In this weekend’s FT Magazine Gilliant Tett has written an excellent column on the precious metal. Perhaps one of the best ever written on the subject. Gold is, indeed, a “premier currency”: It possesses all the characteristics other ‘fiat’ or ‘virtual’ currencies lack: Historically ‘anchored’, finite supply, tangible and, last but not least, a beguilingly beautiful substance with an enigmatic appeal. This explains its enduring appeal, creating the illusion of permanent, intrinsic value.
However, it is a myth to believe gold is a constant store of value. Like anything else, the price of gold is created by supply and demand: Gold in need of a polish?