It is, perhaps, the logical sequel to a decade in which Americans were encouraged to use their homes as ATMs: the recent announcement that next month will see the debut of the first gold-dispensing ATMs in the United States. As any casual Glenn Beck viewer will tell you, the gold market is booming; the metal eclipsed the $1,300-an-ounce threshold recently, the highest price it’s reached in history. That’s nearly double the price it fetched in 2008, and nearly four times its price when the current gold craze took off in the early aughts.
And the appearance of machines dispensing shiny yellow little bars and Krugerrands is, for some investment savants, every bit the warning sign of a bubble’s wooze-inducing liftoff that the ARM-happy mortgage market was back in the day-back when restaurant workers and cab drivers began giddily flipping houses.
But the company that’s pioneered the Gold-to-Go dispensaries-a German concern called Ex Oriente Lux (“The Light From the East”)-contends, on the contrary, that it’s peddling the only form of financial surety out there.
“There is virtually no other form of investment, that is equally as anonymous, transportable and accepted worldwide as a value conservation and payment method, as physical gold,” writes the firm’s lead theorist, “Aureus.” And for good measure, he waves away recent talk of an ascendant gold bubble with an anecdotal appeal: If we can more readily summon up the names of 20 holders of paper securities than we can tick off just five rock-solid gold backers, why then there’s no cause for alarm. Indeed, the very scarcity of the commodity-which is what prompts investors to flock to it at as hedge against inflation and soft money in the first place-argues against a serious bubble ever forming. “How should a bubble even develop,” Aureus asks, “when all gold produced so far fits into a cube of about 19 meters edge length? There is simply no valve on it to blow it up.”
So the idea, it seems, is for on-the-go investors suddenly seized with a Beck-like vision of civilization’s epic collapse, and the mass conflagration of the feckless fiat currencies of nation states and trading blocs, can pop over to an ATM for a quick metallic pick-me-up. It’s much the same process, one supposes, by which bleary, battle-fatigued clubbers slouching toward closing time can stoutly fortify themselves with a vodka-and-Red-Bull.
There’s just one problem with the theory, though: Gold really isn’t an asset, in the conventional sense of the term, at all. It is, rather, another sort of currency, whose value does indeed spike during times like the present, when governments contract enormous debt and investors grow anxious about how resulting inflationary pressures will devalue their holdings over time. Unlike silver, which is also likely on the verge of its own bull rush, gold has very few industrial applications, and jewelry-the only other real use the world has for the stuff-is actually showing a steady decline in gold demand.
So the gold market, far from serving as the sanest shelter amid broader market storms, is itself an unstable compound of investor superstition and fear. That’s how famed Gilded Age con artists like Jay Gould and James “Diamond Jim” Fisk were able to exploit skittish investors to try to corner the gold market-and thereby precipitated the great “Black Friday” financial panic of 1869. It’s also why, at the outer reach of the panic begun in 1893, the uber-banker JP Morgan was able to cow the Cleveland administration essentially into handing over the US Treasury’s gold operations to Morgan’s own global consortium of private bankers. Even the present bull market for gold issues in part from the artificially low price the metal fetched at the end of its two-decade bear market in 2000–2001; as the Wall Street Journal’s Brett Arends notes, gold lost 80 percent of its purchasing power between 1980 and 2000. The idea of a perma-bull gold market-the de facto faith of today’s gold champions-is just as illusory as the belief in the metal’s supposedly transcendent value.
Most of these deeper signs of market distress can be descried in a closer look at the Gold-on-the-Go product launch strategy. The ATMs made their debut in May at the $3-billion Emirates Palace Hotel in Abu Dhabi-certainly a fitting venue to dramatize the whole “Light from the East” catchphrase, but a far cry from the kind of poster child for financial stability that today’s goldbugs would want it to be. The United Arab Emirates-the battered former investment playground for the monarchies of Abu Dhabi and Dubai — is now the slowest-growing economy in the Middle East, thanks largely to the vast amount of toxic debt that the state-run Dubai World concern foisted on its Abu Dhabi creditors. (The UAE’s exposure in the Greek debt implosion certainly hasn’t helped matters, either.) The firm is also slated to expand into Russia-because, well, what could possibly go wrong in that ATM sector?
The same gimlet-eyed sense of market-scouting is guiding the Ex Oriente Lux strategy on Yank shores, as well. The firm hasn’t definitively announced the proud specific venues for the stateside debut of its ATMs, yet, but does allow that the gizmos will be sited at a “well-known Las Vegas casino” and a Florida resort. Yes, that would be the same Las Vegas that, according to yesterday’s sobering New York Times dispatch by Adam Nagourney, is suffering a 14.7 percent rate of unemployment, while as of August, Nevada had led the nation for the 44th consecutive month in its volume of home foreclosures. Florida, meanwhile, boasts the nation’s 45th-lowest income-and has been in recession far longer than most of the rest of the country. It is the runner-up to Nevada in the national home-foreclosure sweepstakes, and as national economists officially declared the recession officially over this month, the state experienced yet another spike in unemployment.
On one level, I guess it’s understandable that footloose global investors traipsing through Vegas or Boca Raton might feel a strong urge to fortify their sagging morale with an on-the-go dose of gold as their towncars glide through foreclosure-ravaged neighborhoods and jobless encampments as they come and go from the airport and their resort/casino of choice. But they might also do well to reflect that Ex Oriente Lux has for some reason chosen to adopt as its slogan a quotation from Goethe’s Faust: “Toward gold throng all, to gold cling all, yes, all!”
Those, you see, are the words that Faust’s love interest, Margaret, utters as Mephistopheles engineers her seduction by Faust via the vessel of a chest stuffed with gold jewels. That would be the seduction that set Margaret on a path of unendurable suffering, and eventual renunciation of the world. Indeed, even after Margaret’s expostulation thrilling to the wonders of the metal, Goethe has her foreshadow her fate with the words “Alas, we poor!”