Gold as a Currency

Contrary to popular belief gold is not a commodity but rather a currency. Its attraction has been maintained throughout history by ancient civilizations and through modern times due to its beautiful luster and limited quantity. The safety offered by gold is now being revisited due to the volatile current economic conditions, which have been called the worst since the Great Depression.

Precious metals have been called a barbarous relic, yet despite their apparently outdated purpose, they have again become a topical subject in finance. With a global economy that is so focused on OTC derivatives and real estate equity, investors have forgotten the importance of hard assets. The stock markets fluctuate wildly on a daily basis, with experts saying no end in sight to the damage to both markets and the world economy.

Treasury bonds and high yield bank accounts cannot protect against inflation. The recent flight to safety into hard assets such as oil and gold confirms the fear held by investors.Gold is a safeguard against inflation is especially important for the working-class to protect their savings against inflation, the hidden tax.

Just recently there have been several major investment banks collapsing on Wall Street. Thanks to the US government's bailouts of these banks, the only way to finance these will be through monetary inflation, for example printing more money. The direct result is the severe inflation and depression of the US dollar, possibly even hyperinflation. The Fed chairman Ben Bernanke was chosen for his position because of his close study of economics during the Great Depression. He claimed that no matter how much debt was accumulated, the global economic system would always be stable as governments can always print more money.

So the US dollar is pegged in some degree to commodities like gold and oil. As the inflationary actions of the Fed have been depressing the value of the US dollar, gold prices have been rising, especially this year. Analysts of investment banks have even called for gold to reach beyond $2000 per ounce.

The best thing you can do to protect yourself and your wealth in inflationary times is to buy hard assets like gold and silver bullion. Avoid the gold ETF's as they have been accused of being fraudulent and not actually holding the gold in their possession. Back in the 1970s gold proved it was the only way to preserve the value of money, and is already proving it again in this decade.