Buying Gold = Shorting Mankind's Wisdom: Analyst

03-25-2011 • CNBC.com

Commodities are not a good investment over the long term because of man's ingenuity in discovering new ways to use existing resources or new technologies to replace depleting ones, according to Dylan Grice, a research analyst at Societe Generale. The long-term return on commodities since the 1870s has been zero as "the history of our species has been one of adaptability and innovation, and I argued that to buy commodities was to short human ingenuity," Grice wrote in a market note. One exception to this rule is gold [XAU= 1433.90 4.41 (+0.31%) ], which is "not like other commodities, and other commodities are not like gold," he wrote. Despite mankind's ability to adapt and invent new materials and make use of new resources, humans seem "hopelessly incapable of learning past wisdom and apparently doomed to repeat past follies," Grice explained.