When Shit Got Pricier Than Gold: Manzoni’s Excremental Alchemy

The canvas of painting history painted a lustrous picture of the wonders of the brush.

Art connoisseurs, real and otherwise, regularly paid obeisance and sang paeans to vivid masterpieces. Rising wealth in recent decades meant that many of these wonders came to be viewed as an investment class. Picasso and Rembrandt now adorned the walls of wealthy patrons; who almost unanimously, liked to think of themselves as connoisseurs.

To the art cynic, however, artists and painters seemed masters at profound conceptual mumbo-jumbo. A few lines here, a few there, random gobs of colour strewn carelessly, with great care, on canvas often resulted in a masterpiece that fetched a fortune. The naysayer was brushed off, ironically, by the artist, on the grounds of utter ignorance at appreciating beauty. The cynics, however, made some of the artists pause and ponder about the state of affairs.

Veiled irreverence had always been a potent tool in a provocateur’s arsenal. A snide remark on his apparent ineptness as a painter from one of his own set off reactive impulses in Italian¬†brushman Piero Manzoni; who rather inadvertently through his actions taught the world an entertaining lesson on the values of popular delusion.

Stung by criticism, Manzoni decided to carry out a real-time experiment. In 1961, he put art connoisseurs to the test by filling 90 tin cans filled with an ounce each; of his valuable excrement and christened his ‘artwork’, Artist’s Shit. The action, rather harmless in intention, turned into a vivid parody of art in subsequent years.

Manzoni intended each can to be priced equal to the prevailing price of Gold by weight. The price of each can would vary according to the fluctuating price of Gold. In 1961, this valued Manzoni’s finely preserved faeces at $37 each, a princely amount for a thing of shitty value.

Shit was worth as much as Gold.

Given his stature among art appreciators, Manzoni’s cans gained in allure with the passage of time. A piece of art was, of course, theoretically priceless, in the eyes of art lovers. Several regime changing events occured in the 1970s, which resulted in Gold’s value fluctuating with gay abandon since. Manzoni’s cans came into their own.

30 years after the cans came into being, art auctioneer Sotheby’s auctioned one can for a rather eye-popping $67,000. The price of Gold meanwhile, poor commodity, had soared to only $375/ounce. Manzoni’s faeces changed hands at 170 times their ‘fair’ price. Rational humans were in the act.

Shit had got pricier than Gold.

But, rationalisation has always been a ready elixir to our actions. Of course, Manzoni’s faeces were in short supply (he died an untimely death). More of it could simply not be created, unless someone volunteered to sit in.

A thing of scarcity value only becomes more (in)valuable with time. Then in 2007, Sotheby auctioned one can…for a monumental $163,000. Gold, meanwhile, after a stellar rally, had only managed to reach $650/ounce. In keeping with the spirit of the recession, another can changed hands for $157,000 in October 2008, at the onset of the financial crisis. Gold managed to inch up to $780/ounce.

After fetching 250 times the price of Gold in 2007, humans demonstrated their natural rationality by remembering the recession and Manzoni’s excrement fell out of favour, somewhat.

Shit was priced at only 200 times the price of Gold. 


Manzoni's Shit

Some felt that Manzoni’s parody on rationality and consumerism had left a bad odour, not-so-ironically, on human beings. Yet others felt that humans had displayed acute understanding of scarcity value.

We humans had learnt our lesson.

Or had we?


The Queer Lives Of Inflation and Deflation

Inflation and his brother, Deflation, were strange siblings. Apart from a rhyming name and a penchant for inflicting pain on those around them, the siblings’ personalities bore few pointers to their brotherhood. Each found it impossible to co-exist with the other, preferring instead the peace afforded by solitary existence. Neither was particularly welcomed by humans, who somehow, abhorred their presence, when they tried to make their existence felt.

