"I can understand the use of gold in the past as money because of it's scarcity and it's properties made counterfeiting impractical. But as a storehouse of value?? What's that suppose to mean. How come copper or lead or diamonds or corn or soy beans aren't a "storehouse" of value? Sure the corn and soy beans have a short shelf life, but as long as they are still unspoiled, they store value as good as anything else."
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Train Guy...
I think you answered your own questions. Throughout history, man has tended to turn to gold in perilous times. While one may argue about it being logical or rational, one cannot argue that it is untrue. Does the value of gold fluctuate up and down like any other commodity?? Sure, but show me a time of political and economic instability where the price of gold went down, instead of rising. That cannot be said for lead, copper, black velvet Elvis paintings, or anything else except for food in times of famine - but food is perishable and in a large society even in a famine I bet gold would be worth a lot more than fiat money.
Your analogy of two men stranded on an island, one with gold and the other with food, is apt only if you get into such a situation. I don't live on an isolated island and I suspect you do not either so in an unstable world I would rather take my chances with gold. The food is going to be consumed or it will rot or be eaten by vermin - either way it is good for only a short time.
I am not a gold bug as I understand the term - until about 18 months ago I had never bought gold or gold stocks at any time. I always viewed it as a poor investment with no rational reason to own it yet you had to pay just to keep it. Times change, and there are now good reasons (in my opinion) to own gold as an investment - and my gold stocks have more than doubled in value with the rest of the market faring less well, to say the least. I look at gold as an investment only, and will hold it only as long and to the extent that it seems to have the potential to appreciate. I am not in love with it, nor do I look to it for economic salvation in perilous times - for such things I look to God, and to Him alone. For that reason, I own no physical gold and probably never will - just the gold stocks, which normally appreciate more quickly than physical gold.
In edit: I do not harbor dreams of gold going to $3,000 or even $1,000 any time soon - chances are I would miss much of any such move by taking profits too early. I do think it could easily go to $500 or higher if my macro view of the economy is correct. I am not as bullish on silver because if my macro view on the economy is correct, the industrial demand for silver will decrease as the economy slows - the same should be true for oil.
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