It has been 48 years since President Nixon took the United States off the gold standard. While other nations had been on the fiat currency model before, this was the first time a truly global system of paper money was under total control of governments. There are some who think it would be a good idea to re-institute the gold standard; others think the flat currency system can be manipulated back to prosperity.
After World War Two ended the dollar became the world’s reserve currency. This meant that central banks could exchange dollars for gold at a fixed value. This guarantee ended in 1971. One fact is certain; the American dollar has lost spending power when compared to gold for the last 10 years. The world’s main economies are all mired in debt, and fiat currencies have contributed to the problem. The solution for individuals is to buy gold, because gold is worth much more than paper money.
Today, nations are plagued with high debt, over extended banks, and artificially low interest rates. All are a result of the fiat currency system. Governments have gone to the fiat currency system to fund ever increasing state expenses. The reality is all state run fiat currencies somewhere along the line have suffered economic difficulties or have even collapsed. Some have gone back to commodity driven currencies to keep from collapsing.
Today, even central banks protect themselves by using gold as an investment. Individuals can benefit too from investing in gold. Greece may fail, and Europe’s debt is likely to keep going up. The debt ceiling bill recently enacted does little to reduce the debt in the United States. Gold is the best way to protect ourselves during the current troubled economy.
It is possible that the dollar will become further devalued. Most economists think a crash is unlikely. Yet, if the dollar and stock market go down gold will probably go up. The best time to invest in gold is now, before the next price spike. This way your investment is worth even more.
To conclude, it has now been 40 years since President Nixon took the United States off the gold standard. While, there were many nations already on the fiat currency system before 1971, this marked the first time a global money system was in place that was not commodity backed. Paper money has lost much of its spending power when compared to gold since 1971. This means gold is a much better investment than paper driven currency.