Aha, I see your problem TJ. Indeed, gold is money. That's not in dispute. It's not a very good form of money, but all the same, it is money and a very reliable form of it at that, so far. But it has various major problems as a form of money, one of which is being heavy in pockets, another that it's prone to falling and getting lost in long grass when rolling around on a hot summer's day.
You have correctly identified gold as a form of money which can time travel through an interregnum to another era. But that doesn't mean it's a good investment. It is still just money. Money is just a store of value and a means of bridging the gap from one asset to another.
But its a decomposing store of value relative to what that value can do if swapped to productive assets. Gold retains its excavation cost and short supply value over thousands of years, but that's all it keeps. It doesn't earn anything during that time, or a shorter time. It's a time dependent value.
Over 1000 years, of course Qualcomm doesn't last, nor does any living person. But Qualcomm and other productive things create more value than they themselves cost to create. As a bloke from long ago said, "Give me a lever and a place to stand and I can move the world". He did point out that the lever should be made from titanium or something stronger than gold. If somebody made a lever out of iron to move the world back then, and somebody else put their efforts into making a lever out of gold to just store it in a hole in the ground to keep the value hidden there, 1000 years later, the world would have moved all over the place with cities built, A380s flying from place to place, Globalstar flying through space delivering Cyberspace to everywhere, with optical fibre strung like cobwebs everywhere, with 150 km per hour cars, medical services and holidays had in pleasant locales. But the guy with the gold lever [his descendants] would have nothing to show for his 1000 years of investment, other than the stored excavation cost and possibly increased scarcity value if people are still keen on wearing ornaments made of gold and there are more people.
With Peak People looming in 2037 and gold excavation costs going down, even the existing price of gold will go down [priced in human value, not US$]. If gold goes out of fashion, look out below. My plan is for it to go out of fashion so look out below.
Don't think of QCOM vs Gold. That's a false dichotomy. Think of a big collection of investments, which produce profits each year, which accumulate, as they have done for thousands of years. While some Aztec tribe might still have their family jewels stashed away in a cave, the Tokyo tribe has gone from nearly nothing 60 years ago to world pre-eminence, with gold not making an appearance on the scene other than as a conductor for electrical connections and a few other purposes. Don't bother pointing out that the Nikkei has gone backwards for 20 years. That's irrelevant. Gold went backwards for as long from the gold boom in 1980.
Compare Warren Buffett versus gold. Applied intellect beats gold any day of the week. And does so for 1000 years too.
A detail on asset-derived cash flow like QCOM you ignored, I bought a load of gold, via GLD last year and sold a chunk of QCOM this year, swapping currencies and moving money [in the form of US$ and NZ$] around at the same time. The speed of transactions was the same, as far as I could tell, for both varieties of asset [GLD vs QCOM]. If I had gone to the extra trouble and much greater cost of buying actual lumps of gold and taking them into my physical possession, the delay would have been days, with horrible transaction costs.
As money, QCOM seems to be a much better form than GLD, US$, NZ$, or actual gold coins. Not only is it a better money, it earns a lot more return on investment.
Mqurice |
