“You can fire your arrows from the Tower of Babel, but you can never strike God!” – Apocalypse, X-Men
Doomsday folks, which usually includes preppers and gold bugs and many free-market folks, often believe that the U.S. Dollar is doomed (DOOOOOOOOMED!).
And because the dollar is doomed, so the theory goes, it makes no sense to invest in dollar-based assets.
They go on to claim that the only “bulletproof” asset is… gold.
It’s indestructible. Untouchable. Impervious to regulation. Immune to inflation.
And so on.
Except it isn’t.
Now, don’t get me wrong. I have nothing against these people. Most of them are sweethearts. In fact, I personally know some people who hold these ideas and I love ‘em.
But, I DO think some of their ideas are mistaken.
Here’s what I mean:
Before America was America, it was very common for kings and dictators to jigger with the value of gold and silver by cutting the precious metal with base metals.
This inflated the cost of goods and services once people figured out that their gold coins were actually 80% gold and maybe 20% iron or lead or something.
And then 80% gold became 60% gold and 40% base metal… and then 20% gold and 80% base metal and then… revolution.
And then it started over again.
And in colonial America, merchants had an awful time with dishonest counterfeiters who clipped coins (literally taking a knife or scissors and clipping off pieces of the metal) or shaved down the edges.
Financial fraud was, at one time, rampant.
Wife and I learned all about this from the goldsmiths and silversmiths at Colonial Williamsburg.
And this problem limped on until the government came up with another bandaid: Greenbacks (paper currency issued during Abraham Lincoln’s presidency, primarily for the Civil War effort).
But this created another problem: speculation in gold… which caused the real price of gold to fluctuate wildly.
And when that problem ended, another one began…
And then later President Franklin D. Roosevelt fixed the price of gold to stop all the shenanigans and finally (FINALLY!) bring price stability to the country… by fixing gold at $20.67 per ounce.
That’ll solve all the country’s problems.
Until… a year later when that stopped working so… the government fixed the price of gold at $35 per ounce… and then in the early 70’s they just did away with the gold standard to “solve” the problem of a shrinking money supply (or something like that).
Point is… there has never actually been a period in the history of the world where a true gold standard has existed because… the government has always been in control of the munnay supply… forcing people to respect their authoritah.
Don’t get me wrong. I am not against a gold or silver, or any other commodity-based standard.
I actually think a free market in metals and banking would be a wonderful thing. And, in fact, necessary for a truly stable economy.
But, unlike gold bugs, I don’t think we should be on some grand mission to RETURN to a gold standard because… we have yet to DISCOVER it.
And until we do, the second best option is not to speculate on precious metals. It’s to buy ownership in stable companies that spit out income every year. And then use that moolah to insure your future by buying more and more valuable productive assets (businesses).
In other words, buy businesses that create value and wealth.
OK, end of sermoning.
If you want to buy some of the most valuable companies in the world, grow and protect your savings (as best as you can in today’s world), and insure all your future income in case ya die prematurely then… hop on my email list and let’s rock n roll.