Could Gold Re-Monetize?

For thousands of years of human history, humans have naturally gravitated to gold and silver as money. Is paper losing ground? 

Money is both a store of wealth and a medium of exchange. For something to be considered money, it must have certain characteristics. Scarcity, desirability, divisibility, universal recognizability and acceptance, portability, durability. Gold and silver have almost magically fulfilled those requirements in unconnected cultures in diverse times and places all throughout history. No other substance lends itself so naturally to these purposes. 

Is it hubris to think that paper and digital representations of money can permanently replace what has worked for hundred of centuries? Maybe so… 

Consider that since the US weaponized the dollar and shut out Russia and other nations with sanctions, that negates an important and vital characteristic of money – universal acceptability. If a significant portion of the globe is shut out of the dollar, yet they still have oil and goods and a desire to engage in global commerce, they will still do so, but will trade in something else. 

Consider Russia’s recent announcement that they will use their recent oil windfalls to acquire more gold. Russia selling oil for gold in September – The Jerusalem Post (jpost.com)  And not just by a little. Their purchases of gold will go from 1 billion rubles a day to 8 billion rubles a day. This is largely enabled by massive profit increases from oil sales. 

What are they doing with this gold? It looks like they are using it to pay Chinese suppliers.  

The Chinese are more than happy to accept payment in gold for manufactured goods. 

Gold has become a medium of exchange between Russia, the oil markets and China. 

Will this trend grow? Is gold retaking its place as a global currency? That remains to be seen, but it recently reached yet another all-time high last week at $2580 an ounce.  

The dollar used to capture trade deals like this. Yes, even between foreign countries that were not even interacting with the US. That universal acceptance and desirability was part of what spurred so much demand for US dollars. The dollar’s status as THE currency of international business allowed us to print so much currency with little to no inflation here at home to show for it. We exported all our inflation. In fact, dollars have been our chief export for over 5 decades, since Nixon closed the gold window in the 1970’s. 

If that comes to an end, you should look at the price of gold not so much as gold going HIGHER, but the reality of the dollar going LOWER.  

Are you ready to preserve your purchasing power with gold? If this trend DOES continue, this would be a power move to make right now. Call us while you can still get a good amount of precious metals for your diminishing dollars!