If you were told to view gold as money how would you respond? You might be inclined to say that you need to invest in gold or that you need to have stock in gold. This is how most folks respond but is this true? Is this how gold should be viewed? I can tell you the answer is no. Gold is money therefore it isn’t an investment at all. Gold is money, currency, and it’s something you can save.
The biggest challenge we face as human beings is our ability to view things differently than we are used to. Therefore you may not be able to wrap your mind around viewing gold as a way to pay your bills or buy groceries. It’s understandable. Most of us have been staring at gold in jewelry since we were born, with no understanding or education about gold and how it plays an important role in our economy.
Gold plays such a key role in our international monetary system, and it always will. Gold coins were first struck around 550 B.C., and they served as currency in most countries even before the concept of paper money was developed. Does the Gold Standard apply to our culture today so that we can all view gold as money?
Gold as Money and the Gold Standard
What does the Gold Standard actually mean? It means that currency is set in a fixed amount of gold. For example, a $1000 dollar bill would have been linked to specified amount of gold. Centuries ago when the Gold Standard existed, this was the norm in every country and gold could be imported and exported without penalty.
Gold coins weren’t the only coins in other alloys that were being exchanged. Not only were these precious metals being exchanged, but as notes came about they were being exchanged as well in domestic form. Everything was measured by gold and in specified amounts in each country and each country set up its form of currency exchange.
Money was controlled by the central banks, and it was controlled in two different ways.
- Gold set in specified amounts and notes converting those amounts. This also meant that the exchange rate was solid.
- A balance of payments with gold as it pertained to the paper currency.
The Gold Standard was the standard until the end of World War I, and after that time the exchange of money wasn’t just in gold or paper, but it was also done with other metals. This is what was referred to as bimetallic, and it gives you an idea of how we came to have pennies and nickels in our wallets alongside silver too!
With money supply linked to gold, and the ideal that history repeats itself, we are going to be headed that way. This is because paper money will be devalued, but gold will not. Looking at the history as I’ve mentioned it here you’ll see that it’s not so strange to have gold on hand after all. Don’t let people fool you into thinking the end of the world is coming just because you need to buy gold as we did in times past.
With a money supply problem and a struggle that is global regarding the economy, it’s no surprise then that consumers are buying gold to prepare for coming changes. I hope that you will keep in mind that it’s okay to see gold as money because it is and there is no better time than now to buy it and save it.