The greed driven sub prime mortgage market collapse has triggered fears of failure for several hundred banks and mortgage brokerages, all of which imperils the twin federal programs that guarantee mortgages as their base of investment. The Bush administration, faced with a looming crisis chose to bail out the “FannieMae” and “Freddie Mac” funds, to the tune of at least $390 billion, fresh printed for the occasion.
Meanwhile, the U.S. dollars in which most of the world’s trade is conducted, has lost something over a third of its value in the past couple of years.
This loss of value means that the price of everything goes up, while your wages remain the same, and you lose, as in the prices of food and fuel. To avoid these losses people with serious money flee from cash and banks in favor of speculating in commodities, which helps drive up prices even further. Oil and food are the major targets of these panic funds, but almost any hard investment is a refuge for loose capital.
But until you take possession of whatever it is you buy, it’s just paper in the event of a financial firestorm. Oil is particularly difficult to store, (barrels stacked twelve high in your backyard) but grains and other foodstuffs are subject to spoilage losses over time.
Which brings us to gold: the ultimate commodity and perfect measure of value in a convenient, portable form.
The secret of gold as a currency of exchange is simply one of basic chemistry. Of all the elements on earth, only gold does not react to oxygen. It does not burn or tarnish. It withstands all “acid tests” and “rings true” when dropped on a hard surface. When heated to melt, gold turns an off-apricot color unlike any other metal and when cooled it still gleams clean, without soot or discoloration. This means gold cannot be imitated or counterfeited, and is therefore a trusted coinage around the world.
And as the base currency/commodity gold is relatively inflation proof. An ounce of gold is worth some number of kilos of rice, or barrels of oil or loaves of bread or carats of Rubies, depending on what you are buying. The rations remain fairly stable, while print money comes an goes, dependent on various factors of political and trade relations.
With the above two paragraphs in mind you know all you need to know to decide whether or not to invest in the metal. The next choice is what form to buy.
Coinage is the most convenient and should be priced at less than 10 percent above daily “spot” price. All nationally issued coins must be .999 pure, so your choice of Chinese pandas, Canadian maple leaf or, the perennial favorite, the British Sovereign, but even native coinage is acceptable if tested pure.
If you have cash to store, gold is a good bet in perilous times and it travels well, if things really get out of hand.
Travus T. Hipp” is a 40-year veteran radio commentator with six stations in California carrying his daily version of the news and opinions. "The Poor Hippy’s Paul Harvey,” Travus is a member of the Nevada Broadcasters Hall of Fame, but unemployable in the Silver State due to his eclectic political views.