The Price of Gold

Gold PricesThere was a very interesting article in Yahoo Finance about the price of gold and what will happen to it in the coming months and years. The point of the article that I found fascinating was the interview with a fellow named Jim Rogers who is considered somewhat of a commodities genius.

After reading the interview I can see why he’s done extremely well in his chosen profession. He is a clear, analytically minded thinker, yes. But he has one quality that sets him apart and that’s what I wanted to talk about today. His forecast for gold is based on what he calls the Mystics, the True Believers.

Gold is a strange thing. Despite what people tell you it has very little inherent value other than its scarcity. I wrote about the various gold standards and elastic currency along with their benefits and shortcomings a while ago but that’s not going to be the focus of today’s thoughts.

What Jim understands, something I often fail to grasp myself, is that so-called mystics who place their faith in belief rather than facts are not to be completely scorned. I have a problem with that. Once I see a person is incapable or unwilling to engage in logical thinking I pretty much discount them. This is a person who offers me nothing in conversation, nothing in ideology, nothing in intellectual stimulation. To me the price of gold is based solely on its usefulness. When I look at making an investment in gold or anything else I make my determinations on solid facts.

This is where Jim proves me wrong. It is the mystics, the true believers, those who have faith despite the facts, that drive many markets, many decisions. This is not only the case in commodities but they are certainly a good case-study. The price of gold is based on people’s belief of its value, not its real value. The salary I’m paid is to some degree based on my perceived value to my company, not my actual value.

This non-logical thinking pervades the world and sets the price of things, the value of things, to something that is inaccurate. I rail against this faith-based thinking in blog after blog but the fact that it exists, that it influences our world, is undeniable. This is where Jim succeeds and I fail.

He takes faith into account when making his decisions. He understands faith-based belief and, using logical thinking, comes to accurate and lucrative conclusions. He is wealthy and successful. I could learn a lesson there. I argue that decisions should be based on logical thinking only. That the price of gold should reflect its real value.

Maybe Jim would argue the same thing, I can’t say. However, this illogical, faith-based thinking and his understanding of it have made him a rich man. I’m not unhappy with my life by any stretch. I have good friends, I like my co-workers, and I have good relationships with my family members.

Jim does offer a lesson for me. Rather than sit there baffled as I listen to someone making irrational decisions I should make my own decisions to take advantage of their way of thinking. Rand tells us to make the most of a situation, to do our best. No great insights here today.

No axes to grind. Just some simple advice for the other logical thinkers out there in the world. If other people choose to think illogically it’s not your fault. It’s not wrong to take advantage of it. I’m not saying to actively practice to deceive but if an advantage arises because of someone else’s inability to think clearly, grab it! Thanks, Jim. I learned a lesson today.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Twist

Current Release: The Sword of Water ($2.99 it’s a logical decision to buy it at that price!)
Next Release: The Spear of the Hunt

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