Chris Poindexter

If you follow the discussions in the financial world, you might have heard talking heads going on about the death of the gold bull.  Don’t believe it.  First off, I maintain that it’s a false premise that there are gold bull or bear markets at all because very few people buy gold as a speculative investment.  Gold doesn’t split, gold doesn’t pay a dividend or report earnings every quarter and gold doesn’t buy back its own shares.  If you want a growth investment, there are better options.

What gold has going for it is that it’s a finite resource with a certain intrinsic value.  Because of its unique attraction through history, gold is an odd commodity, one of only a few that historically has functioned as part of a large-scale monetary system and still functions as a type of unofficial substitute currency.  When discussing gold prices, it’s important to keep the perspective that gold has relative value against paper currency.  So, when we talk about gold prices going up, we are, at least in some sense, really saying that the value of paper currency has gone down.  Or, perhaps more accurately, that people have lost faith in paper currency. 

Chris Poindexter

Chris Poindexter is a senior writer for National Gold Group.

Get the best of Townhall Finance Daily delivered straight to your inbox

Follow Townhall Finance!