Gold has a uselessness factor that is weighing it down. It does not pay any interest, at a time when interest rates are rising, and dividends of equities are strong, and tax law is very favorable to capital gains and interest earnings.
Now the answer to uselessness is usefulness. What can gold be used for? You know about bangles, rings, tooth fillings, electronic leads, reflective surfaces, and medical applications, sure, but why not think for a moment about the most traditional use of gold which is to use it as money.
Why do we not use gold as money? If we did use gold as money, would that not triple the global demand for gold? Would not usefulness push the price up?
Gold in its raw metallic form, as bullion, is hard to authenticate. And malfeasors abound, and get more clever every year. So even coins in holders from reputable firms sometimes turn out to have been drilled, shaved, or re-alloyed.
But, did you know that very fine particles of gold can be mixed with paper fibers, and when the paper is rolled out, the gold becomes enmeshed between and within the fibers of the paper? OK, now you have a piece of paper with gold in it. Say 1/10th of an ounce, so your piece of paper is worth around $130, roughly comparable to a $100 bill, how can that be authenticated? Does it require assay, or cuppolation?
I say it does not. Because I can put a hologram with a secret file number on that gold-bearing piece of paper, and I can put a zone of fluorescent rare earth elements on it as well, and between these two printed on additions I can authenticate that bill. And you can’t counterfeits that bill.
You can’t make a bill that will “pass” as a Paper Bullion Bank Bill. My hologram and my fluorescents zone can be read with 100% reliability, and they can be read fast enough so that Paper Bullion Bank Bills can trade as money.
So, which do you want? Would you like a $100 bill with promises from Secretary Mnuchin on it, or would you like a Paper Bullion Bank Bill with gold in the paper?
This is not Germany in 1938, or Argentina, or Venezuela, or Zimbabwe, nothing could possibly go wrong here, so the sayings of Chairman Powell and Secretary Mnuchin are just as good as gold, you may think. Is that not a strange idea — words that are as good as gold. Everybody that ever believed that in the past 10,000 years turned out to be mistaken, but you might get lucky.
My point — Gold can and should be used the way it is supposed to be used — as money, in circulation, not as big shiny bricks piled up in vaults. Of which, by the way, Italy has quite a huge amount, while it is experiencing central bank financial difficulties. What it needs to do is make some Paper Bullion Bank Bills. By being the first global mover on that new product, Italy will gain a trillion dollars worth of commercial advantage. This new revenue and business activity will help Italy overcome it financial woes. In the meantime, it loses nothing. The gold in circulation in its bank bills now enjoys usefulness which makes it more valuable.
At last — a use has been found for gold!
Use it as money!
Who would have thought of that?
Please visit me at robertfentongary.com and learn more.