When the economy is rocky, folk wisdom says to buy gold…it’s a safe store of value. But why? I mean, it certainly has practical uses – in electronics, for example. But so do many other substances &, whilst commodities have boomed, this is often explained by demand from rapidly developing economies, notably China. In which case, why choose gold specifically?
No, I think the advice is simply down to the world’s desire to hoard scarce gold – as a ‘solid
underpinning’ of wealth. But isn’t this just a circular argument? Why do people want it, if not to use it for something – even if that’s just as personal decoration? And surely its use in jewellery is to a large extent driven by its value…
So I wonder, what the millennia of demand for gold are really based upon – its warm yellowy glister, or its practical use? And how can we be sure it won’t someday be seen as the emperor’s new clothes?