Gold Gets Taken to the Woodshed by Former Bush Speechwriter

David Frum, former speechwriter for President George W. Bush, writes about coming gold bust in a blog post on Wednesday.

Frum sees too much hype in the gold space. He polishes the old chestnut about the time Joseph Kennedy " . . . decided that the 1920s stock boom had peaked when he got a stock tip from his shoeshine boy." He worries about the people who have bought into the advertising on TV:

Now the airwaves are full of ads for gold. After all – it’s never been worth zero, right?

Yet all those people who have bought gold above $1000 over the past year and a half – especially those poor souls who have paid the big premium to buy gold in coin form – need gold to levitate far, far above zero. Odds are: they will be very disappointed.

In a subsequent column, Eli Lehrer chimes in:

Frum’s predictions of a coming “gold bust” are right on. In fact, however, things are worse for gold investors than he implies. First, if gold investors are wrong and the metal declines in value, there’s almost no floor that it couldn’t theoretically fall through. Gold—unlike other commodities—is pretty much useless by itself. Unlike oil, steel, natural gas, corn, or orange juice, it can’t do much other than look pretty.

Lehrer wonders if the gold bugs are right and there is financial apocalypse, how will gold work?

"If society somehow descends into a dark age (which strikes me as hugely unlikely), the likely outcome is probably a lot closer to Mad Max-like battles over oil and other useful resources than gold coins," he writes.