re Gold
I've always looked at gold as a store of value, separate and apart from the price denominated in dollars, and have for years maintained a portion of my savings in bullion.
While I have never researched it and this is probably simplistic, I consider it this way: in 1850 one ounce of gold would buy you this size bag of groceries; in 1929 one ounce would buy pretty much the same size bag; today it will still buy you that same size bag of groceries and I believe it will in future as well, regardless of whether the POG represents $1, $100, or $1000 of fiat currency.
While obviously not precise, this relationship is pretty constant, I think, and represents a zero-sum investment, except that one can get ahead of the game when sentiment drives the POG up or down out of proportion to the size of that bag of groceries (war, inflation, political unrest), or when the supply of the commodity itself (in this case groceries) contracts or expands to extremes (famine).
Keep in mind that, while often pretty, fiat currencies have no intrinsic value. Gold, on the other hand, is relatively rare, and becoming rarer as the easy pickins' have already been picked clean over the centuries, and while nearly all the gold ever mined still exists, as world population increases, per capita the supply of available gold decreases. In addition, gold must be searched for, mined, refined and fashioned into coins, jewelry or bars, whatever, all of which represent hours of human labor and add intrinsic value.
I'm not sophisticated enough to understand all the ramifications of a gold-backed currency, but it seems to me that currencies with intrinsic value (be it shells, lion's teeth, whatever as long as they are hard to obtain and represent a set unit of human labor) have worked better throughout history as a store of value and trading medium than have fiat currencies. Just one gold bug's opinion.
Newly
AI
