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Why Gold is Still the World’s Number One Currency

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Everyone may be obsessed with the “new,” but almost everything they do relies on the “old” and time-tested.

There’s a word for this: “neomania.” People have a tendency to assume that new is better; often mistaking fashionable trends with innovation. Do new things replace the old? Sometimes, yes. But if you look around, you’ll notice that most of the things you use are ancient technologies that go back thousands of years.

You need chairs and tables (roughly 5,000 years old); you use silverware to eat (4,500 years old); you wear shoes (3,600 years old); you need your tea (4,755 years old) or coffee (possibly 6,000 years old) to function; and to wind down, you might drink beer (5,918 years old) or wine (6,118 years old); etc. The car has only been around for 132 years. Sure, we now have electric cars, but that’s still an upgrade to the basic technology of the car.

I think you get the point: things that have withstood the test of time have proven their robustness.

Now let’s talk about money. When most of us think “money,” we think “paper money” (also called fiat currency). But long before the world used fiat currency, gold was the world’s currency of choice.

In this modern age, we don’t walk around with gold coins in our pockets, nor do we buy things on with gold on a daily basis. But gold is still actively trading on the exchanges--and we tend to run to gold when our financial system crashes.

Why is that? Why do we still run to a 2,718-year-old currency--one that is generally perceived to be out of use--every time we run into trouble? The answer is obvious: gold has proven its robustness over millenia; enough to be considered one of the most reliable safe haven currencies in the world.

We all know that the world is an uncertain place, yet we try to pretend that it’s not. Many people are more reactive than proactive, holding off on gold until the very last minute.

Here’s what typically happens:

Inflation begins to skyrocket? Run to gold.

The stock market crashes? Run to gold.

Large banks fail? Run to gold.

The dollar sinks? Run to Bitcoin or gold. But if Bitcoin plunges? Forget the dollar and run to gold.

Geopolitical uncertainty causes one to stress about assets? Run to gold.

Why “run” to gold when it’s too late? Why not just buy gold and hold it?

After all, if you agree that the world is rife with uncertainties, what are the chances that you’ll end up running to it as a safe haven at some point?

Gold is a “hard asset”: a computer glitch or “fat finger error” won’t make it disappear; it’s easy to store, and you can physically account for it because it’s tangible.

Still not a believer? Bear in mind that many people have resurrected entire businesses using gold during times of economic recession. You can’t do that with paper money.

Central banks will just print more money, meaning the purchasing power of paper money just sinks even lower. You can’t save your business or personal wealth with paper money alone.

China and India get it: to them, “investment” has been embedded into “culture.” We Americans, being only 242 years old, well, we’re getting there...slowly.

We should be paying attention to China’s and India’s appetite for gold, to notice that it is increasing. China is the world’s largest consumer; India is second.

Have you thought about why their appetite for gold is increasing? Take a look at the world around you (geopolitical tensions), and take a look at the US Dollar--the Petrodollar (the world’s currency)--and how it’s value is powered by our national economy which is under tremendous strains of debt. Many nations “want out” of the US dollar.

And what do people do when they are losing faith in a currency? You got it. Run to gold.

And this is why gold is still--and perhaps always will be--the world’s number one “tangible” currency.


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All articles are provided as a third party analysis and do not necessarily reflect the explicit views of GSI Exchange and should not be construed as financial advice.

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