E Gold Nuggets And Silver Bullets

KIt is very difficult to let go of someone - or something - when we have invested so much time and energy in it. It is even harder when we have invested so much of ourselves in it; when the outcome is not what we expected; when our reputation is at stake.

In this particular case, that something is gold and silver.

The emotional proclamations just a few weeks ago seemed quite strong, almost being religious in their fervor. But after two thrusts of the dagger to the heart, the explanations afterwards seem a bit hollow.

To be sure, some of the prior adamancy is still there, but it seems more of a stubborn refusal to accept defeat, rather than a meaningful rallying cry.

It's not as simple as being right or wrong, though. Morsels of truth find their way into various analyses of gold or silver. But the waters are still muddied for most of those with any interest in gold or silver. Let's see if we can bring some clarity to the "river of dreams".

GOLD NUGGETS

  1. Gold is real money  Money has three specific characteristics: medium of exchange, a measure of value, store of value. A medium of exchange needs to be portable, which gold certainly is. And gold is and has been easily incorporated into recognizable forms and amounts for use within various standards of weight and measure. But what sets gold apart from every other item that has been used as money is its evidence as a store of value.
  2. Paper currencies are substitutes for gold/real money. The first gold coins appeared around 560 B.C. Over time it became a practice to store larger amounts of gold in warehouses.  Paper receipts were issued certifying that the gold was on deposit. These receipts were negotiable instruments of trade and commerce which could be signed over to others. They were not actual currency but are a presumed forerunner to our modern checking system.
  3. Gold is not an investment When gold is characterized as an investment, the incorrect assumption leads to unexpected results regardless of the logic. If the basic premise is incorrect, even the best, most technically perfect logic will not lead to results that are consistent.
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Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN'T, AND WHO'S RESPONSIBLE FOR IT and  more

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