Why Gold? | The Gold Standard 2225

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Series host Dave Deno kicks off this episode with an attention-grabbing headline from Wall Street veteran Mike Novogratz. “The economy is going to collapse, and we’re heading into a really fast recession.”

Of course, The Gold Standard has warned of a perfect storm of economic troubles from the beginning. That’s why we’ve been reminding our listeners to use gold and other precious metals to protect personal wealth and buying power. But “Why” gold? Why is gold considered a hedge against inflation and deflation? And how does gold provide financial cover during geopolitical strife and uncertainty? These questions are the heart of this episode.

Many people consider gold a unique and valuable commodity. We think of gold as money. Gold is the only real money there is. Even after policymakers’ disparagement and neglect from economists, gold has never disappeared. Savvy investors hold physical gold to protect themselves and their loved ones from complex economic forces and growing instability. The yellow metal is still in the reserves of the international monetary system. It will be more critical to global financial stability in the years to come.

Unlike the uber complex and sophisticated machinery of the global economy, gold is simple and unreactive. Gold is so unresponsive to a chemical reaction that it’s ideal for biomedical purposes. Jewelers love it because gold is durable, exquisitely malleable, and it stays nice and shiny forever.

The history of civilization shows how gold has driven the wealth of nations. The rulers of ancient Egypt were buried with their gold so they could enjoy it in the afterlife. The Roman empire used gold as money, just as we did for nearly two centuries. Spanish conquistadores stole gold from newly discovered lands. The California Gold Rush (1848 to 1855) attracted people from all over the world.

The United States grew in size and prosperity by leaps and bounds using a dollar based on gold. Between 1780 and 1971, the Gold Standard provided the foundation the US needed to become the world’s wealthiest and most prosperous country.

Gold has proved itself time and time again as a haven against uncertainty and disruptions going back thousands of years. There is no other type of investment that even comes close to beating gold’s incredible track record. Gold remains a reliable store of value because it maintains purchasing power no matter what.

More people are waking up to why gold remained popular through the ages. Out-of-control inflation and general uncertainty keep upward pressure on gold. As a fiat currency, the US dollar will decline much further than it is now.

The devaluation of paper currency is only one reason why gold appreciates. As the shrinking dollar value continues, more people will move whatever assets they have into gold. When that happens, the pint-up energy will suddenly expand like an explosion. They can hold back the spot price of gold for a time, but eventually, gold’s inimitable power forces it to move. Regardless of where the value of gold goes on any given date, the precious metal is still the best way to protect your wealth. Why? Gold is free from human intervention and manipulations.

Traditional investment choices, such as stocks and bonds, are too risky for most people. You have to be clear about your investment goals, the time you can afford to have your money tied up in an investment, and how much you could stand to lose in a market crash.

Diversification has become front and center as investors, advisors, and individuals brace themselves for the oncoming financial storm. So-called alternative asset classes are becoming less “alternative” and the more intelligent choice.

The Presidential $1 Coin Act of 2005 sought “to revitalize the design of United States coins and return circulating coinage to its position as an object of aesthetic beauty in its own right.” The one-ounce 24-karat American Gold Buffalo was the result. The American Gold Buffalo has the distinction of having the purest gold content of any bullion coin from the US Mint.

The Gold Buffalo is a tremendous coin that harkens back to the golden era of American coinage when Saint-Gaudens and his disciples created most of the designs. August Saint-Gaudens was America’s greatest sculptor at the turn of the century. His lifelong disciple, James Earle Fraser, designed the Indian head (obverse) and the buffalo (reverse) of the nickel that was minted between 1913 to 1938.

The Fraser nickel design became the basis for the American Gold Buffalo.
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