Gold for Protection and Profit

Ben Bernanke says, “Gold is not money.” Yet for thousands of years cultures across the globe have used gold as a means of exchange and store of wealth. Not one government-backed currency has endured like gold.

Doug Casey often refers back to Aristotle’s criteria for sound money as to why gold maintains this status. In Doug’s words:

• It should be durable (which is why, say, wheat isn’t a good money – it rots)
• It should be divisible (which is why artwork isn’t a good money – you can’t cut up the Mona Lisa for change)
• It should be convenient (which is why lead isn’t a good money – it just takes too much to be of value)
• It should be consistent (which is one reason why land can’t be money – each piece is different)
• And it should have value in itself (which is why paper money leads to trouble)

You don’t buy gold to get rich. You buy it because

it purchases the same amount of stuff now as it did 100 years ago… while the purchasing power of the dollar has fallen by 98%.

Gold Maintains Purchasing Power.

In 1935, when an ounce of gold was worth $35, you could buy:

• A high-quality tailored suit for $19.75
  – or 0.56 ounces of gold
• A family car for $500
  – or 14.3 ounces of gold
• A house for $7,150
  – or 204.2 ounces of gold

With today’s prices around $1,800 per ounce, let’s see what that same gold would buy you today:

• 0.56 ounces of gold is now worth $1,008 – about the price of a Signature Gold suit from JoS. A. Bank
• 14.3 ounces is worth $25,740
  – enough to drive home a Toyota Camry
• And 204.2 ounces is now worth $367,560
  – which gets you an above-average home in all but the most expensive areas of the country

The purchasing power of the dollar has dropped like a stone – but gold has endured and still buys you today about what it always has.

You buy gold because Bernanke and friends have proven they’ll do anything to keep interest rates low and “fight off” the debt crisis – even if it means complete debasement of the dollar.