Related to manipulation, the simple fact is that there is a limited supply of gold.
Those who want to return to the gold standard fail to appreciate that at some point a lack of supply could have disastrous consequences in a gold-based system.
Wars are fought over commodities in short supply. In addition to fighting inflation, the Federal Reserve is also charged with promoting a stable currency. With gold, prices can be far from stable.
Though the dollar is not perfect, the system is much more preferable than to hinge our bets on gold. Look at gold mining towns that went boom and bust when supply eroded. The same can happen on a global scale.
Gold is not the panacea that the proponents make it out to be. Investors would be wise to avoid gold altogether and focus instead on companies surviving the recession.
Jamie Dlugosch is a contributor to InvestorPlace.com.
Closing Bell: Dubai sends jitters throughout the market (S, BBY)
Heinz looking good after the second quarter?
Why isn't Bank of America updating its shareholders on CEO situation?
Reader Comments (Page 1 of 1)
4-18-2009 @ 2:29PM
TX CHL Instructor said...
This is so far from anything resembling reality that it is "not even wrong".
But it certainly reflects currently government policy. By all means, let's not base our money on anything tangible, so that we can manipulated the supply at will!
--
http://www.chl-tx.com
4-18-2009 @ 6:34PM
Mark Herpel said...
Yes, this has to be a joke or this guy is just an idiot. Either way, it gave me a laugh and I'm going to write about for the newspaper and my magazines. This guy has got to be on drugs because this is the worst advice I've ever read. Thanks for the satire and the laughs.
Mark
4-19-2009 @ 7:17AM
john said...
Gold keeps its value, that the point of any money to retain its value. Your thinking is really really wrong. A gold-based dollar would only retain its value or go up further in value.
4-19-2009 @ 12:34PM
Dan Barnett said...
The US had a gold based economy and there were major problems as the growth of goods and services radically outgrew the amount of gold available for coinage. Thus you had the Silver coinage issue of the 1870s -90s. Do we mint silver coinage and if so at what exchange rate with gold? Falling commodity prices also created significant economic injury to the farmer and was the source for the midwest radicalism of the period.
I can only guess at the dislocation if we attempted to go back on a gold standard now.
4-19-2009 @ 1:13PM
ij70 said...
"Gold is not the panacea that the proponents make it out to be. "
Thanks Sherlock. The rest of us learned it from collapse of Spain back in 1650s.
4-19-2009 @ 2:20PM
jes3740 said...
Gold has been the most valueable commidty for thousands of years it will always be the most valueable commidty
4-19-2009 @ 5:08PM
narrienarrie said...
How do i sell raw golds online??
4-20-2009 @ 5:54PM
Iridium said...
Gold is just as manipulated as the common currency, in fact maybe even more so.
Where can I buy something with a piece of gold?
If I can't buy anything anywhere with a piece of gold it is really worthless.