Gold Is a Pet Rock

Why Gold Is a Store of Value

Eleven years ago this week, the Wall Street Journal published an essay entitled, "Let's Be Honest About Gold: It's A Pet Rock", unwittingly marking the bottom of a brutal, two-year bear market. And, to their point, let's be honest about it. Gold really is a pet rock...just not for the reasons listed in the article.

Let's start with a link to the post from July 17, 2015. It's behind a paywall now, but if you have a Wall Street Journal subscription, you can read it here.

To save you time, here are the first two paragraphs, and if you swap out some of the old headlines for current headlines, it reads like it was written last week. Gold is "not a safe haven", "it's down 39% from its peak", and as such, "investors are yanking billions out of gold funds".

Wall Street Journal "Let's Be Honest About Gold: It's a Pet Rock" Article (July 2015)

Gold vs Fiat Currency

I'll save you the old "history not repeating but rhyming" stuff and focus instead upon what Jason Zweig inadvertently got right, that whole "pet rock" thing.

You see, gold really is a pet rock, or pet metal, whichever you prefer. It truly does just sit there and collect dust as it pays no interest or dividends and has no utility. But that's the point! Its value is not measurable. It IS the measure.

The investment world expresses value in fiat currency...think dollars per share or dollars per ounce. But in doing this, the miscalculation is that the dollar is the measuring stick. As if the dollar has the stable underlying value. However, we all know that's untrue. The dollar, or any other fiat currency for that matter, is constantly being devalued by new issuance. The supply of dollars continues to grow, thereby devaluing and diluting the dollars that were already in circulation.

U.S. M2 Money Supply Growth Chart (2000–2026)

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Gold Price and Money Supply

Of course, some will claim that gold gets diluted 1% per year via new mine supply, but that's nothing compared to the long-term growth of M2 money supply, which averages 6-7% per year.

Historical U.S. M2 Money Supply Growth Rate Overview (1960–2026)

As such, GOLD is the measure. Not the dollar. Not the euro. Not the yen. And certainly not the Loonie. Yes, gold is a pet rock. It just sits there in the vault and collects dust. It pays no interest. It actually has a carry cost for storing it safely and securely. And yet, its relative scarcity reveals the sinister underlying effects of the debt-based monetary system.

Follow the live gold price chart.

Why Buying Gold Matters

The gold "price" isn't changing over time and its value remains stable. What changes is the amount of fiat currency needed to acquire it. An ounce of gold is simply an ounce of gold. In the year 2015, it took 1,100 U.S. dollars to purchase an ounce. By 2020, you needed 2,000 U.S. dollars to acquire that same ounce, and now, in 2026, that exchange requires 4,000 U.S. dollars. With government debt and future obligations now expanding exponentially, why would you doubt that by the year 2030 or so, it will cost you at least 8,000 U.S. dollars to obtain an ounce?

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Eleven years ago, the Wall Street Journal thought they were mocking gold owners when they derisively claimed that gold was nothing more than a pet rock. Instead, they left us with a landmark revealing that the purchasing power of the U.S. dollar has declined by 75% in the time since. We should thank them for their service, and we should all buy more gold.

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Read more:

• The End Is Near: Gold Price Outlook

• COMEX Gold Options Speculation

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