You may have laughed but you were wrong. If you have a capital asset that will hold its value, you don't exchange it for a wasting asset. It is paper that gets eaten away by interest rates not gold -- the contrary view is the fallacy of the pseudo-economist. All gold does is reflect that wasting nature of paper. In theory, if the banks did not suppress gold's price in order to float currencies like the Euro, of loan gold at low rates, then gold would perfectly reflect the increase in the money supply and the eroding power of the dollar and never lose its value. The lack of a good command labour market and the false bull market caused by pseudo growth stocks has disguised the weakening dollar. The dollar is a shell, or Potemkin village. Its facade will be seen when gold is 800 dollars. It will return there. It always has. The only thing that can stop it is governments fixing its price.
So if gold does not earn interest, why hold it? Does your house earn interest? No, you pay for it with interest, yet you aren't moving out are you? You will reply that it is gaining value because the money paid for it increases its price. In fact it is losing value as it ages for two reasons. The city land may increase in price, but the mortgage is wasting its worth, not increasing it and it requires more repairs over time. In fact interest is weakening the perceived worth of the money as you pay for all things in time, so the money devalues, the thing does not increase in value.
Gold does not need interest to keep its value as its value is compared to money's.
You may however use an asset to borrow money to speculate. Dangerous but all of you who trade are doing just that. If you take bank money you made, then you are borrowing that money against its interest value. Dont' deny it. Borrow from someone else or yourself, it's the same.
This has been a message from The Council for Gold Money and Economic Sanity.
They know.
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