Tuesday, January 6, 2015
Reason To Buy Gold And Silver For Your Investment
For a long time now I've been telling friends to buy gold and especially silver bullion. I haven't really had time to explain why but I think now I should make an effort. This is a massive story but I will try to be brief. I believe that gold and silver are seriously undervalued. I also believe that there is going to be a crisis in confidence in the money we currently use which will cause a sudden and serious loss of value (very high inflation). Ownership of gold and silver are an insurance against this happening. Once it does happen it will be too late to take out that insurance policy. Precious Metals to Paper Money Gold and silver have little relevance to most of us today. Apart from the occasional jewelry purchase very few of us have much to do with them in a day to day sense. This was not always the case. For much of human history they were used as everyday money. When Judas betrayed Jesus he did so for 40 pieces of silver. When the US Constitution was written, the dollar was defined as a set weight of silver. Gold and silver possess certain qualities which make them ideal for use as money. The ancient Egyptians and the Incas had no knowledge of each other yet each used gold and silver for money, as have most human civilizations. More recently, over many years (even centuries) people have been gradually persuaded to leave their gold and silver in vaults for safe keeping. In return, they received credit notes. In the UK, people could deposit a pound of sterling silver with the Bank of England and receive a note with the words "I promise to pay the bearer, on demand the sum of one pound" signed by the Governor of the Bank of England. These notes became known as "Pounds Sterling" and for many years have been used as money. A similar thing has happened all around the world until today, gold and silver are not commonly used as money anywhere. During this process, the custodians of gold and silver have gradually eroded the rights of people to redeem these credit notes for actual precious metals (PMs). In 1971 Richard Nixon severed the final link, ruling that the US dollar could no longer be redeemed for gold. As the Dollar is the world's reserve currency this had the effect of ending gold's role in all of the world's currencies. Since that time, gold has been mostly kept in central bank vaults and credit notes for this gold and silver (Dollars, Pounds, Yen, and Euros etc.) have been used as money, despite the fact that they could no longer be redeemed in PMs. They had in effect, been defaulted on.