Rethinking Gold: What if It Isn't a Commodity After All?

By JEFF OPDYKE / Wall Street Journal

This won't sit well with some people: Gold isn't a commodity. There. I've said it.

But before you fire off an angry response, hear me out. The facts might change your view of gold's role in a portfolio.

For a long time, we've all heard that gold is a commodity—no different, really, from silver or wheat or pork bellies. Its price ebbs and flows (supposedly) with inflation, which historically drives commodity prices.

Odd, then, that gold's elevated price hasn't fallen in response to tepid U.S. inflation numbers. The Consumer Price Index as of July pegged inflation at just 1.2% for the previous 12 months, not counting seasonal adjustments. Nor has gold reacted to what Mohamed El-Erian, Pimco's chief executive, recently called "the road to deflation" on which he sees the U.S. traveling.(more)