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When measuring wealth, gold is the -- well, the gold standard.
In recent months, the price of gold has soared. It's over $1,500 an ounce. People who have anything made from gold are encouraged to sell while the price is high. Investors are being told that now's the time to buy gold as a hedge against -- something.
See, I'm puzzled by the modern gold market.
I understand that something as rare as gold is coveted and has tremendous value. I've heard that all the gold in the world would fit in a two-car garage, or something like that. I don't believe it. The gold owned by governments around the world is a little over 30,000 tons. If someone wants to see if it fits in my two-car garage, I'll leave it open.
I understand why people with gold lying around the house might want to sell it at today's high prices. But I can't understand the logic of buying gold to protect yourself against the collapse being predicted by -- well, mostly by folks who want you to buy gold.
Here's how the sales pitch goes: The world is headed for worse than a planetary depression. When that happens, the money circulated by governments will be worthless. Inflation will be a gazillion percent. Only those smart enough to invest in gold RIGHT NOW will be able to buy food and fuel for their cars and still have enough left over for cellphone service.
But think about this scenario. If the economy explodes, it explodes for everyone. This means there will be no way to pay producers of everything we consume. No retail store will have any money to pay suppliers, which will be out of business anyway, so store shelves will be empty.
And consider this: If you "buy" gold, you don't get gold. You get a piece of paper -- no, make that an email -- that says you own gold. So, let's say the economy has caved in and you're lucky enough to find someone along the road with freshly dug potatoes for sale. Since you're hungry, you decide to buy some potatoes. "Here," you say to the potato-digger, "I'll tear the corner off my printed-out email and give it to you in exchange for some spuds." Is that how it works?
Or let's say you actually get your gold and hide it in your house. The world economy collapses and you get hungry, since you did not plant any potatoes. You take some of your gold -- a pound or so -- and go looking for food. You find the potato farmer. You say, "How much for some potatoes?" And the farmer says, "They're worth their weight in gold." Really? You're going to give him a pound of gold for a pound of potatoes. If not, what?
Instead of betting that gold is the answer, we better hope we have financial wizards somewhere in the world who will keep the economy afloat.
Joe Sullivan is the retired editor of the Southeast Missourian.