"Why Gold Has Enduring Value"

By Tony Boeckh

(Excerpt from his new book entitled "The Great Reflation".)

The real price of gold (i.e., after inflation adjustment) has fluctuated enormously since the end of the gold standard in 1914. These fluctuations have become even more extreme since the first Bretton Woods system collapsed in 1971 and the official price of gold was freed. In spite of this volatility, gold has retained its special mystique based on a track record that goes back thousand of years. The properties that have made gold so attractive are well know. It is indestructible, it is revered for jewelry and the arts, and its high value-to-weight ratio makes it easy to store and portable - critical qualities in wartime. It is not a liability of anyone. It is easily transferable outside normal banking channels and hence useful to avoid the grasp of predatory governments. It cannot be blocked in time of war or sanctions against regimes that are out of favor. People have used it for tax-free inheritance planning for centuries. It is useful for hiding wealth, which is important in many countries. But, above all, it has provided long-term protection against destruction of wealth by maintaining its purchasing power over very long periods compared with paper money. For these reasons, gold has built a track record of trust over thousands of years in preserving wealth, and this is not going to disappear anytime soon, if ever. People who own gold for wealth preservation are long-term holders. They own gold for insurance and hope they don't need it.