In the wee hours of March 27, plucky thieves stole one of the world’s largest gold coins, a 221-pound colossus named the “Big Maple Leaf” from the Bode Museum in Berlin, Germany.
The coin, which takes two to three strong men to carry, had a face value of $1 million, but at current market prices is worth around $4.5 million.
Despite its weight, which is about the same as a refrigerator or an average-size male red kangaroo, the thieves had no problems carrying the coin through the museum and up at least one flight of stairs to hoist it out of a back window.
The first thing that came to mind reading this piece of news was that the existence of a 200-pound gold coin defeats the purpose. To wit, it violates the second Aristotelian principle for a sound form of money: portability, an attribute that gold is especially well known for.
Aristotle, a Greek philosopher, student of Plato, teacher of Alexander the Great, and the father of the field of logic, listed four characteristics of any sound form of money:
- It shouldn’t be perishable. That’s why—despite all claims to the contrary by preppers—stocked, canned food doesn’t make good money.
- It should hold a large amount of value compared to its weight and size. That’s why flat-screen TVs don’t make good money.
- It should be easy to separate and distribute, as well as re-combine. That’s why artwork doesn’t make good money.
- Intrinsic value. It has value in and of itself; it doesn’t derive its “worth” from something else. That’s why unbacked paper currencies (aka, all of the modern world’s currencies) don’t make good money.
You can see that most things people would consider good investments would not make good money.
Take real estate or farmland, for example, which can be a great asset to have in your portfolio. However, it definitely falls short in the portability and divisibility departments. It can’t be carried around in your pocket, and you can’t divide it into tiny pieces to pay for, say, a loaf of bread.
Commodities like oil and natural gas lack portability. Driving around in a massive tanker truck for your weekly grocery shopping doesn’t seem like a splendid idea.
Stocks and bonds are paper assets, which tells us that they don’t carry any intrinsic value. (And if you think that owning a stock still means you’re owning an actual piece of a company… well, think again.)
Besides, stocks and bonds are largely uncorrelated to gold, which as a hard asset serves as “insurance” against corrections in those sectors.
Diamonds could be considered a form of money, but here we stumble over the inherent-value aspect. It takes an expert to determine a diamond’s actual value (or to tell it from a counterfeit one).
Even silver lacks gold’s inherent portability. At current prices, you would need 546 troy ounces (37.4 lbs.) of silver to carry $10,000 around with you. That’s one big, heavy suitcase full of coins.
$10,000 in gold, on the other hand, or 8 troy ounces, would fit comfortably in your pocket.
It’s certainly no coincidence that gold has kept its reputation as a store of value across millennia. The first recorded use of gold as money was around 700 B.C., when merchants in Lydia, an Iron Age kingdom in the western part of modern Turkey, produced the first coins by stamping lumps of electrum, a natural gold/silver alloy.