Why Is Gold at a New High?

The most recent quote reported in the Wall Street Journal (September 15, 2010) values gold at $1,268.50 per ounce, a historic high, albeit unadjusted for inflation.

Will rosy expectations never fail to persist? It is certainly true that the expansionary policies currently being pursued by Fed Chairman Ben Bernanke auger much higher future rates of price inflation. But it also has never been true that, in the face of economic Armageddon, that people resort to gold-mediated exchange. They instead rely on barter, e.g., trading a pig for a new roof.

‘Investing’ in gold is pure speculation. You may lose or you may gain, but don’t think you are thereby securing your economic future.

William F. Shughart II is Research Fellow and Senior Fellow at the Independent Institute, the J. Fish Smith Professor in Public Choice at Utah State University, past President of the Southern Economic Association, and editor of the Independent book, Taxing Choice: The Predatory Politics of Fiscal Discrimination.
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