To Those Who Say Gold is a Relic, We Say Bull!
From time to time, we read someone echo the old expression— “Gold is a barbarous relic. It’s just an over-rated yellow metal, not money.” Well, they’re wrong. Gold is unique. Gold is irreplaceable as the foundation of sound money.
Here are a few arguments that prove Gold remains a foundation of the monetary system.
1. Central Banks Hoard Gold to Protect Their Currencies
Central Banks of the largest trading nations have always accumulated Gold dating back to the days of the Gold Standard. Back then, all paper debts between nations could be converted to Gold.
The United States is the third largest producer of gold and the single largest holder of Gold reserves in the world. Our Gold reserves protect the credibility of the U.S. Dollar.
If confidence in a nation’s political or economic stability is shaken, Gold stands as a backstop buttressing trust in its creditworthiness.
A nation’s Gold Reserve is physical Gold bullion held by a central bank. The national bank protects the wealth of the nation to ensure the funds exist to honor promises of payments made by the government to the people in the form of currency or to other countries.
2. Gold’s value and buying power has increased dramatically in the 21st Century.
Gold has gained over 500% in the past 20 years
3. First and foremost Gold is an asset that has intrinsic value as a precious metal. As a rule, when the value of the dollar increases relative to other currencies, the price of gold tends to fall in U.S. dollar terms. With the U.S. Dollar in decline, the price of Gold rises automatically.
4. Gold is a highly liquid asset easily bought, sold and traded 24 hours a day. Yet, Gold is not money you can take to Walgreens to pay for your meds.
5. Gold is one of the most reliable ways to store value.
6. Gold is a yardstick for sound money. The price of gold vs. the local currency is a direct indicator of how well the country’s central bank handles monetary policy and how well the government handles fiscal policy.
We hope this gives you a better understanding of physical Gold Bullion and why it is not a barbarous relic.