Gold's death has been greatly exaggerated.
Posted by : David Brewer /
Did you know that on August 15, 1971 the US government was in full crisis mode?
France's Charles DeGualle was sending boats over to the US to exchange dollars for gold. You see back then other governments could take our dollars and legally exchange them for gold. There were other governments doing this as well but he was the most outspoken about our spending habits..
At the rate it was happening the gold would be gone soon. It was not good. Gold has been money for thousands of years and you had to have some of it in case of a rainy day.
"No more. Keep the money", Nixon said.
With that he effectively ended any gold standard. Money would now be pieces of papers with green ink redeemable with...other pieces of paper with ink.
This is Fiat money. Fiat only has value due to A. people having confidence in it, and B. It is mandated by law to be accepted as payments for all debts and taxes.
When you issue too many pieces of money you have to add more 0's as the value of the money goes down.
Gold was dead. The only thing left to do with gold was to dig it out of the ground, pour it into coins, and put it back into the ground vault. Ok, yes you can also make jewelry and put it into some high tech hardware as well.
Very strange our fascination with this metal. The more you learn the more fascinating it gets. I seriously doubt I would be a pawnbroker had I not spent years studying the history and role that gold has in finance.
Roughly 70% of our customers use gold to help them out in a time of financial need. It has saved thousands of people fleeing oppressive regimes. If you lived in Zimbabwe over the last ten years you probably lost everything. Unless of course you kept your savings in gold.
When Argentina devalued their peso in 2001 many people lost their savings. This led to a banking and political crisis where they went through several presidents in a matter of days. Many were unable to access their bank accounts. There began a brisk trade in people cutting their gold chain necklaces up to sell and pay for food.
I'm often asked what is the most interesting item we've had come in the store. It was a wafer thin gold square with Vietnamese writing along with Kim Than Refinery stamped on it. They were made this way so the South Vietnamese could sew them into their clothes or wrap them in bloody bandages while escaping the North's persecutions.
The other day I was visiting Ming Le, a local downtown bench jeweler. I was lamenting the fact that I had sold the one we got in the store. I was asking if he knew about them.
"Yes" he said. "I used to work at Kim Than refinery in Saigon and I was part of a small group of young men that made those gold bars. He told me Generals and important people came in every day to buy them at the end of the war.
"More gold then you will ever see in your lifetime" he said.
So what happened after Nixon took us completely off the gold standard? Well fortunately for us they agreed to keep taking our dollars and not only that they hold them as reserves instead of gold. In affect we get to print dollars and export them to the world. A bit of a free lunch of us.
Will it continue? Who is to say but one thing is true and that is the world is ever changing and it might pay to have some gold.
Source: The Burning Platform
Need more reasons?
1. Gold is rare and requires effort and cost to remove it from the earth vs. dollars can be printed easily or better yet added with the stroke of a keyboard.
2. Gold has a history of being money that has outlasted every currency known to man.
3. Gold has roughly the same value anywhere in the world.
4. Gold is easily identified and considered beautiful throughout the world.
5. Gold will never tarnish or degrade. Most all gold ever mined throughout history is still in existence. All the gold ever mined would fit in to a cube the size of a tennis court.
Gold is history, it is stories, and sometimes it is insurance. It is definitely beautiful.
Oh, and I guess I should mention we have lot of gold jewelry for sale at Posh Pawn.
Thanks for reading and feel free to share any of your own gold stories below.