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Money & Currency

Money and Currency are similar, but they are not the same, we are led to believe they are the same – for a reason.

Money and Currency, both have several shared properties:

  • Medium of Exchange
  • A unit of account
  • Portable
  • Durable
  • Divisibe
  • Fungible (Interchangeable)

Only money is a store of value.

What this means is that real (intrinsic) money over time maintains it’s value, whereas fiat currencies lose value, eventually returning to their true value which is zero, after all its only a piece of paper, and how much is paper actually worth?

As an example of a fiat currency losing its value over time, consider the US Federal Reserve $1 banknote, which has been printed by the FED since its inception 100 years ago in 1913.

https://i2.wp.com/www.freedomsphoenix.com/Uploads/004/Graph/fed_purchase_thumb.jpg?resize=602%2C433

Now compare this with the performance of gold (in US$) over the last 40 years:

10 year gold price per ounce

From this and the previous graph it is very clear to see that over time a fiat currency will lose value, whereas a commodity like gold will either maintain or increase its relative value. By some estimates gold may be soon in a postion where its value may increase vastly, possibly by 30 or even 50 times (3,000 to 5,000%) to compensate for the collapse of fiat currencies.

The recent dip in the price of gold is more down to speculation in what is referred to as “paper gold” than in a drop of the value of the metal. This is best described as a claim for gold, as opposed to actual holdings of gold as a physical commodity. It is a form of price manipulation, which can only be performed on claims for gold, not physical gold. This practice has led to massive leveraging, whereby there are more than 100 claims for each unit of gold. If those claims are ever demanded the bullion owners cannot possibly deliver.

 We have mentioned elsewhere on this site a belief that Gold should be re-constituted as the Worlds reserve currency, replacing the fiat (debt) based US dollar, along with other precious metals such as Silver, Platinum, Palladium, Rhodium, Indium, Ruthenium and to a lesser extent any metal, such as Iron, Tin, Copper, Zinc, Aluminium, Nickel and many others including the Rare Earths. All metals are traded on the commodities markets, and at any given time, have what is known as a SPOT price, below is a link to a website that tracks the SPOT price of all metals:

Metal SPOT Prices

The main reasons for suggesting GOLD as the Worlds Reserve currency is it relative scarcity, and the fact that mankind throughout history has always coveted gold above any other metal. However, from an economic perspective the main attraction of gold is the fact that it is almost inflation proof, even over the span of many generations. As pointed out byG. Edward Griffin, an ounce of gold in Roman times (circa 2,000 years ago), would buy a quality toga, shoes and a good belt, today an ounce of gold (about £765.00) would buy a good quality suit, a fine pair of shoes and a good belt, it has been almost unaffected by inflation. Compare and contrast that with something like a house in  the Southeast of England, back in the 1960′s a 3-bedroom semi might have cost a few thousand pounds, but may now cost between 1/4 and 1/2 a million pounds or more, all in just 50 years, and ALL due to inflation. As explained before, inflation over time is just a reduction of buying power. Ignoring the fact we operate on fiat currency, what was worth a pound in the 1970′s (such as a £1 coin) is now worth in real terms about 6 pence, a 94% reduction in buying power in just 40 years.

 Find gold price charts provided by goldprice.org

Intrinsic & Fiat notes

The following image shows a pre-1930 US dollar note, which highlights the fact that it is a note backed by a commodity of value, in this case silver: The first highlight states “silver certificate” The second highlight states “This certifies that there is on deposit in the treasury of” The third highlight states “In silver …

Gold, Silver & Precious Metals

We have mentioned elsewhere on this site a belief that Gold should be re-constituted as the Worlds reserve currency, replacing the fiat (debt) based US dollar, along with other precious metals such as Silver, Platinum, Palladium, Rhodium, Indium, Ruthenium and to a lesser extent any metal, such as Iron, Tin, Copper, Zinc, Aluminium, Nickel and …

Worldwide Gold Reserves

Gold – the chemical element Au with atomic number 79 – “has never been worth zero”. King Tutankhamen and the Incas understood the value and scarcity of gold and used it as a symbol of wealth and power. Nothing has changed since. Between 1816 and 1931, the pound was linked to the value of gold, …

What does a trillion dollars look like?

Ever wonder what a trillion dollars might look like? Thanks to heroic efforts of Congressman Ron Paul, former Congressman Alan Grayson and Congressman Bernie Sanders to audit the Federal Reserve, we now know that the Federal Reserve secretly lent out 26 trillion dollars’ worth of American money from 2007 to 2010 — much of it …

Liquidity & Solvency

Liquidity and Solvency Liquidity Liquidity is best described as an organisation that has the ability to meet its financial commitments, but may have cash flow issues. This means in accounting terms the assets of the organisation exceed its liabilities. An illiquid organisation may not be able to immediately meet its financial obligations, but has sufficient …

Promissary Notes

A Promissory Note is a written, signed and dated two-party negotiable instrument containing an unconditional promise by the maker (or obligor, payor, promisor) to pay a definite sum of money to a payee (or promisee, holder) on demand or at a specified future date. It is often used as a means to borrow funds or take out a …

Bonds

To an investor just starting out, bonds can be more than a little intimidating. First, there are many different types of bonds – you’ve got corporate bonds, retail bonds, government bonds or ‘gilts’ and index-linked bonds to name but a few. And then there’s the jargon – what on earth is a coupon when it’s …

The real truth about Money

The real truth – We own nothing Because we only have fiat money, we can only discharge our debts, not extinguish them. A monetary note is only a promise to pay, not a means of payment, in fact nothing more than an IOU. If we had intrinsic money, backed by gold or silver, or we …

It can’t end well

In 2008 the global economy crashed; most mainstream media, economists and politicians didn’t see it coming. A number of ‘alternative’ media and economists predicted the crash but were vilified and scorned, they proved to be right. Now the mainstream media, economists and politicians are constantly trying to talk up a recovery, highlighting every possible positive. …

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