Gold is a Hedge Against Inflation

Gold is the money people turn to in times of inflation and economic turmoil. Gold is a means of hedging against inflation. If you are thinking at this moment that gold is not money, but rather a yellow metallic decoration that people adorn themselves with, then you are incorrect.

Gold has been a unit of exchange for nearly 6,000 years. Gold and silver were historically the first relied upon money that agreed with the standards of good money. Aristotle spoke of reliable money to have the following characteristics.

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. Diamonds are not fungible because each diamond has it’s own value.

4. It must hold a rare value or quality.

Aristotle knew something that most modern day people have no clue about. Fiat paper currencies around the world do not match the standards of good money put forth by Aristotle and his predecessor Plato. 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 ink stamped on it is essentially what our dollar bill is. That’s all. If someone gave you some a sheet of paper to wash their car, it is the same thing as receiving a paper dollar. Ink is the only thing making a difference. Both are paper.

If someone gave you oil, silver, copper, or gold to wash their car then it is different. Those are real assets. It indicates hard work and sweat to bring those assets about.

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.

Mining companies must do lots of drilling and surveying before actually bringing a mine online. This takes precious time and resources. Using paper money as currency is a historically recent thing. There have been hundreds of fiat paper currencies in history and all of them have failed. Gold and silver coins are the only way to protect yourself from rising inflation. While paper money falls in value, gold will continue to soar higher.

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?

Pretend you are inflating a balloon. The balloon gets so big that it sometimes bursts. Our government is inflating our dollars in much the same way. Our government is putting massive amounts of money into circulation. When you have more and more dollars chasing the same level of goods, you have inflation.

Inflation means printing more money, it does not mean prices have risen. The result of printing more money is high prices. The best advice I have heard is to get out of dollar related assets before it is too late.

You should only be invested in gold bullion, silver bullion, gold coins, silver coins, and mining stocks over the next few years at least. India, China, Arab states, and several other countries are dumping dollars and buying gold. You decide if it’s time to get invested in gold and silver.

God bless.

Source by Garrett L Strong

Gold is a Hedge Against Inflation