...its role as money. Gold is a commodity with utility like other commodities. It has some limited industrial use, use in dentistry, and of course for jewelry. It always serves in this capacity. Gold is also a hedge against inflation. Since inflation results in eventual devaluation of fiat currency, saying gold is an inflation hedge is saying that gold protects against the inevitable loss of buying power of the prevailing currency. Since central banks and governments always inflate, gold is always serves in this role. Finally, when confidence is eventually lost in fiat currency, gold supersedes itself in the role as insurance to assume the role of money itself. This happens rarely now that the world has long since abandoned gold as "money" through a defined linkage to currency. But, it happens as it has always happened for thousands of years.
IT IS HAPPENING NOW.
from zero hedge by Tyler Durden If there was any confusion before that gold is now the last flight to safety in the fiat devaluation war, the chart below should end that debate. As Portugal got cut, the move in gold was far more pronounced than a comparable move in the dollar. Investors are now bypassing the USD as the beacon of safety and heading straight for the yellow metal.
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