Politics and Whatnot

Just another liberal political blog

Gold officially ridiculously overpriced at over $23,000 a pound

BBC News – Gold price hits record at $1,600 on debt uncertainty.

The bar is worth about $640,000. Not sure how much the hand is worth, but it's probably quite a bit less.

It’s times like this that I wish I had enough money to short things.   Then again, most of my predictions are wrong, so maybe it’s better that I don’t. But despite that, I’m quite certain that gold is not only overvalued, but ridiculously overvalued.

So gold has hit $1600 per troy ounce.  That’s $1600 per 1/14.58th of a pound of gold.   In other words, gold is now worth over $23,000 a pound.   Excuse me.


Nothing in the universe is worth $23,000 a pound.  Nothing.  I don’t care what people will pay for it, nothing is actually worth that much money per pound.  And what does gold even do?  It has some very specific electronics applications, and it looks pretty.  That’s it.  That’s what $23,000 a pound is for.  You can’t even eat it.

By the way, gold is one of the heaviest metals – its almost twice as dense as lead.  One of those gold ingot bars (see picture) is 400 troy ounces.

Now, the price of gold wouldn’t be where it is if there weren’t people who thought that gold is quite sanely valued at $1600, or even higher.  One Ivory Johnson, guest blogging at CNBC suggests that gold is “nobody’s bubble” and that “it’s the unregulated counter-party to three decades of conspicuous fiscal incompetence. ” Mr. Johnson describes how several prior predictions of gold’s demise have failed, suggesting the current thinking that gold is a bubble will also be proven wrong.  Wrong before, wrong again, right?  What goes up, keeps going up.

So the gold price is being held up by ideology, self-reinforcement, and magical thinking.  You don’t need to be a highly paid hedge fund manager to figure out that gold is overpriced.  All you have to do is ask the following:  Which one would you rather have?

  • A pound of gold ($23,000) or a new car?
  • 10 pounds of gold ($230,000), or a decent suburban house?
  • A single gold ingot (thing in picture – $640,000), or a working 1979 Learjet that was flown by Neil Armstrong + $40,000?

Yeah, I think gold’s a bit overvalued.


3 responses to “Gold officially ridiculously overpriced at over $23,000 a pound

  1. Pingback: Time to eat crow on gold (sort of) « Politics and Whatnot

  2. Pingback: Gold below $1600/ounce – and I look smart. Kinda. « Politics and Whatnot

  3. Pingback: Why the economy still isn’t going to implode, despite what public thinks of it « Politics and Whatnot

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