The argument for holding gold and silver over fiat currencies
Before we get to what’s going on around the world currently with paper currencies and the massive monitory mess that’s being created let’s look at historical data of paper currencies, to outline this let’s start with a simple reflection we can all relate too.
In terms of purchasing power, I think most of us will agree that over time the cash money that we use (dollars, pounds, euros, yen, whatever) tends to purchase less, prices of goods and services we use over time rise, food, houses, cars, etc. if you put some paper money aside under your mattress, in ten years you will be able to buy less with it than you can today, why is that?
To me, while there’s many complex reasons to justify this, including things like inflation, the simplest explanation is that it’s actually because the money under your mattress is slowly losing its value, it’s worth less 10 years from now.
Call it whatever you want but the bottom line is it’s currency devaluation over time!
We can see this in a chart tracking the purchasing power of the US dollar from 1913 (the creation of the federal reserve) to 2020, the USD currency has lost over 99% of its purchasing power (what you can buy with it) from 1913 to now. This chart is provided by the federal reserve.
The US dollar isn’t alone in this, more or less without exception every single paper currency has lost almost all its value.
Here’s how the British pound has preformed in terms of purchasing power) from 1760-2020, the British pound is the oldest paper currency in existence.
The next chart shows how a few major currencies have faired in keeping their purchasing power in comparison to gold
Keep in mind, the paper currencies were talking about here are supposed to be the good ones, the USD for one, is the worlds reserve currency, we’re not even looking at paper currencies issued by countries that have histories of defaulting. Like Argentina, Zimbabwe and the so forth.
The very basic argument I’m trying to outline here by the above charts is simply that all paper currency loses its value over time, meaning that historically it’s not a good store of wealth and savings. Paper currency has no actual value, it’s just paper, it can be manipulated and printed on a mass scale by its creators whenever they want.
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Until next time,