Monday, June 9, 2014
The thing about barbarous relics
So gold is a barbarous relic, we know that. It has nothing to do with money anymore. We dig it out of the ground and melt it down, just so we can bury it again.
It has no intrinsic value, except for the following:
1. It's a great conductor that doesn't corrode: this makes it better than copper or aluminium.
2. For some reason it's also good for dental fillings.
3. If you want to keep your wife happy you'd better give her some.
So if the price of gold is more than say $5 a pound (the price you'd expect for its preferability to copper, otherwise we'd wire the planet with it), the price difference is all up to expecting people to pay more for it than you did.
What kind of clown would invest in something with the hope that you can foist it off on someone else for a higher price in the future? Especially if you have to pay a yearly storage cost!
This got me thinking about gold analogues, and specifically art.
Why the heck would someone pay £8.9 million for the Rothschild Egg? It has very little intrinsic value. I mean, sure, it's skilfully made and a historical piece, but that value is entirely subjective.
And what about paying $259 million for a painting of two dudes playing cards? Seriously? Paul Cézanne couldn't have made this painting more banale if he'd instead done a bunch of dogs on velour.
Canadians should be able to sympathize with this argument: after all, just a couple decades ago our National Gallery paid $1.8 million for an eighteen-foot racing stripe. How the heck is a racing stripe worth that much?
Next time some clever dick says gold has no intrinsic value, ask him how he's decorated his house. If he has anything more expensive than a Kylie Minogue poster, you might want to point out the silliness of investing in art.