So, Richard Petty is now hawking gold coins.Part of his spiel is that gold is a safe bet because it is a :hard asset."
The problem with this is that the price of gold is just that, a price. Therefore, like all prices, it is dependent on the values judgments of buyer and sellers.
If you take a look at the history of real gold prices (see graph) you can see that when you adjust for inflation, gold has some serious ups and downs. Gold prices peaked in 1980 at about $1820 an ounce in 2012 dollars and did so again at about $1825 in 2001. (Note: from 1933 to 1975, it was illegal for private citizens in the US to own gold bullion without a special license, so the modern market for gold only dates back to the end of that period.)
It is important to note that after the peak in 1980, gold lost half its value in the next 3 years and then steadily declined (in inflation adjusted dollars) to a nadir of $338 an ounce (in 2012 dollars) in 2001. From 2001-2011 it rose at a significant rate, but has recently lost 1/3 from its value since the 2001 peak.
Not exactly a hard asset.
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