What Type Of Gold Should I Buy – In my opinion yes. 2019 is the year of buying gold. I have added some positions in gold. Gold is something that has always been on my watch list for quite some time. I wanted a wallet with a good mix of gold and bitcoin. The idea is to protect against the devaluation of our currency, political uncertainty, a global recession, and the potential collapse of our monetary system. Collapse? Is this last point not so far fetched? We will see later in this article.
If you want to delve deeper into understanding gold, there are two people to go with, Mike Maloney and Peter Schiff. This isn’t my stuff, I’m just summarizing the information I’ve collected. So check out their YouTube videos
What Type Of Gold Should I Buy
To get started, we must first understand the difference between currency and money, and the seven stages of an empire. This is to help set the context and framework for the content of this article.
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What is the basic difference between currency and money? The similarities between currency and money are that they can be used as a medium of exchange, unit of account, movable, permanent, interchangeable, and divisible. That’s as far as the similarities go.
The main difference that separates money from currency is that money must have a stored value. Our $10 bills in our wallet are coins, not cash. There is no reserve for value. This is because central banks can print money through quantitative easing. The more money they print, the more worthless our paper money becomes.
For example, the purchasing power of the US dollar has lost its value by 95% since 1913. Unlike gold, Egypt first started using gold 5,000 years ago. The same gold that the Egyptians used to buy things can still be used to this day. We don’t have to think too much about whether gold has managed to maintain its value. What do you think about buying a $100 bill in the next 10 years? Is the US dollar a store of value? So this is the first part. Money should have a store of value.
The second part deals with the seven stages of the empire. Mike Maloney describes the seven stages of empire as a social pendulum that swings from qualitative to quantitative money. This happened in every empire in history thousands and thousands of years ago. This is how things go.
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The first stage: the state initially starts with good money which is either gold or silver or a currency backed by gold or silver. This is good money. This is good money at the other end of the pendulum.
The second stage: As the country developed and prospered, it began to expand the layers of public works and social programs. In order to gain votes and popularity, the state begins to take on more economic burdens and debts.
The third stage: As the country got richer, so did its political influence. Now it begins to transfer a large part of its budget to strengthening its defense and military position.
Phase 4: Military expansion leads to global tensions and insecurity. Soon, it began to use its military developments and war broke out between the nations. Significantly increase war funding expenditures.
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Fifth stage: The war creates a huge demand for financing and the country begins to devalue its good money (gold and silver) in exchange for coins that can be produced or made infinitely. This is the stage of the coin falling on the stage. The pendulum has now swung to the other side, the ‘quantum of the coin’.
Stage 6: Excessive growth in the supply of currencies leads to a loss of purchasing power. Prices for basic necessities are starting to rise unsustainably. Once the tipping point is reached, people begin to lose faith in the currency, monetary system, and government.
Stage 7: Everyone starts selling their coins for good money (gold and silver). The coin collapses because no one realizes it has value anymore. The currency crisis leads to an increase in the value of gold and silver.
You will see these seven stages repeated over and over again, even in recent history. Give it a try and see if you connect with the seven stages of the empire as we go along.
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Yes. Now that we know the difference between coin and money and how empires rise and fall as they move from coin to coin, let’s delve into the history of gold. Only if we understand the history of gold will we see the importance of gold in the future.
Gold has been around for 5,000 years. It all started in Egypt when they used gold and silver as commodities. But it was of strange size and purity. Each unit has different values and trading was difficult. This was before the coinage process was invented.
Gold only became money when it was minted in Lydia around 700 BC. This made gold exchangeable. All gold has the same weight and the same value. Goods and services can now be valued in gold.
The concept of using gold coins as money spread in the free markets of Athens. Athens has a free market system that allows them to rise to the top of their civilization. This is evidenced by the unusual architecture of temples and buildings. But what went wrong? Why did Athens fall?
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The reason is always too much greed and too much war. They fought with Sparta as they tried to expand their empire. Athena has already passed from Stage 1 to Stage 4 of the “Seven Stages of Empires”. Gold is used as money, good money. Then they began to expand aggressively and their empire grew into a prosperous one. To expand their influence, they went to war with Sparta which created a huge gap in military spending.
Soldiers miles away are paid in gold and the supply of gold begins to leave the city. This leads to a deflationary spiral as less gold is traded in Athens. So they began devaluing the money to finance the war.
Gold coins are smelted with other metals to produce large numbers of copper coins. Prices of goods and services can now be exchanged for gold, silver or copper. Soon, people began saving and storing gold while only spending copper. Copper is the “amount of money” created as currency in this case. gold and silver
Why is that? This is due to Gresham’slaw, a monetary principle that says “bad money begets good”. If there are two types of commodity money in circulation, people will keep the valuable money and spend the less valuable.
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For the first time in Athens, gold and silver were valued with copper. In the past, the prices of goods and services were measured directly by the weight of gold. As more gold was minted in copper coins in Athens, commodity prices began to rise, leading to hyperinflation and the decline of the Athenian Empire.
When you remember the seven stages of empires, you will see how the pendulum swings from qualitative money to quantitative money. They started with gold and went to war with Sparta as they expanded their empire. Gold decomposes into copper coins, which eventually become worthless when too much of it is minted. As a result, this led to the collapse of the Athenian Empire from its heyday.
Let’s use another, more recent example. Germany, like most countries, began with the classic gold standard. This occurs when a country’s money supply is related, in whole or in part, to the amount of physical gold in the reserves of the central bank. When World War I broke out, they spent a huge amount of spending to fund the war. Thus, Germany departed from the gold standard and the German mark became irreplaceable for gold and silver.
They began to pressure Mark to finance their ongoing war. The number of brands in circulation quadrupled during the war, but prices have not yet risen. This is because people were saving in times of uncertainty and the signs in circulation were not spent.
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However, when the war ended, consumer optimism increased and people started spending every mark that was saved. This is when the prices of goods and services rose sharply to keep up with inflation. The exchange rate was initially 100 marks per ounce of gold, but at the end of the war, it went from 1000 marks to 2000 marks per ounce.
The savers who were hoarding their money found themselves buying fewer goods. By 1919, Mark’s purchasing power had fallen by 90% due to excessive printing of money. In 1923, German paper mills were printing 45,000,000 Marks a day! They began to print more and more money to finance the damage caused by the war. Soon enough, hyperinflation occurred and the oversupply of the brand rendered the coin worthless. He. She
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