Is Gold Money?

Assalamualaikum dan salam sejahtera buat para pembaca blog GCPKenyalang.... Actually GCPK came across this article today.... Pasal Is Gold Money?? Ramai gak pembaca kat luar sana yang still confuse antara fiat money and gold.... Yang mana lebih bernilai?? So.... kalau pembaca nak tau.... teruskan membaca... Just for your reading pleasure.... 

Is Gold Money?

Ben Bernanke was asked recently by Congressmen Ron Paul, "Do you think gold is money?"  The Chairman of the Federal Reserve System paused and said, "No". His response lit up the message boards of gold bugs, conservatives, and Tea Party Members.

I literally wrote the book on gold, "The New Gold Standard,” so I'd like to take a shot at answering Ron Paul’s question. Ben Bernanke was correct! Gold is not money. Not if you define money as a medium of exchange. There are few places in the world where you can buy goods with gold, whereas almost any nation will accept dollars.

Why? Gold is outlawed as a medium of exchange in almost every nation. Legal tender laws declare that only government paper currencies are a legal medium of exchange. The current move toward the accumulation of gold by individuals, institutions, and governments throughout the world is challenging that decree, as many move away from paper money toward gold as an alternative money.  Many are growing suspicious of paper money as a credible medium of exchange.

There is a reason gold served as a medium of exchange on and off for over five thousand years. It possesses certain qualities that make it uniquely suitable to serve as a medium of exchange. One of those qualities is its historic ability to preserve value against other goods. Silver is another metal that accomplishes this.

For example, we complain about the high price of gas, but gas is actually cheap. Would you believe that a gallon of gas only costs about a dime? It does. It costs 1/10th of an ounce of silver. At $37 for an ounce for silver, one tenth of that, or one thin new dime is worth $3.70, or about what the national average price of gas is. If we were on the gold standard, silver coins, which were a part of that standard originally, would be in use today, and gas would cost the American consumer the same as it did a hundred years ago.

Instead, the paper dollar created under the Federal Reserve System has lost 97% of its purchasing power. So yes Mr. Bernanke, you are correct. Gold is not money. And neither is silver. But should it be? Only if you want money you can trust. The gold standard is a monetary system whose lasting integrity is based on something that politicians cannot devalue.

That is of course the answer Mr. Bernanke should have, but never will, give.

Paul Nathan

Aug 14, 2011