It should be defined as a long-term investment that holds its value internationally, in extreme financial times. Is gold one of these? After all, it has fallen from $1,921 at its peak to $1,344 at its trough. This is a 30% fall over the last year plus. At one time George Soros described gold as the "Ultimate Safe-Haven", before saying it was a "disappointing Safe-Haven". Alan Greenspan described gold as being "money in extremis."
The SPDR gold ETF
In the "Bear Raid" we have seen over the last fortnight when gold was smashed down $200 after declining $100 before that, the physical gold sales came almost exclusively from the SPDR gold ETF before being accompanied by a massive 400 tonne gold short on COMEX. In addition, two large U.S. banks, Goldman Sachs and Merrill Lynch appeared to act 'in concert' to ensure the raid was successful.
Until this year the holding of the gold ETFs did not move except slightly as its shareholders were long-term investors not traders in the gold price for profit. They hold gold for wealth protection in the long-term.
By long-term we mean just that. In India for instance gold is passed down from mother to daughter through the generations. There, gold is used as collateral for loans and usually not sold. Some sell when the price is what they consider too high, but sold with the intention of buying back on a price retreat.
Serious gold investors take their savings and financial successes and put them in gold to weather the storms we have seen over the last century. Europe in particular has done this and survived two World Wars and two currency collapses, so far in the last century, provided they held their gold in Switzerland.
These long-term gold holders agree with Alan Greenspan that gold is held for extreme days.