Monday, September 15, 2014

Gold is an Analog Asset

Wat Phra Kaew Temple, Bangkok

At dinner last night Jim Rickards and I were discussing the merits of gold as an asset class, and I hit on the term "Analog Asset", in that gold unlike almost all other asset classes, even real estate, is not digitally vulnerable to cyber attack and exchange disruptions.

Shares, bonds, CDs are only liquid if they can trade on the exchanges they are listed on being available. Whereas gold (and other precious metals) whilst traded on exchanges can also trade directly without a third party between buyer and seller. In a world heading into a new Cold War with Russia, growing tensions with China and ISIS in the Middle East owning an asset that is impervious to a military cyber attack seems very prudent.