Gold: You Can't Eat It…But You Sure Can Trade It

Listening to the hoopleheads debate the intrinsic value of Gold or lack thereof is like watching professional soccer – there will only be one point made for every 27 hours or so worth of back-and-forth tedium.

“Ya can’t eat it!  Buffett says it’s worthless!  Crowded trade!  Earns no interest!  No proof that GLD owns the physical bullion!”.

To which I say who cares?  Are you a trader or are you a central banker?  Because if you’re wasting your thoughts and my time on a circumlocution about what gold is really “worth”, you’d better be the latter.

trb gold chart

Gold, like everything else, has no value whatsoever or all the value in the world, it’s simply a function of what the next 12 people in line will decide to buy and sell it for.  Grow up, end the debate and go buy.  Or go sell, it doesn’t matter.  Whatever price you transact at won’t mean a whit 30 seconds or 30 days later as far as “intrinsic value”.  You and your purchase or sale will simply be recorded and forgotten along with mine and Suzie Q Trader’s.

While I’m on the topic, you Gold vs the Dow Jones Ratio guys are really on my last nerve.  The world has been turned upside down and it will not be rightsided anytime soon – so your historical ratios are broken.

What do I mean by upside down?  Kids now believe that music and movies are free but water is something you pay for.  There was a guy who got pregnant and had a baby.  For the entire last decade, the best golfer has been a black kid and the best rapper has been a white kid.  Grownups are now teaching their children to break the law or have videotaped underage sex in order to promote reality tv shows.

Things have changed in this world and they will not go back to the way that your historical charts and data need them to be.  Deal with it.

Theoretical debates about theoretical value are worthless.  Only the buy and sell prices will mean anything when all is said and done.

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