Dr. Walter J. Palmer, a practicing dentist from Bloomington, Minn., has been hit with his 15 minutes of fame. Unfortunately for Dr. Palmer, he's been hit like a batter beaned by a Nolan Ryan fastball: It's all come with a shocking force and a lot of pain.

Dr. Palmer gained worldwide notoriety for killing Cecil the lion while on safari in Zimbabwe. For the pleasure of relieving Cecil of his mortal coil, Dr. Palmer paid $55,000 to a private guide outfit. The dentistry business appears to be booming in Bloomington.

Unbeknownst to Dr. Palmer, Cecil was a celebrity (albeit on the lowest of planes, considering that Cecil was unbeknownst to nearly every native Zimbabwean just a few days ago) in the hinterlands of Zimbabwe. The U.K. Telegraph tells us, “Conservation groups in Zimbabwe reacted angrily to the news that the 13-year-old animal had been killed; partly because the lion was known to visitors and seemingly enjoyed human contact, and partly because of the way he was killed.” Hwange National Park, the largest game reserve in Zimbabawe, is the park the Telegraph refers to.

By most refined sensibilities, the tale of Dr. Palmer's Zimbabwe escapade is a touch unseemly, and certainly unsporting: Cecil's fate was sealed when he was enticed to venture beyond the park's boundaries by a hired guide dragging a dead animal tethered to the rear of a car. The scent and the prospect of an easy meal proved irresistible  to Cecil (as is so frequently the "guaranteed" 10% annual return to investors). Once Cecil was spotted, he was shot with a razor-tipped hunting arrow, but death eluded Cecil. Cecil, in turn, eluded his pursuers enough to stagger around injured, and no doubt in considerable discomfort, until he was found two days later. Cecil was then dispatched with a gunshot and subsequently skinned and beheaded.

Today, $55,000 must seem like a bargain to Dr. Palmer; the bill of his safari having risen exponentially over the past couple days. His dentistry practice has closed, along with the practice's website. His Yelp page has been swamped by hostile and abusive commentary. Dr. Palmer's Bloomington practice might be salvageable sometime in the unknowable future, but in the meantime he's incurring the cost to service current business obligations sans any current business revenue.

The first response to Cecil's death has been the most predictable – anthropomorphism and overt sentimentality. That Cecil “seemingly enjoyed human contact” is highly suspect. Cecil likely enjoyed it for the potential protein that could be gleaned more than anything else. Let's not forget that Cecil was a grown male lion, which weigh in at 500 pounds. Before we let the water works cascade to flood the delta, let's also not forget that Cecil surely inflicted his share of pain, with no remorse, on many of God's lesser-endowed creatures.

With that said, Cecil's death is a tragedy, but for an under-appreciated reason: Cecil, along with Dr. Palmer, was a victim of the tragedy of the commons. Cecil should have lived another 10 years, or he should have been killed 10 years sooner. Because Cecil was a ward of the state, it was impossible to determine his true economic value. Cecil was wandering property, not an emancipated being.

We could never know how much the people spewing vitriol and idle threats in Dr. Palmer's direction would have paid to keep Cecil alive. We know what Dr. Palmer would pay to see Cecil dead – $55,000. The effusion of sentimental twaddle and “I-feel-your-pain” emoting has been overwhelming, but it's all really meaningless without a concrete money price attached to it. Cecil's value was impossible to determine, given that Cecil roamed public lands where he was owned by no one.

If the Hwange National Park were privately owned and if Cecil were someone's property, his fate would have been predetermined with little fanfare. Perhaps Cecil economic value to a private property owner was $75,000 because of the tourists he attract, then Cecil's value would have been maximized as a tourist attraction. On the other hand, perhaps Cecil's tourist value was $25,000, then his value was maximized as a trophy for Dr. Palmer.

As it is, poaching will always be an intractable problem at Hwange National Park. Poaching can be traced to lack of private ownership, thus poaching is another tragedy of the commons. Because the animals are owned by no one, efforts to ensure their safety are muted. No one gives public property the level of care he gives his own property. You'll do your damnedest to protect Cecil if he's your property. If he's the “people's” property, you'll expend the same determination as a public employee charged with cleaning public restrooms.

