BREAD LINE OR BUFFET LINE?

Craig R. Smith
May 21, 2012


Which is the wise currency to be holding today to maintain your standard of living in the future?

Confidence is key in maintaining the store of value of every paper currency on earth. Gold is the only form of currency that doesn't require confidence because it is universally accepted as a reliable store of value and a global monetary unit.

World economics are upstaging politics in 2012. Governments worldwide are seeking to make citizens feel “safe” by expanding entitlement programs, which require an ever-expanding, taxable population to pay for these programs. That math does not work in Europe and it won't work in the U.S. Our political leaders are making promises they cannot keep.

It boils down to this question: Will you rely on government promises or become more self reliant? When the next crisis hits, your choice now may determine whether you stand in a bread line or a buffet line.

A perfect example of this choice has been played out on the world stage before. In 1919 Germany, some people trusted the government and held Marks others did not and held gold. When the 1922-23 crisis hit, one group of citizens had hit the nail on the head. The other had missed the mark (pardon the pun). Any German citizen who held 170 Marks in the bank had worthless paper that could not buy a piece of chewing gum. Any citizen who owned the gold equivalent of 170 Marks (1 oz) was able to trade their ounce of gold for 87 Trillion Marks, which offered the same amount of buying power for food and shelter as the 170 marks did before the hyperinflation.

CHART: Number of German Marks needed to buy one ounce of gold or silver

One citizen had to scrap for survival while the other had ample money to buy food for his family and even feed his neighbors.

Hyperinflation of paper currencies is the most likely outcome as citizens worldwide continue to demand bigger government and more deficit spending. Sadly, cranking up the printing presses is not a solution but is instead akin to spraying gasoline on a raging fire. Through it all gold will continue to emerge as the ultimate currency worldwide in maintaining your standard of living no matter the circumstances.

If a similar crisis hits again, will you be an American who holds valueless paper or an American with solid gold?

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