Thursday, February 26, 2009

Kedrosky on Gold.

Careful readers of the sunny dispatches of this space know that Ellisblog! is a big fan of Paul Kedrosky's work. Here's Kedrosky's take on gold, which happens to mirror my own view, which means it must be right:

Finally, I hear what you're saying wrt gold. In some very real sense, however, gold is just another ponzi scheme. It is only worth something because other people think it's worth something. After all, gold is near useless as an exchange medium; there is little supply; and it has minimal practical value. Does that mean you shouldn't own gold? No, I do. But it also means that when the wheels come off it, as will eventually happen, then finding a gold bottom is very tough, because there is no underlying economic rationale for any particular value.