Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Gold Is the Best Standard of Value

  by    0   0

Joel BaumanThis article was written by Joel Bauman, SchiffGold Senior Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.

The current debt-based fiat monetary system creates an illusion of wealth expansion.

For example look at this 100-year price chart of the Dow Jones Industrial Average.

The Dow Jones chart looks a lot like a Bitcoin graph with its exponential growth. No wonder so many financial advisors say the best thing investors can do is simply buy and hold.

But one has to wonder, is this chart impressive simply because US equities really have been doing so well? Or is it because the denominator, the dollar, fails to measure wealth over time? Or both?

Let’s look at the same time period using gold as the measure of value instead of using dollars.

Looking at this chart, the classic ‘buy and hold’ advice doesn’t seem so great. You can see distinguishable highs and lows on this graph.

Any potential stock buyer looking to time their purchase may have benefited from the Dow/gold chart. For example, in 2011 it was easy to see stocks were at their relative lows in terms of gold. However, the original Dow chart priced in dollars shows the index near all-time highs.

You can see a similar trend in the US real estate market.

It’s interesting to note how the US real estate market was in a dollar bubble during the early 2000s until about 2006 when prices softened. In gold terms, there wasn’t really a bubble, the market was relatively flat during the early 2000s with a sharp decline beginning in 2005-06.

All of this demonstrates an important truth: Investors should care about maximizing their wealth and it’s difficult to measure wealth with a poor fiat standard like the dollar.

Wise words from the book of Proverbs notes the importance of an honest standard.

A false balance is an abomination to the Lord: but a just weight is his delight.” Proverbs 11:1

Even though gold isn’t generally recognized as money in the modern economy, this doesn’t mean individuals can’t have a personal gold standard. Before making any serious financial purchases or sales, I recommend checking an asset’s gold price history. This can be done through websites such as pricedingold.com. There are also a number of charting tools that allow users to create historical price graphs denominated in gold.

With gold, the real value of assets may be seen and investments can be measured by their true productivity and not their illusionary growth in fiat dollars. This truth cannot be understated.

Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

What the Baltimore Bridge Disaster Could Mean for the Economy

While the total annihilation of the Francis Scott Key Bridge in Baltimore probably isn’t a “Black Swan” big enough to trigger a global collapse, it adds potent fuel to several fires in an already fragile global economy.

READ MORE →

Piketty’s Inequality Con

If you ask a liberal politician who their favorite economist is, there are three likely responses. One response is a panicked change of topic. From the slightly more sophisticated politicians who skim the New York Times, you might hear Paul Krugman. From the politicians who style themselves intellectuals of the left, you’d hear Thomas Piketty.

READ MORE →

The End of Japan’s Negative Interest Rates: What It Means for Gold

The Bank of Japan’s historic move to end the country’s negative interest rate policy after nearly two decades triggered a jolt upward to new all-time highs for gold against the yen. But what are the implications for gold in the medium and longer term? The answer is far from simple. 

READ MORE →

The BLM’s Quiet War on Precious Metals

The Bureau of Land Management is a federal agency that controls 245 million acres of land and controls 30% of the country’s mineral resources. On the East Coast, it manages little land but manages an enormous share of Western states. It owns over two-thirds of Nevada. This gives the federal government enormous sway over the West. Want […]

READ MORE →

PIMCO: The Fed Needs More Unemployment

Analysts at PIMCO say that for the Fed to reach its goal of lowering inflation to 2%, we need fewer people to be employed. Reduced incentives to offer raises and bonuses and less spending from the “resilient” American consumer can help cool down inflationary pressure. But there’s an elephant in the room: Why do we let a […]

READ MORE →

Comments are closed.

Call Now