Why does GOLD matter? What about SILVER?

From my last blog post, I pointed out that gold-backing is something that is necessary for a solid currency, especially a worlds reserve currency.  We- the USA- lost the right to have the dollar as the reserve currency, as soon as President Richard Nixon took that away, in 1971.  Since then, the slow and inexorable inflation creep has eroded our dollar to near-worthlessness, and taken us over the cliff into abject bankruptcy.

Some brilliant mind made the following comment:

Gold has no more value than paper dollars.  The only value is in production, the basics, which are food, shelter, and then safety.

Clearly, the writer of this confuses fiat-money and gold as being exactly the same.  Fiat money, by the way, is money backed by  nothing, except the faith that it will be redeemable at some point for its printed value.  The question that obviously needs addressed is, is gold exactly the same as fiat-money?

Money has to have certain qualities to make it useful and generally accepted AS money.  Well, lets go down the list of what money is, and compare gold against fiat-money (dollars, Euros or any other currency you can think of),  and the commenters ideas about production  food, shelter and then safety. 

1.  First of all, money must be durable, and it must be a storable form of wealth .  If you stash it away for future use, it should be able to be used in the future, for whatever you wanted to spend it on.   For gold and silver (and all other precious metals), this is easy.  Printed fiat-currency, easy.  Production capacity and Maslows Hierarchy of Needs (basic physical requirements)?  No, of course not.

2.  Next, money must be easily divisible .  Physical metals can be easily divided, as can fiat-money.  Production and basic physical needs are not divisible, and thus we check them off the list.

3.  Money must be easily transportable .  If your money consisted of boulders (bigger ones meant more value), how would you get them to the market to buy anything?  So here again, precious metals and fiat currencies do very well, while production and physical needs are again out of the picture.  (Indeed, I think we can dispense with the nonsense about production and physical needs.)

4.  Finally, money must impossible to counterfeit.   That is, it cant be easily duplicated or created, either digitally or physically.  HERE is where precious metals get their luster; each ounce of gold or silver out of the ground takes a lot of work, and there is no way to magically create new gold reserves for a country on a whim.  Fiat currencies, on the other hand, can literally be printed on a whim.  But the corrupt bankster Federal Reserve Chairman Ben Bernanke is digitally inflating the money supply to the tune of $85 Billion per month, just to keep the stock market from imploding, as well as keeping the TBTF banks alive.  The economic situation now is such that as soon as Bernanke stops this, the house of cards that is our economy- what little that remains- will collapse.

As you can see, there is a BIG difference between gold and other precious metals, and fiat currencies.  Gold and silver are REAL money.  Paper currencies which cannot be directly exchanged for a designated amount of precious metals are FAKE money.

This all sounds well and good, but lets use a real-world example, shall we?  In 1920, the price of the average house was $8,094.  An ounce of gold at that time was $20.68.  So, doing a little math, it took 391.4 ounces of gold to buy the average house.

Going by February 2013 prices, the average price of a house was $152,000, and the price of gold was

$1370 per ounce.  Doing the same math, it takes 110 ounces of gold to buy a house

So what this shows is that the $1 bill that you had in 1920 is now worth  5.3 cents.  The Fed has literally printed away 94.675% of the value of the dollar, since 1920.

Yet, the price of the house- in ounces of gold- has actually gone down!  Had your father or grandfather stored away those 391 ounces of gold, youd be able to buy the average house, and still have $385,518 worth of gold left over.

THIS is why gold, silver and other precious metals matter.  They are a store of wealth, that the government cannot invisibly tax via the printing presses (or digital currency creation).  Precious metals are the ONLY means of storing wealth, where the control is exclusively yours.  As the example with the house shows, precious metals preserve your purchasing power, regardless of what currencies are in play, no matter where you are in the world.

Im sure Bernanke would love to have a way to magically spin straw into gold, and save the bankster system, but despite our seemingly enlightened society, weve yet to figure out a way to defy the laws of physics.  Understand, the Federal Reserve was specifically created to entice Americans to believe that fiat-money was real money, and that gold was not.  But their scam has lasted only 100 years, versus 5000 years of history.

Dollars, euros, yuan or yen, it doesnt matter  unless they are backed by precious metals- and can be redeemed for a specific amount of those metals at any time- they are doomed to failure.

Governments will always strive to have their currency by the worlds reserve currency, because it gives them a huge amount of financial power over all others.  But they will abuse it, overprint, lapse into bankruptcy and financial collapse.  This is the nature of governments, and the Laws of Economics deal heavy punishment to those who abuse such power.  WE are now about to be on the receiving end of the payback  and the ONLY way to protect what purchasing power you have  is to convert it to precious metals, as fast as you can.

So my advice, tonight, is to do exactly that; buy silver or gold wherever you can- at dealers (if they have any inventory), Craigslist, whatever  but convert all the cash you can, because time is running out  and when the dollar collapses, it wont take long until you cant buy it, at any price.