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An Investment Better than Gold

September 29, 2010

Come with me into the future.  It won’t take long.  We’ll be back in five minutes.  The year is 2012.  The month is, let’s say, June.  The convergence of the Mayan end-of-the-world faithful, unsatisfied Y2K’ers, and Nostradamus-istas has reached a pinnacle.  People anchored in reality, however, feel the inflation, elevated food prices, and a level of government regulation never seen.  You can buy a dime bag of reefer at Walmart, but growing a tomato in your backyard will get you a $1,000 spank.  Assisted suicide is not only legal but comes with some very favorable tax benefits.  Capitalism is still alive, but it’s stranger than ever.  And gold is roughly $3,400 per ounce, the equivalent of $54,000 per pound.

Continuing on in not-too-far-off-futureville, a franchisee of Dr. Jack’s House of Dignified Dieing notices that your hairline has afforded you ample forehead real estate available for advertising.  The proprietor of the local Dr. Jack’s approaches you with an offer to advertise his services on your shiny dome.  Above your eyebrows he desires a semi-permanent tattoo saying, “Die at Jack’s.”  On the backside of your skull he wants his phone number and address.  You negotiate and strike a six-month contract in which you agree to walk ten miles per week in your city without a hat, sporting Dr. Jack’s advertisement on your head.  For this work you agree to be paid $1,000, with 50% due upon contract execution and the balance upon expiration.  You shake hands and sign the contract.  Dr. Jack’s marketing rep then pulls out a shiny gold coin and his Ronco Gold Flake Shaver and starts to carve off a few bits as your payment.  You say, “Whoa, Jack.”  It’s not that you object to payment in gold.  Remember, folks are using dollar bills these days primarily for wiping and fire starting. It’s commonplace to be paid in gold, silver, and the occasional piece of fruit.  In front of you lay several small slivers of gold, barely visible, but representing your up-front payment of five hundred dollars.  [At my forecasted gold price, $500 worth of the typically useless material would be roughly 1/7 of an ounce, or 4.2 grams, or a weight equal to three paperclips.  At today’s real price of $1,300 per ounce, five hundred dollars’ worth would weigh the same as 8 paperclips.]

So, Dr. Jack points to the pile of golden curls on the table and says, “There you go.  I’ll see you in six months and pay you the balance.”  But you think, how do I know that is really $500 worth of gold?  More precisely phrased, how do you know it is an amount of gold equal to five hundred dollars given the current market price?  You place the gold bits on your equal-arm beam scale and balance the load with a set of weights (e.g. grams, drachms, or grains).  You determine that, yes indeed, Dr. Jack has provided you 4.2 grams of material that is golden in nature.  You’re about to thank him and excuse him when you think a second time and call him back to the scale.  “You have exchanged with me 4.2 grams of golden-looking product for my promise to advertise your services on my forehead, but how can I be sure that this amount of material is worth the price to which we have agreed?”  The Dr. Jack’s rep only smiles reassuringly.  You remember back to your school learning days and recall the material property known as density.  If it is gold, it will have a density of 19.3 grams/ cubic centimeter, or 19.3 grams/ milliliter (mL).  You reach for an old graduated cylinder you picked up at a garage sale many years ago.  A few math maneuvers later, you predict that if the 4.2 grams of yellow metal you have does have a density equal to that of gold, it will displace 0.221761658 milliliters;  that’s pretty close to right between two-tenths and one-quarter of a mL. 

You pour 1 mL into your graduated cylinder and then add in your gold pieces.  You see that the water then rises not by one-quarter of a milliliter but, rather, by nearly one-half of a milliliter.  You break out the abacus again.  4.2 grams of unknown yellow-colored metal divided by 0.5 milliliter displaced = 8.4 grams/ mL.  What?  That’s less than half the density of gold and seems more in line with the density of copper or worse, brass.  You remove the brass chips from the graduated cylinder and pat them dry.  Rubbing the pieces into the palm of your hand and sniffing, the unmistakable smell revealed the truth.

Thank goodness you did the test prior to getting your forehead tattooed.  The lesson?  As gold surpasses $1,300 per ounce, the price of scales and graduated cylinders is sure to follow.  You heard it here first:  buy scales, weights, and graduated cylinders.  Buy them now and be the only guy in your neighborhood who’ll be able to tell if the “gold” is gold. 

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