Sooner or later people will turn to gold and silver as honest money to replace their rapidly depreciating fiat currencies. From Egon von Greyerz at goldswitzerland.com:
“Specie (gold and silver coin) is the most perfect medium because it will preserve its own level, because having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war.” – Thomas Jefferson
Since no current President or Prime Minister nor any Central Bank Chairman understands what money is or the relevance of gold, we turn above back to history and Thomas Jefferson, America’s third president for a proper definition.
Jefferson also understood that “Paper is Poverty, It is only the Ghost of Money, and not Money itself.”
As the world economy goes towards an inflationary depression exacerbated not only by epic debts and deficits but now also by war, the significance of gold takes on a whole different dimension.
So let’s dissect Jefferson’s statement:
“(GOLD) Will preserve its own level”
Gold is Constant Purchasing Power. As such, gold doesn’t go up in real terms. An ounce of gold today buys a good suit for a man just like it did in Roman times.
The graph below shows gold as constant purchasing power at the 100 line whilst all the currencies are crashing to the bottom.
All currencies are continuing to lose value against real money although it never takes place in a straight line. With higher interest rates & inflation, higher deficits & debts, poverty, cost of wars and increasing pressures in the financial system, the currency debasement will now accelerate.