Absurdity

Interesting discussion of gold by Satyajit Das at Prudent Bear.

It includes the now-famous Warren Buffett quote on gold, when gold was $250 an ounce (it’s now around $1700):

Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.

It’s even crazier when you put it this way:

Gold gets dug out of the ground and refined to be a pure, immortal metal that doesn’t rust and is in limited supply and can’t easily be counterfeited.  It can easily be coined and is ideal as money.  It has utility has money and has many other uses.  But governments periodically stole the people’s coinage and are now hiding it back in the ground away from people so they can’t use it as money because governments want the people to use paper toilet as money.  Anyone watching from Mars would be scratching their head  – that perfectly good gold coin money is being stolen by governments and hidden in holes when it is their supposed duty to protect people from theft.   Anyone watching from Mars would be wondering why the people don’t rebel and get their gold back into open circulation!

The madness is not that we dig gold up only to return it the ground.  The madness is that governments do this.  Real people would never do this because they would trade this valuable commodity like any other.

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