Current Gold Prices – Do They Reflect the Value of Our Dollar
There are many forms of currency out there, but the one that has stood as an almost universally accepted form, is Gold. People covet gold, people give gold as gifts, people store their hard earned wealth as gold, and I believe that it will continue to stand the longest as the most accepted form of currency in the history books of the generations to come.
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Gold is a good investment for those people looking to preserve their purchasing power in this unstable economy. As a currency devalues, it loses something, but people often don’t understand what exactly it is. People throw around the word inflation, and they are right inflation is occurring, but that is what is happening to their money not what it is losing. As inflation occurs the dollar is losing it’s purchasing power. Purchasing power is quite simply the amount of stuff your dollar can be traded in exchange for. Current gold prices are the most accurate reflection of the exact purchasing power of your dollar. This flux in purchasing power is caused by what is called an un-backed or fiat currency. This means that there is not a set amount of a valued item that can be redeemed by the currency in question.
Some people don’t realize that as they earn dollars, the purchasing power of their dollar is decreasing by a small amount all the time since we do not have a backed currency; and in this current economy the inflation rate is beginning to accelerate at an incredible speed. Putting your money into Gold is an excellent solution to this problem. Gold has been used throughout the centuries as a widely accepted currency, and often in recent history has been used to back alternative currencies such as copper or silver, both were interchangeable for a certain amount of gold, and in very recent history, Gold backed paper money for a time. Usually when the currencies were backed, the current gold prices were fixed, and that gave a set purchasing power to the relevant currency of the time. In all situations where a set amount of gold was used to back an amount of a currency, that currency held it’s value because gold held it’s value. It is a known and widely accepted fact that the only real way for the value or purchasing power of gold to change is for the supply of gold to increase or decrease. Since the rate of gold being found or being lost is a very steady, the purchasing power of gold remains very resistant to change; but since it is not attached at a fixed price to a currency, the current gold prices will fluctuate, reflecting the current purchasi
