Last August I wrote a short series for Forbes.com on valuation techniques for gold, (Some Thoughts For The Gold Bulls, The Case Against Buying Gold, and At $1,850/Ounce, Does Gold Still Glitter?). At the time I concluded that gold prices at $1,850 an ounce had been far too high; then in a follow-up piece after a large decline in gold prices, I suggested that gold even at $1,700 was still above a proper valuation range. I argued that although it is widely held to be impossible to put a valuation on gold (it has no inherent value, it is completely emotionally driven, etc.), gold in fact has a value and the value can be calculated.
The confusion about gold valuation is a symptom of a larger confusion about valuation in general. We don’t understand any longer what things are worth, because we don’t understand any longer what ‘worth’ means. Worth is merit: the medieval book “The Nine Worthies” was a series of portraits of men of merit. To assign worth to something is to properly rank its attributes in relation to the attributes of another object. The word ‘worship’ is derived from this. Worship is ‘worth-ship’ and in modern English has strong religious connotations; to worship God is to acknowledge His value above all others. But it’s not always religious. In the old Anglican marriage service, the man would say to the bride ‘with my body I thee worship’, meaning…well, you know.