A quick and easy explanation of how and why you should protect your long term savings with real money, Gold!
Our interactive calculators use historical figures to compare how your different savings or investments would have performed against Gold over various time scales, to show your inflation adjusted purchasing power today.
Why should you own some Gold?
Gold is money. (A simplified history)
Gold is and has always been money, the early currencies were basically just a certificate that was provided as a proof of ownership of an amount of gold held in a vault in a bank. As people gained trust in these gold backed certificates they began to simply exchange and accept them for payment knowing they had the physical gold backing of the face value, which they could take possession of at any time.
The certificates (or notes) were backed by gold so were seen as being, as good as gold. Over time, the bankers abused this situation as they became aware that people were confident enough just using the notes and rarely exchanged them for the actual physical gold, so they started printing out notes that weren’t actually backed by any gold and started lending out these unbacked notes for small fee or interest, and that is basically how todays fractional reserve banking system was born (only a fraction of the currency or notes were backed by gold held in reserve). Today, there is no Gold backing the currency so there is no fraction of Gold held, the banks simply hold a fraction of the fiat currency in reserve, which is backed by various debt instruments such as Taxpayer backed bonds.
The printing of currency is inflation (inflating the monetary supply). The effect of this inflation is seen in the increased prices of everything, because it takes more of the devalued currency (fake money) to purchase the same item, the more they print, the higher the prices go, because all the currency in circulation becomes watered down or devalued. All countries inflate their currency but at different rates, therefore we see currencies continually exchanging for different amounts, you’ll be most aware of this when you go on holiday and compare the exchange rates.
Gold is money and always has been due to the fact there is only a finite amount on this planet, it can’t be faked and most of the easy to mine gold has already been recovered, it takes labour and time to extract from the ground and then needs to be processed. That is why it holds its value against fiat currencies which all devalue together against each other, because they are simply printed ink on paper, or more recently a keystroke on a digital ledger which takes zero effort to create any amount in seconds.
Next time you play Monopoly, let the banker create as much fake money as they want, and see how that game plays out.
Have you ever thought about Gold? Probably not, other than as jewellery, but gold has been a hedge against inflation for thousands of years and has seen many fiat currencies destroyed and disappear over that period, while all the time this real money has held its value and protected the wealth and savings of anyone that has held it.
Fiat means something that is done by force of authority.
A fiat currency is a means of payment that is intrinsically worthless as it is no longer backed by anything of value, such as precious metals. It is a forced method of payment by control of government under the legal tender laws. It’s purchasing power is determined by the government and central banks rather than free market economics.
Do you realise you are working hard, for the financial institutions?
Todays financial products are designed to be extremely complicated, most so-called financial experts don’t know how they really work so how is the average person expected to know? This is of course, part of the design to keep people in the dark and enable financial institutions to make huge profits. While the general public are bombarded with advertising telling them how important it is for them to keep depositing their hard earned ‘money’ into these saving and investment vehicles, because “they are there to help”, how many people really know what this service is costing them over possibly 30 years or more?
Once people become more aware that the sole intention of these financial institutions is to transfer as much of your wealth to them through commissions, referrals, fees, charges, penalties, interest payments, market manipulation and numerous other ways, then we soon realise they are not there to help us… But to help themselves at our expense.
Putting aside all the charges etc. that reduce your savings and retirement pension over time, how many people really take into account or consider the continual, unavoidable and worst destruction of your wealth on a daily basis… Inflation!
Inflation is designed to be indiscriminate, it doesn’t care if you’ve already paid income tax on your earnings or capital gains tax or any other tax, inflation will keep taxing you every day, month and year on all fiat currency investments or savings you have, including the ‘tax free shelters’ and will continue to destroy the purchasing power of those savings for as long as you hold them, and the longer you hold them the more you will lose.
Over thousands of years, untold fiat currencies have been debased due to the greed of those in power, returning them to their intrinsic value of zero and causing the downfall of many civilizations. While Gold has remained a store of wealth and real money throughout time, for those wise enough to hold it.
In January 1990 you would only have needed £6.50 to buy 1 gram of gold, but in January 2020 to buy the exact same gram of gold, you would have needed £38.50 because of how much the currency had been devalued during this time due to so much more of it being created out of thin air.
In 1990 the average salary was £13,677.00 which means one months salary, £1139.75 would have bought you approx. 175 grams of gold. In 2020 the average salary is £31,350.00 or £2,612.50 a month, yet the value of gold purchased for a months salary in 1990 would be valued today at approx. £8,044.00 (£46 per gram 31/10/2020).