Generally people are content to let gold bugs rave in their specialized padded cells and internet niches. The only reason to do battle with them is that they recruit innocent but ignorant new people to join their radical visions, much as islamists recruit "martyrs". I know this because I operated on the fringe of goldbug-ism in the 1980's and 1990's. I was ignorant and angry and attracted to gold.
Gold is still important to me, and I own it as a part of my investment portfolio, and gladly so today, but as I got deeper into economic history and the approximately half century long inflation cycle, I got a better perspective on gold as simply another inflation sensitive asset like cotton and soybeans, crude oil, and zinc, real estate and artistic collectables. Stocks and bonds are inflation sensitive too but in different ways. But gold goes up in bull markets during inflation and down in bear markets during disinflation.
Two events made me see the silliness of goldbug-ism. One was the about face performed by goldbugs after 1996 when gold went crashing down. All at once the "bugs" went from being inflationists to deflationists so they could still love gold above all else. The answer to this absurdity was that there had to be a cabal of conspirators preventing gold from pricing higher as it "should have".
One by one writers and sellers in the field of gold converted to the conspiracy theory rather than accept the fact of a disinflationary bear market that was also going on in most other commodities. Gurus and writers and sellers had to talk the talk of their rabid buyers or find a new profession. Many had put in decades on gold and simply had to mouth the new mythology in order to make a living.
The other awakening came through re-reading 18th and 19th century history, particularly with regard to politics and economics. It became clear to me that the gold standard was part of the entire 19th century bourgeois reactionary regime which came into place on the final defeat of Napoleon and largely sketched out at the Council Of Vienna in 1815: very tight credit and very limited democracy. Credit busts were frequent and deep. Economies were easily strangled.
There was and is no way now of going back to an economic world tied to gold in our age of social democracy and integration of the world's poor.
Dr. Eckart Woertz, Program Manager Economics, Gulf Research Center, Dubai, UAE has written a very succinct article for Financial Sense which further explains the dead and absurd concepts still propagated by goldbugs.
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