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Gold and Currency

Jun 19th 2015 at 10:09 PM

If you must know, the biggest mistake people make is when they think that with gold they can get money; this is wrong from every perspective due to the fact that gold is money and so is silver. When you buy gold, you are actually investing in money itself, this is because no matter what happens to the economy of the world, and gold will always retain its value. Ask the Gold Buyers Melbourne and they will tell you that amongst all the precious metals known to man, gold is the forerunner in terms of investments.

Gold investors usually purchase gold as a hedge or bunker to protect themselves from social economic turbulence, as well as political unrest. Other factors that make these investors turn to gold to protect them against losing the value of their assets include social Fiat currency crises, weakening stock markets, increasing national debt, currency devaluation, inflation, deflation, social unrest and war. These investors buy gold as a hedge or harbor against this entire negative phenomenon.

The gold market which is just like any other market is subject to speculation, primarily by the utilization of futures contracts and derivatives. The Gold Buyers Melbourne collective agree that the history of the gold standard, the role of gold reserves in federal banking coupled with gold's minimal association with most other product prices not leaving behind its evaluation in association to ‘Fiat Money’ during the recent global financial crisis, points out that gold behaves more like a currency than a commodity. This wholesome fact is actually something that our ancestors had already realized thousands of years ago.

Throughout history gold has been used as money no matter what form it came in. Trading cash for gold is an accepted ‘act of trade’ until today. Gold was a relative standard in relation to its currency equivalents specific to economic regions or countries; this was until the demise of the Brentwood treaty that was initiated by the United States of America. Most European countries that had implemented gold standards towards their currencies in the latter part of the 19th century suspended it in the financial crises involving World War I. Subsequently after the end of World War II, the Breton Woods system was set in place that saw the pegging of the United States dollar to gold at US$35 for each troy ounce.

The system was in place until President Nixon was inducted into the Oval office in Washington. In 1971 the Nixon Shock, which divorced the gold standard and embraced the Fiat Currency system suspended the direct conversion of the United States dollar into gold. The last currency that abandon the gold standard and to embrace the Fiat currency was the Swiss Franc in the year 2000. Currencies that are independent from their relation to gold has seen the rise in the abusive form of ‘printing money’ as needed by governments that has been cited as the main reasons behind the string of global financial crisis that has plagued the world for the last 3 decades. Most people are hoping that the gold standard will return to set things straight, however, for this to happen, the entire world will be thrown into and economic blackout for a period of time – no pain, no gain!

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