A.I.M. Users Bulletin Board

[AIMster]

Maureen Dowd in her NY Times column today touted her experience as a would-be strike-it-rich prospector for gold in California.
Under the title of "Striking it Poor," her column can be found here:

http://www.nytimes.com/2009/04/08/opinion/08dowd.html

Remembering, of course, Mr. Lichello's experience with gold and his chapter in the book, I was not one to leave this unanswered! No, sir!

My response:

If the Inca description of gold was "the sweat of the sun," that certainly explains the "gold fever" that can still be quite infectious. Certainly gold is often promoted as a steady hedge to hold in times of economic turmoil, so why would people be buying now at a relatively high price, if it goes down, they're sitting on a loss. Of course that's the paradigm many follow with the stock market, buy high, sell low.

In the rather offbeat titled book "How to make $1 million in the stock market automatically," the late Robert Lichello counsels a system to encourage to buy low and sell high; he also devotes a chapter to the relative merits of gold in a post-apocalyptic economy. In his case, immediate postwar Japan. Looking to get some spending money he decides to hock a gold ring in a pawnshop, only to be disappointed with the amount he's given for it. The shopkeeper explains how there's plenty of gold for sale, but not many buyers, thus the low value. You can't eat it, make change easily with it, even barter would be difficult. If you were seen as holding a lot of it, security would become an issue, especially in difficult times.

Since gold ownership can be taken away by the government, as it was in the US between the 1930's and the 1970's, Lichello suggests a far more useful hedge in such an economic scenario: Ivory soap. People are still going to need it, soap has a long shelf life, and the small bars make barter more feasible.

Sounds simple, doesn't it, and storing a couple of cases of soap is a lot less work. Though maybe not as much fun. But you'll be clean, that much is certain.