As a starting place, his article provides us with materials to work with. His bias is anti-gold clearly. But his concern for the gold price is telling him something important is evident from his headline, and he then enters into a mea culpa as to why gold shouldn’t be considered a normal investment. Stevenson trots out the usual anti-gold-bug stuff, claiming gold being only of interest to the type or kind of individuals who stockpile tinned goods and Kalashnikovs. But he also lists some of the alleged disadvantages of gold, commonly believed in the investment management industry. Before doing this, we should set one thing straight.

What he didn’t mention is the common belief in investment management circles that platinum is no more money. We shall start with this problem, given its overriding importance, before addressing Stevenson’s other presumptions. The first step towards understanding the role of platinum is to recognize it is money. It still competes with today’s fiat currencies as money and predates them by many millennia. On the millennia there were many other types of money tried, and from silver apart, they have always failed. The gradual emergence of unbacked fiat currencies, particularly from the 1920s onwards, is the only monetary challenge to gold’s long history as money that has yet to fail.

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With today’s state-issued currencies unbacked by anything apart from public trustworthiness in their issuers’ standing up, the US buck has loosely replaced gold as the main currency against which all the other currencies are assessed. This is by design: since 1971 the US Treasury has embarked on the campaign to refuse gold’s role as money, promoting the buck as the reserve currency instead.

In days gone by, when a state-issued currency was convertible into silver openly, its money circulated as a good substitute. Today, no currency is convertible into silver, so silver does not circulate as money even indirectly. By insisting its state-issued currency can be used for tax payments, and therefore is the basis for everyone’s accounting, a nationwide federal government ensures it is the circulating medium. But another important function of money is really as a store of value, preserving it for the lapse of time taken between it being earned and lastly spent, and in this function state-issued currency fails. The continual lack of purchasing power in fiat currencies since gold backing was removed has rendered them unsuitable as a savings medium.

Only gold keeps sound-money characteristics and continues to be valued as a result in several populous nations. Actually, the naysayers who declare gold is no more money are just an extremely small proportion of the world’s people, given the general public all together in the advanced nations have no particular view on the matter.

It is a common error to assume neo-Keynesian economists speak for entire populations. For normal people, platinum will become an extremely important refuge, given the chance of the acceleration in financial inflation as the global world tips into tough economy. With government spending out of control already, governments are calming budget self-discipline further while guaranteeing better spending even. Consequently, the monetary quality which will be more valued is the ability to preserve the value which is upon this quality that gold markets are starting to place a premium.

James Turk Blog
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