Gold fell yesterday to $466 an ounce. It still has a long way to go to get down to our buying target of $450, but at least it is going in the right direction.

There is no longer any reason to hold gold, say the experts. If you want to hedge against inflation, for example, Wall Street offers many opportunities. You could buy an oil stock. Exxon recently announced a sales figure for the last quarter over $100 billion. No company ever brought in so much money in a single quarter before.

Exxon sells something that the Fed can't counterfeit and the Chinese can't make. Inflation will push up its price. What's more, the company earns a profit, so you get dividends as well as capital gains. And you don't have to rent a safety deposit box to hold your Exxon shares, nor bury them in the garden in the middle of the night.

That is the trouble with gold; it is a like a girlfriend who won't do your laundry or bake you a cake. After a while, you begin to think you can do better.

Gold is the ultimate savings. It has neither earnings nor dividends, and it pays no interest. You buy it. You hold it. You hope it doesn't go down in price.

But modern economists say you can do better. You don't need savings of any sort, and certainly not in a form you find on the periodic table or in teeth...they insist. They say the economy is now so stable, so solid and so well diversified that you no longer need to keep an inventory of ready cash. Money will always be there when you need it: from ATM machines, payrolls, investments, and lenders (including credit cards).

In the old days, a recession meant that people lost their jobs. When the breadwinner was out of work, families needed savings to live on. But that is the old model, the new economists explain. Now, in the rare event of an economic slowdown, jobs are lost in China, not in the world's fully developed economies. Besides, in America, families typically have more than one wage earner...even if one loses his job it is not a catastrophe. And in the worst of cases, there are always credit cards and home equity lines to draw upon. So, why put money in a hole in the ground?

It is a new era, they say. You no longer need to stock firewood, or food, or money; it will all be there for you when you need it at prices you can afford.

We cannot dispute the facts. Thanks to Mr. Greenspan, we seem to live in a world of plenty...with plenty of cheap credit for anyone who needs it. And, no, as long as the world is full of everything everyone needs at a price they can pay, there is no need for gold.

What we dispute is the meaning of it; is this happy world a permanent thing...the real "new era" that so many economists think it is? Or is it cyclical, a period of calm, low interest rates and apparent prosperity...to be followed by a more trying time?

Gold has been in a bull market for the last five years, up about 160%. Yet, few people notice. Only 3.25% of Fidelity Sector Funds are allocated to gold shares. In the gold rally of 1989-90, by contrast, the percentage rose to 36%. Either it really is a new era - a world we've never seen before - or this bull market has a long way to go.

*** Is Greenspan leaving the economy in better shape...or worse shape? Almost everyone in America thinks he is in better financial condition than he was 18 years ago. His house has gone up! Woe to he whose house goes down!

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.