See also Roy Jastram's The Golden Constant: The English and American Experience 1560 to 1976:
> Andre Sharon, head of the international research department at Drexel Burnham, Inc., notes, “the value of gold essentially derives from its capacity to preserve real capital and purchasing power.”† I select this particular quotation because of the prestige of the organization and the position of the spokesman, but statements in this vein can be found in great numbers. They can be traced back for generations and in many countries. How can this proposition so contrary to statistical fact become so widely believed and quoted? Possibly because gold has preserved capital in cataclysmic cases it is easy to infer that it can be trusted to do the same in less severe circumstances. To extrapolate from gold’s protection in singular catastrophes to its use as a strategy against cyclical infation is an example of faulty inductive reasoning.
So if the barbarians are (close to literally) coming across the fields, gold can be useful to hide or take with you as you head for the hills, but for most economic situations it is not useful.
> Stocks and crypto can fall to 0.
In which case, you better be a farmer with lots of ammo so you can feed yourself and protect what's yours. Of course the Mad Max chaos is a popular trope, but historical events show that people tend to be altruistic and pull together during disasters:
> After >40 years, gold has only just gotten back to its 1980s inflation-adjusted price
If you look at the absolute peak of its price for the last 100 years, it took 40 years to get back to it. Yeah, so? Absolute peaks are like that.
If you don't cherry-pick the year, the gold price right now is looking good compared to the past. (Though an honest reading of that chart would lead one to suspect that we might be near another peak right now...)
Gold will always retain some value. It may not retain 100% of its current value (based on that chart, you could lose 80%). But it still might do better than, say, the Zimbabwe dollar, the Continental, or even the ruble over the past decade.
> If you don't cherry-pick the year, the gold price right now is looking good compared to the past.
Then there's the near-decade drought between 2011 and 2019, and the multi-year drought between 2021 and 2024.
Meanwhile, if instead of having cash tied up in gold one had invested in an index fund (total market or even S&P 500), it'd be getting both price appreciation and dividends. Even the so-called S&P 500 lost decade of the 2000s did pretty well if you had some bonds and rebalanced (or, as a US resident, were internationally diversified):
The only time in recent history that gold seems to have been a useful 'investment' was a few years in the late 1970s and between 2000 and 2011. Over the course of decades it seems to have been a money hole.
> But it still might do better than, say, the Zimbabwe dollar, the Continental, or even the ruble over the past decade.
Compared to a diversified portfolio or even bonds (especially TIPS in the US), gold would have been a disaster.
Your original claim was "retain value". I think that was good wording - gold isn't a "make money" asset; it's a "don't lose it all" asset.
Comparing its investment performance to TIPS is therefore moving the goalposts from "retains value" to "grows fast". (Or am I taking the words in your first post as being more precise than they were intended?)
