A few words about gold
Gold. The “barbarian relic.” The word carries mystery and invokes a long history of adventure, from Roman times to the founding of the New World and the annihilation of vast numbers of people and life forms. There is power in it. If you have never seen or held a gold coin, you should. It is easy to do. Any coin shop will have them, and the people behind the counter will take the opportunity to let you have one.
Hold up a one ounce coin. It is compact, beautiful. Heavy. Powerful. A gold coin feels very different in the palm of your hand than the coins we see every day, which are much lighter. They are made of much cheaper metals.
The first time I saw a gold coin as an adult was in 1998. It was an Austrian “philharmonic”. That is an Austrian minted gold coin with an engraving of the philharmonic orchestra on the reverse of the coin. Mine was minted in 1908 and was in mint condition. A work of art. Such a coin was considered “bullion”, meaning it had no “numismatic” or “rarity” value. It was priced simply as gold, and gold was valued at $275 per ounce. The coin was mine for $300.00. Now it costs much more.
Don’t get caught up in a debate about whether gold has “intrinsic” value. Gold has certain industrial uses and some different qualities from other metals, but it derives its value simply from the fact that people have always loved it. It’s rare enough to fight for, but common enough that everyone knows what it is. People have always wanted it, and will probably continue to want it, and so it meets all the money requirements. Whether it is, in fact, “money” is a long-standing argument, but the question is an academic one. Gold is almost certain to hold its value and gain against any country’s currency over the long term.
One could say that the “opposite” of gold is “fiat money”. In the US, fiat money is Federal Reserve Notes, usually (although perhaps incorrectly) called “dollars”. There was a time when the “dollar” was a monetary unit defined in gold or silver; now it exists on its own. Federal Reserve Notes derive their full value from the government’s mandate that they be used to pay off all debts, public and private. Fiat currency can be printed at will and at essentially no cost to the government. Thus, fiat money retains its value, if anything, based on the government’s refusal to print more money. Because governments rarely resist the urge to print and spend, gold gains value against fiat currency over the long term.
Gold, on the other hand, is not dependent on any government action or inaction. Therefore, some people consider holding gold to be a “vote against the government.” While I recognize the political implications of having money that is independent of government, I believe that it is simply common sense to hold something you own in a form that is beyond the power of government to control.