What You Have in Common with King Nebuchadnezzar
Jeff Clark, August 13th, 2009
Page 1
By Jeff Clark, Editor, Casey's Gold & Resource Report
"There's no reason to invest in gold," said the finance editor of a major newspaper interviewing me. "If gold goes up because of inflation, then so does everything else, so why buy it? It's not really a good investment."
She was serious. Yes, she is a finance writer. And yes, it's a newspaper you've heard of.
I was so dumbfounded that I must have sounded like an infant struggling to form its first words when I attempted to counter this inane line of thinking. Tell me you're a deflationist, tell me the Fed will rescue us, tell me foreigners will keep buying our debt - but don't tell me that gold serves no purpose!
I tried to point out the exploding monetary base, the soaring debt, the failing economy - but it was readily apparent her mind was made up. The interview was over and she hung up.
It may sound vengeful, but I'm tempted to keep a list of people whom I could remind someday of their negative comments about gold. I'd put "Betsy" at the top. I probably would chicken out in the end, but right now it's a wonderful reminder of why we're not in a bull market mania yet. Besides, I think the odds are stacked in my favor that she'll someday be buying insanely inflated gold stocks from me. I'll have to thank her then.
But I can address Betsy's misunderstanding now, because part of what she said is correct: gold is not an investment. Gold's primary purpose is to preserve your purchasing power. Whether it be roaring inflation, or dollar debasement, or economic upheaval, or out-of-control government spending, it has been the absolute best form of protection throughout the history of mankind. And I can prove it.
Let's trace what an ounce of gold or silver - true money - has been able to purchase at various periods in history, and how it compares to today.
1979: Gold's average price that year was $306.68. This bought an average-priced full size bed.
►30 years later, $950 would still buy you a full size bed.
1963: A gallon of gasoline in America sold for 31 cents. This meant that 3 silver dimes could buy a gallon of gasoline. The total weight of silver in 3 silver dimes is .217 of an ounce.
►Today, 3 silver dimes would buy a gallon of gasoline anywhere in the U.S.
600 AD: In the Middle East, a chicken at the time of Mohammad would cost a family one silver Dirham (3 grams).
►Today, 1,400 years later, a chicken in the Middle East would still cost a family one silver Dirham.
