Gold is money today only for central banks. Most of the world’s money is fiat money, i.e. paper money with no link to physical reserves. If faith in a nation’s paper currency is lost, this currency will hold no value any more.
As investors look suspiciously at the currencies fluctuations in a worldwide recession time, gold is often seen as the device for hedging risk. The precious metal still has attractions for those who fear for the economic health of their country.
According to definition, “money is anything that is generally accepted in payment for goods and services and in repayment of debts. The main uses of money are as a medium of exchange, a unit of account, and a store of value”.
Starting from the above definition, a non-monetary commodity as gold can serve better than money as a store of value. In the modern world almost every nation has its own currency. In times of hyperinflation, the local currency may be rejected in favor of the dollar or another foreign currency while gold has maintained its purchasing power in spite of the efforts of central banks to replace it with fiat paper money out of political reasons. In times of recession, a reliable standard is needed. This reliable standard is called GOLD. We are witnessing hard times for the paper money system. As a result, gold is going up in price, is getting proper recognition. Gold is not money, but it has most of the desirable properties of money. It used to be money in the past and it may become money once again.
Bill Clinton shocked everybody when he suggested “the financial crisis would never have happened if the dollar was still a non-monetary commodity as gold can serve better than money as a store of value to gold.” He might be right; it’s time to bet heavily on gold. According to financial analysts, people should absolutely have some of their wealth in gold to protect themselves from today’s financial uncertainties.
Learn from professionals how investing in GoldMoney can help you in times of recession.
