Gold has been used as currency for over 2000 years. The gold price per ounce never really had a fixed price. It was always measured in relation to the goods and services that it bought. It wasn’t until after World War II, in 1944 that a ‘gold standard’ was introduced after a conference at Bretton Woods. At that conference they fixed the gold price per ounce at $35. At that time the US dollar was 1/35th of an ounce of gold.
The system was initially a success and it lasted for about 27 years when in 1971 the US President at the time, President Nixon took gold off the gold standard and the US no longer could convert the dollar to gold. Taking the US off the gold standard was a huge turning point as the US was now free to just ‘print’ the currency.
Today all investments are driven by ’supply and demand’. Unlike other commodities which are consumed, most of the gold that has ever been mined still exists by either hoarding or use for jewelry. So the gold price per ounce as with most investments are run by ‘Greed and Fear’ rather than production.
So on to investing today. Is the current gold price per ounce a bargin? With unprecedented amounts of currency being created and with no place for interest rates to go, the US is in big trouble. History shows us that inflating the money supply has always ended badly. But it also creates a fantastic opportunity for the educated investor. People who now understand what is going on with gold have a once in a life time opportunity. Which is great for you.
Most people think that investing in gold and silver in complicated and should only be left to the professionals but that is not the case. Investing in precious metals is actually one of the easiest investments to make. Firstly it is very important to buy the physical metal first. It is very simple to find a safe, secure dealer and take possession of your gold at home or keep it in a secure vault. Just doing that one step will keep you way ahead of most of the professionals. If you are more advanced, then you can buy the gold mining shares or EFT’s to give you more leverage. Today the gold price per ounce at only $1059 approx is an absolute bargin. Which is why you are seeing many gold adverts on TV trying to get you to send them your gold.
Tags: current gold price, current spot price, gold price, Gold Price Per Ounce
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Hyperinflation has actually happened dozens of times before in many different great nations. During World War 1 1914-1918 in Germany, like in the US today, they went off the Gold Standard and made it illegal to redeem their currency, which was the mark, for gold. To fund the war the government had to turn up the printing presses to pay for the deficit spending. Over the 4 year period the Marks in circulation had quadupled.
The main problem was that that people kept hold of every penny that they had in the bank. So there was huge amounts of money being printed into circulation but no one was spending it.
Retail prices finally caught up and rose by 10-20 times. People who still had savings left were left confused because their money now only bought just 10% of what it did a year or two earlier.
In the 1920’s there was a lot of recovery to be done in the economy but the government never stopped printing the vast amounts of money. By 1922 prices had risen another 700%. But the German population had learn’t this time and their attitude of money had changed. Having seen the purchasing power of their currency fall 90% only a few years before.
People knew that if they held on to their money they would get burned and nobody wanted to hold on to it.
The end came when Germany had to pay back its debts to France and they put there printing presses into overdrive. In february 1923 they were printing 45 billion marks per day. By November it was 500 quadrillion. But the value of the currency fell faster than the actual currency they could print. It was the beginning of the end for Germany.
It was reported that in 1923 the purchasing power had fallen 93%. A loaf of bread that cost 1/2 a mark before the war now cost 200 billion marks. The German stock market went from 88 points at the end of the war to 26,800,000,000 points.
It was only gold that had kept the pace with inflation. At the end of the war gold was 100 marks per ounce and by 1923 it was 87 trillion marks per ounce.
People still don’t realise today that hyperinflation has happened over and over again throughout history whenever country goes through financial upheaval, a bubble, war, a market crash or a currency crisis.
It didn’t matter whether you were poor, middle class or rich, it was the people who were smart enough to buy gold that saw there wealth grow exponentially.
Tags: gold price, Hyperinflation, investing, spot price
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