Why You Should Consider Buying Gold and Silver.

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I am a supporter of investing in precious metals, namely gold and silver. I believe it is smart for an individual to hold a decent portion of their wealth in physical bullion coins. I have many reasons for this. Nobody should expect to make a significant profit off such an investment, but rather to preserve their earned wealth in the face of inflation. Everyone’s grandparents can tell stories on how cheap most goods used to be. In 1950, an average movie ticket was about 20 cents, a gallon of gas was 30 cents, and an ounce of gold was approximately $33.00. In 2014, an average movie ticket is about $7.00, a gallon of gas is typically over $3.00, and a single ounce of gold is well over an astounding $1200. Who made the smarter decision over the years: those who held wealth in an ever-depreciating dollar, or those who held at least some wealth in gold?

Establishment economists working for the government typically do not like gold. They do not like it when people choose to buy and keep gold bullion instead of the national currency.  When citizens buy and keep gold or silver bullion instead of national currency, they are effectively saying this to the State: “Screw off. I don’t trust you.” This makes people in the government very upset. People in the State apparatus want control; they want to be able to fully manipulate every consumer at any given time. Wielding control over the money supply gives them this ability: to inflate at will.

Governments have been using inflation to hose citizens for centuries. In ancient times, if a king suddenly needed money to finance a war or whatever, he might attempt to tax it out of the populace. This was obvious and extremely unpopular, and often led to revolt. There was a more deceptive and discrete method that was invented: a king may decree that all coins in the kingdom be brought to the royal smelting furnaces and melted down for whatever reason; maybe to be re-stamped with a new image and then returned to the populace. When the coins were melted down, the king would secretly keep minute amounts of the gold and silver from each coin, and return the newly lessened coins to the public under the guise of being the same amount of gold or silver. Suddenly, the king would have a whole new fortune, supposedly out of nothing. Suddenly, the money supply increased drastically. This was the beginning of inflation.

Inflation is a form of discrete taxation. Most modern governments rely on money-supply inflation to keep their heads above water. They are Potemkin villages, in a manner of speaking. When citizens figure this out, many start to buy more gold. They realize that they need to hold tangible assets instead of rapidly devaluing paper money. This drives the price of gold upwards. A rising gold price typically means this: People are losing faith in the government and the national currency.

Bureaucrats and politicians hate this. That’s why some nations go to great lengths to stifle the gold market. For example: India is a country dominated by Fabian Socialism (which is arguably even worse than regular Socialism, in some ways). The ruling elite in India is dedicated to consolidating and strengthening State power and control whenever possible. They seek unmitigated control over Indian consumers and Indian money. Therefore, the Indian government is committed to stamping out gold ownership whenever possible. However, people in India are historically just as committed to owning gold. For one, gold plays important roles in Indian culture. On an even deeper level, though, many Indians seem to understand that their own government cannot be trusted. The Indian Government frequently demolishes the value of the Indian Rupee with hare-brained inflationary schemes. Therefore, to hedge against this, many Indians would rather hold gold over Indian Rupees. Indian citizens are voracious consumers of gold (typically one of, if not the, top gold-importing nations in the world). The Indian Government is known for placing extreme roadblocks toward gold ownership in India; it never works. The black market for gold in India is booming.

Some people maintain that gold and silver are the only real monies. This is false. Gold and Silver are not money. Not anymore, at least. In America, dollars are money. Why? Because they are the most widely accepted commodity. You can take dollars anywhere in America and buy almost anything. You cannot do the same with gold or silver coins. In a cosmic sense, I consider gold and silver the only real monies; but realistically, they aren’t. They ceased to be in 1914, when European governments ordered banks to suspend gold conversions so that they could finance their World War 1 efforts through massive debt and inflation, which the gold conversion standard put a limit on. Citizens in most of Europe could no longer change out their fiat for gold, which was a clear violation of contract. Because of this, the governments of Europe were able to wage what was the most destructive and miserable war in history up to that time. Had the gold convertability standard not been discarded, the misery of World War 1 may have been severely limited.

The banks got away with figurative murder on that one. Since that time, only government fiat is money. However, it is not “good as gold”, as our lovable establishment economists would like to maintain. We can see how the purchasing power of the dollar has eroded over the past century, while the value of gold has skyrocketed.

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The purchasing power of the dollar will continue to erode, under the “wise” leadership of the Federal Reserve. I have discussed this here.  People who have invested in a moderate amount of gold and silver bullion coins will be able to retain more of their hard-earned wealth, as opposed to those holding a weakened and depreciated stash of dollars. My recommendation: Consider purchasing and holding gold and silver coins.

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