The Case For Gold & The Case Against Gold
I’ve been looking unsuccessfully for an article that succinctly lays out both sides of the debate on whether gold is a good asset to own. So, I’m here to ask for your assistance in pulling together an article that outlines the key points on both sides of the debate. I have some ideas, but I’m sure you have more. Just leave any points of view, good articles or predictions in the comments an they will be added to the article. I hope that this article proves to be useful to readers regardless of your current point of view on the topic. If you’re formulating your own opinion on a given topic, hopefully it’s helpful to get the full spectrum of opinions on the topic. And, if you already have a strongly held point of view, surely it’s good to pressure test your convictions with an opposing view every once in awhile. So, here we go:
The Case For Gold
- The devaluing of fiat currencies around the world through unprecedented fiscal stimulus will cause an increase in the price of gold.
- Gold is a safe haven currency that tends to rise in precarious economic times like these.
- International governments will diversify out of their US dollar reserves and buy gold thereby driving demand.
- Hyperinflation is on the horizon – and that drives gold prices.
- The growth of institutional and retail investment demand for gold.
- Lack of growth in the supply of gold from mines.
- Fiat currency has no intrinsic value.
The Case Against Gold
- Gold doesn’t pay interest.
- Gold goes up when there’s inflation, and deflation is the far greater risk today.
- A safe haven asset like gold goes up when Armageddon hits, and we have avoided that.
- Over the long run, history shows that gold is not an appreciating asset.
- Asset prices are inflated by the dollar carry trade – gold will come crashing down
- Too much hype – sell high, buy low.
- Gold has no intrinsic value.
The Price of Gold/Oz.
- $1,141.70 (11.19.09 – date of post)