Gold Trading is a Religion?

This is a funny article that is spot-on about my feeling that gold trading is more religion than any other type of commodity.

The reaction to Gold’s crash has produced some astonishing rationalizations. The refusal to acknowledge basic trading facts leads us to recognize that Gold bugs and traders have very specific rules that they MUST follow. These social conventions look less like a debate about asset classes and more like a religious cult.

This is one that I have heard quite a bit from the gold-floggers:

6. Gold works whether the economy is good or bad: When we have a red hot economy, Gold is your hedge against inflation. When we have a bad economy, Gold is a safe harbor against collapse. It is a one way trade that never fails!

In other words it acts as a hedge against inflation and a safe harbor at the same time. It is always uncorrelated with other assets so is safe. But I think Warren Buffet said it best:

“Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head”

That is pretty much my feeling on gold. You dig it up and move it from hole to hole and have people guard it. All you can make with it are semiconductors (in which you need like a tiny amount) and jewelry. If people aren't buying jewelry then its only value is as a shiny block of metal that people want for some reason or another. 

I like the idea of wedding season in India being a driver of gold prices to come back from here. Oh look gold took a sickening nosedive now I can buy even more garish gold bracelets for my goofy daughter. Now I can cover her entire body in gold like an armored knight made of gold! I'm sure Indians are rushing out to do that and gold will be back at $1800 again.