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It could be true that Gold had an annual return of 19.4% between 1968 and 1981, but maybe there's more to that story. I seem to recall Gold being restricted until 1973, and the price being regulated at $35 an ounce. After deregulation the price (predictably) jumped up.

The article might be right in some respects, but Gold is not going to be de-regulated this time, so it's performance in the next 10-20 years is unlikely to match its performance from 1968 to 1981.

The article might be right in some respects, but Gold is not going to be de-regulated this time, so it's performance in the next 10-20 years is unlikely to match its performance from 1968 to 1981.

Yes, this is my major disagreement with the article.

Firstly, in spite of central bank attempts to inflate the money supply, the excessively high levels of debt portend deflation. This is what happened in the 1930's, it's what has been happening in Japan, and it's what will happen next in Europe and then finally here.

Secondly, gold is no longer money, it is simply a commodity. The bank runs of the 1930's were all about exchanging gold depository receipts (paper currency) for gold, because back then gold was conceptually and legally the basis of money. There was a well known, legally binding exchange rate between dollars and gold. That's not the case today at all. The dollar is now backed by the same thing that backs gold: the willingness of society to accept it as payment.

I do think gold would make a better monetary unit than any fiat currency. But that's a completely different issue.

Every time I hear this bad usage of "the price of gold" being regulated at $35 per ounce, I cringe. It is such nonsense!

The gold is the money. It has a value stamped on it such as $20 for a double eagle. That $20 indicates it has 20 times the amount of gold as a $1 gold coin. A $1 gold coin has a precise amount of gold that equates to the $1 face value. That equation must not be broken. U.S. paper currency used to be a warehouse receipt for gold coin. The concept of $/oz was of no use.

If the coin tells you its value in dollars, and you can figure out how many ounces or grains are contained in the coin, not that anyone would care, but then it makes no sense to go outside this arrangement and declare the price of gold in dollars.

Unless---you know that people are not paying attention. And that they in general don't know that debasement is a crime punishable by death. You can vary by statute the number of dollars per ounce of gold to enable corrupt people or government to pay their debts with what amounts to clipped coins. They don't know because they never see the coin, they get the paper that represents less gold. They've been robbed. Their property rights have been nullified. The sanctity of contracts---no such thing anymore.

In the mean time, dollars are now interest bearing debt instruments, representing unsecured debt of whoever did the borrowing that brought it into circulation. And since this debt unit is the unit of account, the price of gold is quoted in those dollar terms. And it works, now, because there is not even a pretense to have gold as money. But it is so against the law laid out in the Constitution and in the First money act of April 2, 1792, I don't even know where to begin.