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A market rolling in gold…
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We may observe that over the last century, dropping the gold standard has routinely led to hyperinflation of paper money.
GERMANY dropped the system whereby the Mark could be converted into gold in 1914, and printed a great number of banknotes to fund the First World War. The Treaty of Versailles imposed heavy war reparations on Germany and money was soon being printed and pumped into the economy flat out.
GREAT BRITAIN enjoyed a long period of monetary stability. Inflation started when the gold standard was dropped in 1914. The United Kingdom returned to it in 1925 and prices fell. Following the Great Depression of 1929, the British government decided to abandon gold parity in 1931. Since this decision, prices have continued to soar right up to the present day.
THE UNITED STATES abandoned the gold standard in 1971. The dollar, which was now only paper money with no solid backing, experienced a collapse in its purchasing power in relation to the cost of living. The dollar also plummeted in relation to gold, because the price of one ounce rose from $35 in 1971 to $1400 in 2010, this being a forty-fold increase !
IN FRANCE, the price of a sweet was 1 centime in 1965, 10 centimes in 1978, and 100 centimes of a Franc (15 Euro cents) in 2010. Why this slump in the Franc’s purchasing power ? If we go back further in time, we can see absolute stability of prices until 1914, the year in which France left the gold standard. Between 1914 and 2010, the cost of living index has increased 2408-fold, which is a paper money inflation rate of 240’800% in the space of a century.
PRECIOUS METALS PROTECT PURCHASING POWER.
If money is coupled to a metal standard (gold and/or silver), prices remain remarkably stable. At the beginning of the 20th Century, a fine men’s suit could be bought with one ounce of gold; the same goes for today. In 1900, 12 kg of rye bread could be bought with one gram of gold; the price is the same in 2010.
History shows us that governments in every era and every country always succumb to the temptation to print and pump money into the economy ever faster. So, the purchasing power of YOUR paper money is doomed to drop to nothing over time. Protect yourself against monetary erosion by investing in gold and silver !
By EUPOROS SA ® - Registration of Copyright © 2011
Author : EUPOROS SA® - © dépot légal 2011
Source : www.euporos.ch
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