GOLD

Gold! For most Americans that magical and mythical metal is something the extravagantly wealthy use for ornamentation, while the unwashed might only commune with that exotica when buying a little fourteen carat wedding ring. Asians from the Middle East eastward traditionally use gold much more extensively and most are aware of the vagaries of its price. Americans, generally, could not care less about gold as a commodity than about pork bellies and artichokes.

Recently we are bombarded with advertisements for gold as the only means of preventing the disappearance of our personal wealth. This is not significantly different from the much maligned position of seventeenth and eighteenth century mercantilists, who conventional thinking believed maintained that only gold and silver constituted wealth. Certainly by the beginning of the eighteenth century the mercantilist approach was far more sophisticated than that, despite what Adam Smith said. There is no denial, however, that the pursuit of precious metal accumulation was a strong motivation for all aspects of economic activity.

Having written a master’s thesis and doctoral dissertation on mercantilism provides me some license to address the subject. While I could have justifiably presented an entire course on this subject, I never did. In fact, one cannot teach any history course effectively without considerable attention to the prevailing economic theory and practice of the time.

Pity anyone who tries to explain the prevailing economic theory of the contemporary United States. Attack upon capitalism is more successful than it has ever been. Lack of understanding of economic theory in the general population is no small part of anti-capitalist achievements. Ironically, almost every college student now and from at least the middle of the twentieth century received a strong smattering of Marxist theory and likely read The Communist Manifesto, while few of them, including Economics majors, ever looked at a page of Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations, which is supposedly the Bible of capitalism.

For the moment, gold is our subject. Why not, as it is hovering around $1000 an ounce. An ounce of gold is about the size of the smallest pieces of chocolate in a Whitman’s Sampler.
That equals a lot of peoples’ monthly mortgage payment, a couple car payments, their annual veterinarian bill, or the accumulated cost of going to the beauty parlor for a year.

How many shares of Ford or General Electric can one buy with the required investment in a little chunk (morsel) of gold? Having seen our retirement funds in conventional stocks evaporate, it is easy to agree with gold hawkers that gold has “never been worth nothing”.

If your piggy bank is big and full enough, you might crack it open and buy a fragment of gold. It will retain some value and take up less space than any piggy bank.