The Price of Gold | The Gold Standard #2108

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The price of gold is the subject of this episode of The Gold Standard. When people talk about the price of gold, they’re talking about the "spot price" of gold. The spot gold price is quoted in price per ounce using US dollars. Since gold is bought or sold somewhere in the world 24 hours a day, the spot price fluctuates.

The Gold Standard podcasts have taken a close and sobering look at the US debt and how dangerous it can be for the financial health and well-being of individuals. As background to the discussion at hand, let’s first look at what history teaches us about tremendous debt and the debasement of currency.

“The farther backward you can look, the farther forward you are likely to see.”
(Winston Churchill)

The Difference Between Currency & Money

Since the dawn of civilization, there has been a struggle between currency and money. Historically, societies start with gold and silver. In fact, the precious metals minted into coins of equal weight as far back as Lydia, around 680 BC. Gold and silver come from nature. It is God’s money, if you will. It can’t be created. There is only so much of it available to us. Men create currency as a medium of exchange. Through the ages, the currency began representing the value of gold and silver. Still, inevitably, greed takes over, and the kingdoms no longer want to be tied to the finite amount of gold and silver in their possession. This ambition for more always leads to the creation of a fiat currency. The ancient city of Athens was the first democracy and one of the great civilizations long before the Roman Empire. Greed and arrogance led to war and the debasement of their currency, and Athens came to an end. It’s a pattern throughout history that has repeated itself again and again.

Governments, large and small, stipulate the value of their currency, but it does not have value itself, nor can it store value. Money has intrinsic value and always will.

There are good reasons why gold has been a reliable store of value for over 4,000 years. Ken Russo, the VP of the Midas Gold Group, tells host Dave Deno that people should think of gold as money; and, he gives some good reasons to suggest gold is an alternative form of money. Ken reminds us that the spot price of gold in 1972, just after President Nixon took the country off the gold standard (ending the Bretton Woods System), the spot price of gold was $38 an ounce. In 1999, an ounce of gold was $250. By the end of this year, the price will be around $2,000 an ounce. $25,000 invested in Gold in 1972 would be worth $1.2 million today. Gold has held its value over the years, while our government-issued paper currency has lost 97% of its buying power. Once the dollar was no longer convertible to gold, all paper currencies became free-floating. The dollar buys less and less with every passing day. The debasement of our currency is only one of many ingredients forming a perfect financial storm. The necessity of owning physical gold as part of your financial portfolio has never been as urgent as it is now.

"We’re buying gold for wealth preservation and protection," Ken reminds us, "not for profit potential. Gold will get you through financial chaos."

History teaches us that those who hold onto real money, instead of currency, reap the rewards many times over.

What Determines the Price of Gold

The price of gold, as you’ll learn in this episode, is driven by several factors, including currency devaluation, the amount of gold held in central bank reserves, and the demand to hold gold as a hedge against inflation.

Featured Precious Metal Product

Appropriate to the theme of this episode is our featured precious metal product, the Gold Valcambi CombiBar. Valcambi Suisse pioneered the separable gold bar enabling customers to break off bar chunks into individual segments.

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