Jay I would like to hear you say that you were wrong about "the shiny rock 'comment you made a couple of years ago. It (gold) has outperformed EVERYTING the past ten years.your precious dividends from Merk are being eaten up ny a declining dollar and inflation numbers which are being manipulated.

I agree that gold looks better than a Treasury bond on a wrist or a bosom, but as a long-term investment it doesn't seem more attractive than it did a decade ago.

Gold fanatics bring to mind Europe's 19th-century aristocracy, which, to its misfortune, largely shunned the new joint-stock corporations because it believed wealth grew only from the land. Gold bullion pays no dividends or interest. The world's central banks hold more reserves in U.S. Treasury securities than gold these days.

For all its beauty, gold is a commodity like rubber or oil, one whose scarcity is automatically undercut by new sources of production when prices rise. To bet on gold is to bet against human ingenuity, which has a pretty decent record. The cost of finding and processing a barrel of oil plunged by more than half in the 1990s; there is no reason to think Earth's gold reserves are not similarly vulnerable to technology.

The valuable capital of the 21st century is intellectual, not mineral. That's why stock in Eli Lilly & Co. sells for 10 times the assets on its balance sheet. The drugmaker's worth is in its patents and scientists' brains, not in its buildings and beakers. My wager is on the system, Greenspan and an eventual waning of present troubles. For the long haul, I'll take a few shares of Lilly or any attractive U.S. company over a high-class rock.

The reader's memory was wrong on one point: the counterexample to gold wasn't Merck but Eli Lilly, which has performed even worse than Merck since 2002. The relevant data are below, courtesy of the cool new Google Docs graph feature.

My feeble defense: I said "for the long haul," Lily should outperform gold. Is five years the long haul? It's pretty long. I would still guess, however, that over coming decades stocks will do better than gold or other commodities. Even so, my confidence in central bankers to manage the money supply and in global competition to keep prices down is not nearly what it was five years ago. Gold fans justifiably should feel very righteous these days.