The Modern Media: Disinformation about Gold and the Nature of Money
Dan Denning, author of The Bull Hunter and frequent contributor to The Daily Reckoning Australia, analyzes the curent portrayals of Gold and currency in the popular media for Whiskey & Gunpowder.
Dan Denning (Whiskey & Gunpowder):
We’re going to review your 2010 asset allocation strategy in a roundabout way by exposing some of the snarky disinformation being put out by the mainstream media about gold, courtesy of Michael Pascoe at The Age.
First though, let’s just check to see that markets are still functioning normally. That is, let’s just check to see that heavy government intervention is supporting house prices (by providing guarantees to home lenders), GDP growth (by spending money on infrastructure), and disguising the true state of the labour market (by lying about how many people are out of work).
Yep. Situation normal, all fouled up. The oil price, the U.S. dollar, and bond yields were all up on bullish industrial production figures in the U.S. The “recovery” meme is taking a tenuous hold. Stocks were down. Because why would stocks rise if the economy were recovering?
Ah. Well that tells you something right there. It tells you that stocks haven’t risen in anticipation of a global recovery. They’re just enjoying the benefits of all that monetary and fiscal smack being peddled in Washington, London, Tokyo and Canberra. It’s hard to rally on fundamentals when you’re already over-valued.
Speaking of value, let us now return to the question of element number 79 on the periodic table. The snarky article we mentioned at the top is from Michael Pascoe at The Age, titled “There’s more gold where that came from.”
In the article Pascoe takes on the issue of “peak gold.” But how well has he done in accurately stating the argument for gold? And more importantly, is he right about the relationship between market prices and gold? Well, obviously we think he’s pretty wrong. But let’s see what he’s said.
“Part of the dogma of the less rational gold bugs is that the world is running out of the stuff. As an article of faith, it makes a pleasant change from the idea that fiat money is about to be exposed as huge confidence trick and we’re heading back to the caves.”
Webster’s defines “dogma” as “a religious doctrine that is proclaimed as true without proof.” Already you can see what Pascoe is up to. Gold bugs are nutters and zealots. Apparently 5,000 years of monetary history where gold has proven utility as a medium of exchange and store of value does not qualify as empirical evidence of gold’s value. There’s no pleasing some people, especially those who come to an argument with their mind already made up.
Click here for the rest of Mr. Denning’s analysis at Whiskey & Gunpowder.
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