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The future value of gold bullion investments made today could easily exceed your wildest expectations.

July 08, 2011 – We all know what opinions are like and why, but I will step out on a limb and give mine for the future of gold bullion investments: too good to be true. The entire world is entering unchartered waters rife with unknown dangers. We have built a global economy without a foundation, dependant solely on fiat currency. And it is quickly falling apart.

More than two centuries ago Voltaire warned that “paper money eventually returns to its intrinsic value — zero.” American economist Frank A. Fetter told us early in the last century that fiat money breeds political intrigue and popular misunderstanding, which above all else makes it “n general a poor kind of money.” In The Purchasing Power of Money Irving Fisher tells us “irredeemable paper money has almost invariably proved a curse to the country employing it.”

What is the real problem with paper money? My dad was so fond of saying, “money doesn’t grow on trees,” but he was wrong. That is precisely where paper money comes from, and it has precisely the value of leaves when it is created in excess of the real productivity it supports. Whenever the government steps in to inflate the money supply it does so through credit expansion.

“As a consequence, the economy's overall debt load keeps growing at a faster rate over time than real incomes do, leading to a situation of overindebtedness. This process is of course accompanied by the piling up of massive government debt,” says Thorsten Polleit of the Ludwig von Mises Institute.

The institute’s namesake understood that artificially lowering interest rates fixes nothing, and inevitably must create even graver problems: “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

It surely doesn’t look like anybody is willing to abandon credit expansion, so that leaves catastrophe – in the form of the end of the fiat money era and the return to real money. Countries such as Switzerland and Venezuela are already there, with nearly 100% of their currency covered by gold reserves. If the entire global money supply were to have that backing gold bullion would be worth $60,000 per ounce.

No, I’m not saying gold will get to that price (although nothing says it couldn’t). I will say, however, that the future value of gold bullion investments made today could easily exceed your wildest expectations.

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Jonathan Monroe

Senior Staff Writer -

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