Gold & Silver Essays

There is frequent debate about the valuation of any asset or asset class. Sometimes the debate is fierce, and few investment topics evoke as much passion and controversy as gold — especially among professional investors. Many believe that gold is useless as a commodity and are sceptical of its alleged monetary value. For those that have legitimate doubts about the value of gold, this paper is an attempt to address some of those doubts.

In a recent article in Fortune, Warren Buffett reiterated his well-known view on money. Far less celebrated, however, is the discerning view of his father, Howard Buffett, expounded in a brilliant speech in 1948 while serving as a 4-term congressman from Omaha. Unlike his son, Howard understood gold's value and cherished its inexorable link with human freedom.

In one important respect, gold is like any other asset. You want to buy it when it is undervalued, and sell it when the opposite is true – when it becomes overvalued. Thus, knowing how to accurately value gold is essential for sound portfolio management. In this essay, James Turk explains how his 'Gold Index' can help people do this.