|University of Cambridge, Department of Engineering|
For whatever reason, there is a continuous and deliberate "discounting" of GOLD by the financial media that it borders on insanity. I understand that in any investment you have to present both sides of the argument. However there's complete INCOMPETENCE being discussed in regards to Gold's intrinsic value and I would like to put this charade to rest once and for all!
- First of all, "GOLD is MONEY, everything else is credit." JP Morgan. So you should NOT expect any interest or dividends, period. Gold is a store of VALUE, wealth, and savings. Perfect money has been described as: having value, portability, indestructibility, divisibility, stability and cognizability. Gold falls into every one of these categories, but take out a dollar bill or a stock certificate and apply these characteristics to it and see what you get? Gold cannot be destroyed or created, it is finite. Dollars can be created at will by Central Banks, so why would you want a store of value that can be created to infinity and ultimately becomes "valueless?" Think about any other monetary instrument that cannot be destroyed or go bankrupt? There is NONE!
- "Paper money eventually returns to its intrinsic value--ZERO." Voltaire
- Gold is the soul essence of "intrinsic value," it has no liability and no counter-party risk, it is value within itself. Any financial investment or currency is only as good as the institution running it, whether it's a government or a management team. It's all about CONFIDENCE!
- AS THE CHART SHOWS: Gold is valuable because of the dollar cost/kg and the energy cost/kg required to dig it out of the ground. It's RARE and difficult to mine. Gold is too expensive to be used as a utility metal, although it has better utility qualities than many other metals, therefore it has been used as money for thousands of years. Throughout history mankind has experimented with other forms of money like sea shells, salt, wood sticks, stones, tulip bulbs and silk, but gold is the only form of money that has stood the test of time and WON!
- Gold is everlasting wealth and can be easily handed down from generation to generation. Why else do you think the Royal Families of Europe have maintained their wealth and power for so long?
- Even if the cost of energy were to come down, gold will always be rare, and man's obsession with having something scarce will still demand a high price for gold forever.
- Gold, MUST be a part of every investment portfolio because it's your insurance component in case something goes wrong. Any advisor that designs a portfolio without gold, is not looking out for your best interests. Ultimately it shows his ignorance to economic history and the meaning of money. Yes, of course there are times when you should only have about 5% invested in gold, but THESE are not those times. With all the debt, bailouts, frauds, wars and unemployment, do you really think 5% is enough to protect your wealth? Try 50%!