There are generally considered to be two schools of economic thought concerning gold: the Keynesians and their fellow travellers consider gold to be “a barbarous relic”, in Keynes’ words. The other side, such as the Austrian school, considers that gold (and silver) are real wealth. In a debate during the Great Depression, Hayek of the Austrian School  recommended continuing the gold standard that linked fiat currency to gold. Keynes said no, let’s print.

In my opinion neither side is right. Today we have extreme Keynesianism. This is not working too well, but I doubt the answer would be a return to a pure gold standard. Warren Buffet has a more practical view. He estimated that all the gold in the world would be equivalent to all US farmland. He would rather have the farm.

The following quotes are in no particular order. I hope you find at least some of them worthy of reflection.

Gold has worked down from Alexander’s time … When something holds good for two thousand years I do not believe it can be so because of prejudice or mistaken theory.
Bernard M. Baruch

You have a choice between the natural stability of gold and the honesty and intelligence of the members of government. And with all due respect for those gentlemen, I advise you, as long as the capitalist system lasts, vote for gold.
George Bernard Shaw

Gold is not necessary. I have no interest in gold. We’ll build a solid state, without an ounce of gold behind it. Anyone who sells above the set prices, let him be marched off to a concentration camp. That’s the bastion of money.
Adolf Hitler

The road to hell isn’t paved with gold, it’s paved with faith. Faith in a dollar that’s backed by a belief that people have faith in other people’s belief in it.
Jarod Kintz

[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.
Warren Buffett

We will answer their demand for a gold standard by saying to them: “You shall not press down upon the brow of labour this crown of thorns, you shall not crucify mankind upon a cross of gold.”
William Jennings Bryan

It is health that is real wealth and not pieces of gold and silver.
Mahatma Gandhi

Labour was the first price, the original purchase – money that was paid for all things. It was not by gold or by silver, but by labour, that all wealth of the world was originally purchased.
Adam Smith

If I have cash and I can’t figure a way to put it into real estate or my business, I hold it in gold and silver.
Robert Kiyosaki

Everything has its limit – iron ore cannot be educated into gold.
Mark Twain

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.
Alan Greenspan

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense… that gold and economic freedom are inseparable.
Alan Greenspan

Ferdinand was a gold trader. He was a lawyer for mining companies. When he entered politics in 1949, he had tons and tons of gold. When Bill Gates was a college dropout, Ferdinand already possessed billions of dollars and tons of gold. It wasn’t stolen.
Imelda Marcos

The world’s central banks and the International Monetary Fund still have vaults full of bullion, even though currencies are no longer backed by gold. Governments hold on to it as a kind of magic symbol, a way of reassuring people that their money is real.
James Surowiecki

A gold standard doesn’t imply stability in the prices of the goods and services that people buy every day, it implies a stability in the price of gold itself.
Ben Bernanke

A U.S. dollar is an IOU from the Federal Reserve Bank. It’s a promissory note that doesn’t actually promise anything. It’s not backed by gold or silver.
P. J. O’Rourke

Back in the day, I would wear up to 45 pounds of gold. It would take me four hours to get dressed!
Mr. T

Don’t gain the world and lose your soul, wisdom is better than silver or gold.
Bob Marley

If you have faith in our leaders of commerce, don’t buy gold. If you do not have faith in them, maybe you should buy gold or silver.
Robert Kiyosaki

Over the long run, the price of gold approximates the total amount of money in circulation divided by the size of the gold stock. If the market price of gold moves a long way from this level, it may indicate a buying or selling opportunity.
Ray Dalio

Although gold and silver are not by nature money, money is by nature gold and silver.”
Karl Marx

The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register.
Hans F. Sennholz

There are about three hundred economists in the world who are against gold, and they think that gold is a barbarous relic – and they might be right. Unfortunately, there are three billion inhabitants of the world who believe in gold.
Janos Fekete

For more than two thousand years gold’s natural qualities made it man’s universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper.
Hans F. Sennholz

Gold is not less but more rational than paper money. Money holds value so long as it is in limited supply; gold will always be in limited supply, and would require real resources to produce even from the sea; paper and printing ink are not in limited supply. The gold system is much closer to a modern automatic scientific control system than the crude and relatively unstable system of paper.
William Rees-Mogg

Bullion doesn’t pay interest or dividends, nor does it grow or expand by itself. That’s the price you pay for tranquillity.
Pierre Lassonde

Gold will be around, gold will be money when the dollar and the euro and the yuan and the ringgitt are mere memories.
Richard Russell

Regardless of the dollar price involved, one ounce of gold would purchase a good-quality man’s suit at the conclusion of the Revolutionary War, the Civil War, the presidency of Franklin Roosevelt, and today.
Peter A. Burshre

Nothing beats a little cash in a bear market, of course, and the oldest form of cash is gold.
James Grant

—oo—

 

27 August 2014 Macro