Two Kinds of Gold; Concluding Article in our Series on Wealth

Good Morning Ladies and Gentlemen

”To love or have loved, that is enough. Ask nothing further. There exists no other pearl to be discovered within the dark folds of life.”

Victor Hugo, Les Misérables

Welcome to the concluding article in our series on the intriguing topic of wealth. In our previous three articles, we have examined wealth from philosophical, metaphysical, and cultural perspectives, notably through the lens of literature. We have aimed to illuminate the multifaceted nature of wealth. This article will serve as the final chapter in our exploration, and as with the first three parts, Anton provided the text while I handled the editing.

A recent piece by DE Shaw made a compelling observation regarding wealth and its most traditional symbol: gold. In “https://www.deshaw.com/library/worth-its-weight”, the authors noted, “The growth rate of gold’s aggregate value should, over ultra-long horizons, correspond with the rate of global wealth growth.”

As one might expect, the paper refers to material wealth. Interestingly, the growth rate of wealth could be (or ought to be) mirrored in the growth rate of gold’s value. The reason why this is interesting comes once more from the article. The authors ask: “Where does the value of gold come from?”, and they answer: “[…] society has deemed [it] valuable and reasonably secure over time.”

What is not clear from DE Shaw’s piece is whether the increase in material wealth was first followed by society’s collective assent that the value of gold should represent this growth, or if it was the other way around: society deemed gold to have value, and because of this consensus, the changes in its value were taken to reflect fluctuations in material wealth. This sort of thinking may seem a tad pedantic. However, language is essential, and details matter in getting to the root of things. If we take aside the term “society”, it is impossible not to ask: What does it actually mean when we say that “society” has deemed something? It must be a metaphor for some consensus.

Unlike the scientific consensus that the earth is round, based on tested observations, the consensus underpinning the value of gold is different. Remember what we said in the first article: “value is intrinsically linked to perceptions, human psychology, economic activity, and legal systems.”

In other words, if we apply our observation on value to DE Shaw’s statement above, we shall have something like this: The changes in perceptions, human psychology, economic activity, and laws should reflect, over long time periods, the changes in material wealth. If we agree with the authors of the above article, most people will agree with this link. Once more, we can see how multifaceted the concept of wealth is. However, so far, we have spoken only of material wealth. As we argued in the previous article, in which we explored wealth from a cultural perspective through the lens of literary works, wealth goes beyond the material elements.

An interesting exercise would be to consider what benchmarks we may use to measure how much we value relationships like friendship and family and virtues like honour and honesty. If the value of gold is to be a benchmark for material wealth, how could we measure non-material wealth? Would there also be a societal consensus about these measurements?

Perhaps our personal happiness and fulfilment in life are the benchmarks for wealth? If we are to take the studies highlighted by the American Psychological Association, then our own happiness is a benchmark for the wealth that friendship relationships bless us with. And if we are to take Plato’s words, as recorded in “The Republic” and “Philebus”, then indeed a person of virtue would be a happy, wealthy man or woman. For Plato, true happiness was impossible without virtue.

However, studies show that people, especially the young, are increasingly less happy despite growth in material wealth. For example, the recent World Happiness Report found this to be true in the United States. Meanwhile, young and old Americans have gotten materially wealthier, at least according to a recent article by the New York Times. We can see a similar trend across other nations if we dig further.

Why this apparent discrepancy between happiness and richness? Material wealth growth also means immaterial wealth growth, if happiness is a benchmark for the latter. However, that point differs from individual to individual because lifestyles and consumption habits are not the same for all. The conclusive point is that there is a point in a person’s life when more material wealth does not mean more happiness.

Throughout this series, we have essentially tried to argue that there is more than one kind of gold by looking at the concept of wealth more deeply. There is the tangible asset, labelled DE Shaw with the acronym NPSOV (which, despite its unfriendly look, stands for non-productive store of value). Then there is the intangible asset, the invisible type of gold: friendship, virtue, love.

Dare I say it is the latter kind of intangible gold that ought to be valued more? After all, what good is it to have all the world’s riches but nobody to share it with?

For the world to be truly wealthy, material possessions will not suffice; the voice of the world’s greatest literary authors from ancient times to today is in complete accord. The reason for this is that wealth is closely linked to the nature of the human person, as we have argued in the second article of this series, and the human person needs more than material possessions to feel (and to be) truly wealthy: we need one another, we need love.

Thank you all for reading.

Ladies and Gentlemen

Feel free to send your messages to smk@incrementum.li. Many thanks, indeed!

I wish you an excellent start to the day and weekend!

Yours truly,

Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li