Disturbed, the brothers attempted to unearth the reasons behind this hostile behaviour. What they found perplexed even the mavens of the Queer…

Like some humans, Inflation started thin and – like most humans – progressively grew heavier with time. Deflation, on the other hand, started fat and progressively grew thinner. Keen observers following Inflation’s growth noticed that the lad grew bigger and bigger with each passing day. On further observation, they thought the cause was an abundance in the supply of Money, which was nourishing fodder for Inflation. Deflation, on the other hand, seemed to grow thinner precisely due to a lack of similar nourishment. A handful of eager beavers, maestros of an arcane art-form called Economics, quickly concluded that controlling the supply of Money could regulate the brothers’ sizes. The consequences were dire…

Inflation noticed that he was a master illusionist. He created an illusion of growth for humans, who were generally oblivious to most things around them apart from the nickels that accumulated in their bank accounts. With time, as nickels grew, humans seemed mighty thrilled. What they seldom noted was that costs of most things that they so furiously consumed were on the rise too, sometimes growing faster than wages. Was there really growth? Inflation was a master of Money Illusion. Inflation gloated on learning about this hidden talent and smirked at the folly of human beings.

Queerly, both Inflation and Deflation held an intense admiration for the comely Gold. Humans, fearful of hyper-Inflation, frequently scampered crazy to Gold, courting her, doing their best to convince her to mollify Inflation’s wrath. She appeared to be successful in her endeavours but her record was patchy, at best. But humans, severely challenged when navigating the scale of time, especially backwards, cared for little but the very near-term. Gold seemed to be doing great and they deified her.

Always keen on growing ever thinner, Deflation pushed prices lower with time. Consumption-friendly humans noticed that their friendly neighbourhood cappuccino prices ticked down with time. Down went car prices, tuition fees, rents, real estate prices, household appliance prices and a slew of other materialistic things that humans enjoyed. But strangely, they did not seem happy with the scheme of affairs. Nickel-happy humans observed that their wages were stagnant or, worse, falling. Shrinking wages and dwindling bank accounts soon led to a congregation of the despondent.

It seemed that Inflation was preferable to Deflation. Few had lived in a Deflation-ruled world. Dread was high as a result.

Some felt the only way to trounce Deflation was by increasing Money. Money seemed like the cure-all. The spigots were opened.

All seemed well for a while…

Things got murky beyond a point, as humans forgot the true reason for owning things. Humans, ever alert to homing in on the scent of euphoria, felt a moral obligation to partake in the speculative orgy. Their frenzied buying was so intense that prices everywhere only went higher. Inflation started growing fatter, too much, too soon. When the bubble popped one fine day, prices reversed. The world looked different. Prices now only seemed to be headed down. Deflation stirred from a long period of slumber, even as Inflation prepared for hibernation. The Economists were invited to exorcise virulent spirits.

As Deflation reared his head, the Economist magicians, with their limited but well-rounded view of reality, recommended cranking up the fodder, Money supply. Known neither for prudence nor moderation, the Money spigots ran for far too long. Somebody had forgotten to turn the faucets off. Gradually, Inflation reared his head and Deflation threatened to hibernate. The Economists now recommended the opposite. The brothers were perplexed at these frequent flip-flops. Just who did the humans really like?

In a queer similarity with human relationships, those present went unappreciated while those absent were missed. That there were living entities queerer than themselves was quite enlightening to the brothers.

Neither seemed to understand humans.

Humans reciprocated.

In Maya, I Trust…

So, am back to keyboard tapping after a period of mindful idleness.

I have long been enamoured by Maya….ah….illusion, I meant. No, I’m neither religious nor philosophical. It’s just that I’m sold on the notion that the world around me is an illusion.

As is my wont, I’ll proceed to invoke the spirits of the investing world to unfashionably debunk the fashionable art of sounding intelligent in the investing profession. Most things in investing is Maya and it would probably serve humans well to realize that. What essentially I’m indulging in as an investor is to forecast the demand/supply situation for an asset at some point in the future.

