Blue Scorpion

Lihir Gold: Price and Reality Part Ways

Dear Alan,

You must be a masochist to publicly flaunt your ignorance the way you do here at SA. I'll now try to shed a little light on gold, but it's up to you whether or not you keep your eyes open.

Back in the day, when gold was $35/oz., an oz. of Au would get you a well-tailored suit. Today at $730/oz., that same oz. of Au still gets you a well-tailored suit. But in dollars, that same suit has escalated in price 21 fold. Today, the tailor will make you one sleeve from the elbow to the wrist for $35. Furthermore, there is no other commodity that can make the same claim of purchasing power retention over the past 70 years.

Let me go biblical on you. Back in the time of King Nebuchadnezzar, an oz. of Au bought about 300 loaves of bread. 3000 years later, an oz still buys you those same 300 loaves.

Au has been exchanged as a currency or surrogate for currency off and on for over 6000 years. Which might explain why every central bank of any significance still retains Au in their vaults. But can you point to a single fiat currency that has lasted more than 500 years at best before ultimately collapsing into the abyss of worthlessness?

Au will get you across the border if it comes to that, Alan. And at the rate we are going, it very well may come to that. But if you ever do need to get across the border, it's highly doubtful you'll find any assistance if all you are waving in people's faces is greenbacks.

Au is money, Alan. But it's money that retains its value. Unlike your beloved dollar.

Been fun. See you around SA.