Buying Gold Will Hedge Against Inflation
Many are turning to gold in these times of inflation and economic uncertainty. Gold hedges your money from the risk of inflation. If you assume that gold is just a piece of pretty metal that people strap on their bodies, then you are sorely mistaken.
Gold has been money for over 6,000 years. Gold and silver were the first forms of real money that met the requirements of sound money. Plato and Aristotle spoke of sound money to be
1. The ability to be durable. It must stand the test of time and not wither.
2. The ability to be portable. Good money needs to hold value in a small space.
3. The ability to be divisible. Real money should have the ability to be divided evenly and still hold its value. Also known as fungibility. Diamnonds are not fungible because each diamond has it’s own value.
4. It must hold a rare value or quality.
Those four requirments are important because Plato and Aristotle knew something that most people today are not aware of. Our paper dollar, and all paper money for that matter, do not meet any of the requirements of sound money.
Paper is paper. It can be made on the spot and printed at will. Paper is neither rare or durable. The trust that we put into paper is the only thing giving it value at this point.
A piece of paper with inked stamped all over it is essentially what our dollar is. That’s it. If someone told you they would give you a sheet of paper for a pack of gum, it is equivalent to what our dollar is. There is no difference between the two, and that is where many get confused.
It would be different if someone gave you something with real value like oil, copper, silver, or gold to mow their lawn. Those are hard assets. It means that someone’s blood, sweat, and hard work went into it so you could use it.
Our money becomes more worthless each day our government prints more money. A dollar crisis is happening right now, and most don’t know it. Gold and silver were the first real established currencies that stood the test of time. This is because gold cannot be printed at will.
Gold and silver exploration companies have to survey and drill sites, and then they must mine the ore out of the ground. All of this takes energy and time. Only until relatively recently have governments used paper money as currency. It is important to not that there have been hundreds of paper currencies in history, and they all effectively went to zero.
Buying gold coins and silver coins are the only proven way to protect your assets during times of inflation. Gold will hold its value while paper money falls in value.
Gold is in the midst of a 20 year bull market, and there is no near term end in sight. The gold price has recently hit an all time peak of $1,100/ounce. People turn to gold in times of economic crises and inflation. Why? Because gold is a safe haven asset and cannot be inflated. Inflated currency, what is that?
Think of a balloon that you inflate. Basically, you are making that balloon bigger by blowing air into it. Well, our dollars are being inflated in much the same way. The more dollars that our government prints at will means more dollars in circulation. In this situation you have more dollars chasing the same amount of goods, which results in higher prices.
If you print more money then you have inflation, but inflation does not mean higher prices. Higher prices are the result of inflating the money supply. Basically, you should be diversifying out of dollars as soon as possible.
Gold, silver, gold bullion, silver bullion, and mining stocks are the only assets you should be invested in right now. China, India, Arab countries, and others are diversifying out of dollars as we speak, and India’s central bank just purchased 200 tons of gold from the IMF. You decide if it’s time to get invested in gold and silver.
God bless.
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