What is it about gold? Its price is soaring in the market and is now over $1,000 an ounce. There are more and more TV ads exhorting viewers to "Buy gold, now!" The higher it goes the louder the ads seem to get.

It just doesn't make sense to me as an investment. It generates no cash flow and pays no interest. In fact you have to pay money to store and insure it. How do you value it? The story seems to be that it doesn't matter. It's going up; get on board. That's bubble talk.

I appreciate the history of gold and its mystique. It has been at the center of our monetary system for thousands of years. Backing paper money with gold served as a check against wild government spending and inflation achieved via printing money.

Times have changed and to base monetary policy on how much gold we can dig up and then put back underground at Fort Knox makes no sense. That link was severed in 1971 when the U.S. went off the gold standard.

I know that many are worried about the big federal budget deficits that we face and believe inflation is just around the corner. I grant you that historically gold has been a good hedge against chaotic financial conditions. But I'd buy Treasury Inflation Protected Securities (TIPS) instead. At least they pay interest.

Our history in Alaska will forever be tied to gold because of the Klondike Gold Rush. News of gold in the Yukon in 1896 sent over 100,000 people scrambling to make their fortune. The stampede was on.

The most frequent route saw them sail from Seattle up the inside passage to Skagway and then hike the 33-mile Chilkoot Trail to Lake Bennett. Then it was a 550-mile make-shift boat ride down the Yukon River. Mostly all the miners got to Dawson too late and the gold was gone. It was a classic boom and then a bust. Many sourdoughs said they'd do it again just for the adventure.

Really? The country was in a Depression through much of the 1890's. Adventure may have been a motivator, but a far bigger reason was to make a buck. The rigors of the Chilkoot (I've hiked it; it's tough) and the struggles of the Interior weren't widely advertised back then. Instead, items such as the French rake were. That, it was said, would allow the prospector to rake in the gold from the streams without even getting his feet wet. Sounds like the TV ads today!

A few fortunes were made by those "mining the miners"-- like the saloon keepers and suppliers. Nordstrom made a pile and parlayed that into a department store empire.

At the time there was great debate over the merits of having silver, not gold, back the dollar. Farmers liked the idea because there was lot of silver around and that would mean more money, more inflation and better prices for their goods.

William Jennings Bryant, was their champion and ran for president. His Cross of Gold speech at the Democratic convention was a barnburner. He brought down the house with this line:

"We shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold."

Frank Baum, like Bryant believed that salvation lay in silver, not gold. Historians contend that his book "The Wonderful Wizard of Oz," published in 1900, was an allegory of the times. You tell me.

A tornado hits the heartland in Kansas much like the Panic of 1893 hit the country. Dorothy is carried away to Oz (ounce?), where she is told to get home she must "follow the yellow brick road." That golden road leads to the Emerald City and the Wizard of Oz, but of course there was really nothing of substance behind the curtain. In the end, she must click her "silver" slippers together to return to Kansas (in the 1939 movie they were ruby slippers).

The history of gold is fascinating. Precious metals may look good in uncertain times, but over the long haul they're bound to disappoint as an investment.

Jeff Pantages is an investment adviser who lives in Anchorage.

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