Man walks into a gold bar. Au! FT Alphaville participated in a "Gold Bulls vs Bears" event hosted by the Association of Mining Analysts (AMA) on Wednesday. The motion being discussed was: Is gold's role as a safe haven asset in the global financial system outdated and redundant and if the ubiquitous QE programs have been successful and the global economic upturn is confirmed, the price of gold will continue to struggle? FT Alphaville was on the bear team with Tyler Broda, from Nomura, and Robin Bhar from Societe Generale. On the bull team there was Sharps Pixley's Ross Norman, MoneyWeek's Dominic Frisby and Edison Research's Charlie Gibson. The bears lost the motion. But we did get this as a consolation prize: Since we now have the platform, we'll unashamedly reiterate the bears" case. Any gold bull rebuttal that actually makes logical sense (you'll be working to convince independent adjudicator Jamie Chisholm) has a chance to win the Goldschlager. Here the bears's case summarised. SocGen's Robin Bhar made three stellar points: 1) Where is the inflation?! Simply put, the current gold price appears to be discounting a huge, sustained increase in inflation over the coming years. For example, we can calculate the required annual US inflation rate over the next five years that would justify the current gold price (using 1968 as the starting point): US inflation would have to run at an overwhelming 45% per annum for the next five years. But inflation is subdued. Gold prices have soared in recent years despite the fact that US CPI has stayed below 4% for the bulk of the time. 2) The dollar's strength and US growth The US economy currently offers the best potential for stronger-than-expected growth. This suggests a stronger US dollar in such a scenario with its obvious impact on gold. 3) The end of QE And now we are beginning to see: 1) the economic conditions that would justify an end to the Fed's QE; 2) fiscal stabilisation that has passed its inflection point; and 3) a US dollar that has begun trending higher. Ot seems unlikely that investors would want to add much to their long gold positions in this context. If so, the gold price would trend lower at pace as the physical gold market is seriously oversupplied without continued large-scale investor buying. Selling by investors would add fuel to the fire. Nomura's Tyler Broda focused on flows and changing tastes. Above all he said it's unlikely that the gold market can continue to sustain the investment demand needed to take the price higher: There was also a question of evolving tastes. Who really would want to be seen in the same shirt as their father? Not to mention growing investor sophistication in emerging markets, which leads to demand for investment products that offer yield and income. As he also noted: In the scenario of a US recovery, and an associated appreciation of US dollar, most gold demand categories could weaken after 12 years of bull market growth. Investment comes under pressure (and even puts supply back on the market as is happening now) with normalising interest rates. Commodity currencies weaken thereby lowering the cost curve support. Lower gold prices mean less equity market interest in gold production, so debt and private equity financing increases which could lead to a return of hedging (adding to current supply). US dollar strength, reshoring and lower energy imports, reduces the size of EM trade surpluses, which could see EM central banks not accumulate gold at as fast as recent levels. Longer-term, jewellery demand could be negatively influenced by increasing sophistication within the emerging market economies. The further adoption of globalised tastes means the affinity towards gold could ebb. Gold's dynamics are cyclical in nature. In this scenario, after these trends take hold, there will come a time where lower mined grades, continued nominal income growth (especially in Asia) and a return to investment demand push gold prices higher. However, with the market having built up $250 billion in investment demand alone over the past 4 years, supply and demand suggest the risks are still to the downside With respect to any increase in hedging, he added this would naturally bring forward tomorrow's selling pressure to today, adding to current liquidation pressure. FT Alphaville pointed out that gold's time as a safe asset had come and gone mostly because of technological evolution. Gold certainly used to fulfill a store of value role in deepest darkest history because at that time there weren't many other means to independently verify and record social liabilities. Gold was often the only common denominator between communities that did not know each other due to its fungible state and relative global scarcity. But its value always lay in what it represented: a social liability. Debts and favours have always come before commodity money. Gold was an obvious token to be used to represent social wealth because only a wealthy society could justifiably waste its time doing something so pointless as digging up gold. In that sense gold was naturally associated with free time and social standing. But even in Roman times gold was mostly used as a last resort settlement option between strangers and foreigners only. The Romans actually had a very evolved debt-based system, with coins representing a memory device for social debts in an age when liabilities could not be verified with electronic ledgers. Those who believe gold has value beyond what a gold coin represents in the context of a wider "paper" liability based system suffer from the "Emperor's New Clothes" delusion. Unless gold turns out to hold the key to eternal life, its utility is non-existent (outside of some small use dentistry or the chemical industry). As Warren Buffett famously reflected about the absurdity of the gold market: we take something out of the ground only to immediately rebury it. Which is why in a crisis people defer to objects of real utility for social exchange: cigarettes, favours, food, shelter, medical services and medicine. If gold has value it's because its abundant supply is being constantly manipulated by hoarders who suffer collectively from the same gold delusion. Roman gold hoards are a good example of this absurdity. They exist mainly because the Romans who buried those hoards never rediscovered them. The hoards were hardly a good insurance policy for them. A social obligation authenticated by peers, however, cannot be lost as easily. Thus if gold's value went up during the crisis, it was only because temporarily people were reburying gold more quickly than they were unburying it. But even at this time, the key trade was cash for gold, not gold for cash. The real commodity being demanded was in fact the cash. This created a delayed liquidation effect, as more gold became financialised and hedged by the industry lifting the price of the free-float. In conclusion, we commented that gold's value rests entirely on a belief system as zealous and subjective as any fundamentalist religion. What's more it's a belief system that is driven by selfish and anti-social instincts, obsessed with concentrating wealth among the few on the arcane notion that gold's value is somehow a constant in a world of variables. But there is no constant value system in a social system. Everything is relative. Unfortunately there's no accounting for taste: