The Problem of Gold
By Staff News & Analysis - May 10, 2013

Gold: 3 Essential Facts For Your Future …When any market crashes, it's a shock. For a real nose dive it normally takes something unexpected and dramatic to kick it off. If people had any idea of the reason or that it was coming then the fall would start early and be more shallow. Gold is misunderstood and it is viewed as "the mad metal", so here are three things to remember whether you love or hate gold. – ADVFN

Dominant Social Theme: Can't trust gold.

Free-Market Analysis: Here is an interesting little article that sums up the idea of gold as an untrustworthy investment. Bear in mind that gold and silver have been looked on as money metals for thousands of years … but this article doesn't look at it that way.

Objections to gold-as-money, or as an investment, follow:

1. Gold is a commodity … To many people gold is something special. It's more than just another metal that comes out of the ground. … Whatever you feel about gold, it is just a metal.

2. Gold is not a stable store of value … It is a myth to believe gold is a constant store of value. Like anything else the price of gold is created by supply and demand. When the Spanish pillaged South America and brought the gold and silver back to Europe, there was rampant inflation. More gold meant gold money was worth less and the price of things in gold went up.

3. Gold is volatile … Gold used to be worth a lot less than it is today. As we have seen recently at ADVFN, you don't have to look hard to see gold is as vulnerable to swings in values as any other commodity.

The key to investing in gold is being able to watch the gold price live. A free ADVFN account will allow you to follow it live and direct at home or on your tablet or smartphone via our free app.

There is a lot of misinformation in this article. Gold and silver are money metals and not just "commodities." Anyone who studies financial markets will soon see that there are cycles that alternate between fiat money and money metals.

These cycles are driven by central bank interference in the economy, which debases all sorts of products and services, and currency too. After the inevitable crash, people turn to gold and silver as a way of protecting themselves. They don't turn to soy beans or … or carrots. Inevitably they buy gold and silver.

Gold is characterized in this article as less of a store of value than it has been in the past, and volatile to boot. In fact, gold and silver are subject to price swings but over time – in the longer term – gold and silver have held their value remarkably well.

The biggest struggle in the world is between globalists who want to continue to impose a central banking/fiat currency model on the world and those who believe that money and markets ought to be subject to market forces not managed by governments and private, mercantilist interests.

These interests are constantly colliding and we saw this clearly when paper gold prices were pushed down hard in a two-day period. At the same time, physical gold and silver remain hard to get, and the informal or gray-market price of gold and silver is a good deal higher than the quoted price.

This is just one example of the subterranean war that is waged between those who want to control money metals and those who do not believe in the viability of fiat currencies.

After Thoughts

One need not pick a side in this battle, or perhaps one prudently diversifies between fiat instruments and money metals. But understanding is key …

Posted in Gold & Silver, STAFF NEWS & ANALYSIS
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