There was a time when the dollar and gold could be interchanged. Most of us weren’t there to experience it, but that’s considered to be one of the best periods in monetary and fiscal politics. Everything was going smoothly in the world, and the entire system crumbled when World War I started.
This led to governments printing more gold certificates than their reserves held, which made them prepared and ready for the war. But they weren’t ready for the consequences that came after. Suppressed inflation hits much harder when you postpone it because there’s no feedback about the damage that has been done.
We all experienced this during the pandemic. The massive hit of the virus stopped all trade, which led to the crash of the stock market. Then, the government decided to hand out checks to everyone to boost the economy. Whenever such a major crash happens, everyone becomes scared, and they don’t want to spend money on things that they don’t need.
Since we’re a consumerist culture, that means that the gears of the economy are put to a halt. The stimulus checks boosted the economy, which leads us to the problem of today. Currently, the inflation rate is at 8 percent, which means that it took two years for the issue of the extra money to hit us like a boomerang. Now, the only choice for investors is to buy gold until the entire market deflates from this massive bubble of fiat money.
What led us to this problem?
Ever since 1933, it was forbidden for citizens of the United States to own gold. That’s because the dollar was linked to gold, and the entire world was sending bullion to their treasuries and kept dollars as a reserve currency.
The United States was running on gold, while the rest of the world was running on dollars. However, the Federal Reserve got a bit greedy, and they decided to print more dollars compared to the precious metals they had in their reserves. This led to economic destabilizations, and when other countries started to notice, they wanted to get their gold back.
To stop all of the gold from leaving the borders and leaving the United States economically defenseless, Richard Nixon decided to completely sever the bond between the dollar and gold, which started the era of fiat currencies. If that didn’t happen, then private ownership would have been redundant as before.
All of the currencies in the world would have been as good as precious metals, and we wouldn’t be in this mess today. Some economists believe that after 1971, the entire world has entered a state of permanent inflation. That means that gold will move with it and take a crucial and permanent role as a portfolio asset since it’s the best store of value in existence.
Can we handle this crisis?
A lot of people are worried about whether we can handle the crisis that’s coming. In these types of scenarios, it’s important to note that this is not the first or the last crisis that we’re going to see in our lifetimes. Periods like these have happened throughout history, and they’ve been with us ever since the development of the financial markets.
However, it’s also important to remember that crises have always happened due to manipulation or currency debasements. Whenever people meddled with the distribution or content of gold and silver, a total collapse was watched from the sidelines.
Of course, there were wars too, but technological advancements have made it easier for governments to create money out of thin air. You can go to Hartford gold group reviews and complaints and read more. In the 70s, the Fed had to run a printing press in order to make money. Now, billions of dollars can be created with the click of a button.
How does gold help?
For the average gold investor, this pending financial collapse is like the rainy day that they have been expecting. Since they’ve got an umbrella, even a downpour will not make much difference from a regular drizzle.
The only people that should be worried are the ones who don’t have enough gold to help them through this period. The only thing that’s different between this crisis and the previous ones is the circumstances and the timeline. There are problems from 1971, 2001, 2008, and 2020 that haven’t been addressed. This means that the punch we get from inflation is going to hurt a lot more.
The entire fuss around gold is that it’s indestructible, universal, eternal, and mystical in its appeal. Whenever we want to say that something is incredibly valuable, we compare it to gold. For more than 10 000 years, people have wanted to find a magic formula that will be able to turn other common metals into gold.
We’ve succeeded in cloning animals, and yet we’re nowhere near finding an alchemist’s stone. The dollar, euro, and yen don’t shine bright when there’s a financial storm, which is why there’s no point in arguing that you don’t need them in your portfolio.
How much gold is enough?
Experts recommend keeping 15 percent of your net worth in pure gold. That might seem like a large percentage if you’re used to stocks, bonds, and real estate, but it’s definitely worth the spot. When times get rough, you’re going to wish that you put more money into the sector.
Ultimately, the point of ownership in a gold IRA is based on a single concept. Ever since leaving the gold standard, the value of the money that’s in circulation is in the hands of the government or the central bankers.
That’s a handful of people that are controlling the future of the world and directing labor towards fulfilling specific goals. Even if they had the best interests in mind, their policies don’t work as well in reality. Precious metals don’t have a master, and they’ve had a prudent diversification since they’re shaped into bullion and coins. Get some and sail the waters of the future without a worry.