Wednesday, December 07, 2005

Don't Tell Anybody, but Gold is Making a Comeback

Have you noticed? Gold has passed over the bar of $500 an ounce. According to an article at the Financial Times, some big buyer in Japan is the cause of it. Other speculators, central bankers and investors will probably start to sit up and take notice soon, if they haven't already.

Just keep in mind that these spikes are just that -- spikes. The real figure to pay attention to is the underlying tendency. Ever since we abandoned the gold standard (officially back in the 70's, but the early 1900's is when it began), gold has risen to an approximate real exchange value with regard to the various fiat (unstandardized) currencies that are "floating" around (pardon the pun.) This rise gives us a good idea of how much purchasing power all of our paper money has lost over the last century. For example, gold has gone from around $20 an ounce to $500. Our dollar has dropped a corresponding 96%, from $1.00 to about $.04 of 1900 purchasing power.

It's enough to want to make you scream. What ARE they THINKING, over there at the Fed? They are supposed to be minding the banks and preserving our monetary system, and they are letting both go to hell in a handbasket.

I've always been a believer that you may be able to take the gold out of the standard, but you can't take the standard out of gold.


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