Thursday, April 28, 2011

Why Buy Gold?

Gold is money. This has been a fact since well before the introduction of paper banknotes. The public is generally unaware how currency came into being. What is certain is that without gold, there would never have been any form of currency anywhere in the world.
At one time, gold and other precious metals were the only means of trade throughout the world. Gold was considered a source for acceptable exchange or recognized as a method of payment for goods and services. As we progressed into the modern age, gold began to be stored in safes and vaults resulting in paper currency being circulated in its place. People accepted that this paper was secured by gold and that it corresponded to its exact face value.
The Gold Standard was introduced in 1821. In 1834, one US dollar had a parity value of 1.504632 grams of gold. The Gold Standard was abandoned in 1914 with the outbreak of World War 1. It was later re-established in 1928 but due to the relative scarcity of gold, The Gold-Exchange Standard was adopted by most countries supplementing gold reserves for currency dollars. In time, debt and rising interest rates forced an increase in the manufacture and circulation of paper currency and the disparity between the true value of gold and that of paper currency resulted in a scissor-like divergence.
With the devaluation of the dollar and growing debt, the Gold-Exchange Standard was unilaterally removed by former US President Nixon in 1971. This meant that direct convertibility of the United States dollar to gold was no longer needed. This act was known as the Nixon Shock. This led the way for governments to print as much paper currency as they required. The real value of money was lost.
Paper money is a product manufactured by human hands, which can be replaced at any time. “People who own gold, possess money in perpetuity.” This slogan was sent around the world and was quoted by none other than Alan Greenspan, former chairman of the US Federal Reserve (1987-2006).
In times when currency was scarce as was the case in Germany between 1945 and 1948, one could buy a house for five grams of gold and three grams of gold would provide for an entire family.
Gold is financial security for you and your family!

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