Why Gold Is Today’s Greatest Investment
In 1965, I began acquiring silver coins such as dimes, quarters, and half-dollars.
In 1965, the U.S. Mint began debasing our silver coins. Debasing means the Mint was diluting the silver content of our coins, mixing the coins with base metals, like copper and tin. After noticing the copper tinge to American coins, I would take my paper money, go to a bank and buy rolls of either dimes or quarters.
I’d unwrap them, inspecting each coin. If the coin did not have a copper tinge, I kept it. All the coins with copper tinge on the edge (the debased coins) I returned to the bank. Then I bought more rolls of coins and continued my search for real silver coins.
In 1971, President Richard Nixon (without the approval of Congress) took the U.S. dollar off the gold standard and changed the rules of money—not just for the United States, but also for the world.
This change was one in a series of changes leading to the financial crisis in 2007. In effect, this change allowed the United States to print almost unlimited amounts of money and create as much debt as it wanted.
The question on many of our minds is, can those in power solve our current economic crisis?
Many hope so, but again I say no.
How can the crisis be solved when the very people and organizations that created the crisis—and profit from it—are still in charge? The problem is that the crisis is not diminishing, as some would hope. It’s getting bigger.
In the 1980s, government bailouts were in the millions. By the 1990s, they were in the billions. And today, they are in the trillions.
One definition of crisis I like to use is “change that is screaming to occur.” I personally do not think our leaders will change.
The Dollar Is An “IOU”
When President Nixon took the U.S. dollar off the gold standard, the U.S. dollar became what I call: fake money.
This is because rather than be tied to real money—gold—it was tied to the “full faith and credit” of the United States.
Translation: it became a giant “IOU.”
Why would Nixon do this? Because the trade deficits between the US and other countries were growing too much. Because we were importing more than we were exporting goods. We were losing our gold.
To understand how taking the dollar off the gold standard turned the US dollar into fake money, you need only to look at this chart:
How does this happen? When a currency is not tied to real money, governments are able to print more and more money out of thin air. This leads to inflation, the devaluing of the purchasing power of that currency.
Look at this chart to see how the US government printing money out of thin air has impacted the dollars purchasing power.
This is nothing new. Countries from ancient Rome to Weimar Republic Germany to modern-day Zimbabwe have printed or debased money to the point of no return. This results in hyperinflation where money literally becomes worthless and people use it to create fires rather than to buy things.
Why save money when the government is printing money and reducing the interest rates to zero or below?
Decades ago, it was a different story… but today saving money is an obsolete idea because savers are losers.
Since 1971, the U.S. dollar has lost 95 percent of its purchasing power. Every time the Fed makes its moves—related to QE and ZIRP—my gold and silver go up in value.
Here’s a sobering thought: Never, in the history of the world, has fake, paper money, ever survived.
And neither, many believe, will the U.S. dollar.
In a few years, I expect there will be another global meeting and money will change. And all those dollars you’ve been saving up may be worthless.
Today, millions of people are calling for a return to the gold standard. In other words, they want to turn the clock back to pre-1971.
Saying it another way, some people want us to go back to the time when money was commodity money.
While it is possible that this might happen, it is not probable, and the pain of doing so would probably mean a massive collapse of the entire global economic system.
But rather than wait in hopes of turning back the clock, it is the position of the Rich Dad Company that it is time for ﬁnancial education.
Why I Buy Gold
Gold and silver are finite resources. The government can’t create more whenever they want to.
They are also true money, meaning they have intrinsic value and can be used to purchase other items that have value.
Currency, on the other hand, isn’t always valuable.
For example, take out your wallet and find the highest bill you have. Maybe it’s $5 or $100. You probably feel good having a little cash in your hands. But take away the promise of the government, and what do you have? A piece of paper. And that paper alone won’t buy you anything.
I do not own gold and silver to make money.
They are insurance, a hedge against the stupidity of the elites… and myself. I have insurance on my car, just in case someone hits me, or in case I hit someone else. Gold and silver serve a similar purpose.
All investments have risk, but real gold and silver have no risk. The price of gold and silver will go up and down—because the value of our fake money is going up and down.
When a person invests, let’s say in a stock or real estate, they expect an ROI, a return on investment because they are taking a risk. When a person saves money in a bank, they expect a rate of return in the form of interest, because saving money in banks is extremely risky, especially when elites are printing money.
When I purchase a gold or silver coin, I do not expect an ROI, a return on investment, because I am not taking a risk.
Gold and silver are what I call God’s money. Always remember, the price of gold or silver will go up or down because the value of our fake money is going up or down. Gold and silver are just gold and silver. Gold is freedom. Gold and silver will be here long after you and I, and the cockroaches are gone.
When I purchase real gold or silver, I purchase them forever. I never plan on selling. Just as Warren Buﬀett holds stocks forever, I will purchase gold and silver forever.
Editor, Rich Dad Poor Dad Daily