….the thing is, it is important to understand because it gains in value in difficult times...
Hey, I was just throwing a hand grenade into the room and hoping to slink away unscathed……
Do I wish I had bought gold $1000 ago. You betcha! I think it safe to say any investor would.
That said, from a pure academic point of view, gold should only have value as a component of finished goods. Yet, it does a have a store of value mechanism – but only because people believe such. Because people do believe it, it’s a powerful thing in bad times.
While people talk "value" in the singular, in appraisal, one has multiple definitions of value: book value (not a real quantification of value but an accounting identity), fair market value, fair value (the accounting profession's bastard child of FMV), intrinsic value and investment value.
Whether gold is a good value today is fundamentally based on the irrationality of man. If our political overlords do not accurately identify the symptoms of the global economic crisis, and act correctly, then things will get a hell of a lot worse and gold will go up even more. I think it is more likely than not it will go up more, in the short term, because the uncertainty is too great.
In the long run, it will go down though, because current FMV is greater than intrinsic value.
But as that guy with the turgid style said….”In the long run we’re all dead….”
…the entire month of September is fraught with risk...
No argument. |
