Skip to Main Content
The Global Economy in Turbulent Times
book

The Global Economy in Turbulent Times

by See-Yan Lin
June 2015
Intermediate to advanced content levelIntermediate to advanced
600 pages
27h 11m
English
Wiley
Content preview from The Global Economy in Turbulent Times

CHAPTER 63 Man’s Addiction to Gold1

I am not a gold bug. Gold is an artifact from early history. So much so, it is deeply rooted in the collective human consciousness. The last time I wrote about it was more than two years ago on January 16, 2010 (Chapter 62, “So, the Gold Bug Still Bugs You”). Then, as now, I am not the most optimistic about gold as an investment. But I am a realist. Over the past 50 years, capital gain on gold averaged 2 to 5 percent annually over each decade. Stocks were a better investment—about double to three times the gold “yield.” This is not surprising, since gold has no real intrinsic value. It is sterile, making it difficult to value—one can’t assign a credible price-earnings ratio (PE).

So long as there is love, lust, and guilt, there is a demand for this “barbaric relic” (Lord John Maynard Keynes). But in this uncertain world, many see it as a sexy investment. That’s why gold scams thrive. It is still scarce, readily malleable, and will always command a price. Since the summer, even the darnedest optimist got worried as prices lurched down to US$1,500 a troy ounce (from a September 2011 high of just above US$1,900), wondering whether the decade-long bull-run had ended. No longer. Since US Fed launched its third quantitative easing (QE3) in mid-September 2012, gold has yet to catch its breath, rising 12.5 percent by October 6 to its highest level in nearly a year at US$1,795 per troy ounce. As reported, in terms of euro and Swiss franc, gold hit ...

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

Preparing for the Next Financial Crisis

Preparing for the Next Financial Crisis

Olivier de Bandt, Francoise Drumetz, Christian Pfister
Financial Whirlpools

Financial Whirlpools

Karen L. Higgins

Publisher Resources

ISBN: 9781119059967