But what if all the animals in the Hwange National Park have more value as trophy kills? Imagine the carnage. There would be carnage, but the animals would still exist (as a species, not necessarily the individual). Their owners would be sufficiently motivated to keep them in abundant supply. After all, the species that comprise beef cattle are amply populated (their antecedents, the aurochs, are nowhere to be found). Besides, value need not be mutually exclusive. Perhaps some animals in the Hwange National Park are more valuable as tourist attractions; perhaps others are more valuable as trophy kills.

Cecil's death is the observable tragedy, but not the real tragedy in this saga. The real tragedy is that a human life was ruined because of ambiguity of property rights and the indeterminate value of an animal.

Silver or Lead?

The Spanish-derived idiom is familiar in Mexico. It's frequently associated with drug cartels; the cartels' foot soldiers, the tribal street gangs; and other thuggish black marketeers.

Unequivocal and brief, the idiom drives home the point: Take the money or leave your life. This coercive proposition involves payment – amount determined by the payer – for the services or property of the payee. Give me your silence, your land, your cooperation; in turn, I give you money for what I believe your service or property is worth. Refuse the proposition, I take your life.

No one would label such a proposition equitable. That said, the private coercive proposition has a mirror counterpart few see, and most endorse – the state tax proposition.

Here, the coercive roles are spun. Instead of individual demands for a service or property for money, the state demands money -- amount determined by it --  from an individual for a service or property: The state gives you roads, education, protection, and the charity of its choice, all in the quality and quantity it chooses, and you give the state money at the price it determines. Refuse the proposition, the state takes your life.

To be sure, the state practices more forbearance than the privateer thug; the state will soft-sell the proposition at the outset. An initial refusal is met with gentle reminders peppered with appeals to equity. But if obstinacy persists, stakes rise: Appeals devolve into threats, threats into intimidation, intimidation into violence. If one is intractably obstinate, death is the ultimate outcome.

The difference between the two propositions is always a matter of degree, never a matter of kind.

The more I read BusinessInsider.com, the more I'm convinced it's a venue for clueless half-wits. Endless fealty to Elon Musk is the easy example.(Actual BI article titles:"11 Fascinating Things Tesla Billionaire Elon Musk Said in the New Book About His Life, "10 Things We Learned From Elon Musk This Week," "9 Decisions That Shaped Elon Musk's Extraordinary Career." One could go on and on, and on further still with the cardinal enumerations and never see the horizon.)  Other examples of BusinessInsider's intellectual inertia are more subtle.

To wit, someone named Aurelia End (I have no idea if it's a nom de plume, nor do I care) posted a July 26 missive titled "Greece's Newest Headache: How to Lift Capital Controls." Ms. End, like so many BusinessInsider scribes holds curiosity, skepticism, and critical thinking at arm's length. Hence her forwarding the following useless space-filling quote from BusinessInsinder's stable of space-filling economists. This particular economist, Diego Iscaro, happens to work for IHS. According to the putatively quotable Mr. Iscaro, as transcribed by Ms. End, the problem with capital controls is that they are "easy to implement but very difficult to lift." For IHS' sake, I hope Mr. Iscaro is an easy to dispense contractor, not a difficult-to-fire employee, if that's the best he can offer.

Actually, the problem with capital controls is multifaceted and far more nefarious than Mr. Iscaro's musings and Ms. End's dictation lead us to believe. 

The problem is that capital controls are misery incarnate. They violate every aspect of human nature.Tell a person he can't leave, his mind is consumed with leaving. When it becomes known one person is detained, a contagion spreads; everyone scans for an exit. Clamp down the proles with capital controls and consumption, investment, and production shrivel. A perverse Zeitgeist arises: Everyone's mind is consumed with one thought -- get the hell out. Confidence wanes, fear reigns, and trust disintegrates. Economic activity grinds to a halt. That's the trouble with capital controls. 

Many financial analysts get gold wrong. More annoyingly, they are sneeringly dismissive when they do. The gold pejoratives are as predictable as they are stale: an anachronism, a barbaric relic, a pet rock, or some such parroted dismissal. And why? Because gold is impossible to value as an investment; gold generates no periodic cash flow and has no terminal cash value. Therefore, gold should theoretically have no investment value.

It's all true enough: Gold generates no periodic cash flow and has no terminal value. It's also true that gold has no investment value. Nevertheless, analysts are confronted with a niggling cognitive dissonance: If gold has no investment value, why, then, is someone on the margin willing to forsake $1,100 for an ounce of the stuff? Gold is shiny and can radiate a mesmerizing luster, but few people are so mesmerized to the point to pay a seemingly punitive price for pure luster.

Nomenclature is more likely the issue. To find gold alluring as an investment is as nonsensical as it is to find a cat alluring as a dog. Gold is not an investment; a cat is not a dog. Nevertheless, gold is wrongly slotted into the investment species, and there it attracts scorn for its non-investment properties.

Perhaps history is to blame. Analysts are prejudiced by decades of precedence. Since the late 1930s, they've been inculcated on the analytical stylings of John Burr Williams: no expected future cash flow, no value. Williams' techniques imbue investment analysis with the patina of scientific methodology, just ask any analyst who has had to endure an Excel spreadsheet presentation. But it's nothing more than a patina. After all, every analyst's expected future cash flow is wrong. And as for the required rate of return for the discounting? That's a personal matter. Discount rates aren't delivered like manna from heaven; they are conjured from within. Nevertheless, orthodoxy reins. Based on the underpinning of discounted cash flow precepts, gold cannot rightly be valued as an investment; hence, the scorn.

But gold can be rightly valued as an asset, and assets need not be investments. There is no shortage of assets that create value -- monetary or physic -- that generate no intermediate cash flow and have no determinable terminal value. Nearly all the consumer goods in a home (along with the home itself) are assets. Some even appreciate. Most produce no cash flow and are valued solely for use. To be sure, most consumer assets possess a degree of trade value. In a pinch, the car, the couch, even the cat, can be monetized in a sales transaction. Because these non-investment assets have value, they are insured.

And therein lies gold's value – insurance, Specifically, gold insures the purchasing power of money. That gold insures money isn't terribly dissimilar to negative-yield government bonds insuring money. Paradoxically, analysts treat negative-yield bonds as investments, though the bonds yield no cash flow. To the contrary, they consume cash flow. Why, then, are negative-yield bonds valued and bought? They are bought to ensure receipt of a specific amount of cash at a specific date in the future. Given the precarious financial standing of many European banks, along with the inclination to change established rules mid crisis, it's understandable that someone willingly pays to warehouse his euros or Swiss francs in negative-yield bonds.

Money insurance is equally the focus with gold. Contrary to pervasive belief, gold goes not insure against the financial fallout from disaster, upheaval, mayhem, volatility, or uncertainty. It insures against inflation. Here, another misconception must be slayed: consumer-price inflation, which is at best an ethereal construct.

Like any aggregate, average, or median, a statistical agglomeration of numbers is meaningless to any individual. Unless someone buys the exact components of an index in the exact proportions, the index reveals nothing about his or her situation. Every individual has a bespoken CPI that likely has little in common to the Bureau of Labor Statistic's CPI or the Bureau of Economic Analysis's Personal Consumption Expenditures (PCE) Price Index. To attempt to ensure the ethereal -- a general price index -- is folly.

Properly speaking, gold insures against monetary inflation, which must be distinguished from consumer-price inflation.At a point in time it's possible to have one, but not the other. To be sure, money supply is a variable in consumer prices, but so are technology, productivity, and shifts in the supply and demand curves. It's possible for the money supply to rise and consumer prices to fall: consumer electronics, for example. Consumer prices can fall when there is monetary inflation (and they would likely fall more without monetary inflation). To go farther afield, though, the positive correlation generally holds: When money supply increases relative to goods and services, given enough time consumer prices rise and purchasing power is lost.

In short, gold insures against an increase in the money supply and its corollary, lost purchasing power. The graph below displays the gold price and the theoretical gold price based on money supply growth over the past 45 years.Over time, gold does the job of maintaining purchasing power diminished by money debasement. 
 
                        Actual Gold Price (Ounce) and Theoretical Gold Price (Ounce)








     
















Data Source: Paul van Eeden / Cranberry Capital*

In the modern era of government central banks, fiat money, and fractional reserve banking, that gold serves as insurance to maintain purchasing isn't difficult to understand, though many do. Gold works as insurance because of its established moneyness: Gold has high exchange value; it's scarce, durable, divisible  portable, fungible, generally unconsumable, accommodatingly rare, and widely recognized.

So when someone tells you that gold has no investment value, nod your head in agreement. Then counter that gold has plenty of insurance value. 

*Economists quibble over what should be included and excluded from money supply. van Eeden's data use currency, DDAs, and short- and long-term time deposits. For expediency's sake, I won't quibble. van Eeden's data are persuasive to me because they confirm my bias.