Gold has no more inherent value than anything else -- the laws of supply and demand apply to it as much as they do to currency.
If you'd kept that ounce of gold since 1900, you'd have lost a lot of money. (1) You'd have had zero positive return on your investment. (2) You'd have lost money in storage, transaction and authenticating fees, and you'd have had capital tied down in gold that you could have spent on better investments (securities, real estate, etc.).
Gold is not held for returns, it's for protecting what you have. It's insurance against currency debasement by disreputable governments like the U.S. since FDR.
Now Mr Kaker you say if you had held that ounce of gold since 1900 you would have lost a lot of money. I don't know how I've made it all these years but I know you are wrong on that account.
As you know 1900 was the year the US went on the gold standard until FDR made his thievery in 1933. That year they would have given you a nice 20 dollar gold certificate for your ounce of gold - and vice versa. You could trade the certificate for gold at the bank -- it was redeemable.
Now today that 20 dollar gold certifacte has some collector value -- I guess. I mean surely people collect such things. (I know in my youth there were still a bunch of the old timers holding the Confederate war bonds as souveniers.) But that ounce of gold goes for about 517 today.
And probably more tomorrow. In 1900 the right decision might have been to keep that ounce of gold and let the government keep their piece of paper.
When I was young a lot of people talked about gold. They just didn't have an Internet and do it with a computer.
I imagine sooner or later we will see what happens. Always turns out that way.
HG
The Mogambo Guru answered that very point in his latest column:
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- To show you the absolute intellectual impoverishment of the people who are teaching our children and/or writing our newspapers, let's turn to an article sent to me by alert reader JC, entitled "Precious Metal's Elusive Value," and written by Andrew Cassel, who is a columnist for the Philadelphia Inquirer. He quotes Jeremy Siegel, who is a professor at Wharton. Mr. Cassel quotes this, ummm, ""professor," who is so smug in his arrogance that he dismisses gold, "If you bought $100 worth of gold in 1802, Siegel says, your inflation-adjusted return would be about 30 percent. That is, you'd have a mere $130 in purchasing power after more than 200 years."
This is exactly the damned point of the stuff, you preening halfwit! Gold preserves purchasing power! Hahaha! What a buffoon! What the lackluster professor Siegel did not mention is that if you had saved a $100 in fiat cash, even as late as 1913, then your loss in buying power would have been over 96%! Hahaha! So, what do you want in your future? Depreciated and stupid fiat money, where you end up broke and bitter, or gold, where you end up where you started in terms of buying power, or (as now) ahead of the game and making big, big money on gold's rising price? Hahaha!