Why Gold Is Real Money Pdf
What Is Real Gold Called
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More recently, the opposite has been happening: The inflation-adjusted price of gold has risen, while the real interest rate on 10-year Treasury notes has fallen. This relationship makes sense. Why gold has been such a bad investment so far this year Gold – the ultimate safe haven investment – is proving anything but safe. It’s lost over $200 an ounce since its high at the start of.

To find out how you can get affordable gold for yourself and your family, visit www.WhyWeNeedGold.com. Rickards is the author of The New Case for Gold (April 2016), and four New York Times best sellers, Currency Wars (2011), The Death of Money (2014), The Road to Ruin (2016), and Aftermath (2019. The supply of gold depends on what can be mined. In the 16th Century, the discovery of South America and its vast gold deposits led to an enormous fall in the value of gold - and therefore an.

The global financial market may not be operating under the gold standard anymore, but that doesn’t mean that gold isn’t still as relevant and valuable as ever. As Investopedia puts its, many people fail to realize that “gold, under the current free market system, is a currency.” After all, it is highly liquid and can quite easily be exchanged for money in essentially any currency. But why is gold used as a currency? The story begins with gold’s special properties as recognized by early civilizations.

The Science of It

At first glance, gold doesn’t seem like the only choice to become the standard for money. Copper might have worked, or cobalt, nickel, zinc. Why gold? Let’s hear from the chairman of the chemical engineering department at Columbia University Sanat Kumar: “An element must meet four qualities to stand alone as a premium currency.”

It can’t be a gas.
It can’t be corrosive or reactive.
It can’t be radioactive.
It has to be rare enough to be valuable, but not so rare that no one can ever find it.

That leaves five elements to work with: rhodium, palladium, platinum, silver, and gold. Silver has been used for currency (and also makes a good investment), but it tarnishes easily, which doesn’t make it ideal. Rhodium and palladium were not discovered until later (the 1800s), so technically they weren’t even options. Platinum could work, if not for the fact that it has a super high melting point, so early civilizations wouldn’t have been able to shape it into consistent units.

Why is gold used as currency? There’s your answer: it was the only element that early civilizations could utilize that was both safe and malleable, yet rare enough to have value.

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Gold Throughout the Ages

The history of gold is a long and colorful one. Ancient civilizations primarily used gold at sites of worship, for sacred religious and spiritual purposes. It wasn’t until approximately 700 B.C. that gold was first produced into coins, which allowed it to function more easily as money. Prior to the introduction of coins, gold had to be weighed and its purity verified.

Coins were not without their problems, though. Those looking to cut corners and earn a little extra for nothing would often clip coins that weren’t quite perfect. Eventually, they would accrue enough little bits of gold that it could all be melted down into pure bullion. In England, the Great Recoinage of 1696 put a stop to this by implementing a technology that mechanized the coin production process.

In the 15th century, Spain introduced the Americas to Western Europe, and the world was never the same. Here was this massive expanse of land, with great, hidden stores of gold on seemingly uninhabited land – this, of course, was not true, but that’s how the explorers and settlers felt about it. Spain increased Europe’s gold supply by nearly five times the previous amount, simply thanks to the discovery of America.

The next century would bring about the existence of paper money. Gold coins and bullion continued to prevail within Europe’s monetary system for two more centuries. When paper money hit the scene in the 18th century is when things really started to heat up. The battle between gold and paper money ultimately brought about the gold standard!

In Part Two of this series, we’ll delve more deeply into the gold standard: what it was, how it impacted the global economy, and more. So why is gold used as a currency? To sum up, its elemental stability and scarcity combined with its visually gorgeous hue have caused it to mesmerize us like few other things in the history of humanity. You can learn more about how gold has captivated mankind in our Resource Center. If you find that gold has started to enthrall you, browse our variety of gold options to boost your portfolio today!

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The Federal Reserve - Why US Currency is Not Real Money

Gold and silver are considered real money in most parts of the world. Even in the united states of America, legal tender was backed by gold or silver until 1968 when the Federal Reserve Bank, finally convinced the congress to allow the FRB to remove any kind of real money backing whatsoever.

Before we get into how the Federal Reserve Bank operates, we should comprehend what money is. So let us take a look at the definition of 'money' from before the Federal Reserve Bank 'changed' it for most Americans. In Black's Law Dictionary, 4th edition, we find,

“MONEY. In usual and ordinary acceptation it means gold, silver, or paper money used as circulating medium of exchange, And does not embrace notes, bonds, evidences of debt, or other personal or real estate. Lane v. Railey, 280 Ky. 319, 133 S.W.2d 74, 79, 81.”

So now we are all clear that 'money' means gold or silver or a paper representation of gold or silver. We will take a look at one of the 'paper representations' below. We also know that it does not mean a promisory note or an I owe you.

An understanding of how the Federal Reserve Bank operates in conjunction with the federal government is important to understand why we would no longer have a gold standard for currency. The Federal Reserve Bank purchases, at cost, currency from the United States. The cost is about 2 ½ cents per bill. It matters not whether the bill is a 1 dollar bill or a 1,000 dollar bill. The cost is 2 ½ each. The federal reserve bank then loans the money back to the federal government at face value and is paid back with interest. The interest is in the form of funds collected through the voluntary 'income tax' system.

If the FRB was required to back money with gold, then it could not have so much money at the stroke of a keyboard. All they have to do is tell the federal government when to print more money, the federal government then applies ink to paper, and presto, money magically appears.

Why Gold Is Real Money Pdf

One of the ways that the FRB has taken gold out of the standard is by, through the lending industry, not accepting gold or silver as a 'liquid asset'. What the lending industry is saying is 'We don't accept money as a liquid asset.' After wall, isn't that what gold and silver coins are? They are money. What some people do not realize, is the value of gold and silver has not risen in the last century. That is why the dollar amount imprinted on a one ounce gold coin is still $50. What has changed is the value of the currency that the federal government permits to be used. This currency is debt back by debt.

We used to back our money with gold or silver. US currency actually stated on the bill that it was redeemable for X amount of gold or silver or it was redeemable for X 'Dollars'. You won't find anything of the sort on a Federal Reserve Note.

The following is a ten dollar bill printed in 1934. Note the large print along the center bottom states, 'WILL PAY TO THE BEARER ON DEMAND TEN DOLLARS'. Obviously, that indicates that the bill itself is not in fact money at all, but guaranteed that the bearer would be paid money when he turned in the bill to the US Treasury or 'any Federal Reserve Bank'.

The fine print in view of Hamilton's gaze (Click on image for larger view) states, 'THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE, AND IS REDEEMABLE IN LAWFUL MONEY AT THE UNITED STATES TREASURY OR ANY FEDERAL RESERVE BANK.' (Empasis added) This serves as further evidence that this p