Non Sequitur (1/16/11)

Shortly after the financial collapse of 2008, investors started going gaga for gold. The precious metal jumped from $705 an ounce to $1,365 an ounce in the span of just over two years. I can understand the reluctance to embrace currencies like the compromised dollar, the radically weakened Euro, and the allegedly undervalued Yuan, but what is it about gold that makes it superior? Should one of the world’s currencies collapse, or a substantial government bond issuer default on its loans, will gold be seen as a viable backup or will people rush to secure natural resources instead? In the face of social catastrophe (or even recession) what purpose does gold serve? Sure, it’s pretty, but it has no intrinsic value, at least not compared to clean water and renewable electricity. Hmm…clean water…renewable electricity…now those sound like they’re investments worth making.

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