US Dollar Devalues by 99% Vs Gold in 100 Years as Gold Price Crosses $2,067
The comments below are an edited and abridged synopsis of an article by Jan Nieuwenhuijs
A world reserve currency is supposed to be superior in storing value but, through boundless money-printing, the US dollar hasn’t been able to compete with gold. In 1932, gold was $20.67 per ounce; last week, it crossed $2,067.
That’s a 99% decline in value of the dollar against gold. Other reserve currencies, such as the British pound and Japanese yen, have done even worse. The yen has lost 99.98% of its value against gold in 100 years.
Gold doesn’t yield, if you don’t lend it, but it’s the only financial asset without counterparty risk. After the gold standard was abandoned in 1971, global central banks held onto their gold, despite its price reaching all-time highs. If gold rises, central banks are more inclined to hoard gold (good money) and spend currency that declines in value (bad money).
Gold’s purchasing power is remarkably stable. As it rises, gold compensates for fiat currencies being devalued versus goods and services—gold goes up by the same amount that consumer prices rise. Gold tends to increase in purchasing power, which might reveal that inflation numbers are too low. Another theory is that sound money—gold—should rise in purchasing power as technological development makes goods increasingly cheaper to produce.
Gold will continue to rise and will be part of a new, international monetary system. Central banks will debase their currencies more in the future, because the world has never been in so much debt. Debt levels are unsustainable and can only be lowered through debt relief or inflation. The Fed and other central banks are choosing inflation.
Lowering the debt burden through inflation is the most expedient, least well-understood, and most common way of restructuring debts. It has been done many times before in history, and will be done again.
Owning physical gold stored outside the banking system offers protection of your purchasing power from currency debasement.