What Gives Money Value?
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The value of money is derived from its strict limitation of supply. It’s the old supply and demand equation. The more of something there is, the less valuable it is. The less of something there is, the more valuable it is. If there were only 100 dollars in the entire economy, each would have great purchasing power and awesome value.
The supply of gold is limited by nature. The supply of fiat money is limited by the tolerance of the people to put up with inflation of the money supply and rising prices.
Our dollars are no longer backed by gold. No other world currency is backed by gold, or anything else for that matter. It’s all a confidence game or ‘CON’ Game. We have confidence that we can exchange our dollars for goods or services. Once we stop believing that others will accept them as payment, they become worthless. The confidence in the system is gone.
All currencies ‘float’ (or sink) against each other. They have the appearance of stability when viewed in opposition to each other. Think of two dissimilar objects being dropped from a tall building at the same time. One may have greater air resistance and fall slower. One may be pushed up or down by a gust of wind. However, both will fall to the ground eventually. Viewed from one of the objects, the other appears relatively stable or unmoving (like cars on a highway). But compare them to gold and that perception is lost. Gold sits separate and watches both fall (in value). This can be seen by the rise in the price of gold in all currencies.
And the price of gold has been rising in all world currencies. This is another way of saying that all currencies are being devalued against gold. It isn’t gold that’s changing, it’s the currencies. Gold just is. It’s element number 79 on the Periodic Table of elements. Gold is unchanging. Gold coins taken from Spanish Galleons sunk hundreds of years ago appear as new and are not degraded. Gold doesn’t rust. If one should experience a house fire, paper money will burn. There is no restitution. Gold may melt but it retains the same value as before. It doesn’t need to be pressed into pretty images or have fancy designs to be valuable. It has value just for what it is.
This material may only be copied or reproduced with permission of the author.
About the author:
Jerry Western is author of the newly available work,
Got Gold? Get Gold.
A Book on How to Protect your Wealth with the 21st Century Gold Rush and
a Layman’s Guide to Riding the Golden Bull and the Silver Stallion.
Jerry also provides a Model Portfolio Service listing his top Precious Metal picks and weighted rankings. The portfolio normally contains 18 to 36 companies.
Ordering instructions are available by e-mailing westernoutlook@gmail.com with either the word ‘gotgoldgetgold’ or ‘peek’ in the subject line.
