Thursday, January 10, 2008

Gold is Money

Gold is now at $880, finally higher than the Krugerrand my college girlfriend's mother proudly showed me in January of 1980. By Valentine's day, her ardor for gold had cooled, and so had it's price. Now we have the inflation hawks looking at gold, but gold is rising because it is money, and money is being hoarded. In a deflationary environment, the value of money goes up, but at these prices it time to take some gold off the table.

Gold is an indestructible commodity. It's not eaten like wheat, or burned up as oil. So why do the talking heads talk about jewelry demand for gold? Gold prices now move because of investment demand. The talking heads say oil is high because of speculators, but gold is high because of inflation?

At least Bernanke speaks today. We'll have another tidbit of information that we can dissect again.

But don't look for the Fed's words to be as good as gold.


Anonymous said...

So how many college girlfriends did you have?

Palmoni said...

Your anonymity gives you away... But my roommates did make up a song about it...

"Young Dave young Dave you're just nineteen
Some day, some day you'll find your queen
A girl as pure as virgin snow
May be the one you'll never know...

Some day, some day when you grow old,
And all you'll have is the watch of gold..."

(She wanted the watch back when I broke up-So she got it. It was a good trade!!)

Anonymous said...

A better answer would have been. . . "only one that really mattered".