Why It Pays To Invest In Gold

By Bob Schwartz, California Gold Nugget Prospector

There is a giant vacuum scooping up most of your financial wealth and you dont even hear the noise. Quite simply, you are going broke. The US currency was designed to be, literally, as good as gold, from the very beginning. The Constitution states that our currency was meant to be only gold and silver to prevent exactly what is been happening to the US dollar right now.

When the gold standard was set in place the price of gold remained a constant $20.65 per ounce and fluctuated only one penny over the years 1833 to 1890. From the years 1891 to 1930 the price of gold was still pretty stable. The low was $20.58 and the high $21.32 per ounce. This means that for the period of 1833 through 1930, a total of 97 years, the price for 1 ounce of gold changed only 74 in US dollars. An interesting fact is that gold hit an all-time low $17.06 during the Depression year of 1931.

Many people believe that the 1931 goal was influenced by the newly formed Federal Reserve which kept the money supply very tight. Some believe that it was the Great Depression that created the Federal Reserve. Actually, the Federal Reserve was created in 1913, well before the Great Depression. Since the Fed’s creation, the US has been slowly going off the gold standard. On August 15, 1971, President Nixon announced that the United States would no longer redeem US currency for gold. This was actually the final step for the US abandoning the gold standard.

Since going off the gold standard the value of the US dollar has been steadily and continuously declining. While the actual price of gold remained fairly consistent, one has to look at the value of the dollar. Since going off the gold standard, the dollar has declined.

Recently the price of gold hit all time highs at over $1400 an ounce. Since then the rate has dropped below $1400 but the Federal Reserves latest scheme to buy 600 trillion of the Treasury’s debt, it seems certain that gold is about to reach a new high once again.


Now here’s an interesting fact: In 1964, a quarter would buy you a gallon of gas. Quarters made in 1964 and earlier were roughly 90% silver and 10% copper. Today, with gas going for about three dollars a gallon, the silver in that pre-1964 quarter would buy over a gallon and a half worth of gas. So you can see, it’s not that the price of silver has gone up so much. It’s the fact that the dollar has been tumbling that makes this possible.

There are many out there that are saying this is a gold and silver bubble and it’s about to bust.

The uncontrolled spending here in California by the state government, as well as the Federal government, indicates the dollar value will continually erode, at least in the foreseeable future.

It takes about 5 1/2 pre-1964 quarters to make up 1 ounce of silver. In my example above you can see that the price of gold and silver actually remains quite constant, while the paper currencies that are not tried to gold and silver have actually declined. One can look to the European countries to see the crisis that’s happening with the Euro and individual currencies.

Today the current country in economic distress is Ireland, a few weeks ago it was Greece, and people believe Spain is in the same boat.

This overspending and debt creation has been driving the purchasing power of the dollar down. This is exactly what the founders of the Constitution warned us about and foresaw to prevent by putting us on a gold standard to back our currency. The current $600 trillion Treasury note debt purchase by the Federal Reserve, is just a tax on all US citizens. The government is taking money from each and every citizen by pushing down the value of the dollar. The vast majority of citizens don’t realize this is a tax; in reality that’s exactly what it is.

If you listen to the government, you’ll hear there is no inflation. Go to the grocery store and look at prices for basic staples (milk, fresh vegetables, cheese); they’ve all gone way up. Even though ones salary has been pretty consistent, youre able to purchase much less and have much less disposable income. The concern is not the fact that these commodities are going up; it is that the dollar value is going down.

Investor portfolios should include gold investment in order to offset the decline in the dollars purchasing power.

The majority of the worlds gold mining results in fine gold dust and natural gold nuggets are rare. Everyone should have some investments in gold.

My personal passion is weekend gold nugget hunting. The adventure of finding my own nuggets is a joy. Meeting many other prospectors has been educational and fun.

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