Chris Lehmann: The Gold ATM Comes to America
[Chris Lehmann's book is Rich People Things]
...Gold really isn’t an asset, in the conventional sense of the term, at all. It is, rather, another sort of currency, whose value does indeed spike during times like the present, when governments contract enormous debt and investors grow anxious about how resulting inflationary pressures will devalue their holdings over time. Unlike silver, which is also likely on the verge of its own bull rush, gold has very few industrial applications, and jewelry—the only other real use the world has for the stuff—is actually showing a steady decline in gold demand.
So the gold market, far from serving as the sanest shelter amid broader market storms, is itself an unstable compound of investor superstition and fear. That’s how famed Gilded Age con artists like Jay Gould and James "Diamond Jim" Fisk were able to exploit skittish investors to try to corner the gold market—and thereby precipitated the great “Black Friday” financial panic of 1869. It’s also why, at the outer reach of the panic begun in 1893, the uber-banker JP Morgan was able to cow the Cleveland administration essentially into handing over the US Treasury’s gold operations to Morgan’s own global consortium of private bankers. Even the present bull market for gold issues in part from the artificially low price the metal fetched at the end of its two-decade bear market in 2000-2001; as the Wall Street Journal’s Brett Arends notes, gold lost 80 percent of its purchasing power between 1980 and 2000. The idea of a perma-bull gold market—the de facto faith of today’s gold champions—is just as illusory as the belief in the metal’s supposedly transcendent value....
Read entire article at The Awl
...Gold really isn’t an asset, in the conventional sense of the term, at all. It is, rather, another sort of currency, whose value does indeed spike during times like the present, when governments contract enormous debt and investors grow anxious about how resulting inflationary pressures will devalue their holdings over time. Unlike silver, which is also likely on the verge of its own bull rush, gold has very few industrial applications, and jewelry—the only other real use the world has for the stuff—is actually showing a steady decline in gold demand.
So the gold market, far from serving as the sanest shelter amid broader market storms, is itself an unstable compound of investor superstition and fear. That’s how famed Gilded Age con artists like Jay Gould and James "Diamond Jim" Fisk were able to exploit skittish investors to try to corner the gold market—and thereby precipitated the great “Black Friday” financial panic of 1869. It’s also why, at the outer reach of the panic begun in 1893, the uber-banker JP Morgan was able to cow the Cleveland administration essentially into handing over the US Treasury’s gold operations to Morgan’s own global consortium of private bankers. Even the present bull market for gold issues in part from the artificially low price the metal fetched at the end of its two-decade bear market in 2000-2001; as the Wall Street Journal’s Brett Arends notes, gold lost 80 percent of its purchasing power between 1980 and 2000. The idea of a perma-bull gold market—the de facto faith of today’s gold champions—is just as illusory as the belief in the metal’s supposedly transcendent value....