Last year the Chairman of the Federal Reserve told me that gold is not money, a position which central banks, governments and mainstream economists have claimed is the consensus for decades. But lately there have been some high-profile defections from that consensus. As Forbes recently reported, the president of the Bundesbank (Germany's central bank) and two highly-respected analysts at Deutsche Bank have praised gold as good money.
Why is gold good money? Because it possesses all the monetary properties that the market demands: it is divisible, portable, recognizable and, most importantly, scarce − making it a stable store of value. It is all things the market needs good money to be and has been recognized as such throughout history. Gold rose to nearly $1800 an ounce after the Fed's most recent round of quantitative easing because the people know that gold is money when fiat money fails.
Central bankers recognize this, too, even if they officially deny it. Some analysts have speculated that theInternational Monetary Fund's real clout is due to its large holdings of gold. And central banks around the world have increased their gold holdings over the last year, especially in emerging market economies trying to protect themselves from the collapse of Western fiat currencies.
3 comments:
Until a democrat takes it from you. That's what FDR did. Another socialist pig.
The fact that they stole it from the citizens speaks volumes about its real value as money. It IS wealth.
Nothing has wealth until someone else wants it.
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