Have not written or updated the blog for a while now, actually was doing some research, think "You" will enjoy this article. Came across a gentleman's profile over on LinkedIn, read it, like what he was doing, since we both have a commanding interest. Going to share an article he posted, from a site we both follow. Had no idea it came from that site.
The article is the Gold Standard, how will it affect your retirement? We all need to understand what the true (ROI) will provide, god only number l really care about. Tells me all l need to know, how my investment is performing, need that information, you not agree?
Here is the Story on this subject, enjoy it, as much as l have.
The gold standard is often mentioned but rarely explained. However, it's a fairly easy concept to understand.
Put simply, it is a monetary system under which economic unit of account is based on a fixed quantity of gold. That means paper currency notes are convertible directly into specific quantities of gold.
Looking a little deeper, there are 'Three Types of Gold Standard." Those are:
Gold Specie Standard: A unit of money is tied to the value of circulating gold coins or has the value of a particular gold coin in circulation. Other coins that are less valuable may also be in use. Gold bullion standard: Authorities agree to sell, for a fixed price, gold bullion on demand in exchange for currency. Gold coins are not circulated.
Gold Exchange Standard: A government that does not itself use gold species or bullion standards guarantees a fixed exchange rate between its own currency and that of another country that uses either of the gold standards. As the two currencies are tied, a gold standard is created for the country by default.
A Brief History of the Gold Standard
The gold special standard was the first gold standard system. It arose naturally due to the fact the millennial ego, several different economies in Asia started accepting gold as a currency.
Since then, different gold currencies have enjoyed of a monopoly. For example, the Middle Ages Shaw the Byzantine solidus, known as the bezant, used throughout Europe. Similarly, in 1704, the British West Indies began using gold species, Britain used a gold standard.
Canada adopted the standard in 1853, and the United States and Germany followed in 1873, the Congressional Research Service States.
Finally, however, the gold standard's popularity to wane. The Gold species standard ended in the British Empire after World War One broke out, and by 1976, the international monetary system was based purely on the fiat currency. That means that while gold retains its value as an asset, no currencies are tied directly to its value.
The "Gold Standard's" possible future
That said, efforts to back the gold standard are occurring in a variety of places.
Writing for the "Wall Street Journal," James Grant posits that pure fiat currency may not be the best system available. He "Notes.." the pure paper dollar is a contrivance only 38 years old, brand new, really, and the experiment may yet come naughty. Indeed, History and Mathematics agree that it will certainly come to naught. Paper currencies are wasting assets. In time, the lose all their value.
Grant also comment that the end of Gold Standard in the US inadvertently led to more risks being taken on Wall Street, increased borrowing and serious inflation.
Politically, some form of the gold standard has a strong appeal to niche groups. In the US, that mostly means libertarians and others who believe in minimal governments intervention in monetary policy. However, the idea gained more widespread approval when May 2011 Utah adopted a policy that saw gold and silver coins minted by the US Government made legal tender in the State.
While, as National Interest points out, implementing such a policy is a bit difficult ---- the idea of buying a cup of coffee with a $50 American Eagle coin more than $1,000 at a market price is a mathematical headache --- it indicates how popular the gold standard is to some. Other states have proposed that taxes be paid in gold and silver or that state debt is paid using metals.
Most recently, Canadian Financier Ned Goodman sad at this year's PADC Conference, "the fact is, if we return to a classical gold standard and get rid of the Federal Reserve being who we are, we will have a good time in the commodity market."
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All the Best,
Joseph F. Botelho One Gram at a Time