McArdle teases gold bugs:
The only scenario I can think of in which it makes sense to stockpile a lot of gold is one where you and your household goods are unexpectedly teleported into the sixteenth century. If you worry a lot about this, then by all means, stockpile gold. But you should also probably take the precaution of stockpiling antibiotics and how-to books on dentistry.
Spam is a better hedge against inflation than gold: you can eat it and it lasts 1000 years. Gold is, as Keynes aptly said, a barbarous relic
Leonhardt notes that gold isn't anywhere near its record high once you adjust for inflation. His explanation for what is going on in the gold market:
The recent rise, as Nariman Behravesh of the research firm IHS Global Insight notes, has relatively little to do with inflation fears. “It’s not about inflation,” he said. “It’s a hedge against a weak dollar, not a hedge against inflation.”
Investors who hold a large amount of dollars including central banks like China’s understand that the dollar probably needs to fall in coming years, as today’s trade imbalances slowly shrink. So many of those investors are turning to gold.
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