Gold and silver are the two most widely used precious metals in the world today, despite not having any industrial uses at all. That’s because their value isn’t dependent on how much electricity you can create from them, but rather how much people trust that they have intrinsic value. But why should you buy gold and silver? As it turns out, there are plenty of reasons to choose precious metals over fiat currency. Read more to find out why gold and silver might be right for you too!
What is Money?
Money is simply a medium of exchange that allows goods and services to be exchanged for one another. Money performs three important functions: It serves as a means of storing value, it helps us measure value (in terms of price), and it facilitates exchange. The word money comes from ancient Greece, where coins were used in everyday transactions.
History of Money
The history of money dates back more than 5,000 years. Money represents a universal phenomenon; it is found in almost every society in human history. There are at least three major functions of money: as a medium of exchange, as a store of value and as an instrument for deferred payment. Gold and silver have been used throughout history for all these purposes.
The Role of Fiat Currency in Society
Fiat currency is a form of currency that a government has declared to be legal tender, but it is not backed by a physical commodity. Instead, its value is derived from the relationship between supply and demand rather than the value of a material that it represents. Fiat money can be printed in excess, leading to devaluation over time. The devaluation of currency is a hidden tax on all citizens.
Fiat Currencies - What They Are and How They Work
Fiat currency is, simply put, money that isn’t backed by a physical commodity. Instead, it’s backed by government regulation (i.e., the full faith of the U.S. government) or is technically a legal tender that must be accepted as payment for debts and taxes within a country’s borders.
It can come in various forms, including paper money printed by a central bank, digital cash in a bank account or lines of credit, coins issued by some type of minting authority or central bank, or even virtual currencies like bitcoin.
Some fiat currencies can have minimum reserve requirements while others have no reserves at all. A fiat currency also has no intrinsic value - there is nothing inherent about it that makes it any more useful than another type of paper note from another country (or Bitcoin). That means its value instead comes from how much someone else is willing to pay for it at any given time.
The Dangers of Fiat Currency
The world economy is built on a system of fiat currency, which simply means that it’s paper money backed by nothing but faith. In times of crisis, we see what happens when people no longer have faith in a paper currency—they begin to convert it into something that is harder to replicate or steal (e.g., gold or silver). If you own gold and silver, you can sleep soundly knowing that your wealth will hold its value (or even increase) even during a financial crisis.
Preserving your wealth with sound money
Gold isn’t just a nice shiny metal, it is also a tangible asset that can help preserve your wealth during times of financial uncertainty. Learn how to ensure you have some sound money in your portfolio.
You may not be able to rely on conventional investments like stocks if things get really bad - there could be even more currency devaluation than what we have seen over the past few years as central banks are running out of options.
No one knows for sure what lies ahead but by storing 10-20% of your assets in gold and silver bullion will give you a greater peace of mind knowing at least part of your wealth is safe from further devaluation.