Gold Maya

“What do you think of Gold at $1,400/ounce?” And I hear a volley of the usual; inflation hedge, hedge against the US dollar, investment-for-2012 apocalypse, it is the ultimate currency, diversification…

An asset that throws out a stream of cash over time lends itself to valuation using the beauty of mathematics and discounting. How does one value an ‘asset’ that throws nothing? Humans have waited for centuries and this ‘asset’ has coughed up no cash flow, but remarkably has tended to appreciate in price. Gold bugs use esoteric techniques to justify some price as fair price. For them, gold remained a buy at $850 in 1980 and it remains a buy today at $1,400.

Will it remain a buy if the price were $20,000/ounce? Ah, unsure; that seems a little too high now, doesn’t it?

Decades ago, $35 of paper currency could be converted into an ounce of gold. How was $35 the Holy Grail-ish fair price? And, the fair price remained constant even as time (and inflation) ticked by…

The mind turns to other rarer candidates. Platinum, for instance. Yes, it shines like gold. Is used in jewellery, like gold. Ah, but it is rarer than Gold. About 180 tons of Platinum is mined every year compared to 2,400 tons of Gold. And Platinum is arguably more useful to humanity as it finds industrial use as an auto-catalyst…while Gold mostly adorns lockers tucked away in the confines of safe vaults and god-knows-where. And yet Platinum is priced at a 30% premium to Gold and there have been long periods when it has been priced close to parity with the yellow metal. People just don’t love Platinum as much as they love Gold.

Or, aromatic Saffron. About 300 tons are produced annually and the flower in various forms finds wide usage in food consumption. Doting soon-to-be mothers mix it with milk…apparently it leads to fair skin (Maya or reality?). An ounce is worth $200. People consume this rarity almost daily but it is valued at 1/7th the price of an ‘asset’ that adorns shelves…People just don’t love Saffron as much as they love Gold.

Gold trades at its level (and keeps going up) because human beings perceive it to be of more utility than other rarer candidates. Never mind the rational basis. It is worth whatever people think it to be worth. So long as one can posit that humans, in the future, will continue to perceive Gold in the manner they do today…it is a good idea to own the commodity. Faith is key.


I kept italizing price above. For good reason. Gold is priced in US Dollars. ‘All the money-printing globally will surely lead to inflation and so gold should go up’, goes the voice of reason. And gold goes up. Rather than perceiving the up-move in Gold as a vote of confidence on the metal, one could perceive the same as investors losing faith in the US Dollar.

Just what is the fair price of the US Dollar anyway? Price in relation to? Hmm…gold, platinum, copper are priced in US Dollar. So how does one price the US Dollar itself? In relation to? Gold? Er…we move into the world of circular relationships. (Maya floats in my brain).

Fiat currency is defined as one that has no intrinsic value. It retains value and is propped up solely on faith and because governments around the world say they have value. So the currency darlings; US Dollar, Euro, Yen, Swiss Francs, Monopoly money (er, yes, the last is fiat currency too, except that it isn’t globally accepted as one!) have no intrinsic value.

So long as investors believe in the US Dollar (or Euro, or Renminbi) it will retain value. Fair price?

Faith is key.


Ah, I couldn’t leave these untouched. I wrote (quite intelligently) above:

An asset that throws out a stream of cash over time lends itself to valuation…

The cash that the asset throws out every year is counted in some currency.

And we just saw above that paper currencies themselves have no intrinsic value.

So, cash flows coming out of a business have no intrinsic value either.

So, the value that is computed from the above…

Maya is the only reality. Perception manifesting as Faith plays a pivotal role in determining asset prices. And one cannot quantify Faith, in my humble opinion. An investor is essentially a Perception Forecaster. It is when man endeavours to embellish perception/faith/intuition in the apparent beauty of logic that gyrations begin in asset prices…

…but hey, gyrations (volatility) itself can be traded! (But I digress).

As a parting note, most human beings would readily ascribe no value to an empty head. But an empty piece of land seems to be an entirely different matter!