous. I got a bar with a stylized Art Deco imprint on the “face” side and the usual 999.9 fine declaration on the back. The bar is sealed in a transparent plastic container, bordered by an assay certificate from PAMP of Switzerland. Like a kid with a new toy, I have showed this to everyone I know and, so far without exception, this is the very first bar of gold they have ever seen. It’s wicked cool.

In doing some pricing research before the purchase, I came across this site, which is a very interesting gold blog. This article, had a view of gold I hadn’t really thought of before:

The value of gold has not materially changed for the past 50 years or so. You can still purchase the same material good or services with an ounce of gold as you could 50 years ago. This does not apply to the value of the dollar of course. It takes a lot more dollars to buy the same goods as you could have bought 50 years ago.The question, for investment purposes then, is what do you invest in? Dollars or gold?Investing in dollars leaves one open to the manipulative fluctuations resulting in the dramatic variations of value in the dollar and the devaluation caused by the continual printing of more dollars (we are talking US dollars here) to fund debts such as the federal government debts as well as public and private debts.Gold however, remains consistent and in fact does not increase in value in terms of purchasing power. Rather the value of the dollar decreases, in the long term, against the value of the dollar. Once upon a time 20 dollars would have bought one ounce of gold. Now it takes between 600 and 700 dollars and is quite likely to go higher.However what you could buy for 20 dollars 50 years ago will now cost around 600 to 700 dollars. Interesting! This tells one immediately where to put one's money if you want to retain the purchasing power of your assets.

Although I have know academically that gold is one of the axels around which commerce spins, I hadn’t really thought of it like that before. Kind of interesting.

As to WHY I bought the gold? It has to do with work (I expect to be reimbursed for it), and doubtless will be the source of another blog post in July. At this point though, I doubt this will be my last gold purchase.