There have been several articles recently proclaiming and detailing the fundamentals for gold. A few of them have some excellent points. Most of them don’t. 

And there have been some polite discussions of applicability, meaning, and intent with regards to specific claims.

Some of the discussions involve protracted technical analysis and are quite lengthy. And some analysts have a special formula or barometer of their own, which they use to justify their claims or indicate correlation between gold and a wide variety of unrelated items.

There are commonly accepted – sometimes erroneous – statements of fact and also convoluted explanations which are unclear and long-winded.

A bit of brevity might help. The definition of fundamental is as follows:

 “a basic principle, rule, law, or the like, that serves as the groundwork of a system; essential part…”

There is only one basic fundamental that needs to be known about gold: Gold is real money.

To further clarify, this means that gold is not an investment. Nor, is it a hedge against inflation or deteriorating world conditions. It is also not insurance; or a commodity with special attraction; or a barbarous relic.

Do people view gold as an investment? Absolutely. Which is why they are continually surprised and confused at their investment results. They buy gold (invest in it) because they expect the price to go up. Which is logical.

The problem is that the premise is wrong. When someone invests in gold, they are expecting the price to go up as a result of certain factors which they believe are “drivers of gold”. In other words, they believe that gold responds to certain factors. These factors include interest rates, social unrest, political instability, government policies/actions, a weak economy, jewelry demand, and various ratios comparing gold to any number of other things.

But, again, that assumes that gold is an investment which is affected by the various things listed. It is not.