I got thinking about Anti-Mustachian and Gold based on a number of areas.
Environmental:
As mentioned by KingCoin, we are strip mining our planet to obtain a piece of metal that has limited utility and the value is based off of a shiny metal, vs practical use of that metal. There are numerous towns in China and elsewhere that are toxic, because they are trying to recycle the computers, phones, and other electronic devices to get the 50 cents of gold that is used in these items. Again, it appears from the article listed, the useful uses of Gold (Electronics, Dentistry, and other Industries) derives 11% of the use of gold, the other 89% is Jewelry, bars of gold and ETFs. So we are causing significant environmental damage with the primary purpose of having a shiny metal to hold, wear, touch, and since 2003 to look on a computer or statement that we own gold in an ETF or other investment form.
Supply vs. Demand:
As noted in the article the true useful demand has stayed flat over the 14 year period, supply has been increasing, and the price started to increase at the time that ETF’s started to take off. This is when the advertising for investing in ETF’s, gold bars, protect yourself from the administration started kicking in to high gear. Again, the amount of gold that is used in an income producing fashion was flat during that time, while production of gold was increasing. Yet, prices exploded due to people buying gold for investment purposes. This does not seem sustainable long term. Un-Mustachian to listent to the marketing hype vs. the facts on the amount of true gold consumption going up.
Utility of the Asset:
If gold is held in a physical form, one probably has some concern about protecting the asset from theft and loss. Insurance can be purchased at a price per year, guns and security systems can be beefed up, but again a mustachian way of life would indicate less worry over the assets vs. more. So again, seems a bit anti-mustachian. The asset is purchased typically at a premium over listed prices, it is sold typically at a discount over listed prices, and if you want to skip the middle man to eliminate those discounts then you are typically increasing your risk of loss of life or assets. Again, not a great liquid asset. Not what I would think would be the definition of a good mustachian asset.
If it is in electronic form, then I guess it is similar to a stock or bond in that you have to trust the system that it will be there when everything hits the fan. Except stocks and bonds are valued based on the expected net present value of future cashflows. Gold does not generate income, therefore it is an interesting asset to value Even the 11% that is used in useful production, it sounds like a portion of that is recovered through recyling fillings, computers, etc.
If the world hits the proverbial pile of poo, then I question the value of gold to feed, shelter and clothe your family. I would think the other mustachian skills would be much more valuable, like gardening, ability to hunt, build, sew, scavenge, etc.
Owning gold, reminds me of another post on the forum about spending $2,000 on a speaker. In that case many posters stated, “do not take 2,000 of your little employees and buy a tube Amp”, arebelspy, eloquently stated, “In the future, when someone complains that this community face punches too hard and too often, I'm going to use this thread as proof to the contrary.” The parallels to a speaker that someone enjoys using and listening to, that he believes will retain it’s value over time, and it sounded like was valued at used and discounted costs is in line with someone going out and buying an ounce of gold. Except the speaker can be enjoyed, I guess if someone likes looking at gold there is value there as well.
Owning an asset that does not produce an income stream, that’s usefulness is decreasing not appreciating, and that the value is based on it being shiny sounds like the stories of the stone wheels of Yap or the Tulips that were used as currency. Not a logical, investment for long term gains. As Warren Buffet, states, “What would the Martian’s Think?”
Just an interesting concept as I see Gold being discussed as an asset or a component of the PP. It always struck me as odd to have a piece of metal act as a hedge. As I mentioned in my earlier post, I could see people acquiring rights to metals that are going to be strategic in future technologies like rare-earth metals and as listed in original post. The duller the metail the more mustachian if it is useful:)
Thanks for all of your posts. I will research it further.
Tom