the golden myth

gold cast bar

gold cast bar (Photo credit: hto2008)

English: Myth Logo

English: Myth Logo (Photo credit: Wikipedia)

Maybe you have heard about the “other” golden rule: “Those who have the gold makes the rules.” It’s a myth.

Those who have the military power make the rules. They dictate whether gold or salt or something else is the form of payment that they will accept when they invent tax liabilities to extort from a population.

Here’s another myth about gold: it’s a good investment, or at least decent. From 1933 to 1970, gold consistently lost purchasing power. From 1980 to now, gold has lost purchasing power. It of course is hypothetically possible that gold might soon make a new all-time high in purchasing power, passing the 1980 level, but some of that may depend on exactly how someone is measuring the value of gold.

That chart is from:

Note that the above chart shows a 1980 peak price of about $600. That may be the high monthly average. The actual high was close to $800, so, again, be careful about how data is being presented. A more precise chart below shows how far gold is from the real peak in purchasing power of gold.

Now it is possible that those who have military power in some place in the world will declare that tax extortion payments there must be made in gold. It’s even possible that they will declare that payments to their tax extortion rackets of organized coercion (the monopolized violence of governments) must be made in salt or diamonds or casino tokens.

Anything is hypothetically possible. However, consider that all the hysteria about gold as the ultimate investment is… hysterical, like ridiculous, like hilarious. Let’s look at another chart:

long-term gold prices in yen














Here is another chart showing long-term gold prices (in US Dollars, after adjusting for inflation)

Many people also celebrate gold as an investment and then mention silver. Let’s look at silver as well for perspective:

Last 2 charts from:

I’m going to “boldly” conclude that both gold and silver have been “not great” as investments in the last 32 years. Gold clearly has done better than silver in the last 32 years, but far worse than most real estate investments and 90% worse than many stocks.

I do not know the details of the math behind this one, but it sure is visually remarkable:



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