The other week Willem Buiter, Citigroup’s chief economist, grabbed the news headlines stating that gold bullion is in a 6,000 year bubble. The statement is based on his belief that gold has no intrinsic value. Mr. Buiter went on to exclaim that, “Gold has become a fiat commodity or a fiat commodity currency, just as the U.S. dollar, the euro and the yen.” He continued, “The main differences between them [fiat currencies] are that gold is very costly to produce, while the production of additional paper money has an extremely low marginal cost.”
Is this for real? Gold bullion is no different from fiat currencies?