The Most Valuable Financial Secret In The World

Everyone would like to know the most valuable financial secret in the world. The revelation of this mystery may come as a shock to you. Gold represents the past, present, and future store of value against which all other goods and even currencies have been and will again be measured.

If you can take advantage of this unshakable truth now, then you will profit hugely when the U.S. and other Western nations return to the gold standard in the next decade. In the paragraphs that follow, you will understand why the gold standard has been historically critical, why gold is a timeless store of value that prevents credit and financial collapse, hyperinflation, and currency devaluation, and why the West will soon seek to return to the shelter of its protecting power in only a few short years.

Why Is The Gold Standard So Important?

With a gold standard that backs up a currency, the currency is literally as good as gold. It can only be issued in amounts that correlate with the fixed gold stocks in a nation’s vaults. This is why individuals who are in favor of greater roles of free markets, higher levels of individual responsibility and freedom, and a restriction on government power love money that is backed by gold instead of mere faith and trust in unreliable governments. You simply can not print gold or manipulate its tangible supply, no matter how powerful your government is.

History and Effectiveness of the Modern Age Gold Standard

It may come as a shock to you that for most of their history, the U.S. and Great Britain possessed banking and currency systems that were backed up by gold. Beginning in 1750, the government of King George made it illegal to issue paper money.

The American economy then began to run on silver Spanish pieces of eight and gold coins for bank reserves. This gold standard governed the U.S. and British systems more or less from the years 1750 and 1971.

How well did such a system function? All the way up until President Franklin D. Roosevelt chose to intentionally devalue the dollar in 1933 when he seized control of all gold in the nation, the costs of goods and services remained incredibly stable.

The U.S. dollar’s purchasing power remained almost constant over nearly two hundred years. Would that this were the case today, instead of the dollar dropping by fifty percent over the last decade and by a shocking over ninety-seven percent since 1971.

Timeless Store of Value Provides Immunity to Financial Busts

The main reason that gold functions as the greatest financial asset in the world is that it has always maintained its purchasing power throughout all known history. For thousands of years, gold has remained a timeless and globally accepted store of value.

The yellow metal is extraordinarily suited to be a currency after all, since it is rare, divisible, portable, and enduring. To give you an example of how well gold maintains your purchasing power, consider that one hundred years ago a twenty dollar gold piece bought a fine hand crafted suit. Today, the same twenty dollar gold piece will buy you a fine luxury Italian suit.

The great advantage to your currency being backed by this timeless store of value lies in the stability that it provides. Money systems that are backed up by gold are practically impervious to major destabilizing economic boom and bust cycles. This results from the fact that the money and credit supplies are both rigorously regulated by the value of a nation’s economy.

A bigger economy translates to more gold, which allows for a larger amount of credit and currency to be extended. This means that the insatiable greed of bankers is not allowed to play havoc with a nation’s economy, since they can only make loans out of money based on their tangible gold reserves.

No Way to Protect Savings from Inflation Without Gold Standard

Alan Greenspan once famously wrote that in the absence of the gold standard, you could not keep savings from being diminished by inflation. Money is not a secure store of value without it. Your savings can be safeguarded against inflation when the currency is backed up by gold.

While there may be other ways to protect the value of your money, such as when you purchase real estate or high quality stocks, there is no better way to protect yourself with liquid and portable real money than with gold.

Excessive Debt Burden Leads to Hyperinflation or Default

Without the gold standard, a nation’s debts are allowed to rise to perilous and even unthinkable levels. This is not possible with the gold standard. It is simply a function of the quantity of the country’s gold reserves restricting the amount of debt that the nation is able to carry. Bank reserves can only expand in tandem with the size of the economy, which prevents banks from taking on heavy debt loads as well.

Once President Nixon took the U.S. and most of the world off of the gold standard with his actions in 1971, creditors lost their legal rights to the country’s gold reserves. At this point, the banks no longer had any limitations to their powers to create new money and credit from thin air, except for the Federal Reserve and its ratios.

The Debt Load Began To Explode

Within years, the debt load began to explode in the U.S. and developed world. The banking system expanded astronomically, since it no longer had to acquire additional gold reserves from greater trade or industrial expansion.

When you consider the actual debt of the U.S. to include unfunded entitlements, the American public debt amounts to a shocking fifty-six trillion dollars. This is nearly four times the size of the country’s Gross Domestic Product, or annual total of all goods and services produced in the nation. It also translates to almost seven hundred thousand dollars of debt for every family in the U.S.

These debts can not ever be paid back in today’s dollars. This leaves only a few solutions for Western governments that are increasingly desperate. They can default on the debt, which causes the whole economy to fall apart. Alternatively, they can devalue away the unsustainable debts through currency devaluation and the hyperinflation that inevitably results.

One way to do this is to print literally trillions of new dollars. This has been going on at the Federal Reserve since 2007, and it continues unabated today. One day, this will cause the value of the U.S. dollar to collapse. This in turn will lead to runaway hyperinflation, where the prices of goods and services rise from ten to hundreds of percent each month or year.

Once the U.S. money system falls apart because of all of the unchecked debt and money printing that the departure from the gold standard permitted, politicians will finally look at options for what has to replace the fiat paper U.S. dollar.

Is the Gold Standard Still Practical Today?

There will be many pundits, bankers, and politicians who try to convince you and the public that a return to the gold standard is a terrible idea. The reason that bank and government officials will fight the return of gold backed money with all of their collective strength is simple.

Under the rules of the gold backed currency, they will lose most of their incredible power. Money will no longer be created from thin air with the push of a computer button. The money supply will no longer be micro-manageable.

The government will have to live within its means more or less.

Is it practical to talk about a return to the gold standard? The nation has two hundred and sixty-three million troy ounces of gold. With a two trillion dollar money base in dollars, you divide the number of dollars by the nation’s gold supply to come up with a gold price of $7,604 per ounce to convert to a currency that is completely backed up by gold.

Is there a living example left for how the gold stand works out nowadays? Switzerland never abandoned the gold standard. The Swiss Franc is still backed up by gold, according to their constitution, to this day. You be the judge. How has their economic stability turned out over the last forty years?

 

For more articles like this one please visit the Wealth Building Course