The fool’s gold in gold

I was born upon the fathoms
Never harbor or port have I known
The wide universe is the ocean I travel
And the Earth is my blue boat home

Peter Mayer, Blue Boat Home

Are you paranoid? Good! I might not have swampland to sell you, but I am sure I could be unethical enough to try to sell you some gold, albeit at hugely inflated prices. Owning gold suggests you own something with eternal value. Our currency may get suddenly devalued by ninety percent tomorrow but the thinking goes that as long as you got your gold coins locked up somewhere you still have wealth. You can maintain that standard of living because you own something no one can take away, and whose value none can diminish. You own gold! You are a survivor, you shrewd investor you!

I will grant you that gold will probably maintain its value much better than, say, the Zimbabwean dollar. Gold is pretty to look at, quite malleable, won’t tarnish and it must be worth something or it would not make up the majority of wedding rings. Mine is made of gold too, albeit white gold. It seemed better at the time than a ring from a Cracker Jack box. And since I have gold on me at all times should a financial apocalypse arrive, my wedding ring might buy us some food, a tank or two of gas, and maybe a couple of days in a hotel in our post deflated dollar world. Beyond that my gold wedding ring has far more sentimental value than monetary value. It turns out that its real financial value would be if I sold it for, say, American dollars. Dollars are convenient in pre-apocalypse America in that I can use it for an even exchange of value. Gold: well, not so much. Exactly how do you get change for your gold coin or ring in something that will retain value? It might help if everyone else kept a stash of gold coins too, but of course most of us don’t own gold and if we do it probably won’t be gold coins.

How good will gold be in a post Apocalyptic world? Well, it will be better than nothing but in a post Apocalyptic world when push comes to shove you will gladly exchange a large value of gold for basic foodstuffs and medical supplies. See, it’s that stuff you really need to survive the Apocalypse. Gold has no caloric or nutritional value.

Most people who own gold coins don’t keep them at home because they are worried they will get stolen. Gold coins are worth quite a lot, obviously, with an ounce of gold worth roughly $1600 at the moment. A one ounce gold coin though is probably going to cost you more than $1600. Someone has to make the coin and distribute it, and that’s a profitable business. Curiously no one buys gold with gold, but they do buy it with money, which gold dealers are eager to accept. Money, unlike gold, is fully fungible. Which makes money in general far more valuable than gold, which is why people prefer money to gold.

Some people with enough means pay a banker or a company to store their gold in a vault somewhere. It’s nice to know it is somewhere safe, but it’s unclear if everything goes to hell whether you will actually be able to withdraw your gold. I’m pretty sure most vaults are not safe from nuclear weapons. Even if they are, it’s likely that your banker won’t be around to open the vault. How would you make a withdrawal even if you could get to the bank? Hopefully there would be enough infrastructure in place and you will have an armored car to make the trip safely, providing the bridges have not collapsed and the roads are serviceable. Of course, once you have your bullion you would then feel the need to protect it from theft, not an easy thing unless you own a Brinks truck.

So maybe you need a more fungible form of gold. You could invest in gold stocks. Get a piece of paper that says you own twenty pounds of gold instead. Maybe in a post apocalyptic world showing your gold certificate will let the local black market distributor advance you some credit. Or maybe not. Maybe there just won’t be anyone around to barter for goods with anyhow. In a real Apocalypse, gold will be the least of your problems, because you probably will be dead. We’re pretty sure you cannot take it with you.

Are there reasons to invest in gold? As a hedge against inflation its record is pretty spotty, and people often tend to buy it when it is overpriced, i.e. when they are feeling scared. Perhaps having some part of your total assets in gold makes a certain amount of sense for the same reason some part of your assets should be in cash. In the real world though it won’t be gold that you will use to buy goods and services. It will be good old-fashioned money. You will want to convert your gold into money and use that. And unless gold appreciates in value over time, it’s probably not going to be a great investment.

Gold simply offers the illusion that your worth can maintain value regardless of the uncertainties in life. Rest assured this is an illusion, but perhaps it has some value because you won’t need to regularly pop Valium. Real worth is predicated on people thinking something has value. Moreover, real worth is the consequence of the way society is ordered and your place within in. Worth rests on a complex web of relationships, which must be there for your worth to have value. Worth depends not just on your job and your assets, but in the investment that society makes in civilization. It depends on the networks that make ATM machines possible and people’s willingness to work for a living wage, yes even at Walmart. It depends on roads being there so you can get to where you want to go. It depends on a justice system so the criminals aren’t preying on you and your neighbors. Without these and much more gold is worthless. Which means that chasing gold in the hope that it will keep you safe from calamity is foolish. It is fool’s gold.

As Peter Mayer put it, we are born upon the fathoms. Our home and our standard of living is an illusion. In reality we are living on a boat adrift in the sea, a giant Noah’s ark that we all share. There is no permanence; we are just around for the ride, but it’s a ride that we are all in together, so it behooves us to play nice and share our toys. So if you want to maintain your wealth and standard of living, stop looking at gold and try investing in society instead. Let’s make our world a place where we all have the likelihood to achieve our potential. Let’s keep investing in roads, good schools, new drugs and technological inventions. All these things though depend on a healthy and sustainable natural environment. Which means that our real treasure is not our personal wealth, but our shared natural world.

Now there’s a solid investment